Inside Franchise Business - July/Aug 2018 by Octomedia Pty Ltd

YOUR ESSENTIAL GUIDE TO BUYING A FRANCHISE WWW.FRANCHISEBUSINESS.COM.AU

JULY/AUGUST 2018

ISSUE 31 VOL 4

IT’S THE LAW!

Legal insights to check before you buy

NOODLE TRAIL

Asian flavours fire up fast food

THE

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WHAT’S DRIVING THE AUTO MARKET?

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CONTENTS

REGULARS

LEADERSHIP

5 6 10 132 134 135 136 137

14 10 FRANCHISES TO GET TO KNOW BETTER

EDITORIAL GLOBAL EYE INSIGHTS

In a world of big brands, an unfamiliar franchise can be refreshing.

GLOSSARY TIMELINE INFLUENCERS CHECKLIST RESOURCES

This convenience chain is rolling out a new look in Australia.

22 THE AMERICANS ARE COMING DESTINATION: OPPORTUNITY

Three new brands are settlling into the retail scene.

28 THE HAIRDRESSING FAMILY

FRANCHISE

French global salon brand Franck Provost Paris keeps growing.

30 ZONE STANDS ALONE

The Coaching Zone is a stand-along spin off from the Genesis fitness club..

INDUSTRIES

FRANCHISE BASICS

60 THE NOODLE TRAIL

84 COMPLIANCE IS KEY

FCA CEO Mary Aldred stresses the importance of compliance.

86 IF IT LOOKS LIKE A FRANCHISE...

Be wary of companies trying to sidestep the requirements of the Franchising Code of Conduct.

90 WHAT IS IN A DISCLOSURE DOCUMENT?

This document is a key part of the pre-purchase process when you buy a franchise.

Statistics and insights into the auto repairs market in Australia.

77 STAYING AHEAD

How tourism is shaping the accommodation business.

38 PUTTING FRANCHISEES FIRST

18 7-ELEVEN EVOLVING 26

69 WHAT’S DRIVING THE AUTO BUSINESS?

Carl’s Jr is ready to spur growth across the Australian market.

Gelatissimo builds a strong franchise relationship through listening.

A US franchise presence over here is about more than fast-food favourites.

As the takeaway scene evolves in Australia, Asian cuisine is booming.

34 BEEFING UP INTEREST

98 5 THINGS TO KNOW ABOUT

INTELLECTUAL PROPERTY

Franchises are all about building on the value of ideas.

102 MISLEADING CONDUCT

42 COVER STORY

Spotlight on franchisees taking on a sea or tree change to buy a franchise.

54 MORE THAN WINDOW SHOPPING What’s coming up at the Brisbane and Melbourne franchising expos?

58 7 HABITS FOR SUCCESS

Revealed: the tactics top performing franchisees use to achieve high sales.

111 THE CHAINS THAT BIND

What you need to know about supply-chain rules.

114 COULD YOUR CONTRACT BE UNFAIR? Caution is required if there appears to be a power imbalance in the franchise agreement.

118 HOW TO AVOID DISPUTES

Follow the clearly defined pathways to settling disagreements.

122 RESTRAIN YOURSELF

Restraint-of-trade clauses have an impact on your franchise operation.

124 LEAVING ON YOUR TERMS

Check your options and obligations for exiting a franchise.

Legal pointers that can help you avoid deceptive conduct.

130 5 REASONS...

107 KEEPING IT TRANSPARENT

146 FINAL WORD

The rules governing marketing fund contributions.

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Why you need to get legal.

How the Franchising Code of Conduct will affect you as a franchisee

EDITORIAL

Shining a light Franchising is a force for hard working entrepreneurs achieving their goals out of the spotlight As many a celebrity will attest, fame comes at a cost. So when the spotlight shines on a business it can be for the best or worst of reasons. Franchising has found itself in this position with the parliamentary inquiry into the efficacy of the Franchising Code of Conduct progressing through initial public hearings at the time of this publication going to press. What’s been apparent in the glare of publicity that has pre-empted and is accompanying the inquiry is there is no easy answer to bringing profitability and success to every franchisee across Australia. However, misleading and unconconscionable conduct must be dealt with. The question is, does the Code need to be revised and improved? Do existing regulations suffice but need greater compliance? Do the regulators themselves need more resources? The hearings and inquiry will advance, the committee will review and assess the submissions and the impact of the Code, and by 30 September the franchising sector will have clarity on what happens next. In the meantime, this $146 billion sector continues to power its way through a challenging retail economy, to build up strong service-based businesses, to employ about half a million people across its nearly 80,000 individual businesses. These numbers indicate how entrenched franchising is across Australia - not just through the big names that hit the headlines but through the actions and entrepreneurship of hard working franchisees and franchisors trading in everything from lawn mowing and dog washing to business coaching and IT support, from beauty salons and gyms to hotels and bakers, from pool cleaners and logistics to Mexican food and ice-cream parlours… And fronting many of these operations are franchisees who have shown that a franchise model can bring dividends. Individuals looking to replicate this success fall into two camps: those who know clearly what business and brand they want to be involved in, and those for whom opportunity is wide-open. Whichever profile you match - there’s something in this edition for you. For those that are advanced in their search, salutory advice about the legal issues that are central to franchising are uncovered in the Franchise Basics segment. For those of you just dipping your toes in the franchise pond, it’s a deep pool...you might start with the list of 10 franchises you’ve probably never heard of (see page 14) before moving on to showcases of franchisee and franchisor success, discovering what’s coming up at the next expos in Brisbane and Melbourne, and uncovering some of the brands operating in the Asian food market, and hotel and auto repairs space. Enjoy the read.

EDITOR

SENIOR ACCOUNT MANAGER

SUB-EDITOR

Marketing & sales co-ordinator

Sarah Stowe P: 02 8224 8371 sarah.stowe@octomedia.com.au

Louis Allen louis@octomedia.com.au

JOURNALIST

Gali Blacher P: 02 8224 8355 gali@octomedia.com.au

GENERAL MANAGER

David Strong P: 02 8224 8370 david.strong@octomedia.com.au

Charlotte Redfern P: 02 8224 8373 charlotte.redfern@octomedia.com.au

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GRAPHIC DESIGN

Sar a h Sarah Stowe Editor

OCTOMedia

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Rozelle Carlos rozelle.c@octomedia.com.au Inside Franchise Business is the FCA media partner and official online directory Confirmed distribution of May/June 2018 issue 7,420 - Print Post 100008121

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ALL INSIDE FRANCHISE BUSINESS MATERIAL IS COPYRIGHT. REPRODUCTION IN WHOLE OR IN PART IS NOT ALLOWED WITHOUT WRITTEN PERMISSION FROM THE EDITOR. OPINIONS EXPRESSED IN INSIDE FRANCHISE BUSINESS ARE NOT NECESSARILY THOSE OF INSIDE FRANCHISE BUSINESS OR OCTOMEDIA. © COPYRIGHT OCTOMEDIA, 2016 P R I N T E D BY: B LU ES TA R P R I N T 8 3 D E R BY S T R E E T, S I LV E RWAT E R N SW 212 8 P : 0 2 974 8 3 411

GLOBAL EYE

FRANCHISES SHAPE UP Franchisors have franchisees top of mind as they re-invigorate their business models and spot opportunities to expand.

HOME LOANS FIRM REVISES MODEL

RFG’S THIRD BOSS IN THREE YEARS

Mortgage Choice is introducing a more competitive remuneration model for its franchisees. The news comes as the loans business is under scrutiny in the media for operating a business model that franchisees claim is failing them. A joint investigation by Fairfax and ABC’s 7.30 program revealed that up to 173 franchisees are reviewing the option of legal action if there is no change to the Mortgage Choice model. Franchisees reportedly spoke to the media outlets complaining of struggling businesses and lack of attention from the franchisor. Mortgage Choice said a revised model has been under consultation for months with franchisees. The home loans business said "We acknowledge that the balance between services offered and the remuneration needs adjusting to encourage franchisees to invest in their businesses." The model will be shared at a series of state‐based franchisee workshops and the business expects to introduce this model in August 2018 “These changes are designed to support the long term sustainable growth of Mortgage Choice, increase franchisee remuneration and attract new high‐quality franchisees to our network,” said Susan Mitchell, chief executive officer of Mortgage Choice. Any increase in the average payout rate to franchisees will be offset by operational efficiencies and the company promises investment in new technology will boost franchisee productivity and the customer experience.

Retail Food Group’s new chief is armed and ready to repair the bridges burnt by leaders before him and return the ailing franchisor back to profit growth by regaining the trust of franchisees and significantly boosting the level of franchisee support. Promoted to the role of group chief early June after less than six months leading the local business, Richard Hinson will be on the road in the coming months consulting with the more than 1,000 franchisees in RFG’s Australian network. “My focus is on our customers – the people who rely on us – our franchisees,” Hinson said. “I am committed to delivering tangible benefits for franchisees through reduced cost of goods, new revenue opportunities and more hands-on field support.” Since February $1.5 million has been spent on revising RFG’s field service structure to improve franchisee support, while 25 new roles have been created to support outlet performance and mentor successful owners. Franchise fees have also been streamlined to reduce costs and $3.6 million is projected to be saved by the network each year from a recent price drop on supplied products. The action comes after Fairfax media publicised a series of high profile allegations about RFG’s business practices last December, claiming that a lack of support, expensive and poor-quality products as well as misleading recruitment tactics had pushed partners to the wall. In the months after the reports, RFG’s share price declined more than 80 per cent and trading across its business worsened, compounding what became a $87 million

interim loss in February. Hinson became the third executive to sit in the captain’s chair at RFG in as many years, replacing Andre Nell who took up the reins on the retirement of Tony Alford in 2016. Hinson said it will take him 12-18 months to complete a turnaround of the business, but others believe RFG will need to undertake more structural changes before it is able to deliver any meaningful improvement to stakeholders. • The company’s Donut King has had a win for customer satisfaction, according to Roy Morgan’s latest research. The research company said a customer satisfaction rating of 87 per cent in March 2018, put Donut King ahead of stablemate Michel’s Patisserie on 83.8 per cent.

WHAT’S UP AT MCDONALD’S? Fast food giant McDonald’s is Australia's most popular take away brand. More than half of Australians eat McDonald’s take away in an average six month period, according to new research from Roy Morgan. The leading quick service restaurant was found to be the favourite in every age group polled, with more than 60 per cent of both Millennials and Generation Z having eaten at the fast food chain in an average six months. McDonald’s was far ahead of second place favourite, KFC, which enticed 40.8 per cent of Australians, and a trio of closely packed players in Subway (30.8 per cent), Hungry Jack’s (29 per cent) and Domino’s Pizza (28.3 per cent). In the meantime Australia’s favourite

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GLOBAL EYE

Anytime Fitness

The Leather Doctor

business services and mobile franchises. Which brands have made the list? Check www.frandata.com.au

SUPPORTING MENTAL HEALTH

fast food franchise has unveiled a new look at Sydney International Airport. The design incorporates world first technology for McDonald’s, with the kitchen placed on the upper level and a transporter system installed to carry products to customers on the ground level. The technology interfaces with McDonald’s kiosk ordering technology to deliver a smooth experience for both customers and workers. Kitchen staff attach bags to the system, which then transports orders downstairs to those working at the register.

50 FINANCE READY BRANDS Good news if you’re looking to buy a franchise. Fifty franchise chains in Australia have been marked out as brands committed to improving finance access for franchisees. A list of initial brands which were deemed finance ready was unveiled in October 2017. An updated list has now been released by independent franchise information and ratings specialist firm FRANdata. The Franchise Finance Ready blue tick awarded by FRANdata indicates the company has demonstrated an acceptable level of transparency, provides a superior level of information to franchise lenders or has multiple lending accreditations already in place. Franchise brands listed include major names in food, convenience retail,

Mental health is a major issue for the Australian population, with one in two people in experiencing a mental health condition in their lifetime. Fast food brand KFC is launching a mental health initiative to help Australia’s young people. The KFC Youth Foundation is dedicated to building confidence in young Australians and will work to raise critical funds for the selected partners on this mission: Reach, Youngcare, StreetWork, Whitelion and ReachOut. As anxiety and mental health conditions have an impact on the transport sector Fastway Couriers has stepped up and raised funds for its chosen charity, beyondblue. The Fastway Couriers Wollongong depot has presented a cheque of $28,414 to the charity. Fastway Couriers set a goal of raising $20,000 by the annual convention in March. The network exceeded its target. The money was raised through a range of fundraising events including BBQ’s, trivia nights, silent auctions and other initiatives. Almost 300 Anytime Fitness clubs across the country together raised more than $400,000 for Suicide Prevention Australia through the Tread Together 24 Hour Treadmill Challenge. The event brought together thousands of community members, local businesses, community services, politicians and celebrities. Funds raised will support Suicide Prevention Australia to introduce a new series of research scholarships designed to improve education and inform future development of suicide prevention strategies.

INCENTIVISED PRICE Mobile services franchisor Leather Doctor has just dropped its franchise fee to help individuals get into their own business. Casey Reid, franchise sales manager, told Inside Franchise Business “There’s been a lot of interest because we’ve incentivised the buying price. It’s now more available to more people and allows for an easier entry point.” The start-up cost of a Leather Doctor franchise is now $75,000, a $20,000 reduction on the full price. To make up the difference, the franchisor is increasing the ongoing franchise fees. Franchise buyers can also take on complementary sibling brands Fabric Doctor and Timber Doctor for a small additional cost.

NEW CHIEF AT JIM’S The founder of Jim’s Group, Jim Penman, has appointed existing chief operating officer Tino Grossi as chief executive officer (CEO). Penman has taken on the role of managing director. Under Grossi’s guardianship, the Jim’s Group reports total revenue performance has grown by 14 per cent.

SPICING IT UP Lord of the Fries is heading to India to delight the locals with a modified, spicier vegan fast food menu. There are plans to set up 100 stores across India and open another seven outlets in Australia this year. The company is looking further afield too to the UK, US and Canada. n

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INSIGHTS

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SPEED BUMPS Fast food needs speedy delivery, but this can be a financial burden on a franchise already working to tight margins.

elivery is now a fundamental element of Australia’s retail scene, particularly in the food arena. Almost two million Australians use meal-delivery services such as Foodora, Deliveroo, Menulog and Uber Eats, according to research by Roy Morgan. Younger Australians are leading the charge and embracing these mealdelivery services within the so-called gig economy: in fact 16.1 per cent of millennials/Gen Y, between 28 and 42 years old, have eaten a meal delivered by such a service in an average three months. In comparison, the older population is significantly less engaged with meal-delivery services with a take-up of just 4.5 per cent by baby boomers and 3.6 per cent by pre-boomers, aged 58 and older. The report points to the importance of location with, unsurprisingly, urbanites three times more likely than their regional counterparts to use a delivery service. The Metrotech community of single, young, well-educated, innercity professionals is the major group using meal delivery, accounting for nearly a quarter of the business (22.5 per cent). High-income families (11 per cent) and young, average Australians (10 per cent) follow.

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FRANCHISE CHALLENGE But delivery services are a challenge for food franchises, says Roy Morgan CEO Michele Levine. On the one hand, businesses that provide an in-house delivery option face economic disadvantages. Fast-food billionaire Jack Cowin, chairman of Domino’s Pizza and owner of Hungry Jacks, has hit out at delivery businesses in the gig economy and called for standardised pay and conditions across the industry. Cowin cites the disparity of Deliveroo, Foodora and Uber Eats paying contractor wages without benefits while fast-food chains such as Domino’s pay award wages. In an interview with ABC’s The Business he described the “gig society” as where people contract to do deliveries. “They don't get employee benefits, they don't get penalty rates, they work on a contract rate that is a lot lower than wages.” Cowin acknowledged that some franchisees within Domino’s do use contracted delivery firms as part of their business, but rejected suggestions these franchisees should stop third-party deliveries. “What I’m saying is it should be a level playing field in which everyone, whether you’re a part-time contractor or a part-time employee in a store, has the same benefits.

INSIGHTS 18% 16%

16.1%

14% 13.2%

12%

They don't get employee benefits, they don't get penalty rates, they work on a contract rate that is a lot lower than wages.

10%

Cowin believes there should be a government investigation into the wage disparity. According to Internet Retailing, food-delivery platforms are emphasising the flexibility contract work offers their riders, as parliament considers a Bill to extend workplace protections and benefits to workers in the “gig economy”. Deliveroo country manager Levi Aron says people choose to work in the gig economy because of the flexibility it allows. “Across Australia, people are choosing work that allows them to earn well while providing the freedom to choose when, where and whether to work,” he told Internet Retailing. Analysts at IbisWorld last year estimated that food-delivery platforms drove a 2 per cent revenue increase in Australia’s restaurant industry in 2017-18, playing a critical role in bringing e-commerce functionality to a still mostly bricks-and-mortar business. In fact the online food delivery industry currently worth $600 million could reach a $2.4 billion turnover by 2025, according to Morgan Stanley.

INDUSTRY SHAKE-UP “Uber deliveries may seem fantastic for the customer, but what is the business and social reality?” asked MD Peter Buckingham of geologistics firm Spectrum Analysis. He points to Antony Crowther, New York Minute Burgers MD and a 20-year QSR-industry veteran, who has argued that the massive uptake of Uber Eats represents the single biggest industry shake-up of the past 50 years. “Running an expanding gourmet burger franchise, Crowther knows the Uber economy means businesses must change

8.6%

6% 4%

3.6%

2% 0%

WAGE DISPARITY

9.8%

Australians 14+

Pre Boomers (Pre 1946)

4.5%

BabyBoomers (1946-1960)

Generation X (1961-1975)

Millennials (1976-1990)

Generation Z (1991-2005)

Morgan Single Source: April 2017 – March 2018, n = 15,067 Australians aged 14+

their models or perish,” says Buckingham. John Saadie, from Order Up agrees that delivery apps are putting businesses under pressure. In Internet Retailing, Saadie said “It has been noted by several restaurants that the commissions taken by food delivery apps are simply not sustainable. “While the four major apps – UberEats, Menulog, Foodora and Deliveroo – are reluctant to disclose the official commission or surcharge amount, Menulog put up their hand and declared a 12 per cent commission rate plus a 2 per cent processing fee,” he said. “The other problem lies in the fact that food retailers are often informed of the exact terms of agreement only once they’ve started the sign-up process.” Some restaurants using Uber Eats claim delivery commission can ramp up to about 30 per cent of an order, however the company denies this. A statement from Uber Eats reads: “Restaurant service fees give restaurant partners access to a large network of delivery partners and contribute to 24/7 customer and operational support, as well as app development, marketing campaigns and business insights. Uber Eats can be a cost-effective channel for reaching an entirely new customer base.” Buckingham points out that delivery payments can be a growing expense whittling away at the net profit, and there is also a drop in the net profit to sales ratio.

UNDER PRESSURE “In the meantime, you are continually under pressure for rental increases, as your lease has set annual increases well above CPI. Labour costs are rising, but if you don’t offer delivery, will your sales drop?” The incremental business gained by food franchises may be lost as the spread of food-delivery services extends,

he suggests, diminishing a franchisee’s market share. That is effectively wiping out any competitive advantage. But can a franchisee afford not to offer such a service? Saadie believes that while food delivery services may work for some, they may not be right for everyone. “For many restaurants, fear is driving their decision to sign-up to food delivery services. If you’re not online, do you really exist? As food delivery services grow, will restaurants be left behind? “What restaurants should be doing is working directly with consumers to eliminate the middleman. Ultimately, it’s up to the industry to set the pace of change,” he suggests.

POSSIBILITIES So what are the options? Buckingham raises two possibilities: 1. Franchised outlets that occupy a smaller footprint with fewer in-store seating options, a smaller rent, and a business re-aligned to focus on delivery orders; 2. The introduction of so-called dark kitchens, non-retail spaces in lower-cost industrial areas from where services can pick up and deliver orders. “The black kitchen would need to work on a set of economics knowing all the business will be paying the Uber delivery charges, but a low-rent, tailormade environment may be able to handle the Uber sales for about a 5km radius area quite easily.” There is no doubt food delivery is a game changer. It is an issue that needs to be addressed, and potential food-industry franchisees need to quiz their prospective franchisor and other franchisees in the network over the real costs and advantages. n

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Be the

LEADER OF YOUR OWN SUCCESS Welcome to a world of opportunity, brought to you by 7-Eleven, the brand that’s world famous. A 7-Eleven franchise is a partnership in success. When you buy a 7-Eleven franchise, you buy two things. Firstly, a brand name that’s recognised around the world, and secondly a business system that works, one that provides more support than most other franchise networks.

BENEFITS OF BEING A 7-ELEVEN FRANCHISEE Our stores are open 24/7, so we’re with you 24 hours a day, supporting you in every part of your operation. From setup, to training, to marketing, and even to book-keeping, we’ll help you turn your new business into a solid investment. We set up shop for you and give you

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FRANCHISING

THE LIST

FRANCHISES TO GET

TO KNOW BETTER

In a world of big brands and household names, an unfamiliar franchise can be refreshing. If you’re looking for a business that’s a little different, check these out.

business can be a roaring success with its customers yet remain largely unknown outside its cohort. Some players in the franchising scene have been delivering service and industry expertise to enthusiasts for years, even decades, and are a well-kept secret.

1. AQUARIUM GALLERY

2. CIRILLO LIGHTING AND CERAMICS

3. DRUG-SAFE COMMUNITIES

Aquarium Gallery has turned a pet fish shop into not only a high standard specialty aquarium shop but an Aquarium Gallery which includes fish, aquatic plants, corals, natural aquascaping materials along with equipment and accessories. This franchise offers the tropical fish hobbyist or enthusiast a way to turn their passion into a business and make work their hobby. A franchise term is for seven years with one option to renew. Franchisees can expect to pay at least $300,000 to invest in the brand. Expansion is focused on Sydney Melbourne, Adelaide, Gold Coast, Brisbane and Perth.

Cirillo Lighting and Ceramics with its 40 years of experience offers franchisees a one-stop shop model that combines tiles, lighting, bathroom ware, kitchen appliances, tap ware, door furniture and interior design services for a range of budgets. Franchisees benefit from an innovative, exclusive and wide-ranging product offering sourced from major European manufacturers. The business began trading back in 1978 and has been franchising for two years. Cirillo provides support with site location, leasing, store design and setup and a comprehensive marketing program. Building industry experience is not required. Investment is from $350,000 and a term is five years with renewal options.

Individuals searching for a business that has a positive impact on Australian communities are the target franchisees for this mobile alcohol and drug testing business, which aims to make workplaces safer, more productive and more profitable. The business costs less than $100,000 to invest in (not including the leased vehicle) and there’s accredited training as part of the package. Drug-Safe Communities offers further coaching and mentoring for franchisees. Those best suited to the role enjoy meeting people, and are looking for the back up of a business that has been delivering its services for nearly 20 years.

4. INXPRESS

5. LADIES RUNNING ERRANDS

InXpress is a unique global online shipping and logistics consulting company, with a fully integrated system. The business operates in 14 countries with more than 360 franchisees internationally. It‘s a business model that suits high energy individuals who enjoy a fast-paced business environment and want to invest between $50,000 and $100,000. No previous experience is necessary as full training is provided, but the franchisor looks for a passion to succeed in sales and ambition to build a successful freight consulting business. InXpress is expanding across Australian capital cities and metropolitan regions.

Ladies Running Errands is a family friendly personal transport and errand company. Think airport transfers, day surgery and doctor’s appointments drop off and pickups, school and day-care runs, and special functions. Flexibility is core to the business and it’s a low cost investment under $50,000. Franchisees are likely to work in their local territory, and enjoy providing a community service. The business has been trading since 2011 but began franchising last year. It’s backed up by operations manuals and a marketing strategy. Of course franchisees will need to own a sturdy and reliable vehicle.

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THE LIST

6. LOCAL POOL INSPECTIONS

7. SUKI SUSHI BURRITO

8. TAPSNAP

Here’s one exclusively for Queenslanders. Houses being sold or leased, and in the commercial market units, motels and resorts, all require a pool safety certificate. This business conducts swimming pool inspections across Queensland, with one central call centre. It’s a low level investment, just $20,000 to $50,000,and there are no qualifications required. A three day course covers all facets of the industry. The business is backed up by multichannel advertising and a business development manager who directly contacts real estate agents, body corporate, fence manufacturers and pool shops.

Poke (pronounced Poh-key), is a Hawaiian fast food favourite that has picked up a huge following across the US mainland and it’s at the heart of this new Brisbanebased business. Suki Sushi Burrito has an innovative menu with healthy ingredients served in either a bowl, poke style, or wrapped like sushi or burritos, hence the name. It’s a takeaway delivered in a casual dining venue and franchisees will be team builders creating a fun culture and working environment. It’s desirable but not essential for franchisees to have retail or food experience and they will invest up to $500,000.

A photo entertainment franchise that has reinvented the traditional photo booth for the digital era. TapSnap incorporates two income streams: a social media photo booth for weddings and parties, and a photo marketing kiosk for corporate events. It’s been ranked in the US Entrepreneur’s Top 500 Franchise List. Franchisees have 24/7 technical support, there’s an online booking system, a contact centre, a dedicated marketing team, and equipment is provided. Individuals can invest in this business for between $50,000 and $100,000. It’s important for franchisees to have a fun and outgoing personality.

9. THE ALTERNATIVE BOARD

10. THE GOOD FEET STORE

This is a franchise that provides a niche business advisory board service for more than 20,000 small and mid sized business owners. Since 1990, The Alternative Board, also known as TAB, has been helping business owners achieve their dreams through advisory boards and business coaching in Australia and 18 countries. It’s been ranked by Entrepreneur magazine as the leading business coaching and consulting franchise (2018). Franchisees typically have at least 10 years of senior level management or consulting experience or have previously owned their own business. Some franchisees use TAB to complement an existing consulting practice. Signing up to a franchise with The Alternative Board requires a capital investment of $55,000+ (full franchise fee), with an initial term of 10 years and one option to renew.

A retail concept with a difference, The Good Feet began as a family-owned business in the US in 1992. Since then it has helped more than a million people suffering foot and back pain through more than 100 individually owned and operated stores globally. The Good Feet Stores sell an exclusive, proprietary product line of arch supports and a selection of shoes and foot-related accessories. There are few competitors in the market, and The Good Feet Store has comprehensive branding and marketing. Capital investment in the franchise is between $160,000 and $250,000 and a term is five years with one renewal option. Currently, the franchisor is not charging a franchise fee for the first term. Ideal franchisees have business or retail experience, management skills and a good customer service ethos.

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LEADERSHIP

7-ELEVEN

EVOLVING

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Convenience chain continues to invest in innovation, and is about to roll out a new look in Australia.

onvenience chain 7-Eleven has revealed it is investing in innovation to ensure the network of franchised and corporate stores stays ahead of the game in Australia.

CEO Angus McKay tells Inside Franchise Business, “We’re investing in becoming better retailers. We want people to have a business that’s healthy and makes money.” He says the brand this year gained a 66 per cent net promoter score, and says there is a need to be pragmatic about the math in stores. “The challenge is to get customers to spend more, buy more and come back more often.” Innovations are part of the DNA now at 7-Eleven, he says, with a try-andfail attitude central to the brand’s development. Actions include turbocharging the food-on-the-go offer, doubling its coffee output to an average 500 cups a day per store under the Coffee 500 project banner, adding daily fresh bakery items, introducing a parcels locker service, trialling digital payment options and providing a fuel value proposition. This equates to giving customers choice of a range of fuels, quick access to pumps with a well-maintained forecourt, the fuel app to lock in low prices when they are available, being able to redeem the savings offer, and the ability to grab a coffee or meal on the go. “We have a huge opportunity to lift our fuel game,” McKay says.

NEW LOOK As part of the process of working toward the goal of becoming the premier retailer in Australia, a new look has been unveiled for smaller, urban stores. “Our vision comes back to what makes life easier for customers and easier for store operators,” says McKay, noting that customers today want a different retail experience from the traditional convenience purchase. With 32.1 per cent market share on the eastern seaboard, up 2.1 per cent from last year, 7-Eleven claims to be the fastest-growing convenience-store chain in Australia. • Fuel retail has accounted for more market share, up 8.5 per cent. • Merchandise has risen 10 per cent with like-for-like sales up 5 per cent.

• Strong customer growth has seen transaction numbers rise by 5 per cent. The own-brand Slurpee soft drink is a major traffic generator for 7-Eleven outlets, as well as coffee and tobacco. But there are challenges ahead, McKay says, citing tobacco, sugar and fuel. “We need to be faster and thinking further ahead. “As much as I value confectionery in stores, it’s not now all the customer wants. Whether it’s healthy or a treat you have to offer a range. It isn’t about price. We need to offer good value and good service.”

SENSORY EXPERIENCE And the transformation is not just about shifting the product focus in-store. The outlets themselves look markedly different. In stark contrast to the white, bright décor of a traditional 7-Eleven store, the new-look fit-out is a much darker hue, with black walls creating a warmer, more upmarket feel and, says GM for retail operations Braedon Lord, ensuring the products stand out visually. The chain is testing whether the signature red, green and orange stripes work as well on black signs. “It’s about the customer sensory experience,” says Lord, noting that convenience shopping today is not about buying a can of spaghetti or a band aid, though people do still buy emergency items. Most people do their regular shop through a supermarket or grocer, he says. “Our customers are looking for alternatives, for food on the go. The differential is a quick-service food store.” The refurbished city outlets will stock essentials but devote most floor space to fresh fruit, bakery, coffee; the sandwich offer will increase from 40 to 100 units. A larger area has been dedicated to Krispy Kreme. Typical sites to be refurbished will include non-fuel outlets in high-transit areas such as universities and transport hubs. The convenience chain aims to provide the value-formoney options today’s customers want and to infill these smaller footprint stores in areas not serviced by 7-Eleven. There are now eight of these refurbished stores and the plan is to transform all similar outlets by the end of the next fiscal year. The convenience chain expects to have about 110 CBD-style outlets.

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LEADERSHIP

HIGHLY CHALLENGING The traditional offer in larger stores will remain, perhaps with the space-greedy parcel-locker service adding income opportunities. A nearby small 7-Eleven outlet will take on the new mantle and offer a pareddown merchandise selection of 900 SKUs rather than the traditional 1600 SKUs. Retail is highly challenging, says Lord. “Our stores can be open 24 hours, there are high rents, labour costs, utilities and maintenance costs just to run the business. We needed to make changes.” Lord says the transformation has been successful, with stores picking up an extra 300 shoppers from their base of 700 customers. The transformed stores have reinvigorated franchisees, he says, and the cost of refurbishment has been covered by the franchisor. Across the network there are about 90 corporate stores. “We want every one of our stores to be profitable. There’s nothing we do not share from corporate stores to franchisees , to make lives easier and more profitable.” With 42 stores opening, the total Australian 7-Eleven network was approximately 680 stores in June. The business is moving further into regional areas and into Western Australia, which McKay admits will be a test of the company’s supply chain.

COST EFFICIENCIES Speed and flexibility are crucial in today’s retail environment, and 7-Eleven has adjusted its delivery process to meet these demands and improve cost efficiencies. “The next-gen supply chain is a life blood for our organisation, but we recognised it was not capable of doing what we wanted to do. So we have been devoting time and resources to get it right."

As refining the offer is crucial to the retailer, what is being tried and tested now? • Fresh-baked goods are being trialled in a dozen stores. • Embracing digital payments is one way the chain will progress, but what shape this will take is yet to be determined. One consideration is an app that allows for product to be scanned and payment to be made on the phone with no other checkout interaction. • Digital screens are being trialled – these can tailor each store’s promotional items according to the most popular purchases at any point during the day, reinforcing the buy-me message to customers. • 7-Eleven is tapping into the online shopping trend with the trialled introduction of parcel lockers, allowing customers to receive parcel deliveries from a secure site. • Another idea in the pipeline is geared toward boosting sales across the more quiet times in-store, such as the evening. • To help stores reach the target of a network average of 500 coffee cups a day, each outlet will have a minimum of two coffee machines in use by June next year. Management is “more and more prepared to pull the pin” on innovations if trials prove unsuccessful, says McKay. “The art of retail is finding a good idea.” Agility is an essential element of today’s retail scene, which McKay describes as ‘brutal”. “You have to be patient and really be on your game and know what the customer wants, and be prepared for them to change their minds.”

FIRST CHOICE Looking beyond retail, the vision for the business is to be the first choice

in terms of customer preference and market share. To bring this to fruition, the business needs to grow sustainable profit and business value, double the gross profit delivery in its emerging categories, exceed community expectations and work to a high standard as well as maintain a highly engaged workforce. Six customer strategies devised last year are still the top priorities for consumer development: good value, energised stores, to be known for new and exclusive items, customer experience, famous for Food on the Go, credible for healthy options. The chain’s financial goals are to protect and grow shareholder returns, to achieve sustainable growth in profits for the stores, realise the value from acquisitions and optimise the cost of doing business. “We need to find ways to put time back to people in-store, provide greater efficiencies and processes,” says McKay. The innovation is not all product focused. The launch of the 7-Eleven Good Cause giving program aligns the convenience store’s partnerships with charitable organisations. “Good Cause will give a home to all our charitable activities and add new and exciting projects that will see us, as an organisation and as individuals, inject greater capacity into incredible charities already doing great work for Australia.” Partners include Second Bite, which rescues and redistributes surplus fresh food to more than 1200 community food programs around the country. 7-Eleven will help develop a new model of distribution that will focus on capacity building and establishing new collection points. AMES Australia is the convenience chain’s migrant partner. The collaboration will focus on providing opportunity for economic independence. n

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LEADERSHIP

THE AMERICANS ARE (STILL) COMING US fast-food companies have a large presence in Australia, but many new franchise opportunities are being offered by other non-food offerings

hat is it about the Australian market that attracts so many US brands? Fast-food household names like McDonald’s, Subway and KFC have all made a home here, and the quick-service restaurant arena continues to bring in American chains – think Carl’s Jr (read about this brand’s development plan on page 34) and Wingstop Restaurants. But the US presence extends way beyond our food courts and eating hubs...just check the brands below to see what is on offer on our shores.

BATTLING BUGS Mosquito Squad, a north American insect-control business that has traded since 2005, has its sights set on the Australian marketplace and is looking

for a master franchisee. The US brand has almost 250 domestic locations, and is turning its attention to the global opportunities. It has just signed its first master licensee for Indonesia, with development starting on Java and an agreement to develop 60 sites across the country. Chairman/CEO Chris Grandpre of Outdoor Living Brands, the parent company of Mosquito Squad, says “Following the launch of our first international markets in East Africa this year, we’re continuing to drive our global expansion efforts and are thrilled to be taking Mosquito Squad services to Southeast Asia. “With a dense, tropical climate and forested land, Indonesia suffers a great deal of insect-borne illnesses and is in urgent need of results-driven efforts that can eliminate the spread of mosquitoes.” Since Mosquito Squad partnered

with Malaria No More, a nonprofit global health organisation with the goal of ending malaria deaths, they have raised almost US$500,000 to help fuel the fight against malaria. Mosquito Squad specialises in eliminating mosquitoes and ticks from outdoor living spaces, allowing people to enjoy their yards, special events and green spaces. Services include barrier protection, automatic misting systems, all-natural protection and special-event sprays. DC Strategy is handling the recruitment of an Australian master franchisee.

THE HUMAN TOUCH FirstLight Home Care provides compassionate in-home, senior and respite care to any adult in need, whether they have dementia, an illness or the challenges of old age. The business was established in 2010 and has

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LEADERSHIP been listed in the Entrepreneur's Franchise 500 compilation of top franchise firms. Its web-based business management technology platform has proven to be a major resource for the system's franchisees, enabling higher levels of efficiency and profitability. Since its inception in 2010, the company's goal has been to combine best practice with innovative approaches so it can be an emerging market leader in a rapidly growing industry. FirstLight claims its training programs have enabled it to achieve a retention rate of 86.2 per cent against an industry average of 30 per cent. It is expected this will be a major competitive advantage in the Australian market, allowing the local licensee to also provide staffing aid to a variety of institutions and organisations providing elderly-care services. FirstLight now has more than 230 territories in the US and is looking for a master franchisee to build the Australian market. An ideal candidate should be committed to providing exceptional care, and business development and sales management experience are preferred. The US company is looking at opportunities in several overseas markets, and Australia is a key objective because of the sharply increasing demand for homecare services. FirstLight is also focused on awarding licences in Europe and New Zealand, and in its domestic market expects to add 30 new franchises this year.

THE SPRAY WAY Line-X Protective Coatings is an American franchise that specialises in spray-on corrosion-resistant coatings. The franchise arrived in Australia 18 months ago and is

now aggressively expanding. It has been running in the US for about 30 years and has been franchising for 20. Altogether there are 550 stores, which is a testimony to the success of the business. COO and franchise veteran Mark McPherson helped to bring the model to Australia and franchised straight away. “We had to start from scratch with everything in terms of the franchise side of the model as we have different codes of conduct to America,” he says. In a short time the company found franchisees through organic website traffic and some advertising. So far there are two company stores, in Welshpool and Kelmnscott. There are franchisees in Bunburry, Canberra, Sydney, Rockhampton and Adelaide. The company’s main goal is to be national, with the next priority being Melbourne and Brisbane. By 2020 the franchise wants 30 stores. McPherson says the company is looking for franchisees who are excited about the brand, passionate, and with a strong drive to do well.

THE FRO-YO ROBOT A US robotic frozen yogurt brand has plans for 500 vending machines across Australia in the next five years to bring in US$18 million in sales. Generation Next Franchise Brands has signed its fourth international licensing agreement for Reis & Irvy’s, a concept launched in the US two years ago. Since then, more than 235 franchisees have signed up to run 1100 vending machines. The high-tech robotic vending machines dispense servings of frozen yogurt, ice cream and sorbet – with toppings – in less

than 60 seconds. Troy and Michelle Bingham are heading up the Reis & Irvy’s brand and expansion in Australia. The couple has extensive experience in international business development and global management consulting across areas such as franchising, tourism, distribution channels, customer loyalty, payment and incentive programs. “We were looking for a business that could generate annuity income, require minimal time and staff once set up, and was in a sector we knew we could grow over the next 10 to 15 years,” says Troy. “The patented robotics, seamless payment, marketing interactivity and cloud-based reporting on the supply chain ticked all the boxes. “More importantly, the energy, passion and support from the Generation Next team to grow a quality brand and product was very exciting for us. We see frozen yogurt as just the first of many robotic and technology ideas to come.” Generation Next Franchise Brands chairman Nick Yates, who is based at the head office in San Diego, says “Being an Australian native myself, I am familiar with the similarities between our market here in the US and the market down under. “The market in Australia loves frozen yogurt and has seen steady growth in consumption over the past five years. We believe our product will find a way to disrupt the retail sector, and Troy and Michelle know exactly how to ensure that it happens.” Reis & Irvy’s has also teamed up with manufacturing and logistics partners, including Dannon YoCream, Stoelting Food Service (creator of the first soft-serve machine for US brand Dairy Queen), and Pitney Bowes, which will provide installation and national servicing. n

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LEADERSHIP

DESTINATION:

OPPORTUNITY

Australian franchise buyers are spoilt for choice, especially as established overseas brands are lining up to bring their businesses to these shores.

he business scene is brimming with opportunities in Australia with fresh names joining the familiar faces in franchising on a monthly basis. Some of the newest businesses are homegrown fledgling firms, some are successful overseas brands bringing established business to these shores.

Here are three to consider...

AUSTRALIA: THE CUPCAKE DESIRE A new franchise for Australia, The Cupcake Desire was founded by a couple who previously ran a bakery chain franchise. “We love the industry as so much art and creativity is involved,” says owner Rupal Mahajan. “Assembling a team of like-minded people with a passion to empower customers and who are hungry for success is our goal.” Before going national, the franchise aims to first open outlets in Victoria, featuring cupcakes baked fresh everyday using the finest ingredients. Gluten-free and vegan cupcakes and cakes will be available, Mahajan says. “We empower our customers to tailor their cupcakes and cakes to suit their occasion." An expert has been hired who will negotiate lease deals for franchisees. The franchisor plans not to charge any marketing levy, and franchisees will market the brand locally to boost sales to build the customer relationship.

CROATIA: SURF ‘N’ FRIES Croatian chain Surf ‘n’ Fries has signed a franchisee to launch the business in Australia with plans for at least 22 outlets in the next 10 years. “We researched the consumption of french fries in Australia and figured out that this is definitely the place where we want to be,” says franchisor Denis Polic. In 2015, Australia was the world number-one in french fries consumption per capita. The menu offers a twist on chicken and chips, with the fries being cooked in steam and hot air. Initial franchisee Valentin Perkovic will start offering the distinctively packaged Surf 'n' Fries takeaway menu from a branded trailer before opening a store at Sydney’s Bondi Beach this year. “I am confident Surf’n’Fries will work in Australia because the branding looks like it was made for the market, the packaging and the signature fries shape are new to the country, and the type of food we will have on offer is historically popular here. “We will have our signature fries, five

types of loaded fries, chicken nuggets, chicken strips, battered fish and prawn pieces along with all-natural milkshakes and thickshakes. “The shops are fitted out in a modern, fun and quirky theme with swings as seats and surfboard-shaped tables.” Surf 'n 'Fries started trading in 2009 and now has nearly 50 restaurants in 16 countries.

SOUTH AFRICA: ROCOMAMAS RocoMamas is a South African burger brand that delivers ribs and wings made to order. Its launch venue, a flagship outlet on Chapel Street, was opened mid-June with a design of high polished concrete walls with edgy neon lighting and commissioned artwork. This urban brand has its kitchen and bar area in a shipping container to create a street-food dining experience. Social media is playing a big part in building expectation for the launch store. Franchises will follow once the restaurant is established in Melbourne. Victoria Mastellone, master franchisee, plans to open five outlets in the next 18 months.” “The RocoMamas brand can work anywhere from main roads to shopping centres. It can also work really well in regional c ities lacking fast, convenient and tasty food,” she says. n

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LEADERSHIP

Fabian, Olivia and Franck Provost

THE HAIRDRESSING FAMILY

FRANCHISE TAKING OVER AUSTRALIA French global salon brand Franck Provost Paris keeps growing, and with further expansion offers opportunities for potential franchisees. By Gali Blacher

ranck Provost never imagined his business becoming the global hairdressing salon sensation it is today. He opened his first salon in a chic suburb of Paris in 1975. The brand has grown to become the number-one salon in France and has almost 700 outlets in 30 countries.

With further expansion plans already, there are plenty of opportunities available for potential franchisees. Master franchisor Jean-François Carré of Franck Provost Paris Australia fell in love with it and felt that Australia needed just such a French hairdressing brand. Carré is not a hairdresser by trade, but got into the field with the influence of his sister.

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Fabian Provost and Ana Beatriz Barros

Fabian and Franck

Provost and Lottie

Moss

Fabian Provost and Déborah François Today there are 17 Franck Provost Paris hair salons around Australia – New South Wales: Barangaroo, Beecroft, Bondi Beach, Breakfast Point, Chatswood, Crows Nest, Double Bay, Macquarie Centre, Manly, Mosman, Paddington, Rozelle, Sydney City and Warringah Mall; Victoria: Melbourne Emporium CBD; Queensland, Townsville; and Tasmania: Hobart. Australia also has its own training academy in Macquarie Street, Sydney, which is an extension of the original academy in Paris. “The Franck Provost Paris business model has proven highly successful across the globe, and it is our goal to continue to build the Australian business in the coming years, ultimately making it the nation’s leading hair-salon group,” says Jean-François Carré, who is leading the brand’s expansion in Australia.

FAMILY OWNED

Fabian Pro vo David Gue st and tta

nd rovost a Franck P Oliveira Raica

Carré also believes the brand is powerful because of its family ownership. The global team includes Franck Provost’s son Fabian Provost, who is the global artistic director, and daughter Olivia Provost who is the global communications director. The siblings say they work well together and share a passion for great business and creativity. “On top of the franchise, we also offer two more layers,” says Carré. “Firstly there is the ‘Management Option’, where we actually look after everything so the salon owner can be ‘hands off’. This includes accounting, marketing, human resources, managing and coaching the floor manager, and it is a particularly appealing option for investors who are not hairdressers. “We also offer a ‘Centralised Customer Service Option’, where we answer calls, emails, SMS messaging and live chat centrally from the office, plus we also support the salon floor manager with rostering, planning and staffing.” The company says education plays a pivotal role in the success of the Franck Provost Paris brand. Head of education and talent management Virginie Gayssot leads the Australian training academy in Sydney. She visits the Parisian academy each year to be trained in the latest trend collections and exclusive cutting, colouring and balayage techniques, which she then translates and teaches to all team members back in the Australian business. n

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ZONE STANDS

ALONE Genesis and the Belgravia Group spin off The Coaching Zone as a stand-alone studio ready for franchising.

tried-and-tested fitness concept has become available as a franchise. The Coaching Zone can now be run as a standalone studio with the backing of one of the longest-standing names in the fitness industry, Genesis (and its parent company Belgravia Group). It is based around high-intensity interval training, and 29 Genesis clubs across Australia already provide the zone training platform as part of their offer. Belgravia CEO Ian Jensen-Muir tells Inside Franchise Business “We’re very excited to offer Coaching Zone as a stand-alone studio concept to those wanting to confidently take their first step, or the next step, in their fitness career." Qualified fitness trainers are best placed to take advantage of this franchise opportunity, he says. “Our business model works best if the owner is also part of the coaching team. Ideally, the franchisee will be working in the business coaching sessions, but they could also work in a customer service/sales capacity. “Coaching Zone is all about delivering a rockstar experience for everyday people. Many fitness programs are designed by fitness people to challenge fitness people, and for most people the programming can be too complicated or challenging. "Coaching Zone has been designed specifically with programming catering to entry-level exercisers or people looking to get back into their training after time off.” Eight scalable zone programs allow members to progress from entry-level workouts to more results-based team training sessions as they build their confidence.

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you deserve to join a growing industry Established in 1996, Australian Skin Clinics has now expanded to nearly 50 clinics nationally, due to client demand. We are leaders in highly effective laser and skin treatments, cosmetic injectables, acne programs and skin care products. Australian Skin Clinics has developed The Advanced Skills Academy (TASA) to provide full training and development for all franchisees. If you are new to the industry, you can be assured that by the time you open your clinic, you will be equipped in all areas of management including recruitment, marketing, medical requirements, legal, systems, procedures, protocols; all supported by a Medical Director and in-field teams.

franchise benefits Nationally recognised brand Turnkey operation Ongoing training and development In-field support from business development managers and training teams

Custom IT systems and online sales and support Advanced medical support 7 days a week with a Medical Director Multi-channelled centralised marketing support Latest treatment technology

1300 303 014

weâ&#x20AC;&#x2122;re the oneâ&#x20AC;&#x2122;s in blue!

australianskinclinics.com.au/franchise

Join the fastest growing sector in retail!

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Coaching Zone is all about delivering a rockstar experience for everyday people

‘GREAT TOOL’ “For a business owner it’s a great tool to attract new clients then progress and guide them through their health and fitness journey, providing great retention of members on a high-yielding membership,” says Jensen-Muir. “We find that most of our clientele are females between 25 and 50 years old looking for social interaction and friendships while reducing body fat and toning up. There are also males looking for an alternative to playing sport while living a busy lifestyle.” The Coaching Zone is also integrated with the MyZone heart-rate monitoring system, and the model offers online nutrition support and social events as well as sessions such as the “Afterburn” workout. In the competitive fitness industry, the strength and experience of the Belgravia Group offers franchisees support and simplifies the task of opening a new studio, says Jensen-Muir. Belgravia Health has had more than 20 years’ experience in health-club franchising and will provide support that alleviates admin stress, he says. Accounts, payroll, marketing and programming are all managed by Belgravia Health. The target is to open 20 studios during the current financial year, with an overall goal of growing to more than 100 locations. “Coaching Zone within our Genesis clubs has grown at a very fast rate since the concept launched toward the end of 2016,” says Jensen-Muir. Now 29 clubs have been introduced. n JULY/AUG 2018 | 32 | WWW.FRANCHISEBUSINESS.COM.AU

Are you passionate about leading others? Do you want control of your future?

Join a winning team! Our coaches worldwide recommend this opportunity as a personally-fulfilling and financially-rewarding business, offering a balanced lifestyle.

Earn more, Work less www.focalpointfranchise.biz Contact Andrew Phillips on 0418 500 721

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N G I F U E P BE

INTEREST

After settling into the Australian market, Carl’s Jr is ready to spur growth with the goal of reaching 300 restaurants.

arl’s Jr, the US burger brand that slipped into the Australian market a couple of years ago, has grand plans for growth, with 11 stores lined up over the next 12 months as part of its goal to reach 300 restaurants nationwide. Global CEO Jason Marker says he thinks the brand fits with the Australian psyche. “It’s a bit disruptive, irreverent, impossible to ignore. I think that kind of attitude and tone resonates in Australia.” So how is the business going to achieve its growth targets in a crowded

fast-food marketplace? Marker, visiting Australian restaurants in the burger chain alongside international director Ned Lyerly, spoke to Inside Franchise Business about the plans for expansion. Carl’s Jr now numbers 4000 restaurants globally in a burger marketplace worth US$20 billion. “We’ve tripled our restaurant count in 10 years and we’re expecting 1000 in the next five years. Australia is a key market for us,” he says. A corporate office will be opened here this year with about 10 staff. “Australians are really discerning about food quality. They eat a lot of

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lWeâ&#x20AC;&#x2122;re

FraNchisingl For more information on becoming a Gelatissimo franchise owner contact (02) 8845 0100 or email franchise@gelatissimo.com.au

LEADERSHIP

QSR but try to optimise it. We definitely have a more premium offer, always made to order, hand made, crafted. It is a Californian brand, and the beach culture imagery around it resonates.”

New Zealand already has 18 Carl’s Jr outlets. Launching the brand on the New South Wales’ Central Coast allowed the business to put together strong foundations before extending its footprint, Marker says. “It’s really important for us to do this well. It’s not about growing rapidly at all costs, it’s about the right people, the right locations.”

IMAGE CHANGE Long known for its promotional material featuring women in bikinis, the company ditched the sexist imagery last year. It is now attracting the attention of pop-culture icons such as Snoop Dogg, who tweeted a video of a drive-through visit to Carl’s Jr with best mate Matthew McConaughey. With his Texan drawl, McConaughey voiced the latest ad campaign for the Western Bacon Cheeseburger. So far the brand has just five outlets in Australia, but three of these have been the biggest international openings for the chain within their first month of trading. “We’re expecting to build 300 in the next 10 to 15 years across Australia,” reveals Marker.

PROTOTYPES Lyerly says the focus is on grade-A sites in South Australia, Queensland, New South Wales and, later, Victoria. Franchisees have several prototypes they can consider, from drive-throughs to 280sqm stores or a 60sqm food-court outlet. “We are looking for franchisees in the greater Sydney area,” he says. “We’re very deliberate in choosing franchisees. We look for franchisees that bring a lot of retail and restaurant experience, and an ability to acquire real estate. The sales levels have generated franchisee interest.”

Comprehensive training program

Work life balance

Marker says the business is extremely focused on restaurant economics. “I’m clear, when our franchisees are doing well and making money, that’s how we make money. We have equity restaurants but we own to learn. We’re a franchise. When a franchisee is not making money, it’s our focus. “We approve site selections and procedural things they do. We have a lot of experience in making sure they don’t trip up. We take our model and give people the head start. There’s absolutely no advantage ever to have a franchisee fail – we would not find future franchisees.

BRAND IDENTITY “It’s about partnership and people capability, right people, fantastic processes and systems, and brand identity. You must stand for something; in a busy category you can’t be ‘me too’. You have to stand for something compelling and often different. You don’t have to appeal to everyone.”

Marketing support

Make your sweetest dreams come true Visit us: thecupcakedesire.com.au/franchsing-now/ Talk to us: Contact Kevin Bugeja on 0412 511 630 / kevin@franchise4u.com.au JULY/AUG 2018 | 36 | WWW.FRANCHISEBUSINESS.COM.AU

No experience required

Now franchis ing

You must stand for something; in a busy category you can’t be ‘me too’.

Marker said “The reality is Australia is a competitive landscape. In the food courts, QSR environment, you’ve got to be really good. “The number one thing is fantastic product that has to be delivered to the customer consistent with how the customer wants today. “We have the best burgers in QSR, the best assets, a service system that’s more hospitable than other QSR. We’re focused on made fresh to order,

table service, more touch points for customers. Our restaurant assets are new and fresh, more urban industrial, wood, a contemporary environment.” Marker says there will be customisation to the menu to suit the local market. “Our icons work everywhere and are tried and proven, but there will be an Australian flair to the brand,” he says. “We use Angus beef all over the world, but here it’s Australian Angus.” n

· The Inventors of Windscreen Repair · International Brand with Strong Local Presence · Locally Owned and Operated Franchises Australia-wide · Industry Leading Marketing & Technical Systems

Ph: (07) 3625 2400 | www.novusautoglass.com.au franchising@novusautoglass.com.au JULY/AUG 2018 | 37 | WWW.FRANCHISEBUSINESS.COM.AU

LEADERSHIP

Putting f ranchisees

FIRST

Building a strong franchise relationship at Gelatissimo is all about the franchisor nurturing, listening and helping with concerns.

hat does it take to build a strong franchisee/franchisor relationship? According to Gelatissimo’s national franchise development manager John Nero, it’s easy: go above and beyond.

Putting franchisees first is more than a mantra, it’s a guide to how to recruit, establish and monitor franchisees, he says. For instance, if a franchise buyer is uncomfortable with the rental agreement or the available location, then Nero wants them to walk away from the deal rather than accept an option that is less than desirable. Franchisees have to be comfortable with their decisions. It’s not about picking a site because Gelatissimo wants to be in the location, nor to stop a competitor from moving in. Nurturing the franchisee into the agreement, and continuing to listen and help with inquiries and concerns is what makes the difference, says Nero. “We should be honoured that they apply to us.” Expansion is therefore measured and aligned to the successful recruitment of franchisees. Three to five new stores a year equates on a 44-store strong network to about 10 per cent growth. It’s a figure he’s happy with. “The numberone thing I want is sustainable growth.” The brand is looking west and north for expansion with Western Australian regions, Perth and Darwin the hot location targets.

CULTURE FIT So how does Nero manage to get on board just the right kind of franchisee? Here is an insight into the recruitment process at Gelatissimo... Within 48 hours of an expression of interest, a franchisee will be sent an information statement and an ACCC brochure about franchising. If the franchise buyers like what they read and email their interest to proceed, they will be required to sign non-disclosure and application forms. In the ensuing interview Nero is looking for culture fit before the applicant gets to move to the next stage. “We ask them to go back and do due diligence, look at government websites, small-business sites. Some people can run with this, some can’t. “If it’s all good, there is a business plan pack containing the franchise agreement and other documentation. We then review the business plan.” Franchisees also need to understand which Fair Work awards are relevant to their business. It’s all about implementing good habits at the beginning of a franchise relationship, Nero says. A day spent working in a corporate store with the head of operations allows the executive to give his stamp of approval from a practical perspective. Then the final interview is held with CEO Filipe Barbosa.

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LEADERSHIP

CHALLENGES AND OPTIONS If franchise buyers do not get past the stringent process the first time because of financial challenges, there are options: running a franchise as a manager, or having another partner bring in the money. A successful outcome takes Nero and the franchisee to the practical element of the buying process. “I like to bring franchisees on a journey, trying to set them up for success, pointing out what needs to be considered in a site: traffic generators, foot traffic (where is the ant trail travelling?), who are the direct and indirect competitors?” All franchise buyers will need to revisit their original business plan once they have done some further research and understand the dynamics and numbers of the proposed location. “Now we’ve got something real to deal with,” says Nero. With an eye to keeping costs low, he takes on the site negotiations himself. “I negotiate commercially, I like to hit hard. I like to get a rent-free period. This

give the franchisee time to learn the business.” Nero says there is more to securing a good lease than obtaining the cheapest option. For instance, projecting the rental figures in five to 10 years to ensure they can still be affordable, or finding alternatives to suit franchisees’ circumstances. “If you’re concerned with risk, can you look at a three by three by three term,” he might suggest to franchisees.

OTHER WINS Other wins might include a lease agreement that offers three months free to be used mid year to alleviate cashflow in quiet times; or a rent abatement if all the promised neighbouring stores have not yet opened. In one site, the landlord insisted the store walls would need to be made good in red brick at the end of the lease. But with a herringbone tile design fundamental to the Gelatissimo fitout, Nero suggested a far more cost-effective option: a facing that could be easily removed at the end of the lease, leaving the original brickwork intact. Success in this process is all about taking away franchisee stress and keeping them two steps ahead, he says. The key to getting it right from the start is for franchise buyers to do a proper risk assessment and understand their break-even point. “If you are uncomfortable with the deal, you can say no at any time,” he tells franchisees. “We put in checks and balances to make sure the franchisee is comfortable. It

comes back to how I want to treat my franchisees. I want them to be well informed, comfortable, never pressured. They can call at any time."

SUPPORT CRUCIAL Once in the business, maintaining a strong, supportive franchisee/franchisor relationship is crucial to the network, he says. “We need to make a profit, but franchisees come first. If they are underperforming, we look at why. Are they not garnishing the gelato display, not putting out the top flavours, are they getting customer complaints? Is there marketing in place? Is the centre not generating traffic? “If the store is established and the area changes, is the store still in the right spot? Is the music too loud?” Solving underperformance is a combined effort. Nero says Gelatissimo won’t rush into a store refresh unnecessarily. “When we look at refurbishment, it’s a process. We scope out the work, but franchisees run their own refurbishments and need to look at sales results to pick a quiet week to undertake the work. “If the franchisee is under duress, we can hold off and take it in stages. A partnership is not a dictatorship, telling you what to do.” Franchisors can remove the corporate head-office barrier not through words but actions, he believes. n

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LEADERSHIP

THE

SEEKERS

Inside Franchise Business presents the fourth in a series showcasing franchisees, with the spotlight this time on those who have made a tree or sea change, or moved interstate, in order to buy a franchise, and the challenges they have overcome.

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AARON PETTERSON,

ANYTIME FITNESS, NOOSA

aron Petterson has packed a lot into his 34 years: representing South Australia in volleyball, playing high-level AFL, four years in the military, working as a personal trainer, working in construction, travelling the world. And now he’s a franchisee.

“I was in London, Scotland, doing stints in the US, trying to find out what I wanted to do. I fell into construction and surveying, and when I arrived back here I was one of the last people able to do surveying without a degree. Then I started studying spacial science in uni.” It was during a two-year project in north Queensland that he had a change of heart. “One day I was in with the engineering team. Many of them were depressed and not making their mark. I saw that 12 hours construction and full-time uni was too much for me. That wasn’t the life I wanted.” The one constant in his varied life had been fitness, with personal training a regular part-time career. It was obvious: his future needed to embrace the fitness world. So Petterson moved to Sydney about four years ago, becoming involved in F45 with his friend Dan. “We opened up the Double Bay studio in Sydney, but then I realised the model wasn’t for me, I wanted to get back into the gym, and had the opportunity to manage Anytime Fitness Rose Bay.” This was one of highestyielding clubs in the network, he says, yet still he added 300 members in a single year. He loved the combination of business strategy and management with a hands-on role, helping members with their technique. It did not take him long to see that it made sense to invest in his own club and recoup the rewards. “Six months in and I started looking for the site with the most potential. The search took him interstate and to Noosa on Queensland’s Sunshine Coast. Not only is it, in Petterson’s words, “a stunning spot” attracting people to make their own sea-change from Sydney, but it had an underperforming store he believed he could re-energise.

He took the next step in partnership with his best friend from Adelaide, a sales and leasing expert who has stayed in South Australia. “We did a lot more research into the brand through head office. My business partner and I have a couple of friends who have multi-units with Anytime, and we spoke to them about the challenges they faced. “We contacted a few brokers to gain a feel for what the market was charging at different membership points. We did our due diligence before paying a deposit. We had a look at the competitors (Jetts and Snap) at location and proximity, and spoke to locals.” Once they had paid a deposit to the broker, the pair undertook more due diligence. And then it was real. “I moved up from Sydney. As usual, I put the word out through social media that I was moving up there. I have a lot of good friends through Sydney and Queensland, and was able to meet a couple of restaurateurs who were friends of friends. They had moved up for opportunity themselves. That has been the first step in building the business, doing marketing through them. We’ve stepped up the standard.” Now, just eight weeks into the business, Petterson has already made an impact. “It’s really early days, but the club had not had any growth in four years, and I’ve achieved member growth now in two months. “I think sometimes, in the more regional centres people are not necessarily accustomed to the energy we see in Sydney day to day, but members are giving me good feedback and are becoming more involved.” There is the challenge of trying to change the locals’ mentality. Noosa’s mature demographic is slightly different from the Rose Bay population, and Petterson is being creative about developing the business. “I need to get out and make sure people know they need to move, to keep joints mobile and enjoy the rest of their life. When we did our business plan, one of our starting processes was trying to involve GPs. The older demographic has more of a relationship with GPs. We’re creating a program for over-50s that is more of low impact, but

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Relocation tips: • Embrace the new area, and become a part of where you are. Look to create a new home. • Don’t worry about the quiet days. There will be less action than in a city. But you need to have a clear business plan and stick with it.

still scientifically proven to improve bone density.” He is seeking backing to have a paper published on the topic. “I want to break the stigma of the gym, give people some more knowledge of equipment and the health benefits of exercise.” Of course, there have been personal challenges as well. While cashflow is tight, Petterson has taken the option to rent accommodation at Sunshine Beach. And he has left behind his girlfriend, completing her masters in theatre nursing at St Vincent’s Hospital in Sydney. “I had a pretty great life down there, I moved because I want to move forward in business. We are definitely looking for more opportunity to build this up to a solid membership base, and get enough cashflow in the business.” He says he is enjoying the lifestyle for now, but it will not be home for ever. “I will look for the best opportunities to get more stores in time, but I want to make my way back to Sydney.” n

LEADERSHIP

VIPIN CHANDEL, THE CHEESECAKE SHOP

hen India-born Vipin Chandel was working in hospitality in Sydney’s inner west suburb of Marrickville, he had no idea that within a few years he would be owning and running his own bakery business in another state, with his wife Astha and young son along for the adventure. He worked as a post office stationery contractor before the idea of taking on a franchise became a reality. Chandel left India in 2002, and had been in Australia 10 years when he invested in the franchise. Astha’s parents live in Sydney, and also run a post office, but it was through extended family that The Cheesecake Shop as an investment became an obvious choice. An uncle in Sydney and other family members in South Australia had run outlets in the franchise chain, and were encouraging the young couple to make the move. Chandel went first to work in the store in South Australia and scope out the working environment and opportunity. Before long, he had moved interstate to take on The Cheesecake Shop outlet in Gawler. “I moved my wife and two-month-old son. It was a pretty hard time.” The 1300km move was made easier by a great field manager who offered good advice, he says. Soon after, Chandel’s parents had joined the young

family for an extended visit from India. While the proud grandparents took charge of the babysitting, he and Astha were free to build the business. “If the family is involved you get a lot of support. My wife and I jumped into the shop. Astha is customer services, and I can do the baking and decorating. I like cooking and baking,” he says. “But the first days we were struggling. With the baking I was fine but decorating and writing on a cake, I didn’t want to have a disaster. I was nervous.” He overcame his anxiety about making errors and put his passion and energy into the business. The hardest thing was working in and on the business and finding time to spend with his young child. However, within the first two years he had won an award in The Cheesecake Shop network as franchise of the year, and was then named the South Australia franchisee in the Franchise Council of Australia’s awards. Chandel had a taste for success, but also wanted to be closer to old friends and family. The couple decided it was time to sell up and move on, and the next stop was Victoria. “My wife was born and brought up in Victoria. In Melbourne we have both friends and family. Melbourne is definitely better to settle in for a new family.” After three and a half years in South Australia, the family sold up and bought a Frankston outlet in Victoria. With

the help of the field managers in both states, the purchasing process was timed perfectly, with the supporting South Australian field manager able to help hold off the sale until Chandel had found a Victorian site. “Now I’m actually happy. Our second son was born in South Australia, and now our two boys are going to school we are established here. When I took over the store, people were a bit surprised, but the customers have got used to us.” Supporting local sports clubs with sponsorships and donations has helped the family embed itself in the community. “Victoria is home. There are nice people and friends from India.” Right now the family is renting property but intends to buy a house. That move will be secondary to business expansion, however. “I want to buy a second store. I will have a manager. I can run the store with my eyes closed, I know all my numbers. “I try to work in the shop so you know the customers. It’s easy to deal with the customer when you are a business owner.” n

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Relocation tips: • Be prepared if you know no-one. • Look at the community and find the groceries and restaurants that suit you so you don’t have to travel.

LEADERSHIP

BARRY KING

7-ELEVEN LITHGOW

amily is important to Barry King, so it was top of mind when he thought about moving to a new location to start his own 7-Eleven fuel outlet. The Sydney-born corporate was living in Minchinbury when he grabbed the opportunity to take his life in a whole new direction.

King’s parents had lived in the country, and the Lithgow location he chose put him just 45 minutes away from relatives on the central tablelands side of the Blue Mountains, and yet only 90 minutes from Sydney-based family and friends. “It was a major consideration, to be closer to family and spend time with my aunt and 100-year-old great aunt. It was close enough, and far away enough to be a tree change.” Not only was he moving into a new region, but was taking on business ownership for the first time. “It was a huge change. I’m 55 so have 12 years before I officially retire. It looked like a great opportunity. Regional stores are doing well, and it’s a great system,” he says. Not that he was a newbie in the convenience world...King had spent 20 years in Mobil and had moved around (Perth, Adelaide, Queensland and New Zealand) before joining the corporate team at 7-Eleven. When he made the decision to become a franchisee, he had been New South Wales state manager for seven years. Armed with inside knowledge of the system and the importance of doing his due diligence, Barry made sure he did his homework on the site, checking out passing traffic, customers, the local community and other shops in town. He was confident he could make something of the business. Lithgow leads into four major highways and so attracts a regular flow of tourists and travellers heading over the Blue Mountains or into the tablelands. The 7-Eleven site is the only one for miles – the closest store in the network is in Bathurst, 50 minutes’ drive away – and it serves between 1200 and 1400 customers daily, with food and coffee particular favourites. “It’s a brand new store so a bit of a gamble, but I couldn’t see it not being successful. There’s nothing else like it.” The convenience store neighbours McDonald’s and Zambrero outlets. “We service the fuel customers, and we get a margin as a fuel reseller, but the shop is where the money is made, on food and snacks.”

Barry King is a supporter of a local hockey team.

The store has to be well presented and stocked, says King. And it’s a new-look store with an extended food counter and coffee area. “I probably do 400-plus coffees a day. And Krispy Kremes are big drivers too, and sandwiches and pies.” The location is in the middle of the delivery run from Sydney to Orange, so he’s had no issues with the all-important supply chain. He appreciates the work that has already been done in setting up the store, the systems and processes, allowing him to concentrate on customer service. The decision to invest in his own business is the fulfilment of a long -held ambition, and despite initial doubts and the separation from some family members, King has found the relocation to be a positive experience. “I was giving up time I’d spent with the family, but decided it was time to think about me. I’d always wanted to own my own business,” he says. He is a keen advocate for moving out of the big city to a more rural setting. “There really is a lack of stress, less traffic and there’s no 90-minute commute to and from the office,” he says. “There is not the pressure of managing 20 staff [in a corporate role]. Yes, there are pressures, and I work probably the same hours (I’m a bit of a workaholic), about 60 hours, but the time just flies because you’re having a ball with it. I have great customers, and everyone knows you. I can’t go anywhere in town without someone waving hello.” Country people like to chat, he has discovered. “I have a circle of friends I’ve made through the store. I got invited out for drinks and dinner and accepted the invitations. In Sydney that would never

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Relocation tips: • Do homework on the store, people and traffic numbers, so you know the business is going to be there. • Check how other businesses in the vicinity service their customers. • Supply chain can be an issue, so speak to other franchisees about the challenges and how well they are met.

happen, but in the country people embrace you. “At first I was not sure about the move, but I settled into it and I’m seeing double digit growth every week. I’m ecstatic I couldn’t be happier.” n

LEADERSHIP

JENNIFER AND ROB STEWART,

BEDSHED BUNDALL

usband-and-wife team Rob and Jennifer Stewart are happily ensconced in a family franchise. It was just a few years ago that Rob was a Bedshed store manager, son Kyle was the delivery driver and a promising film-maker ready to head overseas, and Jennifer was working in a cafe. Then everything changed. “We went overseas with, along with franchisees, on a buying trip. While we were away, we were approached about being a franchisee,” says Jennifer. The couple didn’t make the decision immediately. This was a family affair, and the Stewarts have a large family: out of seven children, four lived at home, two with fiances. Add to this Jennifer’s elderly mum. “It was a big step. It took 12 months to make the decision.” The pair looked at a few sites in Melbourne, one near Brisbane, then looked at opportunities in the Gold Coast. “We were big fans of the Gold Coast. We had had holidays there, and had worked there for a spell.” When they compared their existing lifestyle with the delights of the coastal city and the chance to build something for themselves, there was no contest. “We felt we were on a treadmill, bringing money in, paying money out but feeling powerless, just subsisting, not living. I’d been working six or seven days in a cafe for 12 years, my son was being badly bullied. Rob had a good job, but sometimes it is time to move on. “Rob had been at Bedshed for seven years, had worked with amazing franchisees in Mornington, and he’d helped build a business. He couldn’t see any issues with our move.” Even the franchise-sceptic accountant who reviewed the business could not see any reason for the couple not to go ahead with the purchase. The family backed the move, and Kyle

deferred the place he had won at the New York Film Academy. “You have to make sure it is the right thing, and listen to advice,” says Jennifer. “The biggest step was taking care of our own destiny. We were absolutely petrified: it was like jumping off a long plank. I almost had a breakdown when we were loading the moving truck. I wondered if it was a mistake, giving up our security. There were seven of us, five dogs and my mother to move, all at different times.” Plus the Stewarts left behind three adult children while they employed a “try-andsee” approach. They kept their house in Melbourne as a safety net, but have ended up selling it. Not that finding a rental house to accommodate their diverse and largenumbered family was easy – but they did: two properties on one block to cater for everyone. As the Bedshed store they had bought was reopening in August 2015 as a new outlet, the Stewarts were effectively starting from scratch. The challenge was that business knowledge was limited to Rob and a few members of staff. Jennifer had to learn the processes and systems and about the product, beds. But it did not take her long to handle this and start having an input in the business. Unexpected and heartbreaking news was much more difficult to deal with. Within the first few months, Jennifer discovered her mother was dying. “I had to keep running back to the hospital and I had no back up. I felt very stranded and I was losing a mother.” The family kept the sad news to itself. “We didn’t tell the franchisor, no-one knew until the funeral. I’m sure they would have helped, but it was so deeply personal. We’re a very close family. We leaned on each other and we got through.” It truly is a family business. Son-in-law Andy is warehouse manager, son Jarryd is also in the warehouse; Kyle is store

Relocation tips: • Read the fine print and listen to your accountant and solicitor • Take a look at the area. You need plenty of healthy competition • Be clear why you are making the move

manager; another son, Cameron, and daughter, Jenna, are both on the sales floor. The family got to know the local area, and Jennifer likes to promote her business and offer Bedshed’s services whenever she finds great service herself. “We go out and constantly have our business out there. That’s building a community for us.” The result has been friendships and referrals. Developing relationships is key, she says. “For us it’s a big win. We’ve been successful. We actually became Bedshed Franchisee of the Year for Queensland 2016 and Kyle was Bedshed Employee of the Year for Queensland last year.” Bedshed has a group buying process that includes franchisees, and approved suppliers provide a standard range to which franchisees can add their choices. “The group chooses really well, but we’re now starting to import too,” says Jennifer. “We have a say in what we run.” The mid-term goal for the Stewarts is to continue to build the business to reach a point that allows the younger family members to buy their own houses. “We don’t have a mortgage, and we want to pay off the balance of the business. Kyle is 21 and he’s bought a home. “It’s been a great lifestyle change for all of us. We actually have a lifestyle. We go up to Noosa and down to Byron. We’re getting to know our state. I can tell you that the Gold Coast is stunning, the people are far more relaxed. It’s good for family.” n

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LEADERSHIP

PAT AND NADINE TESOLIN CHOCOLATERIA SAN CHURRO

hen Pat and Nadine Tesolin left Perth to take on the running of a San Churro outlet in Sydney’s Shire district, it was a massive geographical move but they say it felt like going home. For the Italian- and German-born couple, relocating had become a way of life...the US, London, Germany, then Australia, where they found their feet in Sydney. They loved the Cronulla lifestyle, and their favourite outlet in Westfield Miranda where they grabbed a takeaway chilli hot chocolate before heading to the movies. But then, Singapore Airlines pilot Pat relocated to Perth and Nadine transferred her hotel-management career interstate; for three years the couple made a life in the Western Australian capital. Surprisingly, they rediscovered their love of the chocolate shop; they hadn’t known its name in Sydney, or that it was part of a chain. “When we moved to Perth I started noticing it. We started exploring the brand as customers,” says Pat. The idea of owning a San Churro outlet was one of those daydreams the couple talked about, as something they might run on the side of their main careers when they were frustrated with their jobs. Then one day, poised to cement their relocation by buying a property, they were hit by a moment of clarity. “We didn’t want to feel stuck,” says Pat. “We started to think, could we open a shop in Cronulla?” Stepping back from the brink of home ownership, the pair contacted San Churro’s head office. The couple didn’t have the

money to buy a new store, but an existing business was for sale in neighbouring suburb Miranda, and the Tesolins were offered a good deal. The outlet was at the time the only franchisee-owned store outside of the chain’s home base of Melbourne, a foot in the door in New South Wales for San Churro. “It wasn’t very successful,” says Pat. “It was being run from interstate, and it wasn’t as profitable as it is now.” The couple snapped up the opportunity to move back to their favoured area of Sydney, and once again relocated. Except this time it was about coming home. “We really wanted to move back. We’re pretty accustomed to relocating, so we’re pretty good at starting from scratch.” Even in business, it seems. The first full financial year of trading for the Tesolins they reported $300,000 sales growth, and have since achieved incremental annual growth of between 5 and 10 per cent . “It was such a learning curve,” says Pat. What made the difference in the sales performance was simple: it was a cleaner store. The couple injected the care factor, and it was their first business. “You live in it for six months, working 60 hours a week. I didn’t mind though, I loved the independence, you feel as if you’re working for yourself, this is your own business. The downside is that you never clock off,” he admits. “Customers probably come in at most once a week, or maybe once a month,” says Pat. In contrast, an independent cafe the couple bought and now run as a side project to San Churro requires a more

personal touch with regular customers visiting more than once a day. Pat has enjoyed the experience of the cafe, but it has reinforced the value of a franchise. “I wouldn’t buy an independent cafe again. The business model is too hard. Running a kitchen is a problem, there’s not as much profit as there is in San Churro and everybody there is so flexible. “The San Churro model and the way we run it, you cannot emulate those figures in an individual cafe.” Whatever the set-up, the most important thing in a hospitality business is to have a happy team, he says. Happy team members helped put the Miranda outlet in the top league in the network. The store achieved the top Net Promoter score for a few months, and has remained in a top-five position. “The link is happy staff, happy customers,” Pat says. “We create a good work environment and pay them well.” Success in the store comes down to the quality of the food, the speed and quality of the service, and the cleanliness of the outlet. n

Relocation tips: • Pick your franchise wisely: products, culture, look and operationally the business must be fun and satisfying to run. • Living close to work is ideal for working in and around of your business effectively while maximising free time. • Start searching well in advance for a good second in command for your business.

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LEADERSHIP

Josh and Fleur Nadzielski have bought a plot of land in Griffith JULY/AUG 2018 | 52 | WWW.FRANCHISEBUSINESS.COM.AU

JOSH AND FLEUR NADZIELSKI QUEST SERVICED APARTMENTS

osh and Fleur Nadzielski have taken the Quest Serviced Apartments brand to the agricultural area of Griffith in New South Wales, finding the regional city the perfect place to build a business.

They had been running other Quest properties in Sydney and Melbourne before deciding to take the plunge themselves and invest in a franchise. “I’d been with the group seven years, and Fleur five and a half,” says Josh. “Owning a business was a medium/longterm goal. In earlier years I’d had some good mentors in the group who talked about what it would be like. “We’d decided we had a passion for hospitality and for bringing other people along and helping them upskill.” The move to Griffith was not a goal in itself; the couple applied some objective analysis to their options when doing their homework on which property would best suit them. “We came out to Griffith, and everything stacked up,” says Josh. They left behind family in Sydney, but since the move Josh’s parents have also relocated to the regional city. This will be a real bonus for the couple as they welcome their first child in October, and the first grandchild for Josh’s parents. “I don’t mind the distance, but Fleur was a little worried at first. She’s one of six siblings. But she just hops on a flight if she needs to spend time with the family.” Not that

there has been much time to do this since the pair opened the doors to the greenfield Quest site in November 2016. The business has absorbed the couple’s time and energy, Fleur working with housekeeping and training, while Josh drives sales and the business structure. They share the accounting duties. “In the beginning we spent a lot of time inside the business, maybe too much,” reflects Josh. But after the first three months he and his wife started to let go a little, and hand over more responsibility to the 18 employees. And they have achieved a high retention rate among housekeeping staff, Josh says. There are now two housekeeping executives leading the team, and the business has extended into smallscale conference rooms, filling a market need in the region. The key to profitability is room rate and occupancy, and business has exceeded the couple’s expectations with the next projection looking good, says Josh. The growth in business will come from the agricultural sector he predicts. But as well as the irrigation, agriculture and wineries in the so-called food bowl of Australia, there is expected to be a significant boost of weekend tourists. Josh is on a committee planning for the growth that lies about two years ahead, with road upgrades and direct flights from Melbourne improving access. The opportunity to be masters of their own destiny is a big bonus for the pair, who after years of working for someone else can now put their ideas into practice. The nearest Quest apartments are two hours away in Wagga Wagga, but many in the Griffith business community are familiar with the brand from their own travels. Josh says the locals who don’t know the brand are keen to find out more once the apartments are up and running. It is a mostly corporate client base, with a constant stream of smaller business owners. “We may see them only once or twice a year. It’s more local business, so much more personal and not tied up in bureaucracy.”

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This has enabled the pair, along with staff members, to build up all-important rapport with customers and ensure repeat business. Both Josh and Fleur found associations such as the business chamber and young professionals of Griffith an ideal way to build relationships and forge friendships. “We’re very mindful we need work life balance,” says Josh. “We aim for two solid days off a week. HR and operations don’t always allow it, but that’s the goal. “The best thing about moving to the region is that the community is so open and friendly. You notice who’s a local and who’s not when you walk down the street and see who is on their mobile phone,” says Josh. “There are some great coffee shops, and people stop and ask how business is going. They are genuinely curious,” he says. It is important to understand how the community works, and being part of social groups has made it easier for Josh and Fleur to enter into a social scene that he says can be “cliquey”. Meanwhile, as a sign that business is going well and their five- to 10-year plan is firmly set in the Griffith region, the pair have bought a 1000 sqm plot of land. “We decided we would move out of on-site living after a year, but couldn’t find what we wanted when we looked for a property. There is the opportunity in the regional areas to buy land, and the prices are quite different to Sydney or Melbourne,” says Josh. Life could be looking quite different by Christmas this year if the build goes according to plan, with a new baby to move into their new home. n

Relocation tips: • You need to be able to visit for a week and see what it’s really like • Be ready to make a support network or find strength in your team. • People do business with people they like. You have to be a people person.

EXPO

When and where

Brisbane, 21-22 July, at Brisbane Convention & Exhibition Centre Melbourne, 25-26 August, at Melbourne Exhibition Centre Open 10am to 5pm Reader offer: Register FREE at franchisingexpo.com.au with the promo code FBM.

MORE THAN

WINDOW SHOPPING Cafes, fast food, home services, finance, health and fitness... there are plenty of business ideas to motivate and inspire at the Franchising & Business Opportunities Expo being held over two cities.

ew franchise concepts are on show at the two expos, in Brisbane in July and in Melbourne in August. They offer access to emerging and established, local, national and multinational brands as well as the opportunity to learn from industry experts.

Business models new to franchising include the mobile Peddler Cafe, Simply Bond Cleaning and the Healthy Inspirationsâ&#x20AC;&#x2122; weight-loss support franchise, which will feature at the Brisbane show. OsteoStrong and Harness Training health-and-safety training will be introducing their brands at both events. Also attending will be such household names

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I DID IT. â&#x20AC;&#x153;Jackie and I bought The Leather Doctor franchise because we love being together as a family. But it built up so quickly we became frantic! We trained our son, Cameron and his wife, Kayla to take over the Mackay region while we stay focused on Rockhampton. Truth is, we do better together than what we do apart!â&#x20AC;? - Jon & Jackie Minards Franchisee

Exciting new brands are now available following the same winning system, The Leather Doctor, The Timber Doctor and The Fabric Doctor. This is real opportunity.

Call 1300 453 284 or visit www.myleatherdoctor.com.au You can do it too.

EXPO

Inside Franchise Business will be at both the Brisbane and Melbourne Franchising Expos. Come and say hello to the team. as Aussie, Clark Rubber, Jim’s Group, MBE and Poolwerx. Fast-food stalwart Subway, which made its Australian debut at the Franchising Expo in the 1990s, will be showcasing its new “Fresh Forward” design. “In light of recent publicity about franchisors who are not doing the right thing by their franchisees, it is more important than ever to meet the people behind the brands, ask the hard questions and talk to franchisees as well,” says exhibition manager Fiona Stacey. “It’s a matter of finding the right people to help you on your journey, be they franchisors, lawyers, consultants, accountants or other advisers. All those people are available at the expo, and more than willing to answer questions.”

SERIOUS BUSINESS Entering a franchise agreement is a serious business and should not be undertaken lightly, says Stacey. “It is crucial you do extensive research on any

franchise you are looking at,” she says. “The Franchising Expo is a great place to start, or dig deeper into a concept you are considering.” Melbourne’s expo is traditionally the biggest of the year, and will once again be a highlight of the Victorian Small Business Festival. As well as meeting people behind the brands, visitors can take advantage of the free seminars that run across the two-day events. “The seminars are an important feature,” Stacey says. “We aim for a broad range of speakers and topics, with general overviews on the benefits of franchising as well as more detailed topics such as legal and financial issues.” A panel session gives potential franchisees the chance to learn about the reality of working with a franchisor and running your own franchise outlet. Franchisees from different brands will share their personal stories and offer tips and advice. Stacey says the founder of Jim’s Mowing, Jim Penman, will be a keynote speaker at both expos. “Jim is an Aussie icon who turned his lawn-mowing job as a student into one of the most successful franchises in the world. That’s the power of franchising for you.” n

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It is crucial you do extensive research on any franchise you are looking at. The Franchising Expo is a great place to start, or dig deeper into a concept you are considering.

Love your work! Make it a reality with The Cheesecake Shop.

Many people just dream about doing a job they love. Why not make those dreams come true by owning a franchise in The Cheesecake Shop. You can be your own boss! Bake tasty masterpieces all for the world to enjoy! And most of all you can enjoy your days working with those you love.

franchise.cheesecake.com.au

LEADERSHIP

7 HABITS OF

TOP FRANCHISEES What do high performing franchisees do to achieve superior sales performance?

he Franchise Relationships Institute, founded by franchise expert and psychologist Greg Nathan, recently conducted a study with senior franchisor executives to elicit typical behaviours that lead to premium franchisee performance.

As revealed in Gregâ&#x20AC;&#x2122;s healthy Franchise Relationships 2-Minute Tips #170, here are the secrets of sales success...

THE 7 HABITS OF TOP FRANCHISEE SALES PERFORMERS 1. They actively engage with their local communities and collaborate with other local businesses. Rather than passively donating money or products, top franchisees find a way to extract value from their relationship with community groups. They turn up to football matches to present prizes. They find ways to encourage kids and parents to use their business. They also network vigorously with other local business owners, particularly those that share a similar type of customer. 2. They coach staff on the specific behaviours that drive sales and customer satisfaction. Top franchisees understand their customer journey intimately. They know the moments of truth that, if handled well, delight their customers, and if handled badly, alienate them. For instance, the warm welcome immediately as a customer enters their shop, as opposed to being ignored while staff are looking at their phone. Or the paraphrasing of what a customer needs,

as opposed to assuming and getting it wrong. And they constantly reinforce these behaviours. 3. They set challenging goals, and seek feedback and ideas from their field manager and peers. There is a thinking style called a Growth Mindset that enhances performance. Top franchisees have a Growth Mindset. They enjoy putting in the effort required to achieve success, and they enjoy setting goals that stretch them. They also adopt an attitude of genuine curiosity to learn from other franchisees who are achieving sales success, and they seek feedback from others on how they can improve. 4. They create a vibrant internal culture that inspires high levels of brand passion in their team. Every business has a culture â&#x20AC;&#x201D; an accepted way of doing things. This includes how people approach problems, talk about customers, and work together. Top franchisees understand the culture starts with them, and they model the behaviours they expect from their team. They understand that how they show up each day is probably the single most important factor for inspiring their team to do their best. 5. They obsessively focus on understanding and staying connected to their existing customers. Top franchisees never take existing customers for granted. And they understand that some customers deserve extra attention because they are more valuable to the business. Maybe they spend more, buy more often, promote the business to friends or family, or are just a pleasure to deal with.

Not only do these franchisees take the time to understand the profile of these customers and categorise them in their CRM, they put aside time regularly to stay in touch. 6. They use systems to measure sales related KPIs and respond quickly to new opportunities. Top franchisees collect and measure the indicators that predict sales performance. These include the behaviour of customers, such as the nature of their enquiry, and the behaviour of staff, such as how quickly they are getting back to customers. Top franchisees especially appreciate the direct correlation between the speed of response to a customer enquiry, and the likelihood this will convert into a sale. They also treat all leads with care, understanding that online leads can be just as lucrative if these are managed effectively. 7. They wisely invest in local area marketing and initiatives to keep their business fresh and relevant. This is the only habit that involves a direct financial investment. This may include upgrading the appearance of their premises or using a paid marketing channel. It may also involve pilot testing innovations for the franchisor as way of staying at the forefront of new trends. But before spending money, top franchisees always ask themselves what outcome they are wanting to achieve. More enquiries from new customers? More enquiries from existing customers? Existing customers to spend more? Or perhaps to boost their reputation as the best place to do business. n

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BECOME OUR NEW

F R A N C H I S E PA R T N E R I N AUSTRALIA Fro m D e nm a rk to th e w o rl d s in c e 19 5 2 , B o C o n c e pt sp e c i a l iz e s in p re m ium qu a l it y int e r io r d e s ig n fo r th e ur b a n- m in d e d c u sto m e r. With over 25 years of franchise experience, and more than 265 stores in 65 countries, BoConcept is an established and proven Retail Franchise system,

J OI N A G L OB A L F U R N I T U R E DE S I G N B R A N D , OF F E R I N G A S T RO N G A N D PROV E N

offering an attractive business model. The strong toolbox, and the outstanding support within all areas of business and retailing, make easy the setup and management of a BoConcept store. Therefore, most of our partners own multiple stores.

R E TA I L F R A N C H I S E CONCEPT

LOOKING FOR FRANCHISE PARTNERS TO COVER THE FOLLOWING AREAS: Melbourne I Perth I Brisbane I Gold Coast

F OR F U RT H E R I N F O R MATIO N F R A N C H I S E @ B O C O N C E P T.COM I BOCONCEP T.COM / F RANCHI SE

INDUSTRY SPOTLIGHT

The noodle trail As the takeaway scene evolves in Australia, Asian cuisine is taking over the sector. By Gali Blacher JULY/AUG 2018 | 60 | WWW.FRANCHISEBUSINESS.COM.AU

Monkey King Thai

sian cuisine is incredibly popular in western culture, especially in countries such as Australia and the US. With a variety of options available such as sashimi for health-conscious consumers to fried rice and noodles for the less fussy, Asian cuisine really has something for everyone.

According to IbisWorld senior analyst Bao Vuong, international fast food, including Asian takeaway, has gained popularity over the past five years, and these products have consequently increased as a share of industry revenue. Wider awareness of foreign cuisines and consumers being more receptive to trying new foods have supported this growth.

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Fast-food companies have faced increasingly strong competition from external sources over the past five years, says Vuong. Supermarkets have expanded their ranges of homecooked meal replacements, and have emerged as one-stop shops that provide consumers with fast, affordable and high-quality food. While many of these products substitute traditional fast food,

INDUSTRY SPOTLIGHT

Food Bites: Misschu • $50,000 initial franchise fee, turn-key from $400,000 • 5-year term • Marketing levy, 1 per cent • Franchise royalty has a tiered structure – 6 per cent on dine-in, takeaway and catering, 3 per cent on delivery

Misschu

The major change in the past couple of years has obviously been the mass movement to online ordering and delivery … this has reduced the competitive advantage of being ‘local’ and has really highlighted the importance of brand strength

consumers prefer takeaway joints that are also sit-down restaurants. Asian food especially has a great popularity with fast-food fanciers who want more variety beyond burgers. Vuong predicts that in the next five years, increases in household discretionary income are projected to boost sales. Competitive pressures will likely force some players to exit the industry, but this will be offset by an influx of new players in relatively niche markets, such as Asian takeaway. To gain an insight, Inside Franchise Business had a chat to three Asian takeaway franchises.

MISSCHU Misschu was founded in Sydney in 2009 by Nahji Chu as a catering business specialising in Asian canapés. People walking past the tiny kitchen in Darlinghurst kept knocking on the glass and asking to buy the food, so eventually a “tuckshop” window and bamboo awning were added, and Chu started selling on the street. The brand quickly earned a cult status with daily queues along the footpath. With a background in private equity, MD Gabi Machado approached Chu in

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GET IN

The Game WITH AUSTRALIAâ&#x20AC;&#x2122;S FASTEST GROWING SPORTS BAR & GRILL SPORTINGGLOBE.COM.AU/FRANCHISE

INDUSTRY SPOTLIGHT

2010 with the idea of taking her Sydneybased Vietnamese concept to Melbourne. This year Machado joined forces with DC Strategy consultants to expand the Misschu tuckshop network from three to 50 over the next five-plus years. The Misschu team says it is determined to do things differently, growing the business with a “fresh mindset” and ‘”real discipline” to ensure each new location has a genuine feel and atmosphere for employees and customers. It has not been an easy path. The business entered voluntary administration in 2014, which apparently did not affect the Melbourne and London branches. Machado says people expect bang for their buck with Asian food, so the value proposition is really important. “The major change in the past couple of years has obviously been the mass movement to online ordering and delivery. In our view, this has reduced the competitive advantage of being ‘local’ to your customer and has really highlighted the importance of brand strength,” he says.

Aesthetics are also important when it comes to choosing property for the Misschu tuckshops. “We look for spaces with character that let us create a unique design with an authentic Misschu feel. Rather than a cookie-cutter approach, we accentuate the individuality of each location and stamp Misschu’s signature on to it,” says Machado. “To date, the strength of the brand has helped a great deal in negotiations with landlords and we expect this to increase going forward.” Each Misschu tuckshop typically has 50 to 90 seats. “We are known for our high energy, bustling and fun vibe. The commonalities across the shops are the casual style, fast service, great tunes and the clatter and flames from the wok,” says Machado. He believes owner-run restaurants typically provide a superior experience for customers because of the total commitment to the success of the business. “The franchise model enables this and provides a fair and structured

relationship, when managed well.” While the menu is Vietnamese inspired, most dishes are unique to Misschu. There is a strong health-conscious bent, incorporating ingredients such as low-carb shirataki noodles, low-GI rice, fresh Atlantic salmon, grassfed beef and olive oil. Most of the menu is gluten free and dairy free, and there are options for vegetarians and vegans.

MONKEY KING THAI Monkey King Thai is a family-owned business that was one of the first Thai restaurants in Australia. While the business has been around for many years, the franchise model is relatively new. There are three locations, all in Sydney (Lindfield, Newport and Narrabeen), and while all are company owned, the ball is rolling with potential franchisees. “Sydneysiders love our Thai food and the Monkey King Thai brand, so we have major expansion plans in place for New

HOW DID FRESHII BECOME ONE OF THE FASTEST GROWING RESTAURANT CHAINS IN THE WORLD? By helping people live better, by making healthy food convenient and affordable. If you’re passionate about fresh, healthy, delicious and affordable fast food, and you’d like to be part of the most exciting new franchise in Australia - we want you! Our award-winning, nutrition-led and nutritionist approved menu is at the heart of a unique and fun global brand that also engages the growing vegan, vegetarian, and gluten-free markets. Flexible footprints between 25-150sqm, and no stoves, ovens or fryers required, helps keep average setup costs low.

Freshii has over 370 locations in 15 countries, with opportunities now available in prime CBD and urban locations across Australia. Average setup cost of $250,000* 6% royalties Fixed marketing fees Financing options available from 0% deposit (STA) • Flexible supplier agreements • Uncapped earning potential • No experience necessary - we can support you with training, marketing and site development • • • •

WH73953

To apply, or find out more, get in touch at franchise@freshii.com.au or visit freshii.com.au/franchising *See Freshii Franchise Disclosure Document for cost breakdown. T&C’s apply. All applicants will be reviewed on an individual basis.

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Ultimately, we are conservative in our site selection and need to ensure our rents are within an acceptable percentage of our sales.

Food bites: Monkey King Thai

• Franchise fee/turnkey cost, $50,000 • 5-year term, one option to renew • Marketing levy, 2 per cent • Franchise royalty, 6 per cent South Wales, including Bondi and Rhodes,” says CEO Top K. Jitrakthaipakdee. The company is in the early stages of the franchising program but aims to open the five new locations by the end of this year. Other potential locations include lower Sydney, North Shore, the northern beaches, Broadway Shopping Centre, World Square, Top Ryde, Macquarie Centre, and Rouse Hill. The franchisor says the Asian food sector is highly fragmented and dominated by independent owner/operators. “We

have introduced lots of processes, systems and standardised procedures, says Jitrakthaipakdee. “We have an operations manager and head chefs who constantly monitor the quality. This consistency and delivery of high-quality products and experiences ensures we are differentiated in this sector and our franchisees will be well supported. “While we look for high-traffic sites and seek to partner with other restaurants in a food precinct, we are not reliant on high-rent locations. Ultimately, we are

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conservative in our site selection and need to ensure our rents are within an acceptable percentage of our sales,” he says. Described as contemporary and modern, the menu is based on family recipes adjusted to the Australian palate. A Monkey King Thai restaurant aims to cater for most food intolerances, provide a variety of traditional and authentic dishes, and appeals to families. The group is looking for compassionate and fun franchisees who love being surrounded by friends and family.

INDUSTRY SPOTLIGHT

SOONTA Soonta’s story began in 2008 when the franchise set up a small shop on Waymouth Street in Adelaide. The mission was simple: eat tasty, eat healthy. Fast forward almost 10 years and the company now has 10 stores around South Australia. “We only get to eat three meals a day, so it is important those meals make us happy. The way we see it, balance in our life and in our diet is a big part of cultivating Red Rooster happiness. This is where we come in,” says marketing manager Sweet Tang. “Our Vietnamese-inspired menu is filled to the brim with nourishing and delicious food, all of which is made fresh daily.” Soonta is proudly South Australian founded and owned, and sources its ingredients locally. The franchise has 10

Our Vietnamese-inspired menu is filled to the brim with nourishing and delicious food, all of which is made fresh daily.

stores, six of which are franchised. All stores are within South Australia, with the latest outlet in Golden Grove. The company has inquiries from interstate and overseas, and is seeking suitable master franchise partners. Soonta believes that in order to make good traditional Asian food, a lot of experience in the food industry is essential. Trying for consistency from a secret home recipe is the biggest challenge for the company. Property prices are a huge cost, and in order to combat this and maintain a

margin, the company works on a portfolio mix of products and adjusts prices accordingly. “It’s quite challenging when you face increasing pressure on operational costs and reduced spending from the demand side: both are a result of high property prices,” says Tang. Soonta studies its competitors and strives to always be better. “It’s about knowing your weaknesses and strengths to position yourself right,” Tang says. n

Food Bites: SOONTA

• Initial franchise fee, $20,000 + GST; plus legal costs, training costs, design costs, shop fit-out cost and equipment cost. • 5-year term • Currently running a special marketing levy of 2 per cent • Franchise royalty, 5 per cent

Soonta JULY/AUG 2018 | 66 | WWW.FRANCHISEBUSINESS.COM.AU

Say hello to Snap 100 years of trust We are 100% Australian owned and proud of our position as one of Australia’s most respected brands. With over 140 Centres across Australia, Snap is the most successful print, design and website franchise network in the Southern Hemisphere.

Our clients win While we’re renowned for our printing, today our graphic designers, web developers and digital team constantly strive to ensure we’re at the top of our game, at every level. Never before have small-to-medium businesses been able to access such a wide range of marketing services from just one source. This is what makes Snap unique and that’s why our clients are loyal to us.

You win too As a Snap Franchisee, you have everything in place to be successful. We partner with you to help you generate an excellent income stream with a range of products and services that lead the market. Our key clients are small to medium size businesses - smart, hard-working people who work 5 days a week. So, we also work when they do, which means you keep very civilised hours - leaving your weekends free to enjoy with friends and family. Start your journey today to ‘Snap-Proof Your Future’. Franchise opportunities available now! P. 1300 810 233 E. franchiseenquiries@snap.com.au snap.com.au

HOW DID FRESHII BECOME ONE OF THE FASTEST GROWING RESTAURANT CHAINS IN THE WORLD? By helping people live better, by making healthy food convenient and affordable. If you’re passionate about fresh, healthy, delicious and affordable fast food, and you’d like to be part of the most exciting new franchise in Australia - we want you! Our award-winning, nutrition-led and nutritionist approved menu is at the heart of a unique and fun global brand that also engages the growing vegan, vegetarian, and gluten-free markets. Flexible footprints between 25-150sqm - and no stoves, ovens or fryers required - help keep average setup costs low. Freshii has over 370 locations in 15 countries, with opportunities now available in prime CBD and urban locations across Australia. • • • • • • •

Average setup cost of $250,000* 6% royalties Fixed marketing fees Financing options available from 0% deposit (STA) Flexible supplier agreements Uncapped earning potential No experience necessary - we can support you with training, marketing and site development

WH73953

INDUSTRY SPOTLIGHT

DRIVING FORCE How does the vehicle repairs market stay on route to prosperity? Inside Franchise Business looks at the signposts for success.

New vehicle sales drive auto repairs business 2017-18 industry revenue is $16.1bn, proﬁt $1 bn...

49.5%

of the market is motor vehicle servicing

wages are

$2.9bn across

23,154 businesses Household and individual customers make up 60% of the demand for services

Operators will spend more than half of their expenditure on purchases

It’s an industry of small, individual operators. Leading brands are…

K-Mart Tyres & Auto

(less than 2% market share)

Ultra-Tune

(less than 2% market share)

Midas and ABS under one parent company (less than 1.5% of the market)...

But while IBISWorld predicts growth of less than 1.5% over the next ﬁve years these larger brands are increasing their market share.

*Statistics: IBISWorld report, Motor Vehicle Engine and Parts Repair and Maintenance, January 2018

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n an industry valued at an estimated $16.1 billion, much of the business is conducted through small scale and independent operators. Franchise brands loom large on the auto repairs highway, among them Bridgestone. The company’s Australia and New Zealand managing director Andrew Moffatt answered the Inside Franchise Business questionnaire... Q: What's the key to staying competitive in the market? AM: “There are a number of factors to staying competitive in the tyre and auto service market but the core of Bridgestone Select’s competitive edge is having a brand that people know and trust and building a strong network around Australia with more than 180 franchise stores. “As a franchisor, Bridgestone Australia is constantly looking at new ways that our stores can meet the changing needs of motorists and continue to add new services to Bridgestone Select’s offerings. A prime example of this has been the introduction of Auto Service in recent years which benefits both the customer and our franchisees. “The tyre and automotive service market is highly competitive and the majority of our Bridgestone Select stores have established nearby competitors, so staying competitive comes down to customer service, having access to the most desirable and trusted brands like Bridgestone and having friendly, passionate experts working in store to deliver the

INDUSTRY SPOTLIGHT

superior service we pride ourselves on.” Q: What does the business do to help franchisees stay profitable? AM: “With any business there are many elements that impact profitability, including external factors and day-to-day management decisions. With this in mind, Bridgestone Australia does all it can in providing resources, structure, framework and support to our franchisees to help run their business. “Bridgestone consults with its franchisees to discuss challenges they face so that we can support them as best as we can. We see our franchisees as our partners, so consultation with them is key to supporting their businesses effectively. We provide personalised support through our field team of franchise support executives, regional retail managers and automotive service advisors to guide franchisees on running their businesses in line with the Bridgestone Select model. “Providing franchisees with the right business framework and processes is a core

PARTNER WITH A LEGAL PROFESSIONAL WITH COMMERCIAL ACUMEN Franchising is an important decision for both franchisors and franchisees. We are on hand to provide strategic, practical solutions to help you plan and achieve your short and long term goals. Unlike other legal firms which provide legal advice piecemeal, we look at the whole picture, help you with risk management, compliance requirements to eliminate unwanted surprises. Our principal has valuable in-house experience, has advised businesses for more than 25 years and understands first hand the many challenges faced by business owners.

Contact Christine Lau on (03) 9653 9203 or via email at Christine@laulegal.consulting for a confidential discussion to start or grow your business

JULY/AUG 2018 | 70 | WWW.FRANCHISEBUSINESS.COM.AU

Bridgestone consults with its Bridgestone Select franchisees to discuss challenges they face so that we can support them as best as we can. way Bridgestone supports its franchise network and strongly encourages participation in our improvement programs, which are built on following best practice in all aspects of business operations. We have received great feedback from our franchisees on the framework for operating their stores. “The introduction of our tyre and auto service model has translated to a range of new opportunities for franchisees and our customers. As ‘Australia’s Most Trusted Tyre Brand’, motorists are drawn to Bridgestone and its stores for quality tyres, while the tyre

and auto service model provides ancillary services and delivers a more comprehensive service for the customer. This has made Bridgestone Select a one-stop automotive solution. “The support we give our franchisees also led to Bridgestone Select being named as a Top 10 franchise in Australia in the 2017 topfranchise awards, an annual survey completed by franchisees across a range of industries.” Q: What will drive growth for Bridgestone over the next five years? AM: “The next five years are exciting.

Bridgestone’s product road map includes a number of exciting new products which will meet the changing demands of the market and features exclusive products for Bridgestone Select stores. Record car sales in Australia over the past three years present great opportunities for Bridgestone Select for Tyre and Auto Service. “Other factors include innovative marketing concepts and more emphasis on our customer retention program, Bridgestone benefits, which is designed to offer services beyond just tyre replacement and encourages customers to commit to tyre maintenance and safety. This allows our stores to build a better rapport with customers and earn their trust over multiple visits rather than every few years when they are replacing tyres. “Bridgestone Select has always used customer service as a foundation and being recognised with the Gold award for the Tyre Retailer category in last year’s Reader’s Digest Quality Service Awards highlights the importance our franchisees place on delivering a positive experience.”

If you are looking for a change, are passionate about water safety and enjoy working with children, this could be the opportunity you have been looking for! Swimming is a life skill that nearly every parent recognises they need to teach their children from a very early age. In fact, many parents begin swimming lessons when their children are still babies. We offer a boutique custom-made swim school with state of the art turnkey fit outs, including full training and support for every Franchise.

If you are keen to find out more and see if you qualify to own your very own Splash Swim School please contact us today for a confidential chat. For Franchising opportunities contact: P: 1800 SPLASH (775274) I E: admin@splashswim.com.au splashswim.com.au

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PROFILE: Splash Swim the art turnke follow Royal L Full training a Operation sys

Splash have t contractor tha

INDUSTRY SPOTLIGHT

Q: What are the big challenges for this market? AM: “Some of the biggest challenges in our market are strong competition, responsible end-of-life tyre management and management of staff. However, all challenges create opportunities. “Like many established industries there is strong competition in the tyre and automotive service sector, which continually lifts the standard of Bridgestone Select’s service. Having a strong trusted brand makes our franchisees stand out and allows our stores to focus on customer service while Bridgestone supports our stores with the right products to meet the needs of their customers. In the age of social media and online reviews, this is even more important because customers who do not have a positive experience are quick to post online. This is also an incredible opportunity because it creates brand advocates and we encourage our customers to provide feedback through post purchase surveys and service reviews. “End-of-life tyre management is a major

The introduction of our Tyre and Auto Service model has translated to a range of new opportunities for Bridgestone Select franchisees and our customers.

“I explored plenty of other franchise models, but Kwik Kopy’s tried and tested system continued to come out on top.” - Dan McKenzie, Kwik Kopy Miller Street

Owning a Kwik Kopy franchise is your chance to be part of the success story.

WE CAN TAKE YOU FURTHER.

As a member of the Kwik Kopy family, you get to tap into a highly established and recognised brand that gives you plenty of leverage in the market. What’s more, you’ll have an extensive support network all focused on your success.

For more information call (02) 9967 5500 or visit kwikkopy.com.au/franchise

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concern for the industry and Bridgestone. We are proud to be members of Tyre Stewardship Australia (TSA) and all Bridgestone Select stores are TSA accredited. TSA is a body that promotes the development of viable markets for end-of-life tyres through funding research into new and innovative uses for recycled tyre product. We also strongly encourage stores to use Australian Tyre Recyclers Association (ATRA) accredited tyre collectors to ensure end-oflife products are being handled responsibly. “The final challenge for Bridgestone Select is one that nearly all business face: finding the right people for the job and staff retention. Being a part of the Bridgestone network is a major drawcard for our stores to attract staff but there is a challenge in keeping people in the industry. Many underestimate the opportunities within the tyre and automotive industries and there are many examples within Bridgestone that highlights the career development prospects within the business and training pathways can start from tyre fitters.” n

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Own a slice of your local community

SPEAK TO US ABOUT FRANCHISE

Opportunities

Web: bakersdelight.com.au/franchise Phone: 1300 309 759

Opportunities don’t happen, you create them WHY CHOOSE BAKERS DELIGHT? No baking experience, no problem We’ll teach you everything you need to know to operate your bakery and run your business We’ve been delighting customers across Australia for almost 40 years Australia’s largest bakery franchise with over 550 existing bakeries Ongoing operational and marketing support.

FRANCHISING, LICENSING AND DISTRIBUTION SPECIALISTS Australia is open for business and the 2018 forecast is for further growth. The ACCC is actively monitoring compliance in the industry! Minimize your risk and ensure your compliance to avoid fines and penalties.

Robert Toth and his team provide advice to companies and individuals in:

• Assisting overseas companies to establish business and franchises in Australia. • Master franchise rights. • Dispute resolution – solution and strategies. • Franchise advice – fixed fee reports. • Sale or purchase of franchise systems. • Trademark and intellectual property (IP) advice. • Company structures. • Business modeling – franchising, branchising, licensing, distribution and agency. • Employment law. • Consumer law and ACCC advice. We have a network of franchise consultants to assist our clients establish their brand and systems. We offer fixed fees based on the scope of work so our clients can budget for their legal costs with certainty.

Marsh & Maher Richmond Bennison Franchising, Licensing and Distribution Group act for local and overseas companies entering the Australian market and have a network of experienced consultants to assist clients with demographic, feasibility, market research and preparation of business entry plans to ensure the best success for our clients www.marshmaher.com

Member of International Franchise Lawyers Association (IFLA), US Commercial Service and Franchise Council of Australia (FCA).

CONTACT: robert@mmrb.com.au Robert Toth

stephen@mmrb.com.au Stephen Shipp

stacey@mmrb.com.au Stacey Ryan

amy@mmrb.com.au Amy Sheggerud-Woods

Partner & Accredited Business Law Specialist

Lawyer

(03) 9604 9400

Special Counsel

Partner & Accredited Commercial Litigation Specialist

INDUSTRY SPOTLIGHT

Staying AHEAD Tourism is still a growing industry, and hotels are big business, which makes them a bright spot on the landscape for franchises. By Sarah Stowe

ustralia’s tourist industry contributed $55.3 billion to the economy in 2016-17, and hotels are big business with $8.1 billion revenue expected this financial year. It is a landscape dominated by big brands, but it’s open to franchisee investment. Domestic tourists are the big spenders, putting $82.3 billion into the coffers, while international visitors added $40.6 billion. When it comes to visitor nights, $16.4 billion was spent on commercial accommodation over 306 million nights, according

to the Tourism Research Australia report State of the Industry 2016-17. Accommodation ranged from backpacking tents to six-star resorts. More than half a million people work in the tourism sector (598,200), with 88,800 of these employed in the accommodation industry. While hotel accommodation has been fairly steady over the past 11 years, there has been a rise in the use of rented apartments and homes by travellers. Disrupters such as AirBNB are listed as a major challenge by IbisWorld’s report Hotels and Resorts in Australia, May 2018.

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INDUSTRY SPOTLIGHT

Simon McGrath Q: IbisWorld reports that a declining wages spend and streamlined processes are boosting profits. How does this equate to the Accor experience? SM: Increased automation of systems has produced greater efficiencies, while the growth of the AccorHotels network in Australia has enabled us to benefit from economies of scale. However, with a large pipeline of hotels coming on stream over the next five years, AccorHotels' workforce will grow substantially. The key is investment in staff development and training, and AccorHotels is a leader in this area. Our investment in growing the skills of our workforce will continue to rise, but this will be offset through productivity gains from scale and technology efficiencies.

Inside Franchise Business put two hoteliers on the spot with a Q&A – AccorHotels COO Pacific, Simon McGrath, and Choice Hotels Asia-Pacific CEO Trent Fraser.

Q: While domestic tourists are 55 per cent of the market, 20 per cent of tourists are from Asia Pacific, particularly China. How does this resonate with the various Accor brands, and where will the greatest growth occur? SM: The domestic travel market remains a strong driver of business across the group. The business, meetings and leisure sectors are all performing strongly, and Sydney is benefiting from the new International Convention Centre. The opening of the Sofitel Sydney Darling Harbour, the first new-build five-star hotel to open in the city since the Olympics, heralds a new era of substantial development in the Sydney hotel market, and this in turn will enable the city to attract larger events, conferences and exhibitions. In cities such as Brisbane and Perth, the downturn in mining-related business has been replaced in part by major investment in new tourism infrastructure, such as the Perth stadium, and the market is readjusting. Across Australia, massive growth in airline capacity to key gateway cities continues to see international travel set records on a monthly basis, and we are confident our hotels will continue to benefit from our strong presence in Asia Pacific, particularly China. We finalised a strategic alliance with Huazhu Hotels Group (also known as China Lodging Group) in 2016, which has created a huge opportunity for our two businesses to combine our distribution systems and loyalty programs, which together boast more than 75 million members worldwide. This partnership enables us to accelerate the development of the Grand Mercure, Novotel, Mercure, ibis and ibis Styles brands in China, Taiwan and Mongolia, with 350 to 400 hotels set to open over the next five years. With this comes an increase in brand awareness for our hotels, and as China’s outbound travellers grow exponentially, these brands are well positioned to capitalise on the influx of Chinese travellers to Australia. AccorHotels was the first to launch Chinese Optimum Standards (Hao Ke Ya Gao) for our properties in Australia, which gives them an added advantage in catering for the market. With the largest-ever increase in hotels across Australia, our industry is well-prepared to grow the market even further. Q: Growth is predicted at a fairly low 2.9 per cent for the next five years. What is the strategy to stay competitive within the Accor brands? SM: Australia’s tourism industry has never been stronger, and pleasingly we are seeing more supportive investment from state and federal governments, including the building of convention centres, tourism precincts and new and upgraded airports. With AccorHotels’ $1.2 billion acquisition of the Mantra Group we are now in an even stronger position to develop our business and play a role in growing the tourism sector. The Mantra Group brands will enhance our brand portfolio and create opportunities for our people, partners and guests. We are also launching a wide range of new-build hotels, with strong lifestyle elements, to cater for changing market trends. We have adapted our product offer – including restaurants – to anticipate these market trends, and we have invested heavily in areas such as distribution and loyalty to ensure our hotels continue to achieve above-market returns. Q: What challenges are facing the hotel sector over the next five years? SM: Updating the physical product to meet changing traveller demands will always be a major priority, as tourism is an intensely competitive industry. Our brands and hotels must stay relevant to the market and exceed expectations. As the hotel industry experiences unprecedented levels of development, the key issue over the coming years is around people: how we attract and retain the best talent to serve our millions of guests each year. We have always put a lot back into the industry and have always been focused on training and developing our people. Our industry is all about people and we are focused on delivering heartfelt service that creates a genuine human connection and memorable moments for our guests. JULY/AUG 2018 | 78 | WWW.FRANCHISEBUSINESS.COM.AU

Trent Fraser, Choice Hotels Q: Ibisworld reports that declining wages spend and streamlined processes are boosting profits. How does this equate to the Choice Hotels experience, and what is the policy for boosting future profits for franchisees? TF: Technology has had a huge impact on streamlining processes in the hotel industry, and it is something we’ve seen driving change in our franchisees’ businesses. Staff wages have increased as well as the cost of utilities, and room rates in some markets have not reflected this. To balance these cost increases, technology has helped create efficiencies in distribution and front-office management. It plays a far greater role in the day-to-day business of hotels than ever, and we have to embrace technology and use it to combat other rising costs. We’ve also seen franchisees embrace job-sharing and cross training in their teams, which is ultimately a win-win for both the business and employees. It means more fulltime work for employees, job security, efficiencies and greater diversity in employee skills and learning opportunities.

Q: Growth is predicted at a fairly low 2.9 per cent for the next five years. What is the strategy to stay competitive within the Choice brands? TF: We’re seeing growth, and there is optimism in the market. To ensure we’re continuing to reach new audiences, drive bookings to properties and stay competitive in the market we are using various strategies. One of these is Choice Hotels’ Needabreak.com platform, which aims to engage travellers in the planning and consideration phase of their trip via inspiring content where customers can research destinations, activities and driving routes. It targets the leisure market to help balance out Choice Hotels’ strong corporate customer base, and also helps drive direct bookings to properties, increasing value for franchisees and direct business over time.

Q:While domestic tourists are 55 per cent of the market, 20 per cent of tourists are from Asia Pacific, particularly China. In total, 1.1 million visitors spent 43.2 million nights in Australia last year. How does this resonate with the various Choice brands, and where will the greatest growth occur? TF: Our biggest driver of business is domestic leisure and domestic corporate, and this is likely to remain the most important part of our property’s business given the regional locations. However, there is significant growth in the international market, in particularly China, which is the largest international market and has surpassed New Zealand in nights booked and in terms of spend. Interestingly though, India grew at the fastest rate in the past 12 months with a 15.2 per cent increase versus China at 12.2 per cent. As the international sector evolves it will grow at a faster rate than domestic business, but it will be a long time before it catches up to the volume of domestic bookings and spend. We’ve seen international travellers start to venture out of the major cities and explore more regional areas of Australia. We’re seeing this trend with visitors from China, where it might be their second or third time in Australia and their confidence is growing. Instead of booking tours they might hire a car and drive to the regional tourist destinations. This is becoming more popular, and we need to ensure that all our properties, including the regional locations, are prepared for this. Q: According to Austrade, overnight spend is predicted to reach $131 billion by 2020, with growth in international spend outpacing growth in domestic spend. What is happening with prices in the Choice portfolio? TF: We have launched an innovative Revenue Management for Hire offering, an extra service for our franchisees which sees a team of revenue-management specialists manage the yield and pricing for franchisee properties during demand periods. This is a result of the technology evolution in the hotel sector and something that would not have existed five years ago. Our specialists analyse market data and competitors to ensure a property’s room pricing reflects market demand, and that they are maximising every dollar from a rate point of view. We have 20 properties signed up to the program, which has been running for six months now, and hotels in the program are seeing an average 16 per cent revenue increase compared to the previous year. This is significant and invaluable to a property, showing just how important it is to embrace the data and technology available. JULY/AUG 2018 | 79 | WWW.FRANCHISEBUSINESS.COM.AU

INDUSTRY SPOTLIGHT

ROOM TO GROW:

hotels and serviced apartments What’s the sector? Australia’s serviced apartments and hotels with more than 15 rooms and a public bar licence. These accommodation sites have a combined revenue of $11.5bn. The big challenger? Airbnb.

HOTELS Across Australia, massive growth in airline capacity to key gateway cities continues to see international travel set records on a monthly basis

Q: What challenges face the hotel sector over the next five years? TF: The rising cost of utilities is one of the challenges facing the industry, as it accounts for 6 to 10 per cent of a hotel’s expenditure. This is significantly higher than several years ago and its impact is being felt by hoteliers. It is also hard to manage as guest usage is hard to control, so efficiencies need to be made elsewhere. Technology is where some of these cost savings can be made, but it’s also presenting challenges in the sector. There has been a huge change in how technology is used in the hotel industry, and in future we’ll see bookings via PCs and laptops reduce. I believe that in just five years most bookings will be made via handheld devices, if not all. The number-one challenge, however, remains the cost of distribution from the online travel agencies (OTAs), which charge significant commissions to generate business for properties. While it is important to work with OTAs, we need to get the balance right and ensure we’re driving an equivalent amount of direct business for franchisees through Needabreak.com and other proprietary channels.

2017-18

revenue $8.1bn, profit $952.6m

Growth 2.9% for 2018-23

55%

Tourists from Asia-Pacific, particularly China, have boosted revenue

Why is it growing? Cheap travel within Australia, weak Aussie dollar, cost of international flights

Domestic tourists are largest market

Serviced apartments are limiting hotel growth

Streamlined processes and declining proportion of revenue spent on wages boosts profits

4* and 5* venues account for 45.9% of revenue

Major hotel company in Australia: Accor Asia Pacific with brands Sofitel, Pullman, MGallery, The Sebel, Novotel, Mercure, ibis, Swissotel

Serviced apartments 2017-18

revenue $3.4bn

Annual growth in 2017-18 is 6% but slowing to 2.2% next five years

Opportunity: international tourists Profit margins have grown. Venues are low-cost base operations in comparison to hotels

26.3%

Domestic business travellers

Serviced apartments are limiting hotel growth

46.7% Domestic tourists

11.7%

Major market share: Quest Serviced Apartments

*Statistics: IBISWorld report, Hotels and Resorts in Australia, May 2018; Serviced Apartments in Australia, February 2018.

Figures sourced from Austrade/Tourism Research Australia State of the Industry 2016-17; IbisWorld Hotels and Resorts in Australia, May 2018; IbisWorld Serviced Apartments in Australia, February 2018.

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INDUSTRY SPOTLIGHT

TOURISM TRENDS

According to Deloitte, which published a Tourism and Hotel Market Outlook this year, the economic growth backed by the Aussie dollar is fuelling the sector. Australia as a destination is seeing growth from overseas visitors with international arrivals outpacing global economic growth for three years in a row. The firm reports a 6.5 per cent rise in international visitors with travel centred around business and education showing the biggest growth. While visitors from China and India have increased travellers from New Zealand and the UK failed to push arrivals beyond their five year averages. American visitors have pushed the US into third spot for inbound tourism, with arrivals up in 2017 by 9 per cent. More than one third of international visitors are travelling to Australia for the first time (39 per cent). Nearly half (49 per cent) are holidaying, while 26 per cent are catching up with friends and relatives.

DOMESTIC TRAVEL

NIGHT STAYS

Business-related journeys and trips to visit friends across Australia have also grown at a faster pace than traditional holidays and leisure travel in the domestic market, with business trips rising 14 per cent in 2017. At home, travel is expected to get a 3.7 per cent annual boost over the next three years. “Strong jobs growth and an increase in the participation rate along with improving consumer sentiment are strong signals for tourism in Australia,” the report reads.

There was a one percentage point lift to room occupancy to 68.5 per cent last year. But the challenge of online trading mentioned elsewhere will hit traditional business and, suggests Deloitte, put a ceiling on further occupancy rate increases for many city hotels. Visitors are more likely now to take shorter trips, but increase their nightly spend so the average for a trip is stable at about $665.

THE REGIONS Northern Territory and Queensland are the winners in growth, with a slight lift expected over the next three years for these regions (3.4 per cent), a little over the national annual average of 3 per cent. And for overseas visitors, Tasmania remains the fastest growing stopover, with a boost of 16.6 per cent, followed by the ACT at 10.2 per cent growth.

FUTURE GROWTH Deloitte expects visitor arrivals to hit 10 million in 2020. The number of nights spent by overseas visitors in Australia could overtake domestic visitor nights in 2023. By 2019 inbound tourism from China is predicted to be worth more than the whole of Australia’s inbound international market value back in 2000. As India maintains its profile as

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fastest growing global economy, this is reflected in consistent visitor growth to Australia of about 12 per cent. Visitor nights from China and Indonesia are predicted to increase by 10 per cent and 11 per cent, with American arrivals boosted by 4 per cent each year until 2020.

HOTELS Sydney and Melbourne occupancy rates are up 20 per cent on the national score, and while Darwinâ&#x20AC;&#x2122;s occupancy rate was the fastest growing capital city at 8.8 per cent a softening of the market is expected. Deloitte reports that room rates nationally have increased by 2.4 per cent, with the biggest growth in average room rates seen in Cairns and tropical north Queensland. As new hotels and serviced apartments continued to open, there were 5,500 rooms added to the accommodation landscape. Growth in the supply of accommodation

is expected to continue, focused on state capitals: Deloitte points to the 50 projects earmarked in Melbourne alone. The next two years are likely to see the greatest influx of rooms, with accommodation boosted by 3.4 per cent annually. n

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Source: Deloitte Access Economics, Tourism and hotel market outlook, Edition 1, 2018

FRANCHISE BASICS

COMPLIANCE IS KEY

The Franchise Council of Australia does not see the need for extra regulations, just the ability to enforce what is already in place. MARY ALDRED CEO, Franchise Council of Australia

xamples of poor franchising experiences would most certainly be reduced by greater compliance and enforcement across the sector, the Franchise Council of Australia (FCA) believes. With franchising having received substantial media scrutiny, it is now the subject of a federal parliamentary inquiry tasked with reviewing the effectiveness of the Franchising Code of Conduct, which governs the sector.Franchising directly employs nearly half a million Australians, with almost 80,000 franchise units trading across the nation. There are simply too many livelihoods at stake for the inquiry to deliver findings that would adversely impact this unparalleled model of entrepreneurship. That is why, in its submission to the inquiry, the FCA

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advocated enforcing compliance with the existing structure rather than adding extra regulations. It believes there should be a stronger culture of compliance across the sector, and that this should be the focus of the inquiry. No-one is more keen than the FCA to understand the underlying causes of poor franchising experiences being reported. Conversely, the FCA is also privileged to hear about the many, many positive experiences franchising provides.

business who have gone on to become profitable franchisees in their own right and individuals who have carved out successful careers as franchisees within more than one franchise brand. These stories and so many more exemplify the power of franchising to positively transform lives and livelihoods. It is important these stories be told, and that any recommendations made as a result of this franchising inquiry do not create a regulatory landscape that impedes the ability of future franchisees to realise their business goals. Australia’s substantial and successful franchised economy is already supported by one of the most comprehensive and effective franchising regulatory systems in the world. In our experience, most franchise businesses by far uphold the highest standards. And while franchised businesses enjoy improved prospects of success and profitability compared to independent, standalone businesses, they still compete in a dynamic and challenging marketplace.

APPARENT BREACHES

SUCCESS STORIES There are stories of families who have built intergenerational franchise businesses, of migrants who have taken the systems and processes offered through franchising and grown successful multi-unit businesses, small-business people who have bought a struggling franchise business and through hard work and dedication turned it into one of the network’s best performers. It is women who have found the flexibility to balance families and business ownership, employees of a franchise

The FCA acknowledges there are examples of poor commercial outcomes within franchising that appear to have risen not only from market pressures, but also from incidences of poor practice and standards, as well as apparent breaches of the Code of Conduct. The issue is not that the regulatory framework fails to prescribe protective measures. Rather, it is that in certain reported cases the code has simply not been adhered to, nor has it always been enforced. This means that regulators such as the Australian Competition and Consumer Commission (ACCC), which administers the Franchising Code of Conduct, need to be adequately resourced to collect data, provide guidance on best practice, investigate claims of wrongdoing and, where necessary, take enforcement action. That needs to be a key focus of this inquiry. That is why the FCA’s submission recommends making more funding available to the ACCC and allied agencies to better support enforcement of the code and more efficiently respond to small-business concerns about any alleged lack of compliance. The ACCC needs to be able to use its powers to issue fines and infringement notices, conduct random audits and take court actions more frequently where there is systemic evidence of non-compliance. A franchisor’s first customer is its franchisees. Publicised examples show what can happen if other imperatives or priorities creep into the franchise relationship. Providing each and every prospective franchisee with the best chance of running a successful business, while acknowledging

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the impact of external market forces, should be the goal of every franchisor.

RECOMMENDATIONS However, more can be done to ensure franchisees have all the pertinent information they need before signing a franchise agreement. The FCA’s inquiry submission makes recommendations for ensuring more franchisees use and follow the code process by: • Allocating funding to educational initiatives that ensure prospective franchisees are aware of the protections available to them, the benefits of obtaining advice, their due-diligence obligations and available guidance resources; • Streamlining the code’s disclosure documentation, providing more focused information about the risks and opportunities, rewards and obligations of a prospective franchise business investment in a format that is easier for franchisees and their advisors to use; and • Translating the code’s Information Statement into multiple languages because about 70 per cent of small-business owners are migrants. Mandating the requirement for some prospective franchisees to obtain competent legal and business advice before making the significant personal and commercial decision to invest in a franchise business opportunity is another of the FCA’s core recommendations.

RESPECT AND PROTECT A strong compliance and enforcement setting is incredibly important to respect and protect this business model and the thousands of hard-working people who depend on it. However, it is equally important that any regulatory changes strike the right balance between a “rules-based system” and the rights of individual businesses to work freely in a market that creates jobs, consumer choice and shareholder wealth through competition, innovation and entrepreneurship. A failure to do this, or overly heavyhanded and unnecessary regulation, will jeopardise jobs, risk thousands of small businesses and also hurt consumers. As the peak body for franchising in Australia, the FCA will continue to work with the government, regulators, franchisees and franchisors, suppliers and employees to ensure high standards are observed and the sector is seen as an employer of choice. Franchising is truly the engine room of the Australian economy, with the $146 billion sector being responsible for nearly half a million jobs across the nation. n

FRANCHISE BASICS

IF IT LOOKS LIKE A

FRANCHISE...

Be wary of companies trying to sidestep the requirements of the Franchising Code of Conduct. Franchisors have specific steps they must take, and this includes a range of documentation they need to furnish to prospective franchisees.

JANE GARBER-ROSENWZEIG Lawyer, Gable Lawyers

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any brands are proud to be part of the franchise industry, but there are others that while legally defined as franchises present to be some other type of arrangement and try to bypass the requirements of the Franchising Code of Conduct.

The Code clearly defines what defines a franchise business. If the four limbs of the Code definition of a franchise agreement are satisfied, then the business you are considering buying is a franchise regardless of what it has been labelled. Simply put, the limbs of the definition are that: 1. There is an agreement between you and the owners of the brand (which can be written, oral or implied); 2. You are granted the right to work under a trademark or a brand name;

3. You have the right to carry on the business of offering, supplying or distributing goods or services in Australia under a system or marketing plan that is substantially determined, controlled or suggested by the brand owner; and 4. Before starting or continuing the business, you must pay or agree to pay to the brand owner or their associate an agreed amount. At this point, you may well ask whether it really matters if the business you are considering investing in is described in all documents as a licence or a distribution arrangement rather than a franchise. Actually, it matters greatly. If an arrangement is considered a franchise, then the Code applies, imposing onerous obligations on the reluctant franchisor relative to the documentation they must provide to prospective franchisees.

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EIGHT REQUIREMENTS These requirements of the Code do not need to be met for licensing or distribution arrangements. However, the Code requires, among other things, eight specific requirements: 1. Provision of disclosure document, in the form and order as well as using headings and numbering of Annexure 1 of the Code. The purpose of the disclosure document is to provide material information to potential franchisees to help them evaluate the franchise opportunity. It must be maintained and updated at least annually. 2. Provision of a copy of the current Code, an up-to-date disclosure document and a copy of the franchise agreement (in the form to be executed) at least 14 days before

FRANCHISE BASICS

If an arrangement is considered a franchise, then the code applies, imposing onerous obligations on the reluctant franchisor relative to the documentation they must provide to prospective franchisees.

a prospective franchisee signs a franchise agreement or makes a non-refundable payment to the franchisor or an associate in connection with the proposed franchise agreement. The Code includes these requirements to allow each potential franchisee time to read the documents and obtain related legal, financial and business advice. 3. Provision of a copy of the information statement to a prospective franchisee as soon as practicable after the prospective franchisee formally applies or expresses an interest in acquiring a franchised business. An information statement must be in the form set out in Annexure 2 of the Code. It warns the potential franchisees of risks when investing into a franchise. 4. Receipt of statement from the franchisee regarding the franchise documents and receipt of advice certificates from a solicitor, an accountant and a business adviser. The franchisor must not enter into or renew a franchise agreement or extend the term or scope of the franchise agreement until receiving from the franchisee or prospective franchisee a written statement of having received, read and had a

reasonable opportunity to understand the disclosure document and the Code. The franchisor must also obtain signed statements that the prospective franchisee has been given advice about the proposed franchise documents and business by an independent legal adviser, an independent accountant and independent business adviser. This requirement does not apply upon renewal, extension of term or scope of the franchise. 5. Provision of copy of the lease and other agreements with the potential franchisee. The franchisor must provide a copy of the lease, an agreement to lease and all lease-related documentation to the potential franchisee as soon as practicable. If there are other relevant agreements, then the franchisor must provide those to the potential franchisee at least 14 days before the day on which the franchise agreement is to be signed. Other agreements include lease of equipment agreement, security agreement such as mortgage and confidentiality agreements. 6. Provision of financials or an audit report. Each franchisor must provide all potential franchisees with either the previous two financial yearsâ&#x20AC;&#x2122; worth of financial statements or an

independent audit report as to the solvency of the franchisor. 7. Disclosure of all material facts. The franchisor is obligated to disclose all material facts that have occurred after the previous update of the disclosure document. 8. The franchise agreement being compliant with the requirements of the Code as to items prohibited from being included. For example, a franchise agreement cannot contain a general release of the franchisor from liability toward the franchisee or a waiver of any verbal or written representation made by the franchisor. When looking at any business opportunity, you need to remember that if something appears to be something else (like a franchise instead of a licence), then it is likely to be so. Evaluate the opportunity, assess all its aspects and documentation, and seek proper legal and accounting advice so as not to buy a cat in a bag. n

Jane's practice focuses on commercial law, franchising, distribution and licensing on a domestic and international basis, leasing, and the protection of intellectual property.

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NATIONAL FRANCHISE OPPORTUNITIES AVAILABLE. ENJOY THE FOLLOWING BENEFITS:

FRANCHISE BASICS

WHAT IS IN A

DISCLOSURE DOCUMENT? If you are considering buying a franchise, the disclosure document is a key part of the process that aims to ensure prospective franchisees can make an informed business decision. LUKE MCKAVANAGH Rouse Lawyers

nder the Franchising Code of Conduct, all franchise systems in Australia must maintain a disclosure document, which must be provided to prospective franchisees at least 14 days before entering into a franchise agreement.

The purpose of a disclosure document is to supply key information about the nature of the franchise system and to help the franchisee make an informed business decision about entering the franchise. Despite being tailored to each franchise system, disclosure documents must comply

with the code’s prescribed format. Key elements in a disclosure document include:

1. A WARNING The warning statement on the first page cautions prospective franchisees that franchising is a serious undertaking. It recommends they obtain independent legal, accounting and business advice, but also highlights their cooling-off rights.

2. SPECIFIC DATES Disclosure documents must specify their

preparation date and be signed by an officer of the franchisor. Franchisees can reference this date to ensure currency. Franchisors must update their disclosure document annually within four months of the end of their financial year (with some exceptions). Therefore, franchisors working on a standard July-to-June financial year must complete their update by the end of each October.

3. FRANCHISOR’S DETAILS The business experience of the franchisor’s officers and the duration the franchise

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FRANCHISE BASICS

system has been active in Australia provides an insight to the stature of the system. Prospective franchisees can judge whether the franchisor has a satisfactory level of knowledge and experience in the industry, which is especially important for new systems. Franchisors must disclose litigation they have been involved in, along with any involvement by their officers in any failed franchise systems.

4. FRANCHISEE DETAILS Contact details for all current franchisees within the system and those who have left during the previous three years (and the reason for doing so) are an essential element of a prospective franchisee’s due diligence. Current and former franchisees should be contacted to assess satisfaction with the franchisor’s training, support and systems. If large numbers of franchisees have had their agreements terminated or have left the system, it may indicate unhappiness with the system.

5. INTELLECTUAL PROPERTY Franchise agreements give franchisees the right to use the franchisor’s intellectual property. This can include copyright (trade secrets), trademarks (business names and logos) and patents (inventions), which will be detailed in the disclosure document. The ownership structure of the intellectual property must also be disclosed. In many systems, a separate holding company owns the intellectual property and licences as part of an asset-protection strategy.

6. SITE AND TERRITORY Franchisors must disclose whether a franchisee is granted an exclusive territory or if their rights are limited to a particular location. Some systems give franchisees the exclusive right to work in a set geographical area, while others can grant the right to work only from a specified store. Franchisees can use this

to determine the risk of competition from within the franchise system itself. If the franchisor has site-selection criteria, then details must be disclosed. Regardless of whether the franchisor nominated the site, it is crucial that franchisees do their own independent investigations as to whether the demographics of the site or territory can support the business. Details of previous franchisees who have worked in the site or territory within the past 10 years must also be provided. A high turnover of franchisees in the one location could indicate a problem.

7. GOODS AND SERVICES In most franchise systems, franchisees must obtain goods and services from the franchisor or an approved supplier to ensure uniformity across the system. The disclosure document should detail how these arrangements will work, along with the franchisee’s rights (if any) to do business online. Franchisors must also provide details

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of any rebate arrangements in place with suppliers.

a statement confirming the franchisor’s solvency, along with their financial statements for the previous two financial years or an independent audit report. It is imperative the financial figures are up to date. If the figures indicate the franchisor is struggling financially, then this is a red flag.

9. MARKETING FUNDS

8. PAYMENTS The franchisee’s establishment costs and all the expected payments during the course of the franchise must be disclosed. Franchisors will often provide large ranges, so franchisees should undertake a careful analysis. The cost of establishing a store within a shopping centre will be much higher compared to a quiet street corner. Unforeseen capital expenditure is also important to note. This could be the franchisee’s costs to refurbish their store, or upgrade and replace equipment and signs. Franchisees should be able to use these figures to estimate what the total costs will be to set up and run the business, and whether the business model can reach and sustain profitability. A franchisee's accountant will play a key part in this analysis.

If the franchisee has to contribute to a marketing fund controlled or administered by the franchisor, then details of the payments and how the fund will be used must be disclosed.

10. END-OF-TERM ARRANGEMENTS

TAKEAWAYS

Franchisors must clearly disclose whether the franchisee has an option to renew or extend the franchise agreement at the end of its term. This includes whether franchisees are entitled to compensation if they do not renew, and arrangements for unsold stock and equipment. It is important for franchisees to understand that once the term of the franchise agreement ends, and if they walk away from the business, they generally lose the right to receive compensation for goodwill.

11. FINANCIAL DETAILS Finally, a disclosure document must contain

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While disclosure documents can seem a lengthy and burdensome read, they contain a wealth of information invaluable to a prospective franchisee trying to choose the right franchise system. Reading the documents from cover to cover is essential. After considering the disclosure document and making proper inquiries, franchisees will better understand the risks involved in the franchise and how their future relationship with the franchisor will work. n Luke McKavanagh is a commercial lawyer specialising in franchising and business law.

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FRANCHISE BASICS

FRANCHISE AGREEMENT

CHEAT SHEET This quick-snap guide provides an overview of what a franchise agreement includes and how to use it. MARIANNE MARCHESI Partner, Legalite

o, you’re buying a franchise and have just received the franchise agreement from the franchisor. You may be overwhelmed by the volume of the agreement alone (not to mention all the other documents).

If you’re a savvy franchise buyer, you’re probably getting professional advice on the documents – but here’s a quick cheat sheet on what to look out for yourself:

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FRANCHISE BASICS

1. TERRITORY One of the first few clauses in the franchise agreement will set out whether you’re being granted an exclusive territory or not. If so, check how the territory is defined (eg is there a map attached?) and whether there are any circumstances in which the territory can be reduced by the franchisor. 2. FRANCHISE TERM Next, you should check what the term of the franchise is and whether you have any options to renew. In checking this, you should also make sure that, if you’ll be running the business from a fixed site, the lease matches the term of the franchise (or at least contains a further option to renew).

5. PERFORMANCE CRITERIA Does the franchise agreement set out any minimum performance criteria? If so, you should feel comfortable that these are achievable and discuss any concerns you have with the franchisor. You should also check what happens if you fail to meet the minimum performance criteria. Sometimes, franchise agreements will allow for the agreement to be terminated where these are not met. 6. SELLING YOUR BUSINESS Most franchisees buy a franchise with a strategy in place to recoup their investment. Make sure you check the transfer provisions, which will set out how you can sell the business and the terms that will apply to the transfer.

3. FRANCHISE FEES You can then jump straight to the most important part – the fees. The fees you’ll need to pay to the franchisor are typically set out in a schedule to the franchise agreement at the back, and can include the initial franchise fee, training fee and ongoing royalties.

7. TERMINATION Obviously to be avoided, you should also check the breach and termination provisions of the franchise agreement. Under the Franchising Code of Conduct, a franchise agreement can only be terminated in certain circumstances. You should check that these provisions match the Code and don’t allow for termination in any other circumstances.

4. SETTING UP THE BUSINESS The franchise agreement will usually contain a clear outline of both parties’ obligations in getting your franchise business set up. This will include clauses relating to fit-out of the premises, completing training and buying equipment and products.

8. POST-EXPIRY/TERMINATION After expiry or termination of the franchise agreement (including selling the business), there will usually be a number of restraints imposed on you which prevent you from conducting a similar or competing business. These restraints should be reasonable,

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and you should consider your long-term plans when deciding whether or not to go ahead with the franchise. Ultimately, restraints should be given very careful consideration and appropriate carve-outs negotiated if necessary. 9. GUARANTEES Franchise agreements will often contain personal guarantees from you in your individual capacity. While common, you should be aware that these naturally involve some risk to your personal assets and you should seek professional advice about their impact. 10. DISPUTES Of course, when buying a franchise, you don’t want to think about things going wrong. However, you need to know what avenues are available to you if you have a dispute with the franchisor. The Code sets out a dispute resolution procedure, so you should check that the franchise agreement complies with the Code in this respect and that a procedure is clearly set out. Reading the franchise agreement yourself first will make sure you understand the “big ticket” items before you seek professional advice on the finer details. Having this understanding, coupled with separate legal advice, will ensure you are a well-informed franchisee before you make such a big purchasing decision. Happy reading! n Marianne is the founder and principal of Legalite, a law firm that aims to simplify legal services.

FRANCHISE BASICS

THINGS YOU NEED TO KNOW ABOUT INTELLECTUAL PROPERTY Franchises are all about building on the value of ideas, so people buying into a franchise need to be aware of their rights and obligations.

ROBERT TOTH Marsh & Maher Richmond Bennison Lawyers

here are five main things to consider in relation to the use of intellectual property...

1. OWNERSHIP OF INTELLECTUAL PROPERTY Identify the owner of the IP and check their ownership. Does the owner hold the rights or hold rights under a licence? If the latter, then what are the terms of the licence? Franchisors must disclose their

ownership rights in the disclosure document. It may comprise not only trade marks but also patents in certain inventions and designs and/or comprise copyright in their works and operations manuals, including things such as recipes. The franchisor would generally warrant that they own or hold the rights that they are then granting to the franchisee, some of which - for example trade marks - will be registered and disclosed. Franchisees can check these registered trademarks or patents on line. Often the IP rights are held by the franchisors related entity which may be a

holding company that only holds the rights and licences those rights to the franchisor's. The disclosure document should clearly set out all of the rights held by the franchisor and/or its related or associated companies used by the business. The right to use this IP terminates on expiry of the franchise agreement or on termination. The franchise agreement will contain restrictions as to how the IP may be used by the franchisee during the term of the franchise and on expiry of it. The franchisee must comply with these obligations otherwise it may be a breach

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FRANCHISE BASICS

To protect their trade secrets, franchisors will require franchisees to sign confidentiality agreements or non-disclosure agreements that extend beyond the termination of the franchise relationship.

of the agreement and give the franchisor certain rights to require the franchisee to cease certain conduct or even a right to terminate for serious breach.

2. INTELLECTUAL PROPERTY LICENCE AGREEMENT Franchisors, or their holding company, grant a non-exclusive licence to the franchisee to use the IP; this may also be by a separate intellectual property licence agreement in addition to the franchise agreement. This licence allows a franchisee to use the franchisor’s IP and payment for this is often the up front franchise fee and ongoing royalties payable to the franchisor. An IP License agreement or right will set out the following: • the rights that the franchisee is granted to the intellectual property, for example, whether they can sub-licence or assign these rights; • any restrictions or conditions on the franchisee’s use of the intellectual property; and • the term of the licence Termination rights and how it can be terminated.

3. PROTECTION OF INTELLECTUAL PROPERTY A significant aspect to any franchise system is the rights granted by the franchisor to the franchisee to use the brand and all of the franchisor’s intellectual property and therefore the franchisor will keenly protect its rights if they are aware the franchisee is breaching its obligations. The franchisee may be asked to assist the franchisor in certain cases where

there may be a breach of the franchisor’s intellectual property by third parties The franchisee would also expect the franchisor to take action to protect its own IP as that is an integral part of the success of the franchise. If a franchisor does not adequately protect its intellectual property and is involved in any sort of dispute, this may impact upon the franchisee’s business. Franchisees should consider whether there is in the franchise agreement a provision that states the franchisor will ensure that all registrations are kept up to date and an obligation on the franchisor to protect its IP.

4. CONFIDENTIAL INFORMATION As opposed to intellectual property, confidential information does not need to be registered. Confidential information refers to anything that a business regards as classified such as its pricing structures, supplier arrangements and other matters confidential to the running of the business. It does not include matters that are of general knowledge or in the public domain. Confidential information includes financial records, customer lists, marketing plans, and so forth. This information is confidential as it is commercially sensitive information to the business. Trade secrets, which is a sub-category of confidential information, refers to the processes, methods and processes for production, supply or manufacturing. The most famous trade secret is perhaps Coca-Cola, which has kept the formula for its drink a secret for decades. Franchisors require prospective franchisees to sign confidentiality agreements or non-disclosure agreements

prior to entering into or providing information about the franchise opportunity and there are ongoing obligations to not use the franchisor’s confidential information without the franchisor’s consent and other than for the purpose of the franchise business.

5. TERMINATION OF A FRANCHISE RELATIONSHIP Termination of the franchise agreement generally provides an end to the license to use the IP. In addition there are usually restraint of trade provisions to prevent the franchisee continuing to operate a similar business in competition with the franchisor within a certain area and for a certain time. Some of these restraints may be unenforceable if they go beyond what is reasonable. The franchisor may be entitled to make a claim of damages against a franchisee who ignores this. Continued use of the franchisor’s intellectual property after expiry of the term or termination of the agreement will be considered an infringement of the franchisor’s intellectual property law and allow the franchisor to seek injunctive remedies to stop the conduct or seek damages for breach. Apart from a claim for breach of the agreement the franchisor can also allege the franchisee is engaging in misleading and deceptive conduct under the ACL Australian Consumer Laws. n

Robert Toth is franchise partner at Marsh & Maher Richmond Bennison Lawyers. He is an accredited business-law specialist, a member of the International Franchise Lawyers Association (IFLA), and a member of the Australian Institute of Company Directors.

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FRANCHISE FRANCHISE BASICS BASICS

MISLEADING CONDUCT

AND HOW TO AVOID IT

Prospective franchisees need to understand the laws that apply to conduct that is fraudulent, misleading or deceptive.

RAYNIA THEODORE Partner, MST Lawyers

any disputes and court proceedings in franchising involve allegations of misrepresentation or misleading or deceptive conduct on the part of a franchisor – specifically, allegations the franchisor misrepresented potential earnings and profitability of a franchise business.

To avoid being misled it is important for prospective franchisees to understand the various laws that apply to conduct that

is fraudulent, misleading or deceptive. Under Australian Consumer Law (ACL), the Competition and Consumer Act 2010 (CCA) prohibits conduct by corporations in trade or commerce that is misleading or deceptive, or is likely to mislead or deceive. A violation of the ACL can expose a franchisor to pecuniary penalties, but also – and more importantly – civil liability to pay compensation to a franchisee affected by the misleading and deceptive conduct. Franchisees may also seek the intervention of the Australian Competition

and Consumer Commission (ACCC) if the misleading or deceptive conduct provisions of the CCA have been breached. Under common law, a right to terminate the franchise agreement may exist where the party has entered into the franchise agreement induced by a false representation. To have a valid claim for misleading or deceptive conduct, a franchisee must prove that: • the conduct was misleading and/or deceptive; • was relied upon by the affected party; and

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FRANCHISE BASICS

•

caused loss. However, if the conduct is a representation or statement about a future matter (such as an income projection), the ACL deems this to be misleading and/or deceptive, unless the franchisor can prove that the representation or statement was based upon reasonable grounds.

as turnover information. If information is shared verbally, the franchisee should make a written note of the information. Financial and legal advice should be sought in relation to the information provided, and in particular as to whether changes should be made to the franchise agreement or sale-of-business agreement to reflect any representations made. Franchisees are often asked by a franchisor to sign a Prior Representations Deed at the same time as the franchise agreement. It is important that any representations made by the franchisor are recorded in this deed. If representations are not recorded in writing at any stage, the parties could well find themselves before a court some day with a “he said, she said” argument.

BELIEVED TRUE With misrepresentation at common law, it is a defence if the person making the statement can show that he or she believed on reasonable grounds that it was true, or that someone else made the statement without reason to know it was not true. The above laws also apply to vendor franchisees who may sell their franchised business to a new franchisee and provide misleading information about the potential earnings and profitability of a franchise business. It is critical prospective franchisees keep copies of all information and documents provided by a franchisor, such as a projected profit-and-loss statement or projected cash flow, or documents provided by a vendor franchisee, such

QUERY METHODOLOGY If an income projection has been given, a prospective franchisee should query the methodology of the projection and request copies of records and supporting documents. Australia’s Franchising Code of Conduct imposes obligations on franchisors who want to provide an income projection to a prospective franchisee.

The franchisor’s disclosure document requires disclosure of: • the facts or assumptions on which the projection or forecast is based • the extent of inquiries and research undertaken by the franchisor and any other compiler of the projection or forecast • the period for which the projection or forecast relates • an explanation of the choice of the period covered by the projection or forecast • whether the projection or forecast includes depreciation, salary for the franchisee and the cost of servicing loans • assumptions about interest and tax. This Item should be examined carefully by the franchisee and the franchisee’s financial advisers. Some franchisors do not give projections but rather historical information (past sales figures), but even this information can be misleading. Even though the information provided might be factually accurate, if it is provided to a franchisee buying a “greenfield” franchise (a franchise in a new location) the franchisee may be led to believe their franchise will perform at the same level.

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Although the franchisees in this case were financially recompensed, they paid a high price in that they lost time and money from the business venture and also became involved in a legal dispute.

ORDERED TO PAY A misleading and deceptive conduct case involved Coverall Cleaning Concepts, a commercial cleaning franchise in Victoria. The ACCC initiated proceedings in 2014, claiming that Coverall engaged in misleading conduct and breached the code in relation to two of its franchisees. The Federal Court found Coverall had made misleading representations to two franchisees about earnings they would achieve, based on their investment in the franchised businesses, and that Coverall had also failed to pay the franchisees for work they had completed, in breach of

the franchise agreements. The judgment was that Coverall engaged in misleading conduct and breached the code by providing earnings information that was not based on reasonable grounds. Coverall was ordered to pay the franchisees compensation of about $22,000 as well as their franchise fees and payment for work completed. Both franchise agreements were declared void. A further judgment in the case handed down in March 2015 dealt with the pecuniary penalties sought by the ACCC against Coverall. The Federal Court imposed pecuniary penalties of

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$250,000 for each of the franchisees affected by Coverallâ&#x20AC;&#x2122;s contraventions. Although the franchisees in this case were financially recompensed, they paid a high price in that they lost time and money from the business venture and also became involved in a legal dispute. Accordingly, it is important franchisees seek appropriate advice. They should never rely on representations regarding the projected income and profitability of a franchise, but undertake their own due diligence and investigations and not hesitate to question a franchisor or vendor franchisee about information provided. n

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2017

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InXpress Franchisee

Winner 2017

Jason

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Hand

2017

R WINNE AWARD

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FRANCHISE BASICS

KEEPING IT

TRANSPARENT If you contribute financially to marketing a franchise brand and its products, there are rules governing how these contributions can be spent. By Australian Competition and Consumer Commission

igning up to a franchise will often require you to contribute financially to the marketing of the brand and its products. Like many arrangements where one party holds the purse strings, concerns can arise about how franchisors deal with marketing fund money. The Franchising Code of Conduct sets out specific rules regarding the administration of marketing funds, and

places limits on how marketing contributions can be spent. These rules aim to ensure franchisors are transparent about the management and use of the franchise system’s marketing fund. If you are a prospective franchisee, the franchisor’s disclosure document will contain information about whether you will be required to contribute to a marketing fund. The franchisor needs to set out in the disclosure document:

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1. Who contributes to the fund 2. How much you must pay, and whether any other franchisees contribute differently 3. Who controls or administers the fund, and the kinds of expenses the fund can be used for 4. How franchisees can inspect the fund’s financial statements 5. The percentage spent on production, advertising and other expenses in the past financial year. Pay close attention to what the

FRANCHISE BASICS

Commonsense goes a long way in determining reasonable and legitimate use of a marketing fund.

disclosure document says about the types of expenses for which marketing fees can be used. Be sure you are okay with fees being spent in the manner proposed.

FRANCHISOR OBLIGATIONS To maintain the fund, franchisors have certain obligations. They must, for example, keep marketing fees in a separate bank account. Under the Franchising Code, marketing fund money can be used only to meet expenses: • described in the disclosure document provided to you, or • that are legitimate marketing or advertising expenses, or • agreed to by most franchisees, or • that represent the reasonable costs of administering and auditing the fund. Commonsense goes a long way in determining reasonable and legitimate use of a marketing fund. A franchisor buying advertising in a newspaper to promote a special on products sold by franchisees is a good example of a legitimate use. The Franchising Code imposes ongoing disclosure obligations on franchisors who run marketing funds. They must prepare a marketing fund financial statement and have it independently audited within four months of the end of their financial year. Copies of both the statement and auditor’s report must be given to franchisees within 30 days.

MUST BE MEANINGFUL Under the code, the marketing fund financial statement must contain sufficient detail to provide meaningful information about who contributes to the fund, and how the franchisor uses the money. While it is ultimately up to franchisors to provide these documents, franchisees should take an active interest in ensuring they receive copies. Though preparing an annual statement is mandatory, the independent audit is not necessary if 75 per cent of franchisees who contribute to the fund vote against undertaking the audit. While the Franchising Code requires the annual statement to contain “meaningful” information, it does not define “meaningful” information. It makes sense, however, to consider what information will be meaningful for the users of the report: the franchisees. Depending on the system, this could involve information about: • sources of income (such as listing the contributions made by franchisees, the franchisor or associates, or supplier rebates) • the nature of marketing or advertising services provided (separately listing expenditure spent on brochures/ flyers, website design, equipment rental, newspaper/magazine advertisements, television spots, photography and so on) • the geographical scope of the marketing (local/national).

Franchisors must deal with marketing fund money in an honest and transparent manner. When it comes to reporting on marketing fund expenditure, they should provide detailed information to give a clear and meaningful picture of income and expenditure.

SOURCE OF TENSION If you are a franchisee or thinking about becoming one, make sure you understand the franchisor’s responsibilities when it comes to marketing fund money. Suspicions and concerns about the use of marketing fund money can be a source of tension between franchisees and franchisors. Where disputes arise, franchisees and franchisors should try to discuss the problem among themselves. If discussion does not resolve the issue, mediation might be a good option. Such services are provided by various state and federal Small Business Commissioners and the Office of Franchise Mediation Advisor. If you are concerned there has been a breach of the Franchising Code, you can also make a report to the ACCC. For more information about marketing funds and your rights and obligations under the Franchising Code, visit www.accc.gov.au/franchising. n

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FRANCHISE BASICS

THE CHAINS

THAT BIND What franchise buyers need to know about supply-chain rules, particularly those that apply within their franchise system.

CORINNE ATTARD Holman Webb Lawyers

ranchise businesses are all about the supply of goods and services to end customers, but there are also supply chains within the franchise system – a franchisee may have goods and services supplied from the franchisor, related companies and third-party “approved” suppliers. If you are assessing a potential franchised business, you need to be aware of how these supply relationships work and what rules apply to the supplies you receive and the supplies you make. Competition law is a complex issue, but here are some simple explanations of common concepts. Particular situations may need more investigation and advice.

Regarding the supply of goods and services from the franchisor, many franchise systems require franchisees to buy goods or services from the franchisor or a related company. There are several reasons for this. Firstly, it allows franchisors to have a separate supply business with its own income stream, or it gives the franchisor company an extra income stream. `

FAIRLY RARE For example, in a coffee franchise your franchisor may supply you with the branded coffee beans and require you to only use those in the business. The franchisor would be reasonably expected to charge a margin on the cost price of

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manufacturing and supplying the beans. This margin might be another cost on top of royalties or other fees payable to the franchisor, and while there are some purely “product-based” franchises where the margin on sales to the franchisee is the franchisor’s only revenue, this is fairly rare. As well as extra revenue, a reason for forcing franchisees to use the franchisor’s product may be that the supply of that product is the essence of the franchise system. The franchise business is identified with the supply of the particular product to customers. Finally, franchisors may prefer to control the supply directly to franchisees as it allows for them to harness greater buying power from their suppliers and to

FRANCHISE BASICS

ensure quality. As well as stock, franchisors commonly supply and require franchisees to accept specified training and business support or advice. The forced supply by franchisors to franchisees of the franchisor’s own goods and services is completely legal even if the supplier is a related company such as a holding company of the franchisor.

THIRD-LINE FORCING Most commonly franchisors require their franchisees to buy goods and services from unrelated suppliers they approve. In the cafe example, this might be the coffee beans but it also might include the coffee cups, the coffee machine or POS software. It could cover business services such as bookkeeping, the payroll or equipment maintenance. Where the franchisor is not supplying the goods and services but requires its franchisees to buy from a third party it is usually known by lawyers as “thirdline forcing”. This concept has had a difficult history in Australian franchising. Originally it was completely prohibited, although many considered it central to the very concept of franchising. How would McDonald’s ensure its Big Mac was the same worldwide if it did not force the franchisees to all buy the same buns, meat patties and other ingredients? Ensuring quality and consistency is the usual reasoning for these requirements. The ACCC has permitted franchisors to impose third-line forcing where it has been formally notified of the proposed conduct. This led to most franchisors submitting multiple formal notifications to the ACCC for this permission. Under these notifications, the franchisors must justify their use of third-line forcing. These notifications can be accessed on the public register on the ACCC website, and by searching the franchisor name you may find considerable information about the suppliers and supply requirements of the system. At the end of last year the law was amended to prohibit only thirdline forcing where it has the purpose or effect of “substantially lessening competition”.

PRECAUTION In many cases, this will mean a notification to the ACCC is no longer needed to impose third-line forcing. In our hypothetical cafe franchise, requiring the franchisees to buy coffee beans from a particular roaster is unlikely to substantially lessen competition in the wholesale

roasted coffee bean market. If the franchisor has any doubt as to the competitive effect it can always just notify the ACCC as was previously the case. In fact, many will still do this as a precaution. Many franchisees question the practice of suppliers paying rebates to franchisors based on the purchases of stock by the franchisees. The law permits this practice provided information is given in the franchise disclosure document (item 10). The name of the supplier and whether the franchisees will benefit from the rebates must be advised, but the actual details of the rebate paid does not have to be disclosed. The rebate may be kept by the franchisor as another form of revenue toward its general business costs, or it may choose to pay it to a marketing fund or allocate it for particular expenditure. Approved suppliers are also often called upon to pay amounts to help fund conferences or promotional or training expenses. Prospective franchisees should query the franchisor about how the rebates work in their system.

TO BE ENCOURAGED Generally in Australia it is illegal for a supplier to require its business customer to sell the supplied goods at a fixed or minimum price. This is known as “resale price maintenance”. You should be able to offer your customers a discount even if the price at which you sell your goods is less than what you paid for them. It is in the interests of Australian consumers that discounting among competitors be encouraged. For the same reason, business competitors are not allowed to conspire to agree to the same prices. This is price fixing and it means the consumer has to pay artificially high prices. Franchisors will usually set maximum prices (not minimum), which is lawful even if they are the supplier or where they compete with their franchisees. It also allows them to advertise a price that is consistent across the system (or at least not lower than that being charged by franchisees). Overall, this is a simple explanation of a complex area of law, but intending franchise buyers should examine the documents provided, seek legal advice and ask questions as to the processes and requirements for obtaining supplies and setting prices. n

Corinne Attard is a partner at Holman Webb Lawyers, Sydney.

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FRANCHISE BASICS

COULD YOUR CONTRACT BE

UNFAIR? Be wary of franchise agreements where there appears to be an imbalance of power between franchisors and franchisees. By Warren Scott, partner, and Cassandra Taylor, lawyer, Mills Oakley

or nearly two years now, the unfair contracts legislation in the Australian Consumer Law and Australian Securities and Investments Commission Act 2001 has applied to standard business-to-business contract forms. Franchise agreements are almost always considered a standard form contract as they are generally granted to a franchisee with a view to consistency across the network. As well as this, there is often a significant imbalance of power between franchisors and franchisees. A term of a franchise agreement is likely to be

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1. A TERM THAT ALLOWS THE FRANCHISOR TO UNILATERALLY VARY THE CONTRACT Probably the most important terms to watch out for are those that allow the franchisor to amend the contract without the franchisee’s consent. Allowing the franchisor to have the unilateral ability to amend terms gives them an unreasonable amount of power in the relationship. You should particularly be wary if the franchisor can unilaterally amend terms that are detrimental to the franchisee, such as the ability to increase fees or to assign the contract at any time.

2. A TERM THAT ALLOWS THE OPERATIONS MANUAL TO BE AMENDED BY THE FRANCHISOR The ACCC has determined that where a franchise agreement requires the franchisee to comply with the operations manual, it will form part of the franchise agreement. Therefore, terms that simply allow the franchisor to amend the operations manual independently are likely be considered unfair. In particular, franchisees should look out for broad terms that allow the franchisor to amend or update the operations manual at their discretion, at any time and with no requirement to give notice to the franchisee. Of course, a franchisor should be able to make some changes to an operations manual over the course of a franchise agreement, however, such

FRANCHISE BASICS

considered unfair if it: • would cause a significant imbalance between the rights and obligations of the franchisor and the franchisee; • is not reasonably necessary to protect the legitimate interests of the franchisor; AND • it would cause detriment to the franchisee if the franchisor was to apply or rely on that term. It is important to note that a franchise agreement will be considered as a whole and that the fairness of a particular term will be determined in accordance with the overall benefits and disadvantages of the agreement. Accordingly, there are specific examples to look out for in a franchise agreement and to help prospective franchisees...

amendments should be reasonable and necessary to protect the legitimate business interests of the franchisor.

3. A TERM THAT LETS THE FRANCHISOR (BUT NOT THE FRANCHISEE) TERMINATE THE CONTRACT

You should also be on the lookout for terms that impose penalties for trivial breaches of a contract or that threaten sanctions over and above what can be expected at law

Franchisees often have to make significant investment into establishing and running a franchise, which may result in considerable financial detriment where franchise agreements are terminated. Accordingly, a franchisor should not be able to unilaterally terminate the franchise agreement unless the franchisee commits a genuine, material breach of the contract. A term is especially likely to be considered unfair if it offers no compensation for early termination by the franchisor or if the term does not give the franchisee a chance to remedy a breach.

amount of notice whether to renew the franchise agreement or not.

4. A TERM THAT PENALISES THE FRANCHISEE FOR BREACH OR TERMINATION OF THE CONTRACT

6. EXCLUSION CLAUSES OR TERMS THAT LET THE FRANCHISOR AVOID OR LIMIT PERFORMANCE AND/OR LIABILITY

Clauses regarding liquidated damages may be considered unfair if they penalise the franchisee for a breach instead of reasonably compensating the franchisor. For example, if a franchisee fails to attend a compulsory training session or managers’ meeting, the compensation paid by the franchisee needs to be a genuine pre-estimate of the loss the franchisor would face as a result of the failure to attend. You should also be on the lookout for terms that impose penalties for trivial breaches of a contract or that threaten sanctions over and above what can be expected at law as these are likely to be considered unfair.

Exclusion or limitation clauses will often be considered unfair as they let the franchisor avoid or limit performance of their obligations or duties under the contract. Such terms will be less likely to be considered unfair if the exclusion clauses require the franchisor to give adequate notice to the franchisee, or compensation is offered to the franchisee where a loss is incurred. What should you do if you think your contract is not fair? If you think a term in your franchise agreement is unfair, the first step is asking to have it removed by the franchisor. However, often franchisors allow little to no negotiation of a franchise agreement. You can also make a complaint to the ACCC, the regulatory body responsible for determining unfair contract terms. You should always seek professional advice before entering into a franchise agreement. Your legal advisers are best placed to consider whether a franchise agreement will be considered unfair or not, and how to rectify any unfairness that may exist. n

5. AUTOMATIC RENEWAL OR ROLL-OVER CLAUSES Clauses that automatically renew or roll over the franchise agreement without needing the franchisee’s express consent are likely to be considered unfair. Once the contract rolls over, the franchisee will often be liable to pay a hefty fee as a penalty for early termination. You should also be wary of clauses that require you to give unreasonable

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FRANCHISE BASICS

HOW TO AVOID

DISPUTES Just as in any business, franchises can be subject to disputes and disagreements, but there are clearly defined pathways to reach an answer.

TAMRA SEATON Director, MDS Legal

isputes and disagreements are all part and parcel of franchising. The latest survey from Griffith Universityâ&#x20AC;&#x2122;s Centre for Franchising Excellence shows that a quarter of franchisors have been involved in a dispute over the past 12 months with a median of two of their franchisees. These disputes involved engaging an external advisor, however many more

disputes and disagreements likely did not involve engaging a third party. How should those in the franchise industry manage disagreements and avoid disputes? 1. Communication As is the case with any relationship, communication is key. In franchising relationships, it is critical that franchisors and franchisees communicate effectively with each other to ensure disagreements and disputes either donâ&#x20AC;&#x2122;t

happen or are resolved quickly. Regular contact from all levels of franchisor management ensures the lines of communication are open between the parties and that any issues can be discussed and addressed at the earliest opportunity. This should happen throughout the term of the franchise. Communication before the franchise starts is equally important. A franchisor must ensure that it clearly communicates the franchise opportunity to a

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FRANCHISE BASICS

prospective franchisee and not make misleading statements. Likewise, prospective franchisees must be truthful in their franchise applications so the franchisor can properly assess their suitability for the franchise. Franchisors should be accessible and respond to franchisees’ requests promptly and professionally. Franchisees should similarly respond to franchisors’ requests. All communications by all parties should be respectful and courteous. Wherever possible, franchisors should be collaborative and seek input from franchisees about proposed changes or other actions that could impact their business. Franchisors should ensure they give franchisees enough notice of proposed changes or events (especially if costs are involved) and also provide a sound business case in support of the proposed change or event. Communication among franchisees can also help manage disagreements and resolve disputes. For example, a franchisee may be able to resolve their issue by seeking advice from other franchisees (or their franchisee advisory

council, if there is one). 2. Professional advice Often disagreements and disputes can be avoided or resolved if the parties seek professional advice from external advisors. For example, if there is a disagreement or dispute about the interpretation of a clause of the franchise agreement, a lawyer can often quickly resolve the dispute by clarifying the correct interpretation of the clause. Lawyers can also represent parties in a dispute by corresponding with the other party. Franchisees should also obtain professional advice from experienced legal, accounting and business advisors before entering into a franchise agreement, to ensure they fully understand all the rights and obligations under the franchise agreement and what to expect in regard to running a franchise. The 2008 Federal Government Franchising Inquiry noted that conflicts in franchising are often caused by franchisees’ expectations being mismatched. That is, if a franchisee has not sought professional advice before entering into a franchise agreement, there is a gap

If franchisors and franchisees collaborate to ensure they are both complying with their respective obligations, the number of disputes will be significantly reduced.

between what that franchisee expects owning a franchise to be and the reality. This can often lead to a dispute between the franchisor and franchisee. 3. Research and due diligence Franchisees can also find their expectations about a franchise are mismatched if they have not done adequate research

• • •

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and due diligence before acquiring a franchise. As well as obtaining professional advice from legal, accounting and business advisors, prospective franchisees should also ensure they do their own research and due diligence. This includes (but is not limited to) carefully reading the franchisor’s disclosure document and contacting current and former franchisees to ask them about their experiences with their franchises. It also includes carefully considering any proposed site and/or territory for the business and independently assessing whether it is suitable and/or adequate for the business. Understanding the financial model for the business is also critical. Franchisors must also ensure the prospective franchisee has the requisite skills and attributes essential for the franchise. Research is also needed in respect of any disagreement or dispute that arises during a franchise relationship. That is, both parties should ensure they have researched their position and are sure their view is objectively fair and reasonable.

4. Compliance Many disagreements and disputes arise because parties are not complying with their obligations. This applies to obligations in the franchise agreement and/or legal obligations. Griffith University’s Centre for Franchising Excellence latest survey quotes franchisors as saying that 63 per cent of disputes are associated with system compliance issues. Disputes also often arise because franchisors have not complied with their obligations and/or engaged in unlawful conduct such as misleading, deceptive or unconscionable conduct. Disagreements and disputes can be avoided by parties complying with their obligations. In the case of franchisees, this means following the system and seeking advice and help from the franchisor if they think there is a reason not to comply. In the case of franchisors, this means providing a system that enables franchisees to run a profitable business and supporting their franchisees to do so. If franchisors and franchisees collaborate to ensure they are both complying with their respective obligations, the number of disputes will be significantly reduced.

. 5. The code’s steps for dispute resolution The Franchising Code of Conduct requires that franchise agreements include a dispute resolution procedure that complies with the code. The first step in the dispute resolution procedure specified in the code is that the complainant must advise the other party in writing: • the nature of the dispute; • what outcome the complainant wants; and • what action the complainant thinks will resolve the dispute This is often referred to as a notice of dispute. The next step is that the parties must then try to agree on how to resolve the dispute. If the parties cannot agree within three weeks, the next step is that either party may refer the matter to a mediator for mediation. At the mediation, the parties must try to resolve the dispute. A party will be in breach if they attend mediation but do not try to contribute answers. n

Tamra is a business and commercial lawyer who specialises in franchising, competition and consumer andintellectual property law.

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FRANCHISE BASICS

RESTRAIN YOURSELF What franchise buyers need to know about restraint-of-trade clauses in (and after leaving) a franchise.

JONATHAN MUNCEY Lawyer, LegalVision

uying a franchise is a big decision, and reviewing a 50- to 100-page franchise agreement can be a daunting task. Consequently, franchisees often overlook how a restraint-of-trade clause will impact their business both during and after the franchise term. The way these clauses work in practice could impact your commercial plans.

A restraint-of-trade clause in a franchise agreement permits the franchisor to stop you, as the franchisee, from either: 1. competing with the franchisor in the same industry, called a non-compete clause; or 2. poaching the franchisorâ&#x20AC;&#x2122;s employees, clients, prospective clients or other franchisees (or their employees, clients or prospective clients), called a non-solicitation clause. A franchisor can enforce a restraint of

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trade against you only if they can show that the restraint is reasonably necessary to protect their legitimate business interests. This takes into consideration factors such as industry, location and time. The restraint clause will generally apply to a specific geographic area (within a 20km radius of your store, for example) and period of time (such as 12 months after the termination or expiry of the agreement). Courts have generally recognised that franchisors can enforce some kind of restraint because they have a legitimate business interest to protect: their client base. This is because, in creating a franchise system, a franchisor has developed goodwill.

COURT OPTIONS Often, the restraint will be drafted as a cascading clause, with several alternatives in terms of time and geography. Do not assume the court will enforce the broadest restraint. The purpose of a cascading clause is to provide the court with options. For example, a 50km restraint for a cafe franchise in a CBD location is unlikely to be reasonably necessary to protect the franchisor’s interests. However, a 2km restraint might be. Restraints can also apply during the term of the franchise agreement. The court is likely to enforce such restraints because you are receiving the benefit of the franchise’s image and systems. Accordingly, the franchisor has a legitimate business interest. You should consider whether these restraints will interfere with your commercial plans, especially if you already have, or intend to open, another business, or even another franchise at the same time. If this is the case, you should negotiate with the franchisor to include a special condition that allows you to be involved in the other business, even though it may compete. It is extremely risky to not disclose the other business and hope the franchisor will be

okay with the arrangement if they find out. It is also common practice for a franchise agreement to make restraints binding on guarantors, directors or shareholders of your company. You should revisit the business structure through which you plan to enter into the franchise agreement to ensure you are clear who will be bound by the restraints.

YOU ARE RESPONSIBLE It is also common for the franchisor to require you to issue employment agreements that replicate the restraints contained in your franchise agreement. Ultimately, you are responsible if your employees breach the restraints. It is important you understand that your franchisor can enforce restraint clauses against you even after you exit the franchise. Of course, whether the franchisor is successful will depend on how reasonable the restraint is and if the franchisor has a legitimate business interest. Depending on your industry, restraints can last for up to two years (sometimes even longer) after your franchise agreement ends. They can also cover a large geographical area. For example, an e-commerce franchisor could seek to impose an Australia-wide restraint because they want to sell their goods (and therefore protect their business interests) nationally. This means that before you sign your franchise agreement, you should think about your future commercial plans and what life might look like after you exit the franchise system. If you aren’t looking to invest long term in the franchise, you could try to negotiate less stringent restraints for when you exit or terminate the agreement. It is possible to enter into a post-exit settlement agreement with the franchisor to remove, or limit, the effect of the restraints, but it is always better to negotiate suitable terms from the outset.

You should also know that if you sell the business, the buyer will be interested in imposing restraints on you, independent of any restraints the franchisor imposes.

INJUNCTION POSSIBLE If the court finds that a restraint is reasonable, and therefore enforceable, and you have breached that restraint, it is possible for it to order an injunction against you. An injunction will stop you from continuing to do something such as running a competing business) and can be granted on an urgent temporary (“interlocutory”) basis. This is much more likely to happen if you, for example, try to solicit clients as soon as you leave the franchise. The court can also order that you pay damages to the franchisor. The court will calculate these damages based on the lost income or profit the franchisor would otherwise have likely received if you had not breached the restraint. Remember, as a franchise buyer you should be sure to carefully consider the effect of any restraint of trade clauses before signing a franchise agreement. You should assess the extent of the restraints within the context of your current and future commercial plans and, if necessary, negotiate less-stringent restraints to accommodate those plans. Approaching your review of the franchise agreement with your commercial goals front of mind will ensure the document you sign is one you thoroughly understand and feel comfortable with. n

Jonathan Muncey is a franchise lawyer at LegalVision specialising in advising both franchisors and franchisees on transactions, contracts, and a range of related legal issues.

It is possible to enter into a post-exit settlement agreement with the franchisor to remove, or limit, the effect of the restraints, but it is always better to negotiate suitable terms from the outset.

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FRANCHISE BASICS

LEAVING ON YOUR TERMS

If you are moving on from a franchise, be sure to look carefully at your options and obligations.

ou have decided to exit your franchised business before the end of its term and move on to the next exciting phase of your life. What are your options and what should you be aware of?

FIrst of all, consider the options... • Sell the franchise • Negotiate a termination with the franchisor • Walk out Check your franchise agreement to see if there is a requirement that you must offer the franchise back to the franchisor first. This is referred to as a “first right of

CHRISTINE LAU Lawyer, LegalVision

refusal” granted to the franchisor. Most franchisors have a first right of refusal to buy your franchise, and procedures vary. Essentially, this right involves: • OFFER: you must first obtain an offer from a buyer (to show that it is a genuine offer) and then submit this offer to the franchisor, OR you must make an offer first to the franchisor; • ACCEPTANCE: the franchisor will then have a period of time within which to elect to buy your franchise on the terms and conditions set out in the offer; • FREE TO SELL: if the franchisor decides not to exercise its rights within the

time frame set out in the franchise agreement, then you will be free to sell to a third party. There are three practical steps to ensure a smooth transition... 1. The length of time the franchisor has to consider your offer can range from 30 to 120 days. What you can do: where possible, ensure your purchaser is locked into a Contract of Sale of Business subject to a condition that the franchisor does not exercise its right of first refusal. This way, you will be able to proceed with the sale to your purchaser as soon as the franchisor turns down its right to

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To claim that all mattresses are the same is definitely a stretch. When each of us have different sleeping positions, varied weights and builds, potentially different sleeping and health issues, the idea that one mattress can be designed to fit everyone doesn’t make sense. How could 25 cm of foam feel the same with different weights and pressures applied?

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FRANCHISE BASICS

buy back the franchise. Note here also that most franchise agreements provide a finite window for you to sell, and if you are unable to sell your franchise during this period, you need to go through the process of offering it to the franchisor before you can go to market again. 2. Franchisor’s consent: Once you are cleared to sell to third parties, they still need to be approved by the franchisor, to have satisfactorily completed all training needed and to be proven respectable, responsible, solvent and capable of running the franchise. What you can do: Request financial and business references from your buyer when they sign the contract of sale, and have these ready for submission to the franchisor as soon as the franchisor declines the buy-back offer. 3. Know your exit obligations: To the franchisor who will look to you for the payment of: • A transfer fee (this is set out in your franchise agreement and can be expressed as a fixed amount or a percentage of the sale price) • All monies owing by you under the franchise agreement • A performance bond (if applicable)

•

– some franchisors require a certain amount of money to be deposited with them to cover your liabilities, which may only be revealed or discovered after the transfer. Such monies will be refunded to you in manners set out in the franchise agreement. To the landlord and where you occupy under a licence from the franchisor, the franchisor: Before changeover, landlords and franchisors (as the case may be) will carry out an inspection of the premises to ensure they are in a satisfactory condition for the incoming franchisee; You may be required to carry out refurbishment works and clean the premises. Ensure you factor this cost into your exit plan.

NEGOTIATE AN EARLY EXIT WITH THE FRANCHISOR This involves negotiations with the franchisor to try to find a way to reduce your exposure to damages and compensation while keeping the value of the franchise

business until a new franchisee comes along. Open negotiations with the franchisor are always encouraged as it is in the interest of both parties that the goodwill of the franchise business is maintained for the next owner. In some instances, the franchisor may offer to buy you out or help with the management of the franchise (at a fee) until you find a buyer.

WALK OUT (ABANDONMENT) A walkout, or abandonment, is not a recommended exit choice as you will be in breach of the franchise agreement. The franchisor will have the rights to pursue you for all losses and expenses that it will incur as a result of your abandonment of the franchise. With a usual requirement that directors of corporate franchisees provide personal guarantees for the obligation of the franchisee under the franchise agreement, your personal assets will be exposed to satisfy such claims from the franchisor. There is no way of knowing the extent of the exposure to damages this will entail.

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OTHER EXIT CONSIDERATIONS Other exit considerations include a premises lease. If the lease is in your name: • Check to see if there is a clause in the franchise agreement requiring you to assign the lease to the franchisor upon termination of the franchise agreement. • In any event, before you vacate the premises, you must reinstate the premises to their condition as at the time the franchise/lease was signed. • If you are retaining the premises and just getting out of the franchise (no compulsory transfer to franchisor), you will need to debrand the premises so they do not resemble the franchised business. • Both debranding and defitting (if you vacate) can be costly. • You must make good any damage to the premises caused by you in the defitting or debranding. • Note here that some leases and franchise agreements give the landlord or the franchisor (as the case may be) a right to require fitouts to be left at the

Open negotiations with the franchisor are always encouraged as it is in the interest of both parties that the goodwill of the franchise business is maintained for the next owner.

premises. In this case you may be able to save on defit and reinstatement costs.

NOW YOU ARE OUT, ARE THERE ONGOING OBLIGATIONS? Restraint of trade You will be restrained for a period of time after the termination of your franchise from working in competition with the franchisor. This usually means you cannot be “involved in” a similar business as your previous business, solicit custom from customers of the franchisor or poach

staff from the franchisor (to name some common restrictions). Note here that “involved in” usually extends to your involvement as a director, manager, agent, partner, shareholder or employee of another entity. This effectively means you cannot work in a similar business for the specified time. Confidentiality You must continue to keep all information of the franchisor confidential. n Christine Lau has worked in the legal industry for more than 25 years, advising entrepreneurs and business owners.

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FRANCHISE BASICS

SUPPORTING

FRANCHISEES Help is just a few keystrokes away with the new Fair Work Ombudsman’s Small-Business Online Showcase

s a franchisee, you need to be aware of workplace laws and your obligations as an employer under the Fair Work Act. The Fair Work Ombudsman (FWO) appreciates that many franchisees are small or are a family business, and that navigating Australia’s workplace relations system can be daunting for both new and potential franchise buyers. Here are three things that might help you to do the right thing by both your employees and your business... 1. DETERMINE YOUR LABOUR COSTS If you are looking to buy a franchise, your due diligence and financial planning should include a calculation of your potential labour costs. Work out what you think your staffing roster will look like each week – how many staff will you need and what work will they do? Make sure your modelling does not rely on yourself or your immediate family working unrealistic hours in the business. Use this information to calculate how much you will need to pay the employees of your business. To do this, make sure you know and understand what award or agreement will apply to your business and the classification levels that apply to employees. Check all the entitlements set out in the award or agreement such as overtime or penalty rates. 2. KEEP EMPLOYEE RECORDS All employers must keep certain employment records. Good record-keeping can also help prevent and resolve issues with your employees and help you with your budgeting and forecasting. The maximum penalties for failing to keep employee records or issue payslips have doubled to $63,000 for a company and $12,600 for an individual. The maximum penalty for knowingly making or keeping false or misleading employee records has tripled. 3. CHECK YOUR OBLIGATIONS AND STAY INFORMED If you employ staff you must remain informed about your ongoing obligations

to your employees. Become familiar with the awards or agreements that apply in your business, ensure you are meeting the minimum standard of the National Employment Standards and implement measures to ensure you are aware of any changes. While the FWO takes a proportionate and fair approach to enforcement action, it also expects employers to have checked the rules that apply to them. You can talk to your franchisor, an advisor or use FWO resources.

The Showcase also includes: Short instructional videos that show how to use the tools and resources to meet your obligations as an employer, including the pay calculator and the Online Learning Centre. An interactive small-business checklist so small-business owners can check how they rate against critical business requirements. Direct links to sign up to My Account to make it easier for small business to stay up to date with changes to workplace regulations.

SMALL BUSINESS SHOWCASE The FWO knows that small business often lack the resources and ready access to professional help that can make it easier to ensure they are meeting their workplace obligations. With this in mind, it has just launched the Small Business Showcase, a virtual hub that provides a wealth of resources for small-business owners seeking information about their workplace obligations. The Showcase is a great opportunity for you to brush up on your workplace relations knowledge, download practical resources and find out more about the help FWO can provide. It consolidates all the information and resources a small business needs in one place. The Showcase contains information on topics that are most relevant to small-business owners, such as hiring, paying and managing employees, handling employee requests and keeping accurate records.

Opinion polls that run throughout the Showcase to provide small-business owners the chance to share insights and highlight the key workplace issues. We know you want your business to thrive. We do, too. Participation in the Showcase will help build positive workplace cultures within your business. You can access the Small Business Showcase at www.fairwork.gov.au/smallbizshowcase. n

The Fair Work Ombudsman (FWO) is an independent statutory office responsible for promoting harmonious, productive and co-operative workplace relations, and for ensuring compliance with Australia’s workplace laws. The FWO’s free services provide employers and employees with information about fair work practices, rights and obligations.

The Showcase is a great opportunity for you to brush up on your workplace relations knowledge, download practical resources and find out more about the help FWO can provide. It consolidates all the information and resources a small business needs in one place.

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NFC18

MELBOURNE 14-16 OCTOBER 2018 Discover the ingredients to your success and unlock your potential This year, the National Franchise Convention is putting the focus on the most important ingredients for franchising success: your people. Because at the core of any successful franchise are happy and profitable franchisees, satisfied and engaged customers, enthusiastic innovative leadership team. To find out how you can be a part of NFC18 as a sponsor or exhibitor, contact Peter White on 03 9508 0811 or peter.white@franchise.org.au

For more information and to register, visit nationalfranchiseconvention.org.au

FRANCHISE BASICS

REASONS TO GET

LEGAL

Legal advice is fundamental to a good franchise purchase.

he challenges of franchising can be faced with good preparation. And that all starts with understanding what the business will require from you as a franchisee, and your rights and obligations.

1. A FRANCHISE AGREEMENT IS A LEGAL CONTRACT A franchise agreement is a business contract that binds both parties to certain obligations. Before signing a franchise agreement it’s crucial to undertake research or due diligence so you can make an informed decision about the business you are investing in. A franchise is no different from any other business purchase in as much as you are bound by the contractual terms.

2. THE DOCUMENTS HOLD THE KEY TO YOUR BUSINESS Franchisees will get an information statement, disclosure document, franchise agreement, perhaps a lease agreement if there’s a tenancy involved...while these can be heavy reading, it makes sense to familiarise yourself with the details of these legal documents so there are no surprises.

3. LAWYERS CAN SHED LIGHT ON THE DETAILS There’s no substitute for taking legal advice on your franchise purchase. Once you’ve read the documents you may have concerns or need clarification about some of the details. A dedicated franchise lawyer understands the terms and the consequences of certain clauses in a way that your local solicitor will not, and is familiar with previous cases and disputes.

4. SHORTCUTS CAN BE EXPENSIVE It costs to invest in a lawyer to read and advise on your franchise documents at a time when you’re counting every cent, but it can be considerably more expensive if it all goes wrong once you’re in business.

5. IN CASE OF A DISPUTE There could be many causes for a franchise purchase to turn sour and end up in a legal stoush but common triggers include miscommunication and misunderstanding, claims of misrepresentation, and complaints over the supply of goods. Some of these might be mitigated or avoided with early legal intervention or clarification - before signing the franchise agreement. n

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FRANCHISE BASICS

LEARNING THE

BUZZWORDS

Like any area of endeavour, the franchise sector has its own particular terminology that new franchisees need to understand.

ACCREDITATION: a banking

loan scheme that provides franchisees with some of the finance they may need when buying the franchise. It is based on a bankâ&#x20AC;&#x2122;s understanding of the brand and its business methods. While this funding option is popular, it is not common across the sector.

ASSIGNMENT: when a franchisee sells their business to a new franchisee, it is referred to as assignment. It is common for the franchisor to retain the right to interview and accept or reject any proposed buyer. The franchisor may also have the right to buy back the franchise. The vendor franchisee can set the value of the franchise. BUSINESS-FORMAT FRANCHISE: a business

model with four criteria â&#x20AC;&#x201C; a franchise agreement, a trademark or symbol, payment of a fee, and a system or marketing plan. A franchise business falls under the jurisdiction of the Franchising Code of Conduct and franchisors have certain obligations to fulfil.

COMPANY-OWNED UNITS:

locations run by the franchisor rather than a franchisee. CONVERSION: an existing

independent business that joins a franchise network. DISCLOSURE DOCUMENT: this

document provides information about a franchise system, the franchisor and the franchised business. It must be supplied to a prospective franchisee in accordance with the Franchising Code of Conduct. DUE DILIGENCE: the process of conducting in-depth research on a business before purchase. FIELD MANAGER: an individual tasked with managing a group of franchisees, with a focus on relationships, brand alignment, and sales and profit. This role might also be called business development manager or area manager. FIXED SERVICE FEE:

franchisees may pay their franchisor a weekly or monthly fixed-amount payment, or a service fee calculated as a percentage of turnover

(above a minimum payment). FRANCHISE AGREEMENT:

this is the legally binding business between the franchisor and the franchisee. FRANCHISEE: an individual

who runs a franchised business using the intellectual property of the franchisor.

FRANCHISEE ADVISORY COUNCIL: a structure for

franchisors to seek and receive feedback from their franchisees. Participating franchisees may be elected or chosen by the franchisor.

FRANCHISE FEE: an up-front cost paid to the franchisor. It covers the use of the brand name and business system. FRANCHISING CODE OF CONDUCT: a mandatory

code that governs franchising in Australia. It is designed to guide the behaviour of franchisors and provide certain protections to franchisees. It is administered through the Australian Competition and Consumer Commission (ACCC). FRANCHISE TERM: this

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is the period granted for trading under the franchise agreement. Most franchise terms are on a renewable three or five year term but they can vary from one year to perpetuity. Franchisors often refer to a term with two options to renew as 5 + 5 + 5, for instance. FRANCHISOR: the franchisor

grants permission to the franchisee to conduct business using its intellectual property, brand name, working methods and marketing.

LOCAL AREA MARKETING:

often abbreviated to LAM, this is marketing the franchisee is responsible in their territory or designated marketing area. MARKETING & ADVERTISING LEVY: a regular flat or

percentage-based-fee paid into a centralised advertising or marketing fund.

brand new site.

MASTER FRANCHISEE: a franchisee who is responsible for a large territory, appointing other franchisees within the territory with direct agreements, and ensuring that the franchisor’s systems and methods are applied.

GOODWILL: this is a

MULTI-UNIT FRANCHISEE:

GREENFIELD SITE: a

calculation of the value of trade in an existing business that is likely to continue and benefit the incoming business owner.

INFORMATION STATEMENT:

this is a two-page standard document that outlines what franchise buyers need to know about franchising.

INTELLECTUAL PROPERTY:

this term refers to the trademarks, copyright, know-how, trade secrets, designs, patents, branding, operational manuals, methodologies and/ or recipes franchisors license to franchisees.

LICENSE: the right to use

a franchisee who has been granted the rights to run more than one franchise outlet. Not every franchise system allows for franchisees to be multiple operators. OPERATIONS MANUAL:

the franchisee’s guide to operating the franchise business. The franchisor may produce several manuals for different areas of the business, and should regularly update the information. REGIONAL FRANCHISEE:

similar to master franchisees, regional franchisees operate a large territory and appoints franchisees within the area.

intellectual property in business, such as sales rights in a territory, manufacturing technology or access to a trademark. A license is not the same as a franchise.

RENEWAL: once a franchise

term nears its end, franchisees may or may not be given a right to renew their agreement for a further term. This process is bound by the Franchising Code of Conduct. There is no

automatic right of renewal. ROYALTY: fee paid by the

franchisee to the franchisor for the ongoing use of the brand and systems, management and technical support. It may be a flat fee or a percentage of sales or profit.

TERMINATION: the ending of the franchise contract between franchisee and franchisor, usually for breach of contract. Some franchise agreements allow the franchisor to terminate the agreement even if the franchisee has not breached the agreement. TERRITORY: is the area assigned

to franchisees for their business. Territories can be exclusive or nonexclusive.

TOTAL INVESTMENT: the total

amount of money a franchisee requires to set up in business. This includes the franchise fee, working capital and any equipment purchases required.

TURNKEY FRANCHISE: a

franchise package that includes all the equipment, information and systems required for a franchisee to open up the business and start trading.

WORKING CAPITAL: the funds required by any business to pay its costs before it starts making a profit, and as ongoing cash flow to counter any dips in business activity.

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FRANCHISE BASICS

BUYING A FRANCHISE:

THE PROCESS It can take three months or 18 months to find and open up a franchise. This is the typical path that will take you to franchise ownership.

MAKE AN INQUIRY

CONDUCT DUE DILIGENCE

Fill out an inquiry form or phone the recruiter for further details of the franchise opportunity that appeals.

This is a crucial stage, so take your time and be thorough in your research. You will need to sign a document confirming that you have received independent advice, or that you have decided not to do so. Obtaining expert opinion from franchiseexperienced professionals can save you money in the long term, so it is a worthwhile investment.

FRANCHISOR RESPONDS If you have emailed an inquiry, typically a franchisor will send out an information pack to you, and follow this up with a phone call.

FIND OUT MORE Fill out an inquiry form or phone the recruiter for further details of the franchise opportunity that appeals.

CONFIDENTIALITY The franchisor will ask you to sign a confidentiality agreement before sharing sensitive information with you. Expect a copy of the disclosure document, draft franchise agreement and the Franchising Code of Conduct, plus an information statement. Your franchisor might also send more commercially sensitive information to help you consider the viability of the franchise opportunity and build your business plan.

FIRST MEETING This is the time you will get a much clearer idea of the business, and the franchise team you will be working with.

PROVE YOURSELF You will need to create a business plan and show to the franchisor you have the capacity to take ownership of and drive this particular franchise unit. A follow-up meeting will enable you to ask further questions following on from your due diligence, and for the franchisor to further quiz you.

OTHER STEPS Some brands can include a number of interviews, try-before-you-buy work experience or a panel review. The franchisor might ask you to complete a profiling assessment.

DONâ&#x20AC;&#x2122;T RUSH IT The process to get from inquiry to sign-up could be a matter of weeks, or it could be months. Buying a franchise is a significant, long-term commitment. It is important not to rush the process.

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THE

INFLUENCERS Who will be driving the business that you invest your hard-earned dollars into?

hat influence will the franchise team have over your future? Here we look at key roles in a larger franchise business that will be shaping the direction and operation of the network. Not every business will include each role and in a small franchise set-up the franchisor will be wearing several, or all, of these hats. CHIEF EXECUTIVE OFFICER/ MANAGING DIRECTOR: : The top ranking executive in a company, the CEO is focused on directing high level company strategy and growth. In a smaller company, the CEO’s role includes operational business decisions and they may be much more hands-on on a daily basis. In a larger business the CEO may have a position on the company’s board, and act as the link between corporate operations and the board of directors. The founder of a franchise typically takes a CEO role. CHIEF OPERATING OFFICER/ OPERATIONS MANAGER: A COO/ operations manager essentially works with the CEO to implement the strategy, making the decisions on how to achieve the goals set out. The role is typically responsible for daily operations, production, research and development, creating operational policies, and HR. The operations manager can influence the franchise business performance through resource allocation, cost reduction, improved efficiencies, the introduction of high quality products and services. In a franchise where the founder is the CEO, the COO may be the more experienced executive.

manages its finances, investments, and capital structure and is influential in the company’s long term success. Any funding for marketing or development initiatives will be approved by the CFO. The CFO manages the finance and accounting divisions and takes responsibility for the accuracy and timeliness of the company’s financial reports. CHIEF INFORMATION OFFICER : A CIO has responsibility for the implementation, management and efficacy of information and computer technologies, vital in today’s digital world. It’s the CIO who will investigate the benefits of any proposed technological change, and then implement the system - a website or inventory software, for instance. The role is increasingly strategic and directed to gaining and maintaining the competitive advantage of a business. CHIEF MARKETING OFFICER: The CMO is essentially charged with increasing revenue through increased sales using market research, product marketing, pricing, marketing communications, advertising and public relations. Responsible for directing the planning, development and implementation of the franchisor’s marketing and advertising campaigns, ensuring a common message across multiple channels and platforms, the CMO reports directly to the CEO. GENERAL MANAGER: A general manager has overall profit and loss responsibility for the company, and usually oversees sales, marketing and daily business operations. The responsibilities of the role may be incorporated into a CEO role.

CHIEF FINANCIAL OFFICER: This senior executive reports to the CEO but plays a strategic role in the way the company

FRANCHISE RECRUITMENT MANAGER: The franchise recruitment manager is responsible for attracting franchise buyer enquiries and for the recruitment

selection process, increasingly working with managers from other divisions and the CEO or MD in the final selection. The franchise recruitment manager needs to meet internal recruitment targets and ensure franchisees are a match for the franchise brand. BUSINESS DEVELOPMENT MANAGER/ FIELD MANAGER: Variously called a BDM, regional manager, field or area manager, this role is the interface between the franchisee and franchisor. Responsibilities include helping franchisees achieve their business goals, ensuring brand compliance across the network, communicating brand direction and strategy to franchisees. TRAINER: The person or team who will set up a franchisee to run the business. Responsibility for training may fall under operations or general management. Training may involve technical skills, customer service, business basics, and operational procedures. The trainer may train franchisee staff. PR AND COMMUNICATIONS: How the brand is presented in the media, how the brand engages with social media, how brand damage is mitigated... all these are influenced by the team that handles PR and corporate communications. This may be an internal team or an external agency. SUPPORT TEAM: The individual employees at head office who manage, monitor and deal with queries, requests and complaints from franchisees. FRANCHISE ADVISORY COUNCILLOR: A franchisee member of the Franchise Advisory Council which is typically involved in providing frontline feedback from franchisees to the franchisor, and in assessing and trialling new initiatives.

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FRANCHISE BASICS

THINGS TO CHECK BEFORE YOU INVEST

Get set prior to your purchase with our easy checklist. Just tick off the must-do items.

Are you confident in the franchisor?

Have you worked out your operating costs?

What are the franchisee and franchisor obligations?

Have you seen a disclosure document?

Do you know the term of the agreement?

What training is available and who pays for it?

Is the franchisor compliant with the Franchising Code of Conduct?

Do you need a permit or license to operate the business?

Who owns the intellectual property and what is licensed to the franchisee?

Have you run a credit check on the franchisor?

Is the business operating from fixed or mobile premises?

What marketing will the franchisor implement?

Does the franchisor have a history of litigation? Are there any cases coming up?

Have you checked the lease? Is there a right to renew?

What marketing is your responsibility?

If you are buying an existing business, have you seen current financial statements (balance sheets, profit and loss, tax returns)?

Does the length of the lease match the franchise term?

What is the dispute resolution process?

Have you evaluated the financial returns?

What are the store fit-out costs?

Do you know what it is like to be a franchisee?

If you are buying a greenfield (brand new) site, do you have sales and profit examples and know the method behind the calculations?

Are you working within a territory? If so is the area exclusive?

Do you have an exit plan?

Do you know all the expenses franchisees are required to pay?

Are you restricted in your product purchase?

Have you spoken to former and current franchisees about the business?

What royalties are there and how are they calculated?

Are you required to reach a minimum performance level?

What restrictions are there on the franchisee and guarantor operating a similar business?

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RESOURCES AUSTRALIAN COMPETITION AND CONSUMER COMMISSION (ACCC)

Users also have access to franchise consultants and advisors who can assist prospective or existing franchisees and franchisors with legal, financial educational and training, IT and other services.

The ACCC is an independent Commonwealth statutory authority which regulates the mandatory Franchising Code of Conduct (Code) and can investigate alleged breaches of the Code.

Visit: WWW.FRANCHISEBUSINESS.COM.AU

The ACCC is responsible for enforcing the Competition and Consumer Act 2010 as well as legislation, promoting competition, fair trading and regulating national infrastructure. Its role is to protect, strengthen and improve the way competition works in Australian markets and industries. Visit: WWW.ACCC.GOV.AU

FRANDATA FRANdata is the home of the Australian Franchise Registry which identifies franchise brands that have up-to-date franchise agreements and disclosure documents, and which have confirmed with the Registry their compliance with the Franchising Code of Conduct. FRANdata also provides reports on the franchising sector. Well established in the US since 1989, the business was established in Australia in 2013 to help the franchise sector address key strategic challenges and take advantage of opportunities available to qualifying brands.

BUSINESS.GOV.AU This website is an online government resource for the Australian business community which gives the public access to government information, forms and services for all things business. It is aimed at assisting individuals or a group of people to plan, start and grow their business. New business owners can access the advice finder, events calendar, grants and assistance finder, a directory of government and business associations, planning templates, business videos, and business checklists. Business topics include emergency management and recovery, finance, recruitment, environmental management, fair trading, taxation, online business, franchising, importing and exporting, intellectual property and training. Visit: WWW.BUSINESS.GOV.AU

Visit: WWW.FRANDATA.COM.AU

FRANCHISE.ED Franchise.ED (previously Asia-Pacific Centre for Franchising Excellence) was created to help people find independent information and research on franchise best practice. FranchiseED is a Not for Profit which provides education to encourage best practice; provides consultancy services; and provides access and dissemination of quality franchise research. The revenue generated by these programs will help support the social enterprise programs of FranchiseED. It extends upon the work undertaken previously by the Franchise Centre at Griffith University with the transformation into FranchiseED.

FRANCHISE COUNCIL OF AUSTRALIA

Visit: WWW.FRANCHISE-ED.ORG.AU

The FCA is the main body for representing franchisees, franchisors and service providers in the $146bn franchising sector in Australia.

THE FAIR WORK COMMISSION

Becoming a member of the FCA is a voluntary and is available for any organisation or anyone involved in the franchise industry including franchisees.

Fair Work Commission (the Commission, previously called Fair Work Australia) and the Fair Work Ombudsman (FWO) are independent government organisations that regulate Australiaâ&#x20AC;&#x2122;s workplace relations system but have different roles.

Visit: WWW.FRANCHISE.ORG.AU

FRANCHISEBUSINESS.COM.AU This is the online arm of the Inside Franchise Business publication. Both platforms are focused on providing essential advice and information for anyone looking to invest in a franchise. The website provides short and snappy business tips and news, video interviews, industry commentary and market reports. FranchiseBusiness.com.au is also the official directory of the FCA and lists franchising opportunities available in Australia and New Zealand. Potential franchisees looking to move into the franchising sphere can explore opportunities that currently exist in the market and enquire about the franchisor or brand.

The Commission is the independent national workplace relations tribunal. It is responsible for maintaining a safety net of minimum wages and employment conditions, as well as a range of other workplace functions and regulation. The FWO enforces compliance with the Fair Work Act, related legislation, awards and registered agreements. It also helps employers and employees by providing advice and education on pay rates and workplace conditions. Visit: WWW.FAIRWORK.COM.AU

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CATCH THE LATEST NEWS AND

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INSIDE FRANCHISE BUSINESS

YOUR ESSENTIAL GUIDE TO BUYING A FRANCHISE WWW.FRANCHISEBUSINESS.COM.AU

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1300 LOCATE

1300 562 283

pipe & cable locators asset protection

Phone: Shayne Boogaard (NSW): 0418 136 156 Brett Reading (Qld): 0407 877 674 Peter O’Hara (Vic/WA): 0408 175 534 Contact: Shayne Boogaard (NSW): szh@7eleven.com.au Brett Reading (Qld): bzr@7eleven.com.au Peter O’Hara (VIC/WA): pwo@7eleven.com.au www.franchise.7eleven.com.au

Phone: 1300 562 283 Contact: Jason Kelly Franchising @1300locate.com.au www.1300locate.com.au Start up costs: Enquire

PROFILE: Over the 11 years in business, our success and longevity within the asset protection industry comes from our experience, and ability to work with an outstanding array of clients who continue to put their trust in us. Through ongoing improvement, upskilling and technology investment we remain current in an evolving market and by working closely with your clients you are able to tailor and adapt our solutions to best meet their changing needs. We therefore offer you an opportunity to join this leading Organisation as a franchise owner covering one or all discipline of Cable Location, Vacuum Excavation (NDD) or Pipe CCTV Survey. Franchise areas cover metropolitan and/or rural locations and have the ability for you to grow your business creating future stability.

Start up costs: $400,000 to $1,000,000 PROFILE: 7-Eleven is the largest convenience and independent petrol retailer in Australia with more than 670 stores across VIC, ACT, NSW, QLD and WA. We opened our first store in 1977 and have almost 40 years’ experience in franchising. When you buy a 7-Eleven franchise, you buy two things. Firstly a globally recognised brand name, and secondly a business system that works, one that provides more support than most other franchises. As our stores are open 24/7, support is just a call away 24 hours a day, 7 days a week. We are looking for Franchisees who have the potential to lead their team to deliver an outstanding experience to customers. Learn more about what it takes to be part of a partnership in success with 7-Eleven, at www.franchise.7eleven.com.au

Contact: Jason Stubbings jason.stubbings@anytimefitness.com.au www.anytimefitness.com.au/own-a-gym/

Phone: 0412511630 Contact: Kevin Bugeja kevin@franchise4u.com.au www.aquariumgallery.com.au

Start up costs: $350,000 - $450,000 PROFILE: Anytime Fitness is Australia’s biggest gym community, with over 500,000 members and 480+ clubs nationwide. With a 24/7 concept, alongside PT’s, Roar 30 and the Anytime Workouts app, we’re getting Australians moving for a fitter and healthier future. When you join the Anytime Fitness family, you’re investing in much more than a gym, you’re joining a fitness movement full of like-minded entrepreneurs. We topped our category in Entrepreneur Magazine’s Franchise 500 list, based on our financial strength and stability, growth rate and size of our system. We have over 3,300 clubs in 26 countries. That means an unrivalled support network to draw on, from dedicated franchise coaches and national marketing teams, to a wealth of online tools and training. As an Anytime Fitness franchisee, you’ll have the support of Australia’s largest health and wellness franchise group, Collective Wellness Group (CWG), to guide and support you every step of the way.

Start up costs: 300K-400K PROFILE: Aquarium Gallery is not your traditional pet fish shop. Think of a high standard specialty aquarium. Yes, an “Aquarium Gallery” which includes fish, aquatic plants, corals, natural aqua-scaping materials along with, of course, the best equipment and accessories to enable anyone to enjoy the wondrous beauty of aquatic life in their own home or office. We offer the customer a truly comfortable retail experience, from the moment walk in they begin their journey into the amazing and inspiring aquarium world because we pay specific attention to every detail resulting in healthy, beautiful and sustainable aquarium life. If you love the beauty of aquatic life we will show you how you can turn your passion into a business and be proud of yourself, what you do every day you are at work and make money doing it.

Phone: 1800 219 512 Fax: 1800 460 819 Contact: Peter Warwick peter@artofaquaria.com.au www.artofaquaria.com.au

Phone: 1300 287 669 Fax: 1300 795 287 Contact: Steve Wren steve@ats.com.au www.appliancetaggingservices.com.au

Start up costs: $45,000 to $200,000

Start up costs from: $52,000 + GST

PROFILE: How About A Business Opportunity Which Generates Serious Profits And An Attractive Lifestyle Art of Aquaria are in the process of releasing a number of territories with established client bases so that you can choose to either walk straight into a cash generating business or build up your own greenfield territory. Are you looking for a business that you can operate by yourself with the support of a fun and dedicated team? Are you seeking a growth industry where you can follow your passions and shape your own destiny? If you share our passion for acquaria and think you have what it takes to be part if our team, we want to hear from you!

Phone: 07 5509 0000 Contact: Mark Crapper franchise@australianskinclinics.com.au australianskinclinics.com.au/franchise

PROFILE: Australian Skin Clinics was founded in 1996 and is one of Australia’s leading cosmetic clinics focused on Skin Rejuvenation, Cosmetic Injectables, Laser Hair Removal and Fat Reduction. With up to 58 clinics nationally Australian Skin Clinics has empowered over 2 million people to look and feel proud of their reflection. Franchisee’s gain access to a turnkey operation supported by a nationally recognised brand. All training is provided via The Advanced Skills Academy, owned and operated by Australian Skin Clinics; covering all areas of running a successful clinic. This is your opportunity to join the fastest growing sector in retail!

PROFILE: Looking for a franchise with on-going repeat business, large territories and access to an existing client base to get you started? ATS are Australia-wide specialists in Electrical Testing and Tagging in accordance with AS/NZS 3760:2010. Providing expert technical, admin, business and sales support, access to our National client base and comprehensive on and off-site training, ATS are committed to helping its 56 franchisees grow profitable and successful businesses.

A-Z No prior electrical experience is required - just a passion for safety and a commitment to growing your business. With low entry fees and minimal franchisee administration, an ATS franchise may just be the opportunity for you.

L I S T I N GS

FOR A-Z LISTINGS ENQUIRIES CONTACT:

NATIONAL SALES & MARKETING MANAGER DAVID STRONG ON 02 8224 8370 DAVID.STRONG@OCTOMEDIA.COM.AU

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A-Z LISTINGS

Phone: 0409 720 063 Contact: Dean Lightfoot franchise@palmoasisventures.com www.baskinrobbins.com.au

A-Z LISTINGS

Phone: 0419 494 480 Fax: 03 9439 5594 Contact: Rod Parker rparker@bedshed.com.au www.bedshed.com.au/franchising

Start up costs: from $150,000 - $250,000

PROFILE: Baskin-Robbins® has been creating irresistible treats to make you smile and feel good inside and out for over 70 years. We’ve perfected the combination of delicious treats and a fun atmosphere. Now, we’re offering rewarding franchise opportunities that help aspiring business owners thrive and to continue to be the world’s leading chain of ice cream specialty restaurants If you love to have fun and put a smile on people’s faces; if you are hard-working, dedicated and community oriented; and in touch with your ‘ice cream side’; Baskin-Robbins® may be a perfect fit for you. Contact: franchise@palmoasisventures.com to scoop up your own Baskin-Robbins®. New sites available in QLD, NSW & VIC.

PROFILE: Bedshed, one of Australia’s largest and most trusted bedding retailers, is continuing its expansion across the East Coast with further opportunities now available in Queensland, Victoria and New South Wales. We are looking for people who are passionate about customer service, managing a sales team, and want to work in their own business. You will have access to our accredited franchise model which has been perfected during our 30+ year history, along with the support of an established specialist team. Take the first step towards being rewarded with the financial and lifestyle benefits of owning a Bedshed Franchise by calling Rod Parker for a confidential chat. Read more at http://www.franchisebusiness.com.au/brands/ bedshed#tbO0B8QGRO75FLzq.99

Phone: +61 474 278 485 Contact: In Australia: Carsten Brink (Business Development Director for Asia-Pacific) franchise@boconcept.com Boconcept.com/franchise

Phone: 03 9508 4409 Fax: 03 9508 4499 Contact: Stacey Mercaldi Stacey.Mercaldi@retailzoo.com.au www.boostjuice.com.au

Start up costs: Around $600.000 AUD

Start up costs: $280,000 - $450,000 + GST

PROFILE: BECOME OUR NEW FRANCHISE PARTNER JOIN A GLOBAL FURNITURE DESIGN BRAND, OFFERING A STRONG RETAIL FRANCHISE CONCEPT From Denmark to the world since 1952, BoConcept is the brand name of Denmark’s most global retail furniture chain, specializing in premium quality interior design for the urban-minded customer and creating outstanding modern and sophisticated living spaces at affordable prices. BoConcept has grown its global presence through a unique strategic market positioning.

With over 25 years of franchise experience, and 265 stores in 65 countries, our franchise model is a proven, strong and award-winning concept. Our business model and core competencies are applied throughout the value chain from design, branding and marketing to production, logistics, sales and customer service, to optimize the overall sales performance in the stores. The strong toolbox and support within all areas of business and retailing makes the setup and management of a BoConcept store straightforward. Therefore, most of our partners own multiple stores.

PROFILE: Boost Juice is an Australian franchise success story. Founded by adventurer and entrepreneur, Janine Allis, the brand has taken its winning combination of healthy fresh fruit, blended and squeezed into delicious smoothies and juices to open over 574 stores across the globe. Boost Juice has come a long way from its humble beginnings but one thing hasn’t changed – our commitment to health, fun and loving life. Our partners are provided with an abundance of support and we strive to innovate and develop in all facets of the business. Take the steps to join one of Australia’s most loved brands today!

Phone: 1300 131 888 Contact: Hannah Giang Email: franchise.recruitment@dominos.com.au Web: www.dominosfranchise.com.au

Phone: 1300 659 676 Fax: 1300 659 675 Contact: Dan Toms customerservice@cashflowit.com.au www.cashflowit.com.au PROFILE: Cashflow It are the franchise finance experts. With competitive rates and flexible terms from 12 months to 5 years, Cashflow It can provide the funding that franchisors and franchisees need today. We offer flexible rental solutions, traditional leasing and business loans tailored to your requirements. What can we Fund - New equipment / Used equipment / Fit-outs / Store refurbishments / Re-financing from other lenders / Buying an existing franchise / National equipment roll-outs Franchise Accreditation - If you belong to a Cashflow It Accredited Franchise system, you can enjoy pre-approval and other exclusive benefits.

Start up costs: $480,000 - $600,000 + GST PROFILE: Domino’s is not just Australia and New Zealand’s leading pizza brand – it’s also one of the world’s most advanced digital retailers and an undisputed leader in online ordering with Australia and New Zealand’s most advanced mobile ordering apps, pizza creation app and only real-time pizza tracker. Being a part of the Domino’s family is a rewarding way to take control of your own personal wealth and be your own boss. You’re not only joining Australia’s largest food chain but a community of passionate, excited entrepreneurs. There has never been a better time to join the Domino’s family. Enquire now to receive your copy of our Domino’s franchise information booklet.

Phone: 1300 852 556 or 0438 801 575 Contact: Andrew Roberts Andrew.roberts@fifocapital.com.au www.fifocapital.com.au

Phone: 1300 884 165 Phone: 0421 644 661 Contact: John Stanton john.stanton@fibonaccicoffee.com.au fibonaccicoffeefranchising.com.au Start up costs: minimum of $100,000 PROFILE: Fibonacci Coffee is a fresh new cafe concept in the Australian coffee landscape. Started as a family business Fibonacci Coffee keeps on building on those traditional family values. Embracing and promoting innovation in the everevolving cafe industry. Encouraging positive community impact, and providing mouthwatering food offering with flexible menus. Designed with a Co-op concept in mind we provide a platform where partners can contribute and share their ideas as well as learn and support others. Fibonacci Coffee is all about helping entrepreneurs to prosper.

Start up costs: Franchise $49,500 or Investor $15,000 PROFILE: Fifo Capital provides cash flow assistance to Australian businesses large and small whilst giving a great lifestyle, excellent returns and an enviable work/life balance to its franchisees. With over 10 years experience servicing the market and the recent release of our new Supply Chain Finance product you could not look at Fifo Capital at a better time. No experience necessary as full training and ongoing support is provided. Below are some of the benefits our partners enjoy as members of the Fifo Capital Network • • • •

ROI of 50+% annualised* Backed by insurance Work your own hours, very low overheads Highly scalable operation

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• • •

Backed by the biggest and most successful business finance franchisors in the country. Multiple income streams Investor options available

Phone: 08 6169 2700 Contact: Robbie Damjanovic franchise@freshii.com.au www.freshii.com.au/franchising

Phone: +61 8 8267 2144 Contact: Andrew aphillips@focalpointintl.com www.focalpointfranchise.biz Start up costs: $89,950 PROFILE: Listing Profile The name Brian Tracy is synonymous with personal and professional success. Our excellent reputation and highly-regarded programs are unrivalled and will give you brand credibility, prestige and trust in your business community. FocalPoint is the franchise arm of Brian Tracy Global. We are searching for high-calibre individuals who are self-motivated thinkers, looking for a business opportunity beyond the generic franchise. If you are an innovative leader with a knack for business and you want to build a solid financial future, take the next step and find about more about the FocalPoint franchise. www.focalpointfranchise.biz

PROFILE:

Start up costs: Investment levels: $160,000 - $300,000 dependant on size and location Capital investment: Financing options available from 0% deposit (subject to approval)

Join the world’s fastest growing franchise! If you’re passionate about food that’s fresh, healthy, delicious and affordable, and you’d like to be part of a unique and fun global brand, then join the Freshii revolution! Freshii is one of the most exciting and fast growing new franchises in Australia, with opportunities available now in prime CBD and urban locations across the country. • Low fees and royalties • Fixed marketing fees • Flexible supplier agreements

• Uncapped earning potential • No experience necessary – we provide training, marketing and site development support

Ready to be your own boss and join an international and socially conscious brand? Visit Freshii Australia today at www.freshii.com.au/franchising * T&C’s apply. All applicants will be reviewed on an individual basis.

Phone: 07 3357 62 70 Contact: Warren Ballantyne warren@guttervac.com.au www.guttervac.com.au

Phone: 02 8845 0100 Contact: Franchise Development Manager franchise@gelatissimo.com.au www.gelatissimo.com.au Start up costs from: $280,000

PROFILE: Australia’s leading gelato franchise is looking for outstanding franchisees. Prior food experience is not necessary however franchisees must have passion for the system and brand, leadership skills, and enthusiasm for delivering quality products through excellent customer service. Multi award winning Gelatissimo provides full training and on-going support from dedicated operational, marketing and development teams enabling them to produce artisan gelato fresh in store using a simple and proven system.

Start up costs: $79,000 + GST + freight PROFILE: Gutter-Vac is an innovative cleaning franchise using revolutionary vacuum equipment to quickly and effectively clean corporate and domestic gutters, roofs, ceiling spaces, rainwater tanks, storm water sumps and much more. Gutter-Vac is now the largest gutter vacuum cleaning network in the world. The Gutter-Vac network includes 80+ franchises across 7 states and territories including Queensland, Victoria, New South Wales, ACT, South Australia, Western Australia and Tasmania. Gutter-Vac now has an international brand “Outback GutterVac” based in Atlanta Georgia, USA. Gutter-Vac is a proven model that provides a lifestyle or entrepreneurial business. A Gutter-Vac franchise is an exciting and promising small business opportunity that is constructed upon a reliable foundation of simple, innovative and effective equipment, systems and procedures.

Phone: 1300 875 377 Contact: Jon Kontopos jon@homecaring.com.au www.homecaring.com.au

Contact: Keith Knapp info@ibeconnect.com ibeconnect.com

Start up costs: $75,000 - $150,000

Start up costs: $10,000

PROFILE:

Home Caring provides an opportunity to be part of one of the fastest growing sectors in the Australian economy – disability, aged and dementia care. As the population ages, it is anticipated that the number of people over 65 will double in the next 30 years and the number of people requiring disability care services will grow from 140,000 to over 500,000. Proudly Australian owned, Home Caring provides professional and compassionate personalised care services in the home and is seeking community minded franchisees who can build a solid financial future combining their local networks and the national marketing of the Home Caring and Dementia Caring brands. Home Caring is offering a limited number of locations in a joint venture arrangement, enabling more people to become involved in the industry at a lower entry cost. Full training and support is provided to ensure a successful, profitable partnership.

IBE Connect is your first choice in expanding your business to the United States. Our successful model has helped franchises of multiple industries expand by helping get their products and services compatible with the US Market. By partnering with IBE Connect we connect you with the best tools, resources and connections that specialize in working with businesses coming into the US. Connections such as national distribution networks, legal representation, accounting, media networks, and much more. Visit us online at IBEConnect.com to find out more.

Phone: (02) 8962 8556 Contact: Benoit Davi franchise@kwikkopy.com.au www.kwikkopy.com.au/franchise

Phone: 0412 692 052 Contact: David Wilkinson sales.au@inxpress.com inxpress.com.au inxpress.com.au/franchising

Start-up costs: $280,000 (for a Greenfield)

Start up costs: $64,950 + GST PROFILE: InXpress provides a revolutionary concept delivering customers with express freight advantages to gain a competitive edge in the marketplace. InXpress is an authorised sales partner for the world class courier company, DHL. Domestically, InXpress partners with companies such as Toll, Startrack and TNT to offer a complete suite of courier and freight solutions, providing increased value and service, saving valuable time and money. Operating in 14 countries with over 350 franchisees globally, InXpress is now accepting applications to grow the Australian business. Benefits to franchisees include: • Low entry costs • Low Overheads • No inventory/warehousing

• Work from home • High income potential • Ongoing training and support

For more information about becoming an InXpress franchisee contact us now. *conditions apply

PROFILE: Start your franchising journey with Kwik Kopy, the leading provider of design, print and online solutions throughout Australia. Kwik Kopy offers a flexible franchise model, where each Centre is fully equipped to create high quality services on-site. Owning your B2B franchise means operating business hours Monday to Friday so you’ll also enjoy work-life balance. As a Kwik Kopy franchisee you get to become your own boss and be part of a supportive community committed to your success. You’ll also receive all the training you require, so no prior print or design experience necessary. A Kwik Kopy franchisee is young at heart with business experience, entrepreneurial flair and most of all – an absolute passion for customer service. We have both existing and new locations for sale throughout Australia.

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A-Z LISTINGS

Phone: +61 402 171 399 Contact: Liz Seeto franchising@laserclinics.com.au www.laserclinics.com.au

Phone: 0420 900 382 Contact: Casey Reid casey.reid@theleatherdoctor.net.au www.myleatherdoctor.com.au

Start up costs: $290-$350K +GST approximately

Start up costs: $49,000 - $75,000

PROFILE: At Laser Clinics Australia & New Zealand, our vision is to provide affordable, effective and safe non-invasive cosmetic treatments. Since 2008, Laser Clinics Australia has grown to be the largest provider globally of laser hair removal, cosmetic injections and skin treatments. Laser Clinics Australia & New Zealand is an award-winning business with over 100 clinics in Australia and launching in New Zealand. Laser Clinics Australia & New Zealand offers every franchisee partner a unique franchise business opportunity. Each location we open is a 50/50 partnership between the franchisee partner and Laser Clinics Australia & New Zealand. Our unique business partnership model reduces start up and ongoing operational costs.

PROFILE: Our Mission. “To be the worlds number one mobile franchise”. This is fast becoming a reality as The Leather Doctor is Australia’s leading franchise for mobile home services in leather. Acclaimed by the FCA as one of Australia’s top five franchise systems in 2016 and 2017, The Leather Doctor is an essential home service. Established in 1989 The Leather Doctor now support over 60 Franchisees who earn great income cleaning and repairing goods made from leather, vinyl, plastic and fabric. They service a wide variety of industries including furniture, automotive, marine, retail and hospitality. Work is abundant and these new and established small business opportunities, are some of the best in Australia.

We seek out the most motivated individuals who will be empowered to take on the day-to-day responsibilities of running a successful clinic. Franchise partners receive a $100,000 salary from day one.

Phone: 07 55 327071 Contact: Michelle Christensen franchising@lonestarribhouse.com.au lonestarribhouse.com.au

Phone: 02 9651 3444 Contact: Dom Galluccio franchise@lockandroll.com.au www.lockandroll.com.au Start up costs: Circa ($100k) PROFILE: Lock & Roll has a great opportunity for you to secure your future and become a part of an exciting venture with strong rewards and real growth opportunities. We are a specialist window and door repair, maintenance & upgrade service for domestic and commercial property owners and managers.

PROFILE: With smiles as wide as the sky, the Lone Star Rib House offer a stimulating and energetic dining atmosphere, and a taste as big as Texas! With franchise opportunities across Australia, the Lone Star Rib House offers a proven business model with robust operations, training systems and support.

If you like DIY and you’re looking for a better work-life balance, then a Lock & Roll franchise could be worth considering. We will be able to show you how you can earn a strong rewarding income and ultimately be your own boss with an opportunity to grow a business that fits into your desired lifestyle.

Phone: 02 8115 9550 Contact: Phillip Blanco franchising@madmex.com.au www.madmex.com.au

Phone: 03 9604 9400 Fax: 03 9600 3313 robert@mmrb.com.au www.marshmaher.com.au

Start up costs: $375,000 to $550,000 PROFILE:

PROFILE: As a thriving fast casual food brand with a strong growth strategy, we are actively seeking new franchise partners. Our menu is influenced by fresh, Baja-style Mexican food made with authentic ingredients true to our roots. We’re focused on leading the way in tasty, fresh and healthy with the freshest produce available, food made fresh every day and allowing our customers to tailor their meals to personal tastes and dietary requirements or health trends. If you have the drive to lead the way with fresh authentic Mexican flavour, a passion to utilise your past business knowledge & skills to deliver an outstanding customer experience, all with a cheeky grin, then this journey is for you! Become your own Head Honcho at Mad Mex, enquire today!

A-Z L I S T I N GS

FOR A-Z LISTINGS ENQUIRIES CONTACT:

Well recognised and published franchise specialist with over 30 years industry knowledge and experience. Providing advice to: 1. International Franchisors and Franchising. 2. Master Franchising. 3. Dispute Resolution – Solutions and Strategies

4. 5. 6. 7. 8.

Franchisee Advice and fixed fee reports. Sale/ Purchase of franchise systems. IP/ Trademark advice. Company structures and tax advice. CCC and Consumer Law advice.

We provide clients fixed fees based on the scope of work. Contact Robert Toth on (03) 9604 9400 or by email at robert@mmrb.com.au

Phone: 0403 228 405 Contact: Andy Barratt www.minutemanpressfranchise.com.au Start up costs: $30,000—$50,000 PROFILE: Minuteman Press is the world’s largest & #1 rated print & marketing franchise. For over 40 years, we have led the way as a top b2b service franchise. At Minuteman Press, We Are The Modern Printing Industry™ providing high quality products & services that meet the growing needs of today’s business professionals. We have developed a unique business model that offers products and services that every business needs and uses for their operational, advertising and marketing efforts. Minuteman Press has multiple revenue streams, normal Monday through Friday business hours and does not require any prior experience in the industry.

CONTACT SENIOR ACCOUNT MANAGER CHARLOTTE REDFERN ON 02 8224 8373 CHARLOTTE.REDFERN@OCTOMEDIA.COM.AU

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Phone: 02 9472 8555 Contact: Peter Elligett info@mrsfields.com.au www.mrsfields.com.au

Phone: 0413 546 565 Fax: 8 5095 456 Contact: Marc franchise@nirvanabeauty.com.au www.nirvanabeauty.com.au

Start up costs: From $199,000 Start up costs: $250,000 - $550,000

PROFILE: Mrs. Fields Bakery Café is more than a Café… Mrs. Fields is all about making people feel good through simple, special moments. Whether it be nibbling on a softbaked cookie, enjoying an award-winning coffee, roasted exclusively by Mrs. Fields or sitting down to grab a bite for lunch – whether it be a toastie, a pie or any of our other savoury offerings… we want to serve up moments made better, every time. We have a number of delicious franchise opportunities available around Australia, so if you’re ready to call the shots and run your own Mrs. Fields Bakery Café, contact us today.

PROFILE: Having conquered some of the latest beauty treatments and technologies, Nirvana Beauty Laser Clinics presents a huge investment opportunity for people wishing to enter an industry with enormous potential. As a franchise owner with Nirvana Beauty Laser Clinics, you will experience the satisfaction of working in an exciting and on-trend industry. Every day you will reap the fruits of your own input by delivering results-driven treatments to many satisfied clients. Enjoy working with state-of-the art equipment, a great work-life balance, a personalised support network, and ongoing training through our Head Office What are you waiting for? Contact us today and join in our success.

Phone: 03 8851 4200 Fax: 03 8851 4277 Contact: Michael McNamara franchise@noodlebox.com.au www.noodlebox.com.au/franchise

Phone: (07) 3625 400 Contact: Ralph Marks franchising@novusautoglass.com.au www.novusautoglass.com.a

Start up costs: $175,000 - $200,000

Start up costs: $40,000

PROFILE: At Noodle Box we believe in the power of the mighty wok. To transform a humble kitchen into a fiery theatre. And transform the simplest ingredients into a feast that’s out of this world. Noodle Box started life in 1996 on the back of a vision of two adventurous young Aussies who were amazed by the fiery theatre and the incredible wok-charred flavours of Southeast Asia’s hawker markets. They brought their experience back to Australia and worked with the best wok chefs in the business to bring new life to traditional recipes and satisfy Aussie tastes. Today, Noodle Box restaurant numbers continue to grow, strengthening our position as Australia’s leading Noodle-based franchise system. And while this growth has been fueled by continuous investments in our brand, our products and our systems, our success is due to the ongoing dedication and loyalty of our Franchise Partners. With franchise opportunities available nationwide, there’s never been a better time to join the Noodle Box family.

PROFILE: Novus Glass invented Windscreen Repair Technology. A Novus Glass franchise enables you to go into business for yourself, but not by yourself. Novus Glass is an international brand with over 55 locally owned and operated franchise territories across Australia. Novus Glass also replace windscreens and all other auto glass components. Novus Glass offers a complete franchise package covering everything from initial Technical Training through to Ongoing Marketing and Operational support. Novus also offers its franchisees access to its unique patented products, equipment and specialty resins. Enquire today about owning your own Novus Glass franchise – The Clear Choice for Windscreen Repair and Replacement.

Noodle Box – Wok Inspired, Market Fresh

Contact: May Chang, National Franchise Sales mchang@orangetheoryfitness.com.au marketing.orangetheoryfitness.com/franchisees-int/

Phone: 1800 245 447 Email: joinourteam@poolwerx.com.au Web: www.poolwerx.com.au

Start up costs: Please enquire

PROFILE: Orangetheory Fitness is one of the world’s fastest growing franchises with over 900 studios open in 15 countries and zero studio closures globally. We’re growing rapidly across Australia but there are still some prime territories available. Orangetheory is a one-of-a-kind, group training experience that uses heart rate based interval training to promote maximum calorie burn. Every single workout is scientifically developed and approved by a Medical Advisory Board to ensure it remains 100% results oriented. As an Orangetheory Fitness franchisee, you’ll have the support of Australia’s largest health and wellness franchise group, Collective Wellness Group, to guide and support you every step of the way.

PROFILE: Australia’s Franchise System of the Year - Twice!! Build your successful business future with us. We have a career path in business that we can tailor to suit you. As a Poolwerx Franchise Partner, you can start small or jump right in. Join us as a man in a van, progress to multi-vans, a retail store and vans and then in multi store. Or purchase an existing fast start mobile territory or retail mobile business. Whatever your journey, we will help you realise your vision. Our one focus is to create a profitable partnership. We do that by matching over 25 years experience and outstanding support, marketing and business development systems to your energy and enthusiasm. For more information, visit poolwerx.com.au/franchising.

Phone: 1300 729 900 Contact: Gary Glen franchising@schnitz.com.au www.schnitz.com.au

Phone: 1800 809 913 Fax: 03 8699 1555 Contact: Anna Goncalves franchising@questapartments.com.au www.questfranchise.com.au

Start up costs: $500k +

Start up costs: $750,000 upwards PROFILE: PROFILE: Quest Apartment Hotels is the largest and fastest growing apartment hotel operator in Australasia, with a network of 150 franchised properties across Australia, New Zealand and Fiji. For 30 years, Quest has provided convenient locations, reliable standards and flexible living conditions for extended stay business travellers. Quest is now one of the top 15 apartment hotel providers in the world, and widely recognised as the market leader of apartment hotel accommodation in Australia. To become a Quest Franchisee you must be prepared to make a significant investment and commitment to the business, both personally and financially.

We all know the smell of home cooking. The recipe might be different for each of us, but the feeling of experiencing something that’s been made with love and care never leaves us, and brings us back to the table time and time again. Our mission is to extract that feeling via the crumbed goodness of a lovingly prepared Schnitzel. At Schnitz, we’re a franchise family obsessed with schnitzel. To this day each and every schnitzel is obsessively made by hand with fresh, locally sourced, quality ingredients, and crumbed then pan cooked and never (ever) deep fried. It’s food made the right way not the easy way. We’re proud to share the happiness that only a schnitzel cooked with passion can bring.

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A-Z LISTINGS

Phone: 07 3399 3000 Phone: 07 3399 3077 Contact: Patrick Mulcahy franchisedevelopment@shingleinn.com www.shingleinn.com

A-Z LISTINGS

PROFILE: Shingle Inn is a leader in the boutique café market. Established in 1936, against the backdrop of the Great Depression, Shingle Inn has been the perfect destination to share special times with family and friends for generations. Luxurious high-backed chairs, warm rich colours and intimate booths create an atmosphere that attracts customers and Shingle Inn’s focus on superior quality food and coffee keeps them returning. With decadent cakes and delicious treats, made from traditional recipes in Shingle Inn’s central bakery, Shingle Inn prides itself on an exclusive product range that will not be found in any competing café. Together with Shingle Inn’s constant focus on coffee excellence and freshlyprepared meals on our extensive menu, Shingle Inn is unsurpassed in today’s café culture. Contact us to find out why Shingle Inn could be the right coffee and food business for you. Patrick Mulcahy 0431 649 450.

Phone: 07 54 784 014 Fax: 07 54 777 133 Contact: Leigh Wallis leigh@smithandsonshq.com www.smith-sons.com.au Start up costs: $50,000 - $80,000 PROFILE: We aim to make the world a better place – better businesses mean better families and better communities. Our happy, profitable franchisees own and run their own professional renovation businesses utilising the systems, tools and resources we provide. Smith & Sons is committed to seeing each of our franchisees and master franchisees reach their business and personal goals.

Phone: 1300 810 233 Contact: Kevin Lacey klacey@snap.com.au www.snap.com.au

Phone: 1800 762 766 sota.franchise@snapon.com www.snapontools.com.au Start up costs: from $55,000

PROFILE:

The sophisticated Snap Centre of today is a far cry from the convenience of the corner printer of the 60s, Snap is one of the most recognised brands in Australia with a reputation in its field of quality production and service, and a commitment to people. Snap continues to evolve its franchise model and is building on its reputation for innovation and embracing change through the introduction of new products and services combining the best of traditional print with online marketing solutions. We are Multiple Award Winning Australian Franchise Success Story that has expanded its successful franchise model into Master Franchises in Ireland, China, New Zealand.

PROFILE: Snap-on Tools is a mobile franchise operation putting high quality tools and equipment into the hands of mechanics, engineers and technicians across the country. Snap-on Tools Australia & NZ is a wholly owned subsidiary of Snap-on Inc., a developer and manufacturer of innovative and technologically advanced tools with over 4,500 franchisees worldwide. After 30 years in the Australian market, Snap-on Tools continues to grow with an increasing number of franchisees reaching the million dollar club, and new growth opportunities available for existing franchisees such as sales assistants, multi-units and specialised tool storage and diagnostic sales programs. Initial training occurs in Dallas, USA and ongoing support is provided - no previous mechanical experience required. Snap-on offers an exclusive finance package to assist new franchisees.

Phone: 1300 781 735 Fax: (02) 9150 0837 Contact: Stacy Alogdellis info@soccajoeys.com www.soccajoeys.com.au/franchise

Phone: 03 9830 4166 Fax: 03 9888 6327 Contact: Bettina Davis bettina.davis@snooze.com.au www.snooze.com.au/franchising PROFILE: Snooze has been giving Australians a better night’s sleep for more than 40 years. These eight points form the basis of our franchise support system: Marketing and promotional support Benchmarking & KPI measurement Sales and merchandising support and comparison Product training Site selection and property Business management support negotiation IT services Store design & layout What’s needed to be a Snooze Franchise Partner? Enjoy working with people, have good interpersonal skills, enjoy being retailers and have a strong customer service orientation. Have an ability to organise, supervise and motivate staff. Have a hands-on approach to their business and have a strong work ethic.

PROFILE: Soccajoeys has been developed by a team of childhood development experts to provide soccer programs to children aged 2.5 to 8 years. We deliver our programs to over 35,000 children annually with over 300 classes in operation across the country. Transform lives, including yours and become a Soccajoeys Franchisee. We offer a unique opportunity for people to become mentors to the next generation of Australian kids, instilling in them a passion to lead healthy and active lives.

• Ongoing training to boost your success • Continuous Head Office support (marketing, operational, financial and systems) • Access to industry leading childhood development programs • Coaching and mentoring workshops • Trusted Australian brand • Become part of a thriving and energetic network of franchisees • Your own business and exclusive franchise zone • Rewarding career in the childhood development industry • Flexible lifestyle.

Phone: 1800SPLASH (775274) Contact: Kylee Clasper admin@splashswim.com.au www.splashswim.com.au

Phone: 1300 372 300 Contact: David Thomson Franchises@sportstaracademy.com www.sportstaracademy.com

Start up costs: From $150,000

Start up costs: Starting From $25,000

PROFILE: Splash Swim School is a boutique custom-made swim school. We have a state of the art turnkey fit out. Our pools are custom made to suit any size warehouse. We follow Royal Life’s Swim and Survive program that is accredited Australia wide. Full training and support. An easy 1800SPLASH telephone number to remember. Operation system and full support Splash have their own in house architectural service, project manage and building contractor that are registered in all states of Australia

PROFILE: Sport Star Academy (SSA) believe “Champions are made, not born” and see the potential in every child. Through sport, SSA empower kids to believe in themselves and nurture a love of sport through focused attention, dedication and simply having fun. SSA is the number one provider of skill based sport programs, providing weekly sessions to over 5000 children nationally. Football Star Academy (Soccer division) was awarded “Franchise Business of the Year” in the 2017 Optus My Business Awards. Choose your franchise from the following options: Rugby, Netball, Footy (AFL), Football, Basketball, Cricket, Golf, Tennis, Sport Star Performance and Soccer Time Kids.

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Phone: 02 9037 2849 Contact: Doug Downer doug@thealternativeboard.com.au www.thealternativeboard.com.au Start up costs: from $40,000 up to $95,000

PROFILE: The Alternative Board is a membership organisation of Business Owners and CEOs who meet monthly in confidential board meetings to assist each other in transforming their businesses. The Alternative Board (TAB) exists to help business owners align their business vision with their personal vision. It exists to provide owners/CEO’s with the power to ensure that their businesses will deliver what they want out of life.

Phone: 02 9723 1011 Fax: 02 9727 6771 Contact: Nick Avgerinos nicka@cheesecake.com.au www.cheesecake.com.au Start up costs: New store - $389,000 + GST PROFILE: The Cheesecake Shop is one of Australia’s favourite retailers and shares in the celebrations and happy occasions of millions of people each year with their signature dessert products. With over 200 stores across Australia and New Zealand and a two time winner of the Franchise Council of Australia’s Franchisor of the Year award, The Cheesecake Shop is one of Australia’s premier franchise systems.

In addition to the monthly board meetings, the facilitator/coach meets with the business owner/CEO each month and works with them in a one on one coaching session focussed exclusively on their business.

Phone: 0412511630 Contact: Kevin Bugeja kevin@franchise4u.com.au www.thecupcakedesire.com.au

Phone: 03 9645 4798 Contact: Brad Dekkers franchise@sportingglobe.com.au www.sportingglobe.com.au/franchise

Start up costs: $260K-$320K

Start up costs: $700,000+

PROFILE: The cupcake Desire was established in 2014 as a premier speciality cupcake and cakes store. Having successfully operated for more than 4 years, we have decided to commence franchising to allow franchise partners to join our business. We believe franchising will add more resources, fresh and innovative ideas and support to constantly grow The Cupcake Desire and create product differentiation in the market. The quality of our cupcakes is what people come back for. They are baked fresh everyday using the finest ingredients. We bake Gluten –free, Vegan cupcakes and cakes . We empower and value our customers as they contribute to an overall success of “the Cupcake Desire”

PROFILE: The Sporting Globe Bar & Grill is Australia’s most loved sports bar and grill franchise. Offering high quality casual dining in a social and welcoming atmosphere with a state-of-the-art sports fitout, The Sporting Globe is great place to eat, drink and catch a game. The Sporting Globe business model has been designed to allow our Franchise Partners to focus on what is most important – customers! With venues opening across Australia, now is the time to get involved with Australia’s fastest growing sports bar and grill brand – do something you love, enquire today!

Phone: 04 3909 4068 Contact: Sarah Oram franchising@unique-laser.com.au www.unique-laser.com.au Start up costs: $100,000 to $450,000

Phone: 1300 549 200 Contact: Kevin Bugeja kevin@franchise4u.com.au walkersdoughnuts.com.au Start up costs: $100,000 - $250,000

PROFILE: Unique Laser is revolutionising the aesthetics industry… Have you noticed that laser clinics and skin franchises all look the same? Unique Laser is the newest laser clinic and is different. Very different. We have developed a Unique, multi-award winning business model that: • Stands out from the rest in terms of initial investment, return on investment (ROI) and branding • Has exclusive rights to the fastest, newest lasers in the world • Provides complete training, ongoing support and medical supervision We have a range of partnership opportunities available that will allow you to take control of your life within a booming sector. Do not invest in another laser franchise before speaking to us. Contact to us today to see how we can change your life, and the lives of others, for the better.

Phone: 0414 669 101 Contact: Stephen Spitz stephen.spitz@xpressodelight.com.au www.xpressodelight.com.au

PROFILE: We make food that adds a smile to your day. Just one bite and you’ll know you are eating something special; something reminiscent of your childhood. A simple model with absolutely minimal baking* in store; just filling, decorating and displaying. Our famous varieties include Boston Custard Cream, our signature Vanilla Glazed, Pretzel Choc Caramel, Cherry Bomb, Cookies & Cream and many others. Our *Hot Jam doughnuts are freshly proofed and cooked on site throughout the day. The aroma is impossible to resist! Together with our specialty-coffee created especially for Walker’s, our Classic hot dog flavours, our soda-fountain diner Milkshakes, and our speciality Heritage Sodas imported exclusively by Walker’s Doughnuts directly from the USA, you’ll find us an unbeatable and irresistible offering.

Contact: info@collectivewellness.com.au www.xtendbarre.com.au Start up costs: From $120,000

Start up costs from: $47,100-00 + GST

PROFILE: Invest in an Xpresso Delight franchise and seize the opportunity to profit from one of the fastest growing markets on the planet. As the number of savvy, educated coffee drinkers has boomed, the market has exploded! This pent up demand for gourmet coffee in the workplace is very poorly met. Each day, thousands of workers trek to the nearest café to pay as much as $4.00 for their morning and afternoon coffees. This is the premise of Xpresso Delight - transplanting the cafe into the heart of the workplace at a fraction of the price that people pay normally.

PROFILE: Barre is one of the most popular programs in boutique fitness, with a loyal client following that continues to grow. Xtend Barre leads the barre industry with its unique teaching formula, dynamic programs and personalised approach. Founded on pilates, it’s a safe and effective workout that delivers RESULTS. When you invest in Xtend Barre, you’re investing in much more than a barre studio. You’re joining the world’s biggest barre franchise, and an ambitious and supportive community that spans the globe. As an Xtend Barre franchisee, you’ll have the support of Australia’s largest health and wellness franchise group, Collective Wellness Group (CWG), to guide and support you every step of the way.

JULY/AUG 2018 | 145 | WWW.FRANCHISEBUSINESS.COM.AU

A-Z LISTINGS

FINAL WORD

IT’S CODE FOR COMPLIANCE

Australia has one of the most rigorous codes of practice for the franchise sector in the world, and unlike many countries, it is mandatory. Lawyer Ashley Tan looks at why the Code is important to franchisees. ASHLEY TAN Lawyer, DC Strategy

he Competition and Consumer (Industry Codes—Franchising) Regulation 2014, dubbed the Franchising Code of Conduct, was introduced in 1998 to try and create a more level playing field in an entrepreneurial system with a relatively imbalanced bargaining position between the franchising parties. The Code amendments on 1 January 2015 ramped that up further with greater disclosure requirements from franchisors, fines for non-compliance and the obligation to act in good faith. It applies to all aspects of the franchise relationship from assessing the franchise you will purchase and then signing the initial contract, through the years the agreement is on foot, to your exit from the system and termination of the franchise agreement. The Australian Competition and Consumer Commission (ACCC) regulates the Code and enforces the conduct of its participants. The failure to comply by either party (including a franchisee) can incur financial penalties of up to $51,000 and an infringement notice of $8,500 per breach. The key aspects of the Code that are particularly relevant to franchisees are:

DISCLOSURE DOCUMENT It is imperative to thoroughly evaluate the franchise you are considering to purchase. The disclosure document contains in-depth information not otherwise publicly available to a prospective buyer so that you can conduct what is known as due diligence (an in-depth appraisal) prior to entering into a typically five to seven year relationship with the franchisor.

arbitrarily, and assesses whether parties cooperated to achieve the purposes of the agreement. The good faith obligation does not mean that either party cannot act in its own legitimate commercial interests. It is also important to note that neither party can contract out of, or limit this obligation imposed by the Code.

resolution. Both parties have the right to stipulate the nature of the dispute and the outcomes sought and refer the matter to an appointed specialist franchise mediator to assist in resolving the dispute. A franchisor cannot require a franchisee to pay for a franchisor’s costs in settling a dispute under a franchise agreement.

TERMINATING A FRANCHISE AGREEMENT ARRANGEMENT 1. TERMINATION DURING THE COOLING OFF PERIOD The Code provides that a franchisee may terminate within seven days after entering into the agreement and making any payment under the agreement (pre-payments). That is, you can change your mind during that time and the franchisor must, within 14 days, refund all payments made by the franchisee to the franchisor. 2. TERMINATION WITHIN THE TERM OF A FRANCHISE AGREEMENT A franchisor may terminate a franchisee if they believe the franchisee has breached a term of the franchise agreement. The Code requires that the franchisor give the franchisee reasonable notice in writing, how a breach may be remedied, and allow the franchisee no more than 30 days to remedy the breach. Another area the Code ensures that the parties proceed in an equitable and reasonable manner is in dispute

STATEMENT OF INDEPENDENT ADVICE Last but not least, the Code requires the franchisor (or their representative) to provide a Statement of Independent Advice to you before entering into the franchise agreement. It recommends that you seek independent legal, business and accounting advice. It is absolutely critical to contact a franchise specialist lawyer and business advisor because they can assist you in assessing all the information, clarifying your rights and obligations under the franchise agreement and even negotiating with the franchisor if you require. n Ashley Tan is a commercially driven franchising lawyer with degrees in both economics and law. An enthusiastic member of the DCS Lawyers team, she develops and reviews franchise documentation, advises on general commercial and corporate matters including business structuring and lease transactions with a special interest in dispute resolution and consumer law.

GOOD FAITH Arguably, franchisors and franchisees acting in good faith in their conduct with each other is the most important element of the Code. There isn’t a definitive explanation of good faith, but as a general guide, the Code stipulates the necessity for all parties to act honestly and not JULY/AUG 2018 | 146 | WWW.FRANCHISEBUSINESS.COM.AU

SIX STORES IN FOUR YEARS.

NOW CHAD IS COOKING UP EVEN BIGGER PLANS.

Chad Cable Multi-Unit Franchisee

2016

BUYS THE STORE WHERE HE STARTED AS A TEAM MEMBER

2014

ENTERS PARTNERSHIP ON FIRST DOMINO’S STORE

201 6

SU MO A CC ST ST UST ESS OR RA FU E 3 LIA L IN A R YEA N OW RS

SEL

2017 BUYS SIXTH DOMINO’S STORE

Chad Cable’s recipe for success is simple. Have fun, work with a great team, and always be hungry for more. With a burning desire to succeed, he now plans to open ten more stores in the next five years. Chad’s proof that a little ambition can take you a very long way as a Domino’s franchisee. To start building your Domino’s business, visit dominosfranchise.com.au.

L MO RE PIZ HAV ZA EM ORE FUN !

Weâ&#x20AC;&#x2122;re spreading our love of flame grilled Portuguese chicken with new restaurants in QLD, VIC, WA and Regional NSW. Customer centric and business minded? Want to own your future? Enquire today: w ww.oporto.com.au / franchising