Inside Franchise Business Feb/Apr 2022 by Octomedia Pty Ltd

FEB/APR 2022 ISSUE 35 VOL 01 AUS $6.95 | NZ $7.95

FORGING AHEAD

Booming logistics business scoops top award

SPEND $150K+ 8 franchises you can afford to buy

PREMIUM SCOOP Market report: ice cream trends

FIRED UP FOR 2022 Recruitment franchise ready for growth

IN THIS ISSUE

REGULARS

Global eye

Insights

The list

Q&A

COVER STORY

Tuning up

Heavy lifting

BUDGET

Find a franchise for $150,000+

MARKET REPORTS

Premium Scoop

Bright and shiny

Diving in

Fighting fit

The learning advantage

Location, location, location

PROFILES

PROPERTY

InXpress is forging ahead

Rapid Tunes wins top award

Snap Fitness franchisee’s triumph of tenacity

Look what’s in the price range!

Ice-cream stores in the spotlight

What’s driving the car wash sector

Pool care potential

Working it out at the gym

Influences shaping tutoring

Property hot spots unveiled

WWW.FRANCHISEBUSINESS.COM.AU | FEB/APRIL 2022 | 5

WALK YOUR OWN PATH! 2021

Top 10

Are you ready to explore new frontiers, unleash your drive, and challenge yourself to realise your ambitions? Lorem ipsum

Seize the initiative and become a Kwik Kopy Franchise partner, in an environment that heroes your independence while providing the support you need to thrive. You'll be joining one of Australia's most dynamic and creative franchise groups, working in the exciting field of business communications and marketing. Owning a highly profitable Kwik Kopy franchise means you'll be joining Australia's leading design, print, signage and marketing supplier - with almost 100 franchises already enjoying proven success around the country. Visit kwikkopy.com.au/franchise or call Maria Chemali on (02) 8962 8526 for information. Australian citizens & permanent residents welcome to apply.

EDITOR’S NOTE

Fresh new look to kickstart 2022

EDITOR

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

Is 2022 going to be different? Perhaps this will be the year when things really do get back on track. Is it time to take the big step forward? At Inside Franchise Business we’ve taken a big leap forwards across all our media channels. This is the first issue of our bold, new look magazine, with content designed to inspire and inform, whether that’s through personal tales of success, business case studies, market reports, location updates or industry insights. To help you better understand the dynamics of a sector and perhaps spark your interest in an industry you hadn’t considered, each of our quarterly editions will feature market reports where we put the spotlight on key statistics and trends. In this issue take a look at what’s happening with ice cream stores, pool care, car washing, gyms and tutoring. We put the spotlight on brands still new to franchising as well as established names such as InXpress, Frontline Recruitment Group, Rapid Tune, Price Attack, Gelatissimo and Snap Fitness. Inside Franchise Business magazine gives you a peek into the world of franchising and showcases the success that can be achieved. This year we are introducing a brand new print publication packed with vital information and advice that will be an essential handbook as you take the path to becoming a franchisee. Look out for this no-nonsense guide to buying a franchise, launching autumn 2022. We’ve also taken big bold steps with our digital presence; to enhance your online search for the right business an exciting new website is coming soon… Let’s make 2022 a great year. Enjoy the read.

SUB-EDITOR Karen Gee Haki Crisden

HEAD OF SALES

Jeff Purser P: 0408 401 076 jeff.p@octomedia.com.au

SENIOR ACCOUNT MANAGER Gerry Little P: 61 414 455 772 gerry.l@octomedia.com.au

ADVERTISING COORDINATOR Mathilda Ehne P: 61 2 8224 8375 mathilda.e@octomedia.com.au

GRAPHIC DESIGN

Rozelle Carlos rozelle.c@octomedia.com.au

OCTOMEDIA

OCTOMEDIA Pty Ltd Suite 3, Ground Floor, 131 Clarence Street, Sydney NSW 2000 Ph: +61 2 9901 1800 WWW.OCTOMEDIA.COM.AU FOR SUBSCRIPTION ENQUIRIES call Customer Service: 02 8224 8383 ISSN: 1321-408X

PR INTED BY: BLUESTAR PRINT 83 DERBY STREE T, SILVERWATER NSW 2128 P: 02 974 8 3411

Sarah

Sarah Stowe Editor

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 www.facebook.com/insidefranchisebusiness/ twitter.com/ifranchisebus au.linkedin.com/showcase/franchise-business-australia www.instagram.com/insidefranchisebusiness/

WWW.FRANCHISEBUSINESS.COM.AU | FEB/APRIL 2022 | 7

GLOBAL EYE

Expanding horizons Check out franchise growth plans, acquisitions, innovations, retro developments and new appointments.

Malaysian fitness brand launches in Aus A brand new fusion fitness concept from Malaysia has landed in Australia, with the first of 10 studios set to launch by the end of 2022 already open. In total six studios have been signed up by Fitness Business Sales, the Australian business tasked with growing the fitness chain’s footprint here. Fire Fit plans four more Aussie studios this year, according to Damien Bain, founder and managing director of Fitness Business Sales. The Fire Fit concept is class-based, with sessions available both online and in studios and most (80 per cent) delivering a mix of training techniques. “As a franchisee you can have up to six disciplines under one roof: cycle meets boxing and function strength training, for instance. For a business owner, if for some reason the discipline/s you have do drop out of fashion,

you can change your studio, say from an indoor cycle studio to Strike Boxing.” The capital investment for a Fire Fit franchise is between $150,000 and $400,000 and franchisees need a minimum $100,000 liquid cash.

Macca’s reopens original store The very first McDonald’s store in Australia has reopened, with a flashback to the 1970s. Sydney’s Yagoona outlet was the standard bearer for the burger brand back in December 1971 and now the reimagined store celebrated its opening with limited time retro pricing on the menu. For just two hours, the Hamburger was

8 | FEB/APRIL 2022 | WWW.FRANCHISEBUSINESS.COM.AU

priced at a mouthwatering 20 cents! Andrew Gregory, CEO McDonald’s Australia, said “We are incredibly proud to reopen McDonald’s Yagoona and recognise its important part of our history. “ The original restaurant operated from December 1971 to 1994.

BUY A BUSINESS WITH BITCOIN Is cryptocurrency the new payment method for buying a franchise? Sushi Sushi has put up a retail outlet for sale, listing the price in cryptocurrency, while kids multi-sports business Sport Star Academy has priced a franchise at one Bitcoin. The Sushi Sushi store for sale is at Surfers Paradise, priced at $1 million or ₿15.09 (Bitcoin), ◎3,580.25 (SOL, Solana) or Ξ161.63 (Ether).

7-ELEVEN PLANS WA GROWTH 7-Eleven expands in Western Australia with the opening of five new stores, including its first regional store at Busselton. Nick Maddox, 7-Eleven Area Lead – WA, reports the company is going to continue to grow by investing approximately $6m new stores in 2022. “We expect to open about seven stores in Western Australia in 2022. We are incredibly excited to open our first regional store at Busselton and will continue to grow our regional network adding a new store at Treendale in early 2022,” he said. The convenience chain has invested $5m in recent growth, bringing the total invested in the region to more than $47m since the unveiling of the first store in October 2014.

Mad Mex plans 25% store growth as chain reverts to 100% Aussie ownership Mad Mex founder Clovis Young has bought back the Mexican fast food business, buying out 50 per cent venture partner Singapore-based 4Fingers International. Young is hesitant to give a timescale for this. “We still can’t travel till March. The challenge is no-one from Mad Mex has been in New Zealand in 29 months, it’s very hard for us to get a handle.” “We’re certainly continuing to build capability and have an interest in expanding outside Australia and New Zealand; it’s horizon two, it’s medium term,” he said. In New Zealand the short term plan is to keep trading, the medium term goal is to grow from 15 to 20+ stores. For Australia, Young plans

25 per cent store growth annually. “We see a lot of great opportunities. Mad Mex is the preferred retailer from a shopping centre perspective, Mexican is critical for appealing to a younger demographic. “Our short term priorities are super regional shopping centres, and high density neighbourhoods. We have a positive view of CBDs but it will be a two year recovery.” Most importantly for the Mad Mex founder, total ownership gives the company the ability to act swiftly to secure the best deals. “We can act aggressively and quickly, take advantage of great lease deals and prioritise great franchisees.” he said.

Motto Motto franchisees double up The very first franchisees to open a Motto Motto restaurant a year ago have already signed up to their second outlet. Franchisees Frank Jiang and Linda Zhang opened the doors to their Carindale outlet in November 2020; the pair have now expanded their business with the Motto Motto Westfield Garden City restaurant. Motto Motto is a chain of 10 premium-casual restaurants featuring a mix of traditional and modern Japanese or Japanese-inspired dishes. The chain began in Brisbane and has since expanded through company stores in south east Queensland at the Gold Coast and Sunshine Coast and in March 2021 opened the first New South Wales restaurant at Castle Towers. The goal is now to expand the business through franchised stores in Victoria and then nationally.

Multi-brand fitness firm heads to NZ Australian-based Boutique Fitness Studios is heading to New Zealand, launching three fitness franchises from the stable of brands owned by US company Xponential Fitness. The three fitness brands – indoor cycling franchise CycleBar, wellness concept StretchLab and the boxing-inspired fitness chain Rumble– have all been set up in Australia by Boutique Fitness Studios, a joint-venture master franchise operation group led by Matt Gordin and several stakeholders,

including former AFL player Tory Dickson and professional cricketer James Pattinson. The firm’s goal is to provide entrepreneurs with manageable, scalable and high-return franchise entry points into the wellness industry. So far in the last 12 months Boutique Fitness Studios has secured 37 franchise studio territories around Australia, with a further six confirmed to roll out across New Zealand in 2022.

WWW.FRANCHISEBUSINESS.COM.AU | FEB/APRIL 2022 | 9

GLOBAL EYE

Mortgage firm’s acquisition

ON THE MOVE

Mortgage broking business MoneyQuest buys Buyers Choice, a boutique sub aggregator which currently settles more than $250 million a month. Buyers Choice provides finance for property, small business, vehicles and equipment as well as personal finance and car loans. MoneyQuest has more than 100 offices across the country, and the national mortgage broking franchise has big plans for the combined business.

Fitstop boosts WA footprint Functional fitness franchise Fitstop has added two more studios to the three already operating in Western Australia. There’s also a new facility in Queensland at North Ipswich. Each of the gyms opened with at least 100 members signed up. In total, Fitstop now has 68 outlets across Australia.

Anytime Fitness co-founder Jacinta McDonell has joined Boutique Fitness Studios as a director, board member and investor. Former McDonald’s Australia CEO Catriona Noble has been named as the head of Australia Post’s retail business.

Kellie Cranch moves from Retail Food Group to take up the role of chief of franchise development at Poolwerx. Snap Franchising CEO Richard Thame returns to the logistics sector as CEO at CouriersPlease.

We have steadily grown our brand, franchise footprint, customer and franchisee satisfaction scores and revenue. Mark Rippon, founder, Rapid Tune

How long have franchisees operated their businesses?

32% 25%

30%

37%

Five years or less

Between five and 10 years

More than 10 years

Source: The 2021 Australian Franchisee Survey, conducted by Frandata on behalf of the Franchise Council of Australa. The first national franchisee survey is based on responses from 1,007 franchisees representing 82 Australian franchise systems. Read more about who Aussie franchisees are, and what they are thinking, on page 12.

Why not join us on social media? Keep up with the latest news, views and franchise stories. 10 | FEB/APRIL 2022 | WWW.FRANCHISEBUSINESS.COM.AU

FB: TW: IG: LI:

@InsideFranchiseBusiness @ifranchisebus @insidefranchisebusiness au.linkedin.com/showcase/franchise-business-australia

THE LIST

2022

On trend

BACKUP PLANNERS

As supply chain disruptions continue to impact purchasing capacity, consumers will find creative solutions to buying their favourite products.

CLIMATE CHANGERS

Eco-anxiety and the climate emergency are pushing environmental activism towards a net-zero economy. Last year just over a third (35%) of global consumers curtailed their carbon emissions.

DIGITAL SENIORS

Mature-age consumers are increasingly competent users of technology. Online solutions need to meet the demands of this growing audience.

FINANCIAL AFICIONADOS

Consumers are strengthening their financial literacy and security. Now more than half of the world’s consumers are confident they will be better off financially in the next five years.

THE GREAT LIFE REFRESH

There’s a new focus on personal growth and wellbeing, and consumers are taking bold life changes that reflect their values, passions and purpose.

THE METAVERSE MOVEMENT

Immersive, 3D digital ecosystems begin to transform social connections. Around the world sales of AR/VR headsets grew 56 per cent from 2017 to 2021.

PURSUIT OF PRELOVED

The up and coming influences that will shape business this year and beyond.

onsumer trends are reflecting the current state of uncertainty and the challenges businesses face to deliver services and goods. Check out what the key influences will be according to global business intelligence firm Euromonitor International.

Secondhand shopping and peer-to-peer marketplaces flourish as consumers embrace the unique, affordable and sustainable.

RURAL URBANITES The tree or sea change continues as people relocate to safer, cleaner and greener neighbourhoods.

SELF-LOVE SEEKERS Lifestyles embracing authenticity, acceptance and inclusion bring new spending habits.

THE SOCIALISATION PARADOX

It’s all different now. In 2021, 76 per cent of global consumers took health and safety precautions when leaving home and the pandemic uncertainty continues. Alison Angus, head of lifestyles at Euromonitor International, says “Businesses need to transform alongside rapidly evolving consumer preferences.”

Source: Euromonitor International Top 10 Global Consumer Trends report 2022. WWW.FRANCHISEBUSINESS.COM.AU | FEB/APRIL 2022 | 11

INSIGHTS

What franchisees really think What are Aussie franchisees optimistic about this year? The very first national survey of Australian franchisees reveals a positive attitude for 2022, despite some concerns from business owners.

t’s good news on the business front with almost half (49 per cent) of respondents expecting a better or much better trading performance over the next year and just 14 per cent predicting a decline. The most optimistic industries included convenience stores, retail food outlets, retail stores, pet services and home services franchises. On the financial front, 66 per cent did not foresee a borrowing need over the next year; in contrast 20 per cent

12 | FEB/APRIL 2022 | WWW.FRANCHISEBUSINESS.COM.AU

expect to borrow at least $50,000 in the next 12 months. The sector can expect to see increased staffing levels, with more than 70 per cent of respondents seeking to boost employment numbers over the upcoming 12 months. Nearly one third (30 per cent) indicated they hope to employ between two and four more staff, 21 per cent are planning for an additional five to 25 employees and 3 per cent are expecting to add more than 25 new staff.

What does 2022 look like for franchisees?

49%

70%

expect better trading

will boost staffing

66%

20%

Money matters

no need for loans

On reflection A great majority of respondents (80 per cent) indicated they were receiving high levels of marketing support from their franchisor; 67 per cent said they were receiving good levels of technology and systems support. About 30-40 per cent of respondents reported receiving high levels of support when dealing with landlords, vendor relationships, payroll and HR issues as well as accessing government support programs. Overall 80 per cent of respondents found their franchisors supportive throughout 2021 (many franchise systems had a spread of responses) and nearly 60 per cent saw distinct advantages to being part of a franchise system rather than operating as an independent business. The survey showed a fairly even split in the length of time respondents had been operating: 33 per cent less than five years, 30 per cent had been operating between five and 10 years, and 37 per cent had notched up 10 years in business. Most popular as a business model, the bricks-and-mortar premises, with 36 per cent of respondents operating from stand-alone premises and 33 per cent within a shopping centre. The survey revealed 22 per cent of franchisees were operating from a mobile van or home office. 

expect to borrow $50,000

What franchisees think of franchisor support

80%

good marketing support

67%

good tech and system support

WWW.FRANCHISEBUSINESS.COM.AU | FEB/APRIL 2022 | 13

INSIGHTS Challenges and concerns Almost half (49 per cent) revealed their staff were being subjected to negative or aggressive behaviour when asking customers to comply with government health directives and more than 60 per cent said they were a little, or very concerned about the safety of staff. This particularly affected franchisees of retail stores, retail food, convenience stores and fast food outlets.

Who are Australian franchisees?

Franchisees revealed their biggest challenges ahead are the risk of lockdowns (57 per cent), staff recruitment (56 per cent), and the financial performance of their businesses (53 per cent). 

69% 29% 45%

Where do Aussie franchisees come from? How many business units do franchisees have?

57%

73%

Where are franchisees operating?

20%

76%

capital cities

The 2021 Australian Franchisee Survey Report is based on responses from 1,007 franchisees representing 82 Australian franchise systems. It was conducted by Frandata on behalf of the Franchise Council of Australia.

14 | FEB/APRIL 2022 | WWW.FRANCHISEBUSINESS.COM.AU

Amber – A proven business system. Become a part of this iconic and successful brand.

Over 45 5 years of successful trading shows that the Amber business system works. We aim to take advantage of the past to leverage a stronger future. The Amber brand is synonymous with style and value. Sourcing product from around the world, Inspirational living spaces are made easy with our huge range of pavers, natural stone, retaining walls, floor and wall tiles and bathroomware. With product for both the indoor and outdoor areas of the home, coupled with our group buying power, the Amber franchise model provides a unique business opportunity like no other. We currently have 28 stores across three states/territories with many thousands of

For more information contact: Dan Snyder Head of Franchise Relations & Development Email: franchising@ambertiles.com.au www.ambertiles.com.au

satisfied customers. Recent market research continues to confirm that Amber has a powerful unaided recall with customers - incredibly strong in fact for any retail field. The success of our network has always depended on the success of our Franchisees. Our stores are supported by market leading IT systems with a dedicated and experienced support team with a passion for the success of our franchisees. It's our intention to grow and nurture the Amber Franchisee family well into the future.

PROFILE

Forging ahead

The freight and logistics industry is booming, and InXpress, the FCA International Franchisor of the Year 2021, is wellplaced to take advantage of the increased demand.

16 | FEB/APRIL 2022 | WWW.FRANCHISEBUSINESS.COM.AU

arcel Lal joined InXpress in 2018 as country GM for Australia and New Zealand, before taking on the role of CEO Asia-Pacific in May 2019. In October 2021 the business was awarded by the Franchise Council of Australia for its international focus. “The awards are really important to give a business like ours additional credibility. We’re not a traditional business you can touch and feel. Ours is under the radar, it takes more time to understand. “The award has been helpful in our marketing, it validates what we are doing with an investment-led mindset,” says Marcel. “The results are there to support that we’re heading in the right direction.” Operating in the business-to-business marketplace, InXpress provides a shipping solutions platform, with a single point of contact and one invoice, no matter how complex the shipping job. The vast majority of clients (90 percent) are small and medium enterprises (SMEs), who value the service, advice and automated platform that InXpress provides. “We’ve made life easier for them, in time and costs,” says Marcel. “During Covid, without the same level of face-to-face interaction, SMEs in Australia generally really value service-based industry, comfort and advice,” he says. Navigating the challenges of the Covid-19 pandemic has served to show how resilient the InXpress business can be. “It’s about constantly looking back at results, looking at what you need to do in resources for support but continuing to look into the future. That is really important, it’s easy to just focus on the here and now,” he says. There’s been the challenge of finding capacity in an overstretched courier market and against the background of external domestic strikes. Marcel’s solution has been to focus on these problems but with an eye to the future, to resource up and spend money on staff, increasing corporate staff by 50 percent, to get ahead. “Now we have a really experienced team in place across Asia-Pacific. As we stand right now, in Australia we’ll finish the year with revenue growth

of 40 percent; in New Zealand, which is a much smaller market, it will be more than 100 percent,” he says. Marcel is projecting a similar increase for 2022, about 30 to 40 percent, and a minimum 30 percent growth year on year for the next five years. “We take our management fees based on margin not revenue, we’ve got skin in the game. It’s about profitable revenue growth. That’s why we’re investing so heavily.” InXpress has 55 franchisees in Australia, with some consolidation of existing franchises, and there are more joining. “It’s been good to see that level of growth – it’s certainly justified the increased spend and resourcing and system enhancements that provide more services for franchisees to sell.” Business resilience is also built around communications, the process of testing ideas and garnering feedback from franchisees, monthly country calls, virtual sessions and various other engagement points, says Marcel. “We revamped our processes to provide much more individual and group communication and that has built resilience among franchisees too.” E-commerce has boomed but successful businesses can’t rely just on technology – they need to have people on the other end of the phone. Investing in staff and technology is crucial. A good franchisee support centre ensures franchisees can in turn support their customers, and InXpress operates with a very high ratio of staff to franchisees: one support staff member to three franchisees, as an overall rule.

Encouraging a good gender mix Marcel is also a big advocate for encouraging women in the logistics industry. “I’m approaching three years in the CEO role, and in the last 12 months we have more women in the network and in staff across Asia-Pacific.” About 60 percent of the staff is female, a particularly high proportion for the freight and logistics industry. Some of the female staff are mums coming back into the workforce. Ø WWW.FRANCHISEBUSINESS.COM.AU | FEB/APRIL 2022 | 17

PROFILE

BEDDOWN INITIATIVE InXpress is a freight partner for the homelessness charity Beddown, which repurposes vacant spaces into pop-up accommodation. Staff, franchisees and business customers also engage in fundraising, donating money or their time to the cause. As a system-wide initiative, there’s a network-wide focus from conference attendees putting pen to paper to provide handwritten cards for the homeless, to individual franchisee events.

“And six out of 11 of my direct reports are women,” adds Marcel. “I believe in employing the right person for the job, so I don’t pigeonhole people, it’s important to look for opportunities for people.” To action this requires getting multiple men and women involved in the hiring decisions. “Even if the role doesn’t relate to their area, there are aspects that could fit. We have an energetic, fun, ambitious and forward-thinking workspace. The team is aware of what to look for.” It’s also important to refrain from being too prescriptive in the recruitment process, with the questions asked, and with the job ads. “A business coach may have the skill sets but not done the role before,” says Marcel. “We have a global women’s seminar, where all staff and franchisees are female.” It’s about developing female managers, gaining international certification for franchising, attending the International Franchise Association’s annual event, to create the next wave of female leaders. Traditionally it has been men who have shown most interest in buying an InXpress franchise. “However, once they realise this is not a 18 | FEB/APRIL 2022 | WWW.FRANCHISEBUSINESS.COM.AU

traditional freight business with a truck, that it is tech-enabled, a number bring in their partner to be involved. Some women come in direct.”

The challenges ahead Challenges are ongoing in the new world, says Marcel, from freight capacity challenges – road freight, air freight capacity, less airline space, strikes – to contingency and future planning based on technology. The key is providing a seamless service for customers, he says. InXpress ensures that if there’s a problem with one carrier, a customer can have an alternative carrier provided to avoid any business disruptions. “It’s about what we’re doing to counter the challenges,” he says. “Franchisees are working in business-to-business, and face-to-face engagement is crucial. And that is why InXpress has an 80 percent customer retention rate, there is regular engagement with the local franchisee. “During Covid we did a lot to help franchisees’ communication skills on the phone, online, video, to make sure we are providing a personalised service.” ¢

PROFILE

New recruits A dynamic year ahead, new branding and happy franchisees – 2022 is lining up well for Frontline Recruitment Group.

“

e've had a major success in franchise sentiment, the Net Promotor Score increasing by 36 points in July,” reports an enthusiastic Arthur McColl, CEO of Frontline Recruitment Group (FRG). “We’ve been perfecting the business models, gained the trust of franchisees and increased profitability.” In early 2020 the group was purchased by US firm Express Employment Professionals. In addition to a substantial support system and resources, FRG now has a sibling business focused on flexible staffing, with the US model tweaked and introduced to the Australian market in 2021. It’s been a whirlwind couple of years with new owners and the challenges of Covid thrown in. So looking ahead to a new year and a newlyminted brand is exciting for the FRG team. “We relaunched FRG in January as a new, vibrant brand and a working group of six franchisees has been heavily involved,” reveals Arthur. Creating working groups in marketing and IT/ data has been one solution to franchisee requests for more collaboration. “This is a 26-year-old brand, so we listened to the network, undertook an engagement survey and they said the brand was dated. So we went to

the US [head office] for a budget.” FRG’s chief marketing officer, Michelle Gamble, believes the timing is perfect, one year into acquisition and post-lockdowns. “Attracting consultants drives our growth, so we need the brand to be modernised,” she says. “Lots of our business is female focused and our brand is quite masculine. It needs to reflect what we are today, the diversity of the client bases, a more sophisticated business, it needs a human element.” FRG operates within a number of industries, where franchisees draw on their personal industry experiences to operate their own small business in their chosen sector: retail, hospitality, construction, health, education, and IT and digital industries. Today FRG has 80,000 clients and 1.2 million candidates on its database, which franchisees can tap into. The business model provides business systems, training, budgeting and financial analysis so franchisees are set up for success from the start. Arthur says three new agencies came on board with the Express brand last year – one corporate, one a conversion from an FRG agency, one in New Zealand – and with strong performances overall in the final few months of 2021 the company is set to expand on its success. Ø

WWW.FRANCHISEBUSINESS.COM.AU | FEB/APRIL 2022 | 19

PROFILE

FRANCHISEE TESTIMONIALS Pia O'Neill Frontline Hospitality Queensland, South Australia & Northern Territory

When business took a dive during Covid, within a week Pia’s business was closed. However, despite juggling all the challenges of the pandemic, a new baby and a new franchisor, she reports that now business has never been better! Pia has been with FRG 16 years, starting as a parttime receptionist for a franchisee. She purchased her first store at 26 in Brisbane and then formed the Queensland Hospitality division, added in North Queensland, and five years ago ventured into the Northern Territory and South Australia. The hospitality sector has been badly hit by the pandemic, she admits. “Covid was really harsh. My business closed down in a week and we were closed for five months. “We’ve pulled back operations so for now we are just based out of Brisbane. We are still operational interstate but not on the ground. “On the recruiting front we had people who went home, who left the industry – it was heavily affected, people changed careers. It’s been really hard. “Having said that, we’re the busiest we’ve ever

20 | FEB/APRIL 2022 | WWW.FRANCHISEBUSINESS.COM.AU

been! As a business we only focus on permanent roles at management level and there’s a very big shortage of chefs.” Pia says the new franchisor has made a difference to the business. “FRG was bought out at the start of Covid. It was a very wild, nerve-wracking time. But it was a very smooth transition, there were lots of people involved talking to us. “I knew it was a good business beforehand and I loved the previous owners so it was very daunting. “The level of communications was great, we had operators in Express making contact, and our CEO Arthur was quick to come out and meet us.” New departments including learning and development have been introduced. “We’ve got so many more tools, you can see they are investing a lot in the business to help us perform at our best. “We have good supply rates now because we’re so much bigger, there’s a network of support with other agency owners, and everyone is very motivated. “It’s busier than ever. It’s been a big journey.”

Graham Howard Frontline Health and Frontline Education Queensland

Reflecting on the company’s acquisition in 2020, Graham has nothing but praise for the process and the new owners. “The old owners ran this for 25 years so it’s been different. I like to think of it as ‘we’ve had a fantastic house but now we’ve got solar, modern furnishings, it’s even better’. “And having been in corporate I’ve never seen a changeover better handled.” Graham first got involved with FRG as an executive looking for retail staff, and he loved the business model. “It sowed a seed, it grew. It’s white collar, Monday to Friday, dealing with people, so I explored what was available.” Graham has a background in health and, along with the Sydney franchisee, was the first to operate in this sector. “I had no clients and no candidates. Systems and processes don’t mean a thing when you haven’t got anyone to talk to. When I look back, it was incredibly daunting, where do you start? “Health is a behemoth so which sector do you go after? I started with the jobs supplement, and once I’d found the jobs I got in touch with the

recruiter and put the jobs on our jobs board. Then I started to build up a database. “The key to success in our business is the people we employ. If we don’t have the right people, it’s incredibly hard for anyone and a huge drain on finances if you get it wrong. “The best part about our business, and the worst part about our business, is you’re dealing with people. You have to sell the job to the candidate, then sell the candidate to the business. “You have to market yourself. While it has aspects of HR, first and foremost it’s a sales and marketing role.” Over the years Graham and his business partner (who runs the education agency) have made friends with other agency owners. “The greatest advantage to me has been the networking, sounding out ideas, best practice, sharing information, genuinely supporting each other. We’ve all been on a rollercoaster from the day we started. “It’s our colleagues that rally around. “I love my team, what I do, coming to work. In the next 12 to 24 months I’d love to step back a bit but I don’t see myself managing myself out of the business.” ¢

WWW.FRANCHISEBUSINESS.COM.AU | FEB/APRIL 2022 | 21

PROFILE

Tuning up A to support franchisees Take a look under the bonnet of the Rapid Tune automotive aftermarket repair business, the 2021 Established Franchisor of the Year.

22 | FEB/APRIL 2022 | WWW.FRANCHISEBUSINESS.COM.AU

small office onsite at the very first Rapid Tune outlet was where founder Mark Rippon hatched his franchising plan. Today the business that started in Ferntree Gully, Victoria, boasts 29 locations, 25 franchises and four company stores based in its home state and Queensland; 18 of the stores have been launched within the last five years. The business delivers a range of mechanical repairs on all makes and models of vehicles including logbook servicing, brake repairs, air conditioning, management system diagnostics and a complete range of tyre fitting services. Mark has personal experience as a franchisee with other brands, and that has given him the franchise smarts required to launch a system that works for franchisees. He set out to create a franchise brand with a unique culture and high franchisee satisfaction, and launched the model in 2008. “We have steadily grown our brand, franchise footprint, customer and franchisee satisfaction scores and revenue,” Mark says. It’s been a deliberate choice to focus on steady, sustainable growth, starting with Victoria, and in 2016, Queensland, where there are now eight outlets. Once there are 25 stores operating in the Sunshine State, Rapid Tune will expand into New South Wales. The very first franchisee came from within the business and 90 to 95 percent of franchisees today are Rapid Tune employees-turned-business owners. The initial franchisee has been an integral part of the company for more than a decade. Mark says,

“Over his career he has purchased and sold multiple Rapid Tune franchises, and is currently a shareholder in one of Rapid Tune's best performing outlets.”

Supporting franchisees Three years ago Rapid Tune established a financing department to provide financial support to franchisees who are unable to access capital, and it’s been a fundamental tool in achieving the brand’s growth, says Mark. Now the $50,000 deposit can be paid off during the duration of the franchisee agreement. There’s also the opportunity for franchisees to access equipment financing. Like so many other businesses, Rapid Tune had to adapt to the challenges set by operating in a pandemic. For instance, in Melbourne services were cut back to just emergency repairs during lockdown, which put a strain on those franchisees. “We intervened to lessen the impacts and protect franchisees from the financial fallout,” explains Mark. There were other changes across the network such as negotiating rent relief for franchisees, providing relief from royalty payments, assisting franchisees to apply for government subsidies and support, loan deferrals and financing help. “These measures not only helped franchisees weather the storm, they also helped us build integrity and bolster our franchisee relationships, demonstrating our proposition of being one of the most supportive franchise systems in the country,” says Mark. 

WWW.FRANCHISEBUSINESS.COM.AU | FEB/APRIL 2022 | 23

PROFILE

“We work hard to build trusted relationships, and open and honest communication with franchisees. This enables us to have the tough conversations when needed and encourage accountability in order to help our franchisees succeed.” When franchisees start out, they work for a month in another outlet while their store is being established. Franchisees receive training on business operations including financial reporting, employment law, compliance, sales techniques and customer service; on instore operations; technical training if required; and Fair Work Australia and Work Safe introductory training. As franchisees build their businesses, training continues across all aspects of the business, and for any underperforming franchisees there is a tailored training program to help get them back on track. Head office can undertake real-time analysis using a cloud-based revenue management system and provide the appropriate franchisee support. Personalised training and support is also available to help franchisees manage mental health and work–life balance, something that proved particularly important during Covid-19. Looking ahead, it will be the ongoing technological advancements within the industry that create service and repair opportunities for franchisees. “All franchise outlets are fitted out with the latest service equipment needed to maintain this ever-changing industry. To date, Tyre repairs, diagnostics and vehicle repairs and maintenance remain our core sources of revenue,” says Mark.

Award-winning business Rapid Tune was named the Australian Established Franchisor of the Year 2021 in the FCA Excellence in Franchising Awards held in October last year, after being a finalist in the two previous annual awards programs. The award recognises excellence in an Aussie franchise that has been trading for at least five years. So what is distinctive about the business that makes it a success? “That’s easy,” says Mark, ”Rapid Tune’s superior culture. Every individual at Rapid Tune places a considerable amount of value in backing each other through the good times and the bad. In business, having people you can rely on for support is your greatest asset, and that’s what you get when you’re part of the Rapid Tune team.” ¢

24 | FEB/APRIL 2022 | WWW.FRANCHISEBUSINESS.COM.AU

WHAT DOES IT TAKE TO BE A RAPID TUNE FRANCHISEE? • Automotive and mechanical knowledge • Customer service and sales experience • A working history demonstrating commitment • A clear understanding of the responsibilities and obligations required of them when aligning with the Rapid Tune brand • The right personality to maintain the brand culture

THE DETAILS • Investment: $265,000 – this includes the complete site set up and franchise fee. • Marketing fee: 3.6% • Franchise fee: 9%

HISE RETAIL FMCG SWE FRANCHISE RETA USINESS FRANCHIS HAVE MALL BUSINESS FRA A NEW L FMCG SMALL BUS HISE RETAIL FMCG LOOK! S FRANCHISE RETA USINESS FRANCHIS MALL BUSINESS FRA L FMCG SMALL BUS HISE RETAIL FMCG S FRANCHISE RETA USINESS FRANCHIS MALL BUSINESS FRA octomedia.com.au

PROFILE

‘Quirky’ Royal Stacks ready to beef up The distinctive Melbourne-area burger business has plans to more than double its number of stores over the next two years.

“

e do good classic burgers in a friendly environment, using the best ingredients. We’re not trying to be everything to everybody.” The Royal Stacks burger restaurant started in 2016 but founder Dani Zeini’s burger journey began earlier, at Dandenong Pavilion, Grand Trailer Park Taverna, and Truck Stop Deluxe. He wrote on Instagram after closing the Grand Trailer Park Taverna in lockdown, “At its peak, just before we shut the doors, we were getting almost 2,000 people through the doors a week. When you talk about good burgers in the CBD, I’d say we were right up there, and that was something that meant a lot to me.” Dani flipped his efforts to enhancing the Royal Stacks flagship and today his goal is simple. “I want to be the Melbourne number one burger brand.” He’s ready to bring in other passionate business owners to help. Royal Stacks will open four new locations over summer 2021/22, doubling its restaurants to eight, and has plans to increase its footprint significantly over the next two years. Dani says gradual and considered growth is important for retaining the distinctive burger culture and character of the brand in a busy marketplace. “On the surface it seems crowded but we’ve got our own little niche. We try to be quirky, more 26 | FEB/APRIL 2022 | WWW.FRANCHISEBUSINESS.COM.AU

than just a burger joint. We try to be a restaurant first,” he explains. “ I want people to come to the restaurant to get that experience from the vibe, the music, the decor.” Neon lights and elements of an American diner give the brand fresh appeal and there are features unique to each venue, such as an in-house podcast studio and a vintage Flavour Shot machine. When it comes to restaurant design, while the kitchen layout is standard, the front of house can be more collaborative. “We’re actually hoping franchisees will have personality traits or hobbies that will influence the design, perhaps basketball or music vernacular.,” Dani says. Traditionally, burger stores sport dark decor and loud music; the design thread that runs through Royal Stacks stores is one of colour and light. That’s one reason Royal Stacks appeals particularly to female customers, Dani believes. Women make up 55 per cent of the main customer demographic – 18- to 34 year-olds. Another reason is the size of the menu – and the meals. Just nine items are on the menu, which features moderately sized burgers dressed with lighter sauces and mayonnaise. “They are not overwhelmingly heavy,” Dani says. “We’re always fresh, we’ll never do frozen. Our bread recipe has been developed by us, we use

different types of proteins.” So what’s the story behind the name? Royal Stacks is a juxtaposition of an Aussie colloquialism, ‘stacks’, and ‘royal’, indicating premium; the implication being that you don’t have to be royal to eat like a queen every day. “Everyone’s working really hard,” Dani says. “This is an opportunity to treat yourself. We are trying to replicate the age-old tradition of making fresh food.”

Expanding through franchising

THE DETAILS • It will cost $350,000 to purchase a franchise. This includes the store fit-out, kitchen equipment, capital, and franchisee fee. • Franchisees will pay a 6% royalty fee and a 1% marketing fee. • New franchisees will undertake a training program that includes an in-restaurant period of 4-6 weeks.

“The plan is not to be the most franchised, but to service the franchise well. Franchising the restaurant gives others the opportunity to build their own kingdom and we have taken our time to ensure that every piece of the project is world-class. “This is all about sharing success with people, providing others with an interest in our brand to build something of their own. Royal Stacks is a family at the end of day. I want to make people happy and this is the perfect opportunity to do so.” Royal Stacks has highlighted 10 suburbs for possible expansion. The measured franchise expansion plan is a deliberate move to develop the business locally, and a recognition of the role franchising can play. “Our main priority is customer satisfaction and the franchisee can provide that,” Dani says. ¢

WWW.FRANCHISEBUSINESS.COM.AU | FEB/APRIL 2022 | 27

PROFILE

Turn up the volume Fitness chain S30 Studio plans 17 new franchised outlets within the next 12 months.

28 | FEB/APRIL 2022 | WWW.FRANCHISEBUSINESS.COM.AU

his fledgling franchise offers a sensory-led, fully immersive experience, with 45-minute group weight sessions set to hiphop and R&B tracks from an immersive sound system, with dark LED-lit decor reminiscent of a nightclub. S30 Studio workouts are streamed to display units, which control the movements, timers, and music; a lighting system integrates sound and vision, matching the beats per minute of the music to the lighting. The Western Australian company’s existing studio footprint includes sites at Mount Lawley, South Perth, the CBD flagship, and the recently launched studio at Myaree. S30 Studio chief operating officer Luke Faulkner believes the current enquiry level will lead to as many as 17 studio openings in 2022. “Our studios offer a friendly and encouraging space for people of Perth to get a customised, results-driven workout,” Luke says. “We are excited to continue our expansion into the Perth metropolitan area and welcome additional franchisees to the group.” For franchisees, all the stress of paperwork, payments and suspended memberships is removed with head office handling administration. And before the business is even up and running,

WE ARE EXCITED TO CONTINUE OUR EXPANSION INTO THE PERTH METROPOLITAN AREA AND WELCOME ADDITIONAL FRANCHISEES TO THE GROUP.

the franchisor will be managing elements such as council approval, equipment and logistics. Franchisee Christian Leembruggen, who co-owns the newest site at Myaree, says he was originally attracted to the brand for its unique customer experience. Having started his S30 journey as a trainer at the flagship location 12 months ago, he’s excited to be expanding his involvement in the business. “The S30 experience is something that really stands out from competitors. From the studio space itself, to the customised workout, the offering has an edge that competitors will struggle to keep up with,” Christian explains. “The investment and innovation of the S30 owners in continuing to strengthen the company’s offering provided us with the confidence to invest and become a franchisee.” ¢

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 is an Accredited Specialist in Commercial Law and 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

WWW.FRANCHISEBUSINESS.COM.AU | FEB/APRIL 2022 | 29

PROFILE

Turbo charged Store manager turned franchisee Daniel Fenech now has seven Battery World stores. And he’s not stopping there. So how did he do it?

aniel reveals there is a simple explanation for his success – his staff. “A lot comes down to staff, you have to trust them to run the business. A lot of multi-unit franchisees fail because they don’t give staff ownership or the responsibility to make key decisions. “Training is constant. The area manager does a lot of training and there is also a lot from the franchisor. “What do staff do? It’s their attitude and presentation that matters. You can teach product to anyone; you can’t teach attitude and manners.” While Daniel praises his staff’s ability to deliver first class customer service, he’s also grateful that it was the original team who were operating the first two stores that got him over the line into the third outlet. “Once one store was doing well, then there was the opportunity for a second, and the team behind it then said we should do a third store. “I make sure I have the right team and they share the same common goal. Every Monday we meet to see where staff are at with sales, and they have a good grasp of where the business sits.” Transparency among the team has been important, and it’s helped shape the strategy for a business built on spotting opportunities. “The strategy comes as the business grows. Once the third store came along, we knew the vision,” he says. Now the goal is clear: 10 Battery World outlets in New South Wales by 2025. The Battery World model encourages growth through multi-unit franchising and is, says Daniel, well set up for it. “I’m not in any financial debt, this growth is achievable with cash flow. The return on investment is generally 12 to 18 months.” About one third of the franchise network own two to three stores, he says. 30 | FEB/APRIL 2022 | WWW.FRANCHISEBUSINESS.COM.AU

How do you know you’re ready to open another store? “If you can remove yourself for two weeks, and the place still runs, you know you’re ready. You have to stop working in the business and remove yourself.”

IT COMES DOWN TO STAFF, YOU CAN BUY A BATTERY ANYWHERE, SO WHAT MAKES YOU DIFFERENT? IT COMES DOWN TO STAFF.

“The franchisor is great to deal with. It is still treated as a mum and dad group, with more personal care if it’s required, we don’t get lost in the system. The general manager will pick up the phone if you call, or call you back.” Running his own business proved to be just what Daniel was looking for after he left his role as Battery World Caringbah store manager for a short spell in car sales. He came back to the brand to purchase the very same store. “I had ultimate control, didn’t have to answer to anyone or seek anyone’s approval. It gave me a real sense of autonomy.” It was the magic mix of his own savings, some funding from his parents and a bank loan that got him on the first step on the ladder to success as a business owner. Since acquiring the stores, most have experienced significant growth and profit, including Kirrawee and South Nowra, which achieved double-digit growth from 2020–2021 (17.95 percent and 13.85 percent respectively). Each allocated territory includes a store and a 24-hour roadside assistance van. “With Covid, we saw a lot more consumers utilise the roadside assistance,” says Daniel. “But people prefer stores – they prefer the choice. And it gets people out of the house.” Conversely, the business is well positioned to withstand the e-commerce onslaught. “I don’t think online is as detrimental, you can’t post a battery. That’s bulletproofed us to the likes of Amazon,” he adds. Daniel also owns and operates a single Opposite Lock 4WD accessories store, located next to a Battery World outlet, but this will remain a standalone business, he says. As Daniel looks ahead to adding another three Battery World stores to his business, he reiterates the importance of a good team. “It comes down to staff, you can buy a battery anywhere, so what makes you different? It comes down to staff.” ¢ WWW.FRANCHISEBUSINESS.COM.AU | FEB/APRIL 2022 | 31

PROFILE

The heavy lifting pays off Five years in the making, Snap Fitness Doonside is a triumph of tenacity and the fulfilment of a dream for a local boy-turned-franchisee.

or Egyptian-born, Sydney-raised Michael Georgy, setting up in business was always about giving back to the community. Michael, working with his sister, wife and brotherin-law, has opened the Snap Fitness Doonside gym – the fulfilment of a long-held dream. In fact, the dream was forged between Michael and his sister Shirein back in 2013, even before the siblings had married their partners, who are now involved in the business. It’s a testament to family and to good old-fashioned tenacity that the gym dream has become a reality. Michael works in education as a wellbeing and learning adviser. He is a PE teacher and personal trainer with years of experience, having travelled to the US on a soccer scholarship and worked as a personal trainer (PT) in the UK. So it made sense for him to follow the fitness trail when looking to set up in business.

Long road to the right location A hefty amount of research went into finding exactly the right fitness brand, then began the search for a location and a workable site. 32 | FEB/APRIL 2022 | WWW.FRANCHISEBUSINESS.COM.AU

“We opened Doonside in October 2021 and it’s been five years finding the right model and location, and negotiating with the landlord,” Michael says. “We were trying to find the right site first, not just open any gym; it had to be in an area with no competition, good traffic, dense population, and a parking facility.” In 2018, when Michael and Shirein started the demographic analysis for suburbs around Doonside, then pinpointed a location that had the size and other attributes they were looking for, the pair had no idea the journey to opening their own gym would still be so far off. “It was another two years of negotiations with the landlord; it’s hard to negotiate with someone when money is not a motivator for them. My brother-in-law and business partner has a background in construction, and he hung in there. “We were almost there in 2020, pre-lockdown, then after lockdown we started negotiations again; we were already working on a presale campaign when lockdown hit again. “It was tough, but it was worth the wait,”

Michael continues. “We knew if it got over the line it would be great but the location has exceeded expectations.” It was thanks to the patience of brother-inlaw Jay Hickman, and Michael’s own belief in the project, that the Doonside option kept bubbling away, when most franchise buyers would have ditched the location long ago.

Connecting with the community Michael believes it’s the lack of suitable sites in Western Sydney that has kept most gym competitors out of the area. But with the team wanting to provide a positive health and fitness community for local residents, the idea to open Doonside’s first gym had been in the works for many years. Snap Fitness Doonside is even taking exercise out into the community, with free bootcamps on Saturday mornings. “Growing up in Doonside, we understand the area and have identified a gap in the market and a need for a community location where people can gather together to socialise and exercise – a place for the youth in the region to come and spend their time,” Michael says. “It’s great to communicate with the community, which has had a bit of negative publicity recently, and to bring a premium site to the area.” Just a month into the business – although, he admits, “we’ve had a long time to think about this” – Michael has engaged with local football, soccer and cricket teams, and set up deals with local businesses, including Subway stores.

ALL OUR BUSINESS PARTNERSHIPS ARE LOCAL BUSINESSES. WE’RE TRYING TO CREATE A COMMUNITY HUB. “Physios, chiropractors and massage therapists, nutritionists – all our business partnerships are local businesses. We’re trying to create a community hub,” he explains. Chatting with Michael, it’s clear he has a strong sense of community that stretches back to childhood. When his immediate family and other relatives arrived from Egypt, they bought land in Doonside and built their own homes. There are now eight houses in one street owned and lived in by the extended Georgy family. “I couldn’t be happier, my whole family is part of the gym, my parents have supported the idea from day one, they occasionally help in the gym and train there also.” The four key players in this business have a handy mix of skills: Michael’s sister, Shirein, brings Ø

WWW.FRANCHISEBUSINESS.COM.AU | FEB/APRIL 2022 | 33

PROFILE

business development; his wife, Tamara, adds marketing expertise; and brother-in-law Jay is well-versed in the world of construction.

A premium fitout And it was Michael’s expertise in fitness training that came to the fore when fitting out the new gym. “We changed the layout of the gym about 98 per cent from the original design. I redesigned it and we have every body part included in the equipment. A big point of difference is that we have eight squat racks – most gyms only have two,” he says. The premium aspect extends to the changerooms, with a beauty bar including vanity mirrors, hair dryers and straighteners available for member use. While the opening is recent news for the Georgy family, the extended period in getting to this point has given them a sharper focus on what’s next. Right now, they are focusing on establishing a good member base and discovering what it takes to keep members happy. “We’ve had a high focus on member retention from day one,” Michael says. “We make sure they are happy with classes, we will fix any broken equipment straight away.” Fast forward to the next step and it’s clear that one gym won’t be enough. “We’ve started to look for a second or third site. Our aim is to create the same community vibe,” Michael says. ¢

Michael’s top 5 tips for franchise buyers 1. Do a lot of demographic and competitor analysis. 2. Do your own research and don’t rely on what you are told; the cost isn’t necessarily what you end up paying. 3. Be prepared for a really tough slog for the first six months. In presale, we worked for four months, 10-hour days, seven days a week. Prepare for intensity. 4. A Snap franchise is great for flexibility and profitability, with really good benefits and passive income. 5. Work in the business for a year before you put in a manager. We split our shifts at the gym between us, each doing six days a week.

5 reasons why Snap Fitness was Michael’s ideal gym brand 1. Snap Fitness is a premium 24/7 model with a premium fitout. 2. It has evolved well in the market. 3. There is a functional area for the functional fit trend, so it competes with a boutique brand like F45 or Orangetheory Fitness. 4. Equipment choice is first class. 5. Classes are one of the biggest points of difference from other 24/7 gyms – HIIT, boxing, zumba, yoga…

34 | FEB/APRIL 2022 | WWW.FRANCHISEBUSINESS.COM.AU

Tech-enabled start-up business in an essential services industry Get the security and freedom that you’ve been looking for! A Respected Partner To Global Carriers

Tech-Enabled Essential Services

Founded in 1999, InXpress has a long history in managing

Get the security and freedom you’ve been looking for! In 2020,

successful businesses around the world. This is combined with

our franchisees enjoyed the security of working in an essential

the know-how to train and support franchisees in running a

services industry and operating their businesses as usual, with

sales & business management franchise in freight consultancy.

minimal impact.

With 450+ franchises, located in 14 countries, the multi award-

Plus, being a tech-enabled business means that you - as a

InXpress has already

business owner - can work from literally anywhere in the world!

established strong relationships with trusted courier partners,

InXpress’ online shipping portal, Webship Plus, is built on over

providing access to highly competitive rates. This leaves you free

21-years of insight into what customers need, saving them hours

to concentrate on building sales, working towards your goals and

on their shipping and empowering franchisees with insights into

creating the lifestyle you want.

their business performance.

winning business continues to grow.

The Inxpress Franchising Opportunity Build your own successful and profitable start-up business with the freedom to work from anywhere, all with the security of the world’s largest franchisor of global courier services. No experience is necessary to become an InXpress franchisee. All you need is to be sales-oriented and have an aptitude for business. We’ll provide full training, with ongoing business coaching and support.

Recession-resistant, essential services industry Low entry and ongoing costs Proven model for 21 years, constantly evolving Comprehensive training and ongoing coaching No inventory, warehousing, vans or trucks No employee base initially, opportunity to grow Potential to earn unlimited passive income Ability to work from anywhere!

Are you ready to take control of your future? Contact Ryan 1300 097 857 sales.au@inxpress.com

PROFILE

Shaping the future Body Sculpting Clinics sets its sights on expansion, with more clinics planned to open in 2022 using the company’s co-ownership business model.

36 | FEB/APRIL 2022 | WWW.FRANCHISEBUSINESS.COM.AU

WE CAN NEVER SACRIFICE QUALITY AND SAFETY AND WE NEED TO BE PRICE COMPETITIVE.

his year is set to be a big one for Body Sculpting Clinics, which aims to nearly double the number of clinics in the chain. Late in 2021 the Sydney-based aesthetics business unveiled a Newcastle outlet, its sixth clinic and the first site outside the New South Wales capital. For 2022 the plan is to focus on opening five sites in key locations including Sydney’s CBD and northern suburbs, as well as capital cities across Australia. Body Sculpting Clinics offers a co-ownership business model, allowing for a lower initial investment and reduced risk to franchisees. It costs between $250,00 and $350,00 to invest in a 50/50 partnership with the franchisor. There is support for setting up the clinics and fitout, staff recruitment and the purchase of medical-grade devices which give the “masstige” (upmarket but affordable) business a competitive edge. “We can never sacrifice quality and safety and we need to be price competitive. We’re the Qantas of the market, but at entry level,” says Ben Gialouris, Body Sculpting Clinics co-founder. The business has created a niche market, as the name suggests, focused clearly on body treatments. Dominika Gialouris, Body Sculpting Clinics co-founder, says, “We do a few things really well and that always will be our focus. I don’t believe you can be a jack of all trades; you need to be focused

on your specialisation. “Clients know what we do and that we do it well. We’re growing profitably for franchisees.” Ben and Dominika say franchisee profitability is crucial to the business as the network of clinics grows. “We’re here to drive profitable clinics with sustainable growth,” says Ben. “We need to ensure we are scaling at the right pace. “After years of building and refining our business model and operations, we’re now in a position to offer a premium business opportunity to motivated and dedicated franchise partners interested in investing into the beauty revolution.” It’s an advantage but not a necessity for franchisees to have medical experience – one successful franchisee is a doctor but another has a corporate/finance background. Ben says business acumen, the ability to deal with people, to lead and manage are crucial skills.

Finding the right partner Finding the right partner extends to the suppliers, team members, even clients, Ben explains. “We operate ethically, looking after our team and customers.” It is also part of the plan to encourage team members to buy their own clinic. One employee recently invested in her own Body Sculpting Clinic. “She was with us from day one, part-time. We approached her because she has a passion for the business. We wanted to help her grow and take the next step in her life. She’s loving it. “It’s all about making sure it’s a win-win.” ¢

WWW.FRANCHISEBUSINESS.COM.AU | FEB/APRIL 2022 | 37

PROFILE

A cut above When Michael Herde started his hairdressing training in his dad’s business as a 15-year-old, it was hard to imagine he would be still in the industry 55 years later.

38 | FEB/APRIL 2022 | WWW.FRANCHISEBUSINESS.COM.AU

ow he and his business partner Beverly Iterrott are retiring, and selling their Mount Gambier salon after 25 years. “Bev and I actually trained together with my dad,” Michael says. “We have loved everything about this industry but as we are getting older, it’s time to wind down and enjoy retirement. We are both so invested in the business that even if we left it running in the hands of a manager, we would still try to micro-manage it, so we’ve made the difficult decision to sell.” The south-eastern South Australian city is a popular tourist destination well known for its limestone, volcanic landscape and crater lakes. “Mount Gambier is a great place to live, everything is here so it’s a great opportunity for somebody to buy themselves a job and be their own boss,” points out Michael. “There’s no hard sell, because the great thing about this business is it’s a clean business: you open the door in the morning, you leave at night and you don’t have to do anything else. You don’t have to take work home. We are the only Price Attack in the region, so you are drawing clientele from the surrounding districts, even (when allowed) from across the Victorian border.” For Bev, it will be a wrench to leave the business after a lifelong hairdressing career. “I have been wanting to retire for two years now, but I knew I would miss it like crazy, so kept moving the goal posts,” she admits. “But it’s time to spend more time with my grandchildren. The business has been wonderful for us and has supported two families, which speaks to the strength of the industry.” Not only has the business been fundamental to Bev and Michael’s families, it has helped provide opportunities for locals, with the franchisees training 86 apprentices over the years. Michael reflects on the benefits of the

business model which has so impressed the pair’s accountant. “The proof is in the fact that we’ve been here for that long: obviously you don’t stay if you’re not doing well at it, and we have loved it. The business is both retail and hair salon: two streams of revenue which stood the test of operating through a pandemic landscape,” he says. “Our accountant said, ‘I don’t know how you guys do it, your figures progressively go up all the time’.” While Covid has brought its challenges, for Michael and Bev there have been upsides too. “I think because people are not travelling as much, they are treating themselves more. I think that will be in place for a long time. Not to mention all the online meetings where people have seen themselves differently on Zoom so have looked at a makeover.” While the hairdressing professionals have been hands-on in operating their Price Attack franchise the incoming franchisee may not have any experience. “We could sell to an aspiring hairdresser but you don’t have to be a hairdresser because there is so much happening on the retail front. “The beauty of buying a franchise is you’ve got support and back-up of a team of professionals from product managers to a marketing team working on your business for you, unlike if you open a business on your own. The training is in place for anybody coming along.” Michael admits he’d like to see the business forge ahead under the guidance of another passionate franchisee who has long-term ambitions for the Mount Gambier outlet. “I’d love to see a younger person here who’s going to make some longevity and keep going. You have all of that while being very much a local business.” ¢

WWW.FRANCHISEBUSINESS.COM.AU | FEB/APRIL 2022 | 39

INVESTMENT

Invest in your future with $150K+ Yes, you can buy a food, fitness or hair-and-beauty franchise!

solid investment can be the start of a great future as a franchisee. It’s possible to buy a retail-based business, even one with an established brand presence, for less upfront capital than you might expect. In this investment feature, eight brands that are premises-based outline the costs of investment, showcase their franchise offers, and reveal their plans for the business this year and beyond.

Reunion

A new franchise from the co-founder of F45, offering group training focused on strength, movement and conditioning; elite trainers are involved in the structured and progressive programming. Founder Luke Istomin says, “Creating community is just as important as our programming. Reunion brings people together whilst helping them achieve their goals with their health and movement training.”

Investment level: upfront franchise fee, turnkey cost $250,000-$490,000. Any new offers or deals to incentivise franchise buyers? An innovative finance structure reduces the initial outlay to $136,000-$243,000. Our franchise journey has just begun and for Inside Franchise Business readers, we are excited to offer special reduced fee rates for our first five franchisees. We have a tiered system in place for franchisees, ranging from $29,000$65,000 for the initial fee, with flat monthly fees. Number of studios Five company-owned studios Franchises planned for 2022 17 What's included in initial training and how long is it? Eight weeks onboarding that guides you through modules including presales, daily operations, local area marketing, business admin, and preparing you for studio opening.

42 | FEB/APRIL 2022 | WWW.FRANCHISEBUSINESS.COM.AU

What assistance do you provide with site selection? We can assist with site selection and landlords if needed. How often will a field manager visit franchisees? The operations team will continue to assist with quarterly studio visits, programming and in-studio coach education. What product or service innovations will you bring in 2022 to help franchisees boost their businesses? Members enjoy free access to exclusive digital platforms and programs. Our strong nutritional partnership with Thrive also allows members to have access to meal plans and nutritional advice, along with supplements, apparel, and wearables.

Walkers Doughnuts A Melbourne-based family business harks back to the glory days of American diners, dishing up a dose of nostalgia with its sugary doughnuts. Co-founder Rose Stoupas says, “We have a year of planned growth for Walkers as we move from being a solely Victorian brand to opening franchised stores in New South Wales and Queensland. We have worked hard during the past two years during Covid lockdowns to refine and perfect the model and we are poised for strong growth in 2022.” Investment level: upfront franchise fee, turnkey cost Franchise fee $50,000 plus GST, turnkey cost $180,000-250,000 (after a landlord’s contribution). Any new offers or deals to incentivise franchise buyers? Any fit-out contribution is shared with the franchisee, which can reduce the initial investment by up to one-third. Number of franchised stores: 13 Franchises planned for 2022 10 new stores What's included in initial training and how long is it? Two weeks in store prior to opening and one week handover in the franchisee's own store.

What assistance do you provide with site selection? We take care of all site selection on behalf of the franchisee. What assistance do you provide with lease negotiation? We take care of all lease negotiations on behalf of the franchisee. What tech tools do you provide for franchisees? Franchisees have access to Redcat POS and the Polygon reporting system, which provides benchmark reporting as well as training systems and operations hosted on World Manager. How often will a field manager visit franchisees? Weekly in the first month then, twice a month or as needed.

How do you monitor franchisee feedback? We have constant dialogue with our franchisees and also have regular franchisee meetings. How do you support franchisees in financial distress? We have an intensive care program to assist franchisees. What product or service innovations will you bring in next year to help franchisees boost their businesses? We will be launching our online Loyalty App platform for franchisees, which will enable them to have greater intel and interaction with their customers and understand their customer audience by age and demographic. Ø

WWW.FRANCHISEBUSINESS.COM.AU | FEB/APRIL 2022 | 43

INVESTMENT

Stretchlab

Matt Gordin heads up Boutique Fitness Studios, which has the master franchise rights for US business Stretchlab in Australia. “Stretchlab is a unique concept in that it complements almost every other fitness brand,” Matt says. “It’s a service that adds value to other fitness modalities, rather than competing against them. Post-lockdown Australians, now more than ever, are focused on their health in a holistic manner and we’re seeing this through current membership attrition numbers.” Investment level: upfront franchise fee, turnkey cost Franchise fee: $50,000 plus GST for single territory, discounts available for multi-area development. Turnkey cost: $250,000. Any new offers or deals to incentivise franchise buyers? First-mover advantage – an opportunity to claim the best territories in Australia.

Comprehensive training and ongoing support. Minimum 20-plus hours of franchisee training during onboarding, excluding flexologist education. This excludes ongoing weekly sales calls and monthly marketing calls.

Most of our training and ongoing education is conducted via internal online resource hubs and virtual flexologist bootcamps; however, once border restrictions allow consistent travel, we will endeavour to visit the studios annually.

What assistance do you provide with site selection? Our in-house real-estate team helps source and vet sites in conjunction with our property partners – BDC Property Partners.

How do you garner and monitor franchisee feedback? We have a monthly CEO call for each of our brands, which is an open forum for feedback and discussions.

What assistance do you provide with lease negotiation? Together with BDC Property Partners, we assist with lease negotiation to ensure the best possible deal.

Franchises planned for 2022 20-plus

What tech tools do you provide for franchisees? We manage and regularly update our in-house learning management system (LMS), which works as an all-in-one resource hub. We also integrate several sales management and marketing management systems.

What's included in initial training and how long is it?

How often will a field manager visit franchisees?

Number of franchised studios 13

44 | FEB/APRIL 2022 | WWW.FRANCHISEBUSINESS.COM.AU

How do you support franchisees in financial distress? We would deal with it case by case. We will help wherever we can and the focus would be on ensuring there is a good team in place and they are hitting their key performance indicators. What product or service innovations will you bring in 2022 to help franchisees boost their businesses? We are continually updating our inhouse automation systems to ensure all franchisees are assisted regularly and sufficiently. Our LMS platform will continue to expand, ensuring support, resources, and education are readily available to all franchisees.

Chatime

A leading bubble tea brand from Taiwan, Chatime has built a strong presence in Australia over the last 12 years. Andrew Benefield, chief development officer, says “We are filtering potential business partner interest in putting a Chatime everywhere, to ensure we only end up in the most relevant and successful locations.” Investment level: upfront franchise fee, turnkey cost Approximately $250,000-$350,000. Any new offers or deals to incentivise franchise buyers? Fit-out contributions from landlords are passed on to franchisees in full, reducing the entry cost. Number of franchised stores: 144 Franchises planned for 2022 A total of 34, which includes a number already pre-sold but postponed by Covid construction delays.

What's included in initial training? The full training program is six weeks, including business training and assistance with recruitment and training of the initial team.

survey and discuss our performance with our business partner influencer group. We also use an internal social media-based platform where partners can share all forms of communication.

Is there help with site selection? Assistance includes finding new sites, approving them as potential Chatime locations and negotiating lease terms.

How do you support franchisees in financial distress? We start by analysing the reasons for their distress and then apply the appropriate strategy in marketing, cost reduction, restructuring, rental relief, or other.

What tech tools do you provide? An intelligence reporting platform that provides analysis of franchisees’ business and benchmarking against peers. How often will a field manager visit franchisees? There is a regular call cycle to assist partners with business performance, and more regular visits for new and struggling partners. The business development manager is with a new partner for the first week of operation to ensure a great working relationship. How can franchisees give feedback? We conduct an annual franchise satisfaction

What product or service innovations will you bring in during 2022 to help franchisees boost their businesses? We are further integrating our contactless ordering app with in-store self-serve kiosk technology to significantly reduce labour costs at the front counter. And we have a number of exciting co-branding opportunities for 2022, building on successful partnerships with Philadelphia and Oreo. We will also be accessing the global resources of our Taiwanese parent to deliver new, on-trend drinks. Ø

WWW.FRANCHISEBUSINESS.COM.AU | FEB/APRIL 2022 | 45

INVESTMENT Price Attack

The retailer has a growth strategy that’s ramping up in 2022, with a particular focus on regional New South Wales and Victoria. John Pascoe, CEO, says ”As a leading specialist hair care provider and retailer, we will continue our strategy for further market share through rapid expansion, opening three stores in New South Wales in the first quarter of 2022. “We are committed to driving franchisee profit and expanding the network, with opportunities for franchisees from both inside and outside the network.” Investment level: upfront franchise fee, turnkey cost Between $150,000 and $200,000 is the turnkey cost, including the franchisee fee and stock. Our franchise fee is $50,000. Any new offers or deals to incentivise franchise buyers? We have identified key locations critical to expansion and are keen to offer incentives and discounts, which will be negotiated case by case. Number of franchised stores 62 Franchises planned for 2022 10

What's included in initial training and how long is it? A comprehensive business induction program covering three facets of the Price Attack business model: hair styling and industry appreciation; retail understanding and knowledge; and business intelligence. What assistance do you provide with site selection and lease negotiation? We find the site and do all the lease negotiations with the lease in the Price Attack name and license to the franchisee. What tech tools do you provide for franchisees? Our shortcuts point-of-sale system is a powerful reporting tool that provides essential stock and customer data to simplify business. How often will a field manager visit franchisees? Once a month. How do you garner and monitor franchisee feedback? Our online platform Jostle allows for integrated and inclusive communication. Adding to this, our marketing depart-

ment conducts surveys every month and at the end of each campaign. Our franchisees can raise any concerns or issues. These surveys can also be answered anonymously, allowing for open communication. How do you support franchisees in financial distress? We have a legal responsibility not to allow a franchisee to trade if they are insolvent. That being said, we assess each situation case by case and, in the worst-case scenario, will help navigate a distressed store out of its lease, and negotiate a favourable exit for both parties. What product or service innovations will you bring in 2022 to help franchisees boost their businesses? In 2021, we kicked off the PA Academy: a new and innovative education platform with a threefold agenda – staff retention through upskilling, increased brand recognition, and recruitment. Salon and retail staff, as well as franchisees, can take advantage of more than 26 education modules, covering off on everything from the latest in colour and styling to stock take and point-of-sale tips.

Fitstop

Fitstop uses athletic-inspired, evidence-based training to create real results for members and business owners. Founder and CEO Peter Hull sees opportunity in integrating business performance data and members’ human performance data into a central system. “This ensures evidence-based and progressive training creates a completely unique offering that continues to garner growth,” Peter says. Investment level: upfront franchise fee, turnkey cost Fitstop has an upfront franchise fee of $50,000; the turnkey cost is $200,000250,000. Number of franchised studios There are 60-plus across Australia and New Zealand, with 120 agreements signed. Franchises planned for 2022 Aiming to reach a total of 170 units across Australia and New Zealand. What's included in initial training and how long is it? Franchisees are onboarded with reading material, group inductions and e-learning content across all aspects of

the back end of the business, progressing to in-location shadow shifts and practical product training. What assistance do you provide with site selection? What assistance do you provide with lease negotiation? There is support for lease negotiation to gain incentives from the landlord, comprehensive support for fit-outs, and an extensive fit-out manual. Plus, the franchisor provides reputable industry contacts. What tech tools do you provide for franchisees? Tools include a custom-built Fitstop app and an integrated business owner dashboard that provides live updates on the health of businesses. This includes metrics such as member milestones, engagement, weekly payouts, pause and cancellation rates, and high-risk members. How often will a field manager visit franchisees? The operations team visits locations at least once a quarter to complete ‘health checks’ with franchisees.

46 | FEB/APRIL 2022 | WWW.FRANCHISEBUSINESS.COM.AU

How do you garner and monitor franchisee feedback? Through anonymous surveys, an extensive operational rhythm (monthly, quarterly and annual events) and an internal Franchise Advisory Council. How do you support franchisees in financial distress? We provide a robust operations team that can diagnose where the business needs help – made easier by strong data collection. On a case-by-case basis, Fitstop also assesses any financial support it can provide. What product or service innovations will you bring in 2022 to help franchisees boost their businesses? Fitstop is set to launch a new product offering. The new way of training focuses on the same grounding principles of Fitstop; it uses technology and elevated sessions to generate member results, and this will attract new members.

Right at Home The home care industry is worth over $40 billion a year – one of the largest markets in Australia. An ageing population, disability services, shorter hospital stays and a preference for ageing at home are fueling the demand for in-home care services. Right at Home provides a full range of services: companionship, domestic support, personal care, skilled nursing, and allied health services. We do this across the aged-care system, disability, and post-hospital care systems. Investment level: upfront franchise fee, turnkey cost The upfront cost is $120,000 for the franchise fee and you will need an additional $80,000 in working capital. Any new offers or deals to incentivise franchise buyers? We have finance available for qualified candidates. Current number of franchised units There are 33 franchisees covering most of Queensland, a large portion of Sydney and some regional areas of New South Wales, plus Perth and Kalgoorlie.

Just Cuts

Amber Manning, CEO, says the Just Cuts hairdressing salon model has been refined over three decades to provide a strong foundation for franchisees. “Our 2022 forecasts are predicting 20 per cent sales growth for our network of small, family-owned businesses. In October 2021 alone, Just Cuts had the highest website visitation in our 30-plus-year history. “Since we reopened, more than 57,000 new clients have visited a Just Cuts salon for a Style Cut. Becoming a Just Cuts owner brings you unbeatable brand awareness that’s stood the test of time, combined with the latest innovations in technology to future-proof your salon.” Investment level: upfront franchise fee, turnkey cost Initial franchise fee payable to the franchisor: $17,500 (kiosk) $35,000 (salon) Total estimated costs: $80,000$270,000. Number of franchised stores In Australia, 192; in New Zealand, 28; and in the UK, eight. Franchises planned for 2022 Another eight in Australia, 12 more for New Zealand, and seven for the UK; five in Taiwan, three in Singapore.

Target number of franchised units for 2022 Territories are available in regional New South Wales, regional Western Australia, the whole of Victoria, South Australia, Tasmania, and the Northern Territory. What's included in initial training and how long is it? Initial training in Brisbane is included in the cost of the franchise and covers bespoke systems, care management, care delivery, recruitment, sales, marketing, operations and managing the business. The Rightstart program provides intensive support during the start-up

What's included in initial training and how long is it? Seven in-person or Zoom sessions of two hours each for new owner training. This includes franchisee/trainer introductions and brand basics, operations manual review, workplace health and safety and security procedures, point-of-sale training, marketing, grand opening strategy, and in-salon training sessions. What assistance do you provide with site selection? Just Cuts uses an interactive Google Map showing every shopping centre in Australia. All centres are categorised by size and location, and the academy team can directly compare and evaluate foot-traffic estimates, floor plans, and major anchor tenants. What assistance do you provide with lease negotiation? The Just Cuts academy team facilitates and negotiates all leases. What tech tools do you provide for franchisees? The Just Online POS system tracks wait times across salons, timesheets for staff, daily sales and percentages, and identifies high-performing stylists.

phase that underpins the early success of franchisees. What assistance do you provide with site selection? Population maps and demographic statistics are available to help with territory selection. What tech tools do you provide for franchisees? The franchisor manages search engine optimisation, pay-for-click programs, internet advertising, and social media advertising.

How often will a field manager visit franchisees? The Op Central compliance platform helps manage audits and tasks online for the Academy Team to review. How do you garner and monitor franchisee feedback? Regular text message surveys for instant voting/feedback and a closed Facebook group for owners’ polling and surveys, ‘Owners on the Couch’ Zoom sessions for open forums, and an elected Franchise Advisory Council. How do you support franchisees in financial distress? Landlord negotiations for rent concessions if centre performance is a contributing factor. To address salon performance issues, there are checklists and action plans, with training, operations, and local-area marketing support. What product or service innovations will you bring in 2022 to help franchisees boost their businesses? In-salon click-and-collect for the Justice range. The Just Cuts app will be updated with new functionalities in 2022, to further grow the loyalty program. ¢

WWW.FRANCHISEBUSINESS.COM.AU | FEB/APRIL 2022 | 47

MARKET REPORT: ICE CREAM STORES

THE PREMIUM SCOOP

Aussies are seeking new taste sensations and a superior ice cream, the latest industry report reveals.

hat are the key ingredients for a successful ice cream store in the 2020s? According to IBISWorld's Ice Cream Stores in Australia, released in October 2021, there are a number of factors at play.

KEY STATISTICS

$404.7m Revenue

Annual Growth 2022-2027

1.7%

Delivering the goods

Annual Growth 2022-2027

INDUSTRY OUTLOOK 2022-2027 Revenue growth predictions 7.5

5 Percentage (%)

Lockdowns heralded the end of the ice cream queue but brands were quick to scoop out a fresh way to keep revenue. Customers who were once concerned about product remaining fresh and frozen with a delivery service relished the chance to stay home and wait for their favourite flavours to land on their doorstep. Pick up and delivery options have helped retailers retain revenue through 2020/21. A diversification in distribution over the past five years has also seen brands like Ben & Jerry's sell their take-home tubs in supermarkets. A rising health consciousness, and a taste for superior product, has been driving the market. Gelato, for instance, has higher profit margins and is difficult to recreate at home. Swapping to a cheaper alternative isn’t an option for premium-product and to customers, and that has helped maintain the market.

1.3%

2.5

0 -2.5 22

YEAR Source: Ice Cream Stores in Australia, October 2021, IBISWorld

48 | FEB/APRIL 2022 | WWW.FRANCHISEBUSINESS.COM.AU

MARKET REPORT: ICE CREAM STORES

Franchising scoops the market The author of the IBISWorld report, Suzy Oo, writes that franchisees “benefit from strong branding, consistent advertising campaigns and operational support. The four largest players, all of which have extensive franchising networks, are expected to account for over 30 per cent of industry revenue in 2021-22”.

Who’s who? Cold Rock Ice Creamery [Franchised Food Company]. Most Cold Rock Ice Creamery stores are in prime sites, such as shopping centres, with the associated high operating costs. Expanding store numbers are expected to drive company revenue. Wendy’s [Supatreats Australia Holdings] began trading in South Australia in 1979 and became part of Supatreats Australia in 2015. Some stores closed, the remaining Australian outlets were rebranded as Wendy’s Milk Bars in late 2018.

“Revenue will lift just 1.3% over the five years through 2026-27, to $432.2 million.”

Estimated brand market share

Baskin-Robbins Australia is a global brand owned by the US-based Dunkin’ Brands Group Inc, which also owns Dunkin’ Donuts. Almost 7,300 Baskin-Robbins franchises operate in about 50 countries with more than 75 stores in Australia. The Australian master franchise is held by Palm Oasis Ventures, owned by United Arab Emirates-based Galadari Brothers Group and Dunkin’ Brands Group Inc. Gelatissimo is the retail arm of major Australian premium gelato manufacturer and wholesaler Bravo Gelato, and one of the largest gelato retail franchises globally with stores in Saudi Arabia, the Philippines, Singapore, Bangladesh and India. Ben & Jerry’s [Unilever Australia] is a global, US-based brand that started out in 1978 and in Australia has been owned by Unilever since 2000. It is committed to using only Fairtradecertified ingredients in producing its ice cream products available in its scoop shops and local stockists.

9.5% Franchised Food Company Cold Rock 9.2% Wendy’s 8.7% Baskin-Robbins 5.1% Gelatissimo 67.5% Others

New Zealand Natural operates under Emerald Foods Australia, part of the Hong-Kong business Emerald Foods Group (HK) Ltd. Stores have declined with just over 20 stores and local stockists in Australia; the brand has franchises in more than 30 countries. Gelato Messina has expanded to more than 10 stores in Sydney, and several stores across Melbourne, Queensland and the Australian Capital Territory but it is not a franchise. à

WWW.FRANCHISEBUSINESS.COM.AU | FEB/APRIL 2022 | 49

MARKET REPORT: ICE CREAM STORES

WHO IS BUYING? 42.1% Consumer aged 25 to 44 33.9% Consumer aged 45 to 64 12.6% Consumer aged under 25 years old 11.4% Consumer aged 65 older

Why premium products are the solution Gelato, unique ice cream, frozen yogurt are a growing market. Premium product offers high margins. Customers are craving variety.

WHAT WE’RE EATING 13.5% Gelato

9.5% Sorbet

Innovation wins

Innovation has helped Baskin-Robbins respond to changing consumer tastes: vegan ice cream flavours, social media contests. Gelatissimo has introduced new flavours and limited time offers to drive sales.

What will influence the market’s growth? • • •

• • •

Soft-serve ice cream

31.3%

Hard-serve ice cream

A rise in household discretionary income Health consciousness Domestic milk and sugar prices

What’s constraining the market? • •

16.2%

Rising health consciousness Competition from gelato and frozen yogurt stores Increasing competition as small operators join the market Increased competition from businesses like McDonald’s offering soft-serve Downward pressure from ingredients costs

50 | FEB/APRIL 2022 | WWW.FRANCHISEBUSINESS.COM.AU

12.4% Yoghurt

17.1%

Other products*

*[hot dogs, pancakes, waffles, milkshakes, thick shakes, smoothies, soft drinks, slushies, coffee and tea].

MARKET REPORT: ICE CREAM STORES

Sector

Industry

COST STRUCTURE 2022

10%

20%

30%

40%

50%

60%

Wages

Purchases

Profit

Rent

Utilities

Other costs

70%

80%

90%

100%

Depreciation

Ice Cream Stores in Australia, October 2021, IBISWorld.

High franchising fees, standardisation, rising competition and rental costs have proved challenging for franchisees who have seen low profitability. Brands have suffered some store closures. “Supatreats, Baskin-Robbins and Franchised Food Company have all lost market shares over the period,” writes author Suzy Oo. Conversely, she says, some franchisers have benefited from a rising demand for premium gelato products. Stan Gordon, who heads up Franchised Food Company, disagrees that Cold Rock has lost market share, saying that despite Covid-19 corrections, the business has grown over the past few years. “While the increase in the health-focused market has come with its learning curves, there is still a strong focus on having 'cheat days' and treating yourself which is exactly what Cold Rock is. We are heavily guided by our loyal customers and see the increase in the health focused market as a way for us to reimagine what’s possible at Cold Rock,” he says. Aussie gelato chain Gelatissimo’s experience reflects Suzy Oo’s comments that

gelato is an increasingly popular premium product. CEO Filipe Barbosa says “Gelato consumption continues to grow across all channels which is great to our industry. Consumers have really developed a love for great gelato, which has given rise to a higher level of expectation from all players in our space.” It’s the premiumisation that’s helped global ice cream brand Baskin-Robbins buck the trend with four years of strong double digit positive comparable sales growth, says general manager Julian Casa. “Despite IBISWorld’s speculation, the brand has achieved industry recognition, excelling in the execution of innovative marketing campaigns and immersive digital experiences and recorded its most successful promotional campaign in recent history,” he says. Julian also points to early adoption and leadership in online food delivery, compelling new product innovation and strategic brand partnerships, as indicators of the brand’s position in the marketplace. n

What are the operating costs? Other costs include : •

• • • • • • • • •

Depreciation [ice cream manufacturing and dispensing equipment, freezers, display cabinets] Utilities Advertising Franchise fees Insurance Communications Contractors Vehicle leasing Accounting Legal

WWW.FRANCHISEBUSINESS.COM.AU | FEB/APRIL 2022 | 51

MARKET REPORT: ICE CREAM STORES

CREAM OF THE CROP

Baskin-Robbins

Ben & Jerry’s

Cold Rock Ice Creamery

GLOBAL PRESENCE

BRAND WITH PURPOSE

MASHING IT UP

Turnkey franchise cost: $130,000-$200,000 Length of term: 5 years Number of brand outlets: 83 stores nationwide How will you innovate in 2022? Compelling new product development and brand partnerships. Digital ordering and delivery-channel excellence, renewed focus on guest service experience, the use of technology via online learning and development platforms to support our franchise partners and team members.

Turnkey franchise cost: $250,000-$450,000, depending on site Length of term: 5 years and one option to renew Number of brand outlets: 44 locations across ANZ What’s unique? Our social mission: using our business as a force for changing the world – one scoop at a time. How will you innovate in 2022? More new products and flavours, new channels such as catering, and the expansion of our new loyalty platform, ‘The Inside Scoop’. How will the brand grow in 2022? New stores in targeted locations, new strategic partners and new channels.

Turnkey franchise cost: From $100,000 Length of term: 10 years, with another 10-year option Number of brand outlets/vans: 88 stores operating nationally, including 20 Express locations and one mobile van How will you innovate in 2022? New flavour offerings, merchandise, gifting options, more locations, think dog-friendly ice cream, whatever your mind can imagine…We have introduced retail products to help push the Cold Rock experience at home for customers and we hope to expand this offering.

52 | FEB/APRIL 2022 | WWW.FRANCHISEBUSINESS.COM.AU

MARKET REPORT: ICE CREAM STORES

Gelatissimo ARTISAN GELATO Turnkey franchise cost: $280,000-$350,000 Length of term: 5 years with one option to renew; however, this is site dependent. Number of brand outlets: 41 sites nationally, with further stores scheduled . How will you innovate in 2022? Our product development team continues to create exciting new flavours, which also cater to a range of dietary needs to keep our customers happy. We are also working on some exciting innovations for the new year that are all designed to enhance the customer experience and ambience in our stores. Customers will see these changes in some of our stores in early 2022, which we are very excited about.

Hakiki TURKISH ICE CREAM Seven years ago, Nevzat Bagriyanik (Nev) opened Sydney’s only Turkish ice cream outlet, serving up the chewy and stretchy ice cream based on a 400-year-old tradition from Maras in southern Turkey. “I lived in Turkey for 16 years and learned to make ice cream there,” Nev explains. “Australians are big consumers of ice cream, and it’s a year-round product. We started getting queues of customers the first day.” For flavours, think pistachio, melon and feta, grape molasses and tahini, sour cherry, Turkish delight, even baklava, as well as Aussie classics like hazelnut swirl. The cafe also has Turkish coffee and tea, and baklava pastries, on the menu. “It’s all made in-house, everything is freshly baked,” Nev says. The ice cream base is delivered to stores twice a week and flavours are added in-store. “We’ve invested in a factory and warehouse in Smithfield to help support the supply distribution.” Nev is keen to expand with another three or four outlets in Sydney. “We get people calling us every week,” he says. High-foot-traffic sites like Manly and Bondi are well-suited to the ice cream scoop kiosk, which costs from $180,000. The family-oriented cafe concept, which includes extra menu items, costs from $260,000 and suits a suburban or sub-suburban location.

Will’s Batch COMING SOON! When did you start retailing? We have a tradition of serving ice cream that goes back 40 years, when two mates opened a little seaside ice creamery opposite a popular Melbourne beach. In time, we became a wholesale boutique ice cream maker, distributing across Victoria, southern New South Wales and occasionally even overseas. In 2011, we decided to create an ice creamery reminiscent of the ones we loved as kids. So Will's Batch opened in Bentleigh and since then we’ve added stores in Bayside, Melbourne. Which product is your biggest revenue earner? In our revenue, 80 per cent comes from serving ice cream. In hospitality, there's always the temptation to have a broad menu. But we're proud of the ice cream we make; that's our practice and we don't extend ourselves into products where we can't be best of breed. Our most popular flavours tend to be the classics, like dark chocolate, French vanilla bean and salted caramel. However, we’re always creating new and surprising flavours and we love the fun of experimenting with various combinations, it's ice cream after all. How will you innovate in your business in 2022? The wonderful thing with ice cream is that there are always new boundaries to cross. There are a number of interesting flavours we’ve created, which we’re keen to share. There’s also a range of ice cream sandwiches and choc tops we would like to reintroduce. What's unique about your brand? Our ice cream is inspired by a time when ice cream tasted like actual ice cream. Our ice cream is made from scratch, using our own original recipes. Our style is simple, unmasked and bare of overdone mix-ins, so the essence of each flavour can be savoured. We take our time, slow down our process and let each batch fully age. Each batch takes four days to prepare. Generic, ready-made, imported product can be made within an hour, but it’s simply not the same. It comes down to being real and treating everyone with courtesy. What will be the capital investment for a franchise? We're never generic or formulaic, so when it comes to new store locations, we create an ice creamery to meet each market. This means there are opportunities for our partners to invest in everything from express-type stores to flagship locations. The investment is generally in the range of $250,000-$450,000; note that our fitouts are always of a high standard. ¢

WWW.FRANCHISEBUSINESS.COM.AU | FEB/APRIL 2022 | 53

MARKET REPORT: CAR WASH AND DETAIL

BRIGHT AND SHINY What’s the future for the car washing sector? Like so many industries, car wash and detailing has suffered a downturn from Covid-19. The good news is there are plenty of positive trends that will help drive this business into the future.

ccording to an IBISWorld report, Car Wash and Detailing June 2021, there is only one major player with a market share above 5 per cent. Magic Hand Car Wash is the single biggest hand car wash provider in Australia, with 45 outlets, and it is the industry's largest player in revenue terms. The business model includes a cafe. Other significant players include BP Australia, Coles Express Car Wash, and Mpower Franchising, which is the parent company of mobile detailer Car Care. Franchises typically operate in the hand-detailing and mobile sector.

WHAT’S THE MARKET? • Onsite automated car washing, premium manual hand detailing, mobile services

MARKET SNAPSHOT The good news • Greater awareness of environmental impact of washing cars at home • Rising discretionary incomes and stronger economic conditions • Consumers outsourcing tasks The downsides • Increased urbanisation, more people are using public transport

FORECAST 2022-27 Annualised 3.2% rise in revenue to $577.7 million Increased number of motor vehicles will grow the market.

• No dominant brand • A mature market

BE AWARE

WHAT WILL BRING IN BUSINESS?

• Wages are a bigger part of expenses but manual hand washers tend to work part time, so costs are constrained • Other major costs are cleaning products/accessories and franchisors often control these costs through wholesale deals

1. 2. 3. 4.

Convenience Price Loyalty discounts On sites, revamped premium areas, proximity to motor vehicle repairs

54 | FEB/APRIL 2022 | WWW.FRANCHISEBUSINESS.COM.AU

WHY MANUAL WASH OR MOBILE SERVICES ARE A GOOD BUSINESS OPTION • Manual and mobile car washing are increasing amongst higher income consumers. High-value customers have expensive cars and household incomes at the top level have remained strong. • Premium mobile services are increasing their market share. • Climate concerns will help drive business.

DID YOU KNOW? Increased online shopping has increased the number of vehicles on the road in the private business sector.

WHO ARE THE COMPETITORS? DIY home washing and detailing Local competitors

Car wash and detailing June 2021 report from IBISWorld.

ADVERTORIAL

Innovative Working Practices to Accelerate Business Bounceback When 7-Eleven Australia made the decision to switch to new ways of working inspired by agile in 2019, the reason for change was to enable the business and its franchise partners to achieve the bold ambition of a billion customer moments by 2030. Little did the team know then that they would be planning and making the transition during the midst of a global pandemic. While the change was all about enabling the future of convenience, the agile methodologies have equipped the business to be nimbler and more adaptive in supporting franchisees throughout the pandemic, while taking every opportunity to accelerate sales growth as restrictions changed across the country. 7-Eleven Australia General Manager – Channel, Braeden Lord, says the company’s franchisees have access to much broader expertise as a result of the new ways of working. “In a traditional style retail operations team, individuals each have a territory where they would be the main general contact for franchisees to help them support and grow their business. More specialist capabilities, such as learning and development, are applied on a state or national basis” Mr. Lord said. “Our way of working means we have a group of talented individuals with a diverse range of cross-functional skills who work together to focus on the individual need of each store. The group is empowered to work with franchisees and make decisions that deliver the best experience to the customer and the best results to the franchisee on a store-by-store basis. Ample data is readily available to ensure we apply the most suitable talent to the need of individual stores. “One store might need advice and support around providing a heightened experience across the counter to maximise customer satisfaction; another might need help with specific training and development of their team to maximise sales opportunities; or a franchisee might need coaching on how to implement the most efficient rostering in their business. The cross functional nature of the support squad our stores now have access to means that talent is on tap, and that talent is empowered to direct their efforts to the activities that will make the most difference to that individual store.” “The group also supports every store to ensure safety and operations’ standards are at the highest levels across the network. Mr. Lord said that the ways of working have empowered the brand’s teams that directly support stores to make the rapid decisions needed during the past two years of constant change. “The way we work means there is greater flexibility. At an enterprise level we set the outcomes we want to achieve and agree how we are going to measure our achievements. From there, our people set their targets and focus areas, and can adapt as things change more rapidly than they could previously. “As a leader, it has been a wonderful experience to empower our talented people to work with our franchisees to decide what each store needs to focus on and deliver. It provides the best outcome for our customers, and ultimately that leads to our franchisees maximising the potential of their business,” Mr. Lord concluded.

MARKET REPORT: POOLS

DIVING IN

Australians love a backyard pool, which is good news for the ever-growing pool care sector that combines retail with maintenance.

early 2.7 million Australians have a house with a swimming pool, according to the most recent Roy Morgan survey (2018). That translates to about 13 percent of the Australian population enjoying a backyard splash. And according to a report on Linkedin, an estimated 25,000 new inground pools are built each year. Lindsay McGrath, CEO of SPASA, the swimming pool and spa industry association in Australia, says there is now a six- to 12-month wait for most pools and spas. “The industry has never before seen this level of demand. There’s been a 50 percent increase in demand for the last two years, with capacity hit at 30 to 35 percent over a normal year,” he points out.

Clark Rubber How many customers will your franchisees service in 2022? Pool servicing represents a massive opportunity for Clark Rubber, not just through the store network but also the mobile service vans. The target is to service at least 100,000 pools over 2022. What are the top maintenance concerns for customers? The biggest concerns for pool owners are managing the water chemistry and maintaining pool equipment. Ensuring pool and spa water is balanced, safe and healthy to swim, and keeping equipment well maintained and clean goes hand in hand with good pool water management.

And there’s no sign of the demand easing as Aussies continue to fulfil their dream of a backyard pool – even in smaller household settings. “The trends are swim spas and plunge pools as the smaller block size demographic has exploded and householders want a beautiful piece of blue in their backyard. Recent events have increased the desire for a happier and healthier community atmosphere a pool or spa brings to families. Everyone wants that everyday-cation feeling,” Lindsay says. Claudia Burgio-Ficca, author of the Swimming Pool and Spa Equipment Stores in Australia report November 2021, suggests that while the sector is predicted to face smooth waters ahead, with a rise in revenue,

How often do technicians clean a pool? Usually a customer gets their pool cleaned once per month, but over the summer months, or if the pool is used regularly, it happens every two weeks. How long does it take to clean a pool? The average pool takes between 45 and 60 mins to clean. How many clients could a franchisee service in a week? With one technician a store could do 30 to 40 visits per week. How do franchisees get new clients? Social advertising/word of mouth/data collected through software called pooltrackr that registers a customer when

56 | FEB/APRIL 2022 | WWW.FRANCHISEBUSINESS.COM.AU

profitability will be squeezed amid increasing competition in the sector. In the report, produced by IBISWorld, the author predicts a positive sentiment will help the pool care stores.

A rising tide? The pool care retail scene is a highly fragmented marketplace with Clark Rubber, Poolwerx and Swimart leading the way. However, the estimated combined market share of the three brands accounts for only about 25 percent of the market. Aside from the bricks and mortar stores providing pool accessories and tools for home maintenance, there’s a wave of mobile van franchisees and technicians servicing pools – both residential and commercial.

they come into a Clark Rubber store to get their pool or spa water analysis. What about environmental concerns? After severe weather, pools need more attention. Not just cleaning debris, but balancing the pool chemistry after heavy rain or dusty winds blow small particles into the pool. What will be the capital investment for a franchisee in 2022? Depends on location, but between $250,000 and $600,000. But a mobile service van could be as little as $40,000.

MARKET REPORT: POOLS

Jim’s Pool Care How many customers will your franchisees service in 2022? Approximately 20,000 pool owners. We receive on average 10,000 new customer enquiries per year. What are the top maintenance concerns for customers? Water balance and knowing the pool is safe to swim for their kids, friends and family. There has been increased demand for pool minerals such as magnesium over the last few years. How often do technicians clean a pool? We usually service regular customers every month but some customers require fortnightly or even weekly services. How long does it take to clean a pool? We allow up to one hour per job but it does depend on the state of the pool

and the local environment such as trees, gardens and extreme weather events. How many clients could a franchisee service in a week? Most mobile franchisees have a goal of 40 weekly regular customer services, but many will do less and allow time for urgent call-outs for new customers, such as green pools and equipment failures. How do franchisees get new clients? Jim’s Pool Care runs a national and local marketing (LAM) program. This is always complemented with franchisees following their own LAM plans. What about environmental concerns? There is a range of water-saving measures such as pool blankets and covers and suppliers are always innovating technology. Many products are now

connected to Bluetooth, Wi-Fi and the Internet of Things (IOT). This means customers can check their pool from anywhere, turn heaters, waterfalls and lighting on and off from their phones and keep a general eye on water balance. What will be the capital investment for a franchisee in 2022? $69,900. This includes the franchise fee and a $25,000 start-up package. Franchisees just need to buy/lease a suitable vehicle. A great supplier network enables Jim’s to run orders with a “just in time” strategy so they do not hold too much stock. Franchisees need to invest in a modern vehicle and keep up to date with the brand and sign writing. Often the largest capital cost besides their vehicle and water testing equipment is a fresh set of uniforms each year. Ø

WWW.FRANCHISEBUSINESS.COM.AU | FEB/APRIL 2022 | 57

MARKET REPORT: POOLS

Poolwerx How many customers will your franchisees service in 2022? In 2021, Poolwerx serviced 400,000 clients across all states in Australia and New Zealand. What are the top maintenance concerns for customers? Water balance, pH alkalinity and chlorine levels are the top three areas of concern for clients. Also, the issue of pool discolouration – such as a pool turning green in colour due to algae – is a major concern, and there is a big interest in pool blankets and rollers to reduce heat loss and evaporation. How often do technicians clean a pool? Technicians conduct weekly cleanings on commercial pools and fortnightly or monthly cleans on residential pools. How long does it take to clean a pool? It takes approximately 45 minutes to one hour for a standard service.

How do franchisees get new clients? A large portion of referrals come from existing Poolwerx clients as well as direct marketing campaigns to pool owners via the exclusive Pool Point data system. A digital and social media presence, industry tenders, and preferred supplier relationships with commercial businesses are ways to acquire new clients. What about environmental concerns? Poolwerx has a major focus on energy-saving initiatives, creating variable speed pumps with suppliers that save over $700 per year in energy usage. The pool blankets save water by reducing evaporation through capturing solar energy to naturally heat the pool. Poolwerx has a commitment to utilising environmentfriendly or natural chemicals in all its products. What will be the capital investment for a franchisee in 2022? A Poolwerx franchise starts at $150,000 turnkey for a new franchise and up to $1 million for a resale of a large existing franchise with multiple retail stores and service vans.

How many clients could a franchisee service in a week? A Poolwerx franchise partner can service approximately 40 to 50 clients per week.

KEY POOLCARE TRENDS Covid-related travel restrictions have fuelled demand for industry products Challenging trading conditions and increasing competition have reduced industry profitability Competition from external players has placed downward pressure on product prices Revenue is projected to benefit from mandatory water-saving devices and practices Stronger price-based competition among operators is likely to erode profis Consumer sentiment and income growth is likely to support demand for industry products The Covid-19 pandemic has led consumers to reallocate surplus funds to home improvement projects Source: Swimming Pool and Spa Equipment Stores in Australia, November 2021, IBISWorld.

58 | FEB/APRIL 2022 | WWW.FRANCHISEBUSINESS.COM.AU

MARKET REPORT: POOLS

Swimart How many customers will your franchisees service in 2022? Swimart’s franchise partners currently service almost 80 different locations across Australia and New Zealand. That number will reach 90 local communities in 2022. What are the top maintenance concerns for customers? Green pool recovery given the wet, warm start to last year’s summer. This was heightened by climate driver La Niña producing a relatively cool, damp and stormy period for much of Australia’s north and east. Servicing and upgrading filtration and sanitisation equipment, given more people have been using their swimming pool during Covid-related travel restrictions. Maintaining hygienic water quality to ensure bathers are safe and swimming conditions are ideal. How often do technicians clean a pool? Initial once-off pool cleans are popular for new pool owners and then customers typically choose between weekly, fortnightly or monthly cycles. Commercial pools (resorts, aged care facilities, learn-to-swim schools, holiday homes, etc.) require multiple services in a week due to higher bather loads and council requirements.

How long does it take to clean a pool? Domestic pool cleaning ranges from 30 to 45 minutes; commercial pools take from 2 to 3 hours. Extreme weather events, faulty equipment, high bather loads, and incorrect chemical levels are just some of the factors that contribute to longer servicing requirements. How many clients could a franchisee service in a week? This depends on a few factors – number of staff, size of the pool, size of territory with rural technicians travelling longer distances – but a single technician can service 25 to 30 domestic swimming pools each week.

water loss – ie reducing evaporation with a pool cover or liquid blanket, maintaining equipment to prevent leaks – while also advocating equipment that is environmentally conscious. Waterco, Swimart’s franchisor, is one of the world’s leading manufacturers of water- and energy-efficient pool, spa and water treatment equipment. Many of its filtration and sanitisation innovations have achieved the coveted Climate Care Certified stamp of approval, which is an industry-led, independently audited sustainability program. Consequently, Swimart’s franchise partners have access to best-practice water-saving systems and solutions – all of which are passed on to customers.

How do franchisees get new clients? Swimart has a strong brand identity due to nearly 40 years of industry experience. Because of that, referrals from existing customer bases, local community engagement and an engaging social media strategy consistently attract new customers – while retaining existing ones. Many franchisees have been with Swimart for decades, so that long tenure has led to enduring relationships with customers and the wider community.

What will be the capital investment for a franchisee in 2022? This depends on whether someone is setting up a greenfield franchise or investing in an existing franchise. The former depends on the size of the premises and the extent of fitout required while the latter factors in the value of plant, equipment, goodwill and going concern. Typically, an average new store costs between $150,000 and $250,000 to establish. ¢

What about environmental concerns? Swimart actively educates customers on using the right products to prevent WWW.FRANCHISEBUSINESS.COM.AU | FEB/APRIL 2022 | 59

MARKET REPORT: GYMS AND FITNESS

FIGHTING FIT Shaping up to 2022 in fitness – what are the trends? Check out this market report.

ill the onset of digital programs and apps significantly change the fitness landscape? The pivoting required by gym chains during pandemic lockdowns saw a swift adoption or extension of all things digital to keep businesses trading. And in revealing its predictions for the year ahead, the Australian Institute of Fitness (AIF) listed online training as its third most important trend. Steve Pettit, Australian Institute of Fitness CEO, says, “A combination of old meets new will become the norm as technology continues to drive evolutions in gym and PT offerings. Increasingly, we will likely see the fitness industry tailor bespoke programs, experiences and services to consumers’ individual wants and needs through a mix of in-gym, online and hybrid models.” He suggests flexibility and choice will be crucial to consumers; fitness operators will need to respond with diversification, personalisation and the

ability to provide training opportunities where consumers want to workout. “We will also likely continue to see fitness shift further beyond aesthetics and weight loss towards deeper areas of holistic health and wellbeing. The key role that fitness can play in broader health outcomes – especially mental health, chronic disease prevention and management, and evolving conditions like Long Covid recovery – will all be key areas for Australia’s fitness industry to engage with,” he says. There have been new and young players determined to make their mark in an increasingly competitive marketplace as fitness has become more polarised, with niche and boutique businesses vying for attention with the old established order. The customers’ search for connection has been particularly noticeable after lockdown with Australians seeking more of a bond through greater interaction at their gyms, which they find in the

60 | FEB/APRIL 2022 | WWW.FRANCHISEBUSINESS.COM.AU

personality of a dynamic instructor or the more personal touch of a boutique gym.

Attracting customers According to IBISWorld, in the Gyms and Fitness Centres in Australia report published in September 2021, functional fitness, yoga and Pilates will drive profitability. However, report author Ross Dean suggests the growth of a business may not translate into more customers in the gym space; the existing pool of gym goers may simply be recycling their commitment between one brand and another – something that will allow brands to expand in an increasingly saturated market but won’t bring in a new wave of customers to the overall fitness space.

MARKET REPORT: GYMS AND FITNESS

CHALLENGES AHEAD

High level of competition

Capital costs for equipment

MUSCLE MEMORY

Wages

Rents

FITNESS FORECAST

- flashback to 2021

• • • • • •

It’s been a tough two years for the fitness industry. And Ross Dean believes the industry has been weighed down by the Covid challenges and seen an inevitable decline in revenue. Budget vs premium In the pandemic, budget models needed to bring in staff to deploy Covid rules. They may not have a sense of community that customers are seeking. However, premium gyms recovered market share from budget gyms because they could more easily pivot their businesses. Mergers and acquisitions In 2021 the global Lift Brands, which owns Snap Fitness and 9Round, took a 30 percent share in Aussie functional fitness chain Fitstop. In 2020 Viva Leisure bought Plus Fitness and F45 was acquired by Crescent Acquisition Corporation. Who was using the gym? Not so many of the 15–34-year-olds. As a share of revenue this has declined as more young Aussies turn to organised sports. What was trending? Boutique fitness and classes

Expect to see a bounce back in 2022–23 Revenue will rise 4% through to 2027, to $2.4 billion Royalty fees a growing share of industry revenue Membership numbers will rise Staffing demands will reduce as Covid rules lessen Most new entrants will be boutiques and small gyms – inexpensive equipment boosts profitability

Source: Gyms and Fitness Centres in Australia, September 2021, IBISWorld

AUSTRALIAN INSTITUTE OF FITNESS: top 10 fitness trends for 2022 1. Wearable technology 2. Exercise as medicine 3. Online training 4. High intensity interval training (HIIT) 5. Health and wellness coaching 6. Hybrid gyms 7. Functional fitness training 8. Mobile exercise apps 9. Outdoor activities 10. Mind and body training

EXTERNAL DRIVERS 2022-27

3.8%

lift in household discretionary income

2.8%

growth in obesity levels

0.4% rising health consciousness

0.7%

consumer sentiment to fall but remain positive

-0.1% average weekly hours worked

Sources: Gyms and Fitness Centres in Australia, September 2021, IBISWorld; Australian Institute of Fitness

WWW.FRANCHISEBUSINESS.COM.AU | FEB/APRIL 2022 | 61

MARKET REPORT: TUTORING

THE LEARNING ADVANTAGE

Kids’ tutoring is expected to increase as education and schools become increasingly competitive. Learning opportunities There is ongoing concern over numeracy skills among Australian adults and children, says Mathnasium director of operations, Samantha Aad. She points to data from a global study by the Organisation for Economic Co-operation and Development (OECD), which conducts a Programme for International Student Assessment (PISA). Pre-Covid, there was evidence of declining performance. “PISA 2018 shows the long-term change in maths performance reflecting Australia having one of the strongest decreases in performance among participating countries and economies,” says Samantha. This is the latest data available, as OECD member countries and associates have postponed the PISA 2021 assessment to 2022 to reflect post-Covid difficulties. There’s no doubt Covid-19 has had an impact on kids’ learning. “The Covid-19 pandemic has affected

children mentally and also in their learning. Technology used for online learning in parts of Australia has been both positive and negative, some students have thrived, while many have struggled and fallen further behind,” she says.

Business opportunities On the business front, Mohan Dhall, Australian Tutoring Association CEO, says the tutoring market had a strong rebound from the Covid lockdowns up until late June 2021. “The lockdowns from late June to early November set everyone back a lot,” he says. “There is expected to be another rebound next year, but no one anticipated Omicron. “There’s quite a lot of uncertainty about openings and closures.” While the government’s jobs outlook data shows strong growth over the next five years, Mohan believes it is difficult

62 | FEB/APRIL 2022 | WWW.FRANCHISEBUSINESS.COM.AU

to predict what this will look like. What he can point to is that every bricks and mortar location will need a really good online supplement. “That’s been the biggest nuance over the last year and a half,” he says. “Franchised organisations did not have a great online offer, but that’s changed.” Among the points potential franchisees should consider while reviewing a franchise business are systems and support. “There will need to be systems in place that are robust in the event of parent complaints, how do you backtrack and find what happened? It’s harder online. “Business owners will need to carefully look at what content is available and what content support there is – how much investment in ongoing development of curriculum is there? This is a significant driver of enrolments.”

MARKET REPORT: TUTORING

Q&A WITH THREE TUTORING BRANDS Kumon

What’s the demand for your services? Up to December 2019, Kumon Australia and New Zealand student numbers increased every year for a decade, with an average annual growth of 3 percent. We exceeded 55,000 student enrolments in Australia and New Zealand in 2019. While our student enrolments are now at 50,000 in 2021, we are again experiencing growth and are confident we will catch up to our 2019 student numbers in the first two quarters of 2022, and then continue to increase afterwards. Where will the growth come from? Growth will continue to come from all metropolitan markets, but, in particular Sydney and Melbourne as they rebound after the impact of extended lockdowns in the last two quarters of 2021. We are also expanding into regional Victoria and New South Wales, such as Bendigo, Frankston, Wagga Wagga and Orange, as these are population growth areas. What are parents looking for? Extracurricular support in mathematics and reading, to develop confidence and self-learning abilities. How do franchisees source new clients? Kumon franchisees primarily source new students through local area marketing and an active social media presence. Kumon offers a national free-trial campaign twice a year during May and August. This event creates awareness in the community and can increase enrolments either directly or from participants telling friends about their positive experience. As a result of the free trials, June and September are among the months of highest enrolments at Kumon. What makes your business model successful? Kumon’s business model is kept very simple so franchisees can focus on preparation that relates to instruction of their students. The royalty includes the cost and free delivery of all worksheets and materials required. There is no additional marketing levy or hidden fees.

Tutor Doctor

What’s the demand for your services? We are in high demand. The pandemic has caused the Covid learning loss crisis, with many parents turning to tutoring for help. In fact, the global tutoring market is expected to grow 16.1 percent by 2027. Tutor Doctor Australia has seen a 155 percent increase in student enrolments in 2021 compared to pre-pandemic 2019. Where will the growth come from? We are in an education crisis that will have a ripple effect for years to come – impacting students’ academic gains, wellbeing and economic prospects. In fact, a recent study by McKinsey & Company found that teachers in Australia reported students were on average two months behind where they usually would have been by November 2020. What are parents looking for? Parents, students and individuals alike are looking for private learning services that are tailored to their specific needs. How do franchisees source new clients? We have a combination of digital and grass-root marketing strategies that feed each other. Parent-child website structure to maximize SEO, pay-per-click, social media, community events, partnerships, etc. What makes your business model successful? Our service is highly personalised. A one-size-fits-all strategy isn’t what we do. Through carefully matched tutors and a creative approach tailored to each child, we help students confidently achieve their personal best through in-person and online tutoring. We are local. Our franchise owners are actively engaged in their local communities – building partnerships, supporting local schools and positively impacting the communities they serve. More than tutoring. From our X-Skills Program, equipping students with vital life skills, to regular session reports keeping parents up to date, to our recruitment process bringing in only the best tutors – we do so much more than homework help. Ø WWW.FRANCHISEBUSINESS.COM.AU | FEB/APRIL 2022 | 63

MARKET REPORT: TUTORING

Mathnasium

What’s the demand for your services? Numeracy skills are not about abstract mathematics, they are required in many aspects of daily life. The fastest growing occupations require STEM skills which include a sound grounding in numeracy. Parents are acutely aware of this and are prioritising their child’s maths understanding and excellence. Where will the growth come from? Growth will derive from three fundamental areas: parents looking to help their children achieve foundational maths skills that they are currently behind in; parents who are keen for their child to become a top achiever in maths; and secondary school students who are looking for assistance and support with their school maths program and homework. What are parents looking for? Parents approach Mathnasium wanting to help their child catch up, keep up or get ahead in maths. Parents also want to ensure their children have strong numeracy and problemsolving skills, which are considered prerequisites for the workforce of the future.

How do franchisees source new clients? Our franchisees source new clients by utilising a complete range of marketing tools, assets and promotional materials across the marketing mix. Mathnasium maintains a full range of ready-to-use marketing materials, including formats for online advertising, social media assets, flyers, display ads, direct mail pieces and brochures; as well as continued access to specialist marketing professionals. What makes your business model successful? Focusing primarily on children from kindergarten to Year 10, Mathnasium centres offer year-round learning through our maths-only learning centres. Each centre utilises the Mathnasium Method, an individually customisable educational curriculum that has been created through over 35 years of classroom experience and research. Its goal: teach children maths in a way that makes sense to them. Mathnasium is a multiple award-winning franchise network. We offer a simple business model that is resistant to Covid-19 disruption with a successful online model to complement in-centre learning. Mathnasium has a fantastic support network and offers huge revenue potential to our franchisees, including the opportunity to open multiple centres and no maths or teaching experience is required. ¢

WHAT DOES IT TAKE TO SUCCEED?

1. Good technical knowledge

4. High prior success rate

2. Convenience and easy access by

5. Good reputation

Here’s what the Art and Non-Vocational Education in Australia report suggests:

3. Recommendation/accreditation

public transport from authoritative source

64 | FEB/APRIL 2022 | WWW.FRANCHISEBUSINESS.COM.AU

6. Effective cost controls Sources: *Art and Non-vocational Education in Australia, March 2021, IBISWorld gpseducation.oecd.org/CountryProfile?primaryCountry=AUS&treshold=10&topic=PI

MARKET REPORT: ACCOUNTING

COUNTING THE FUTURE Small business and accountancy trends that can fuel Aussie enterprises.

mall business owners are the engine room of Australia and those that have survived the last two years are looking to fire up for 2022; what are the skills and trends that can help accountancy and business advisory franchisees stay ahead of the game?

2025-2030 skills set Skills accountants rate as crucial

51%

43%

40%

30%

29%

technology skills

strategic thinking

communication skills

customer service skills

growing a business

More than the sum of their parts Financesonline.com points out that accountants today are applying business skills, strategic thinking and tech skills that go beyond traditional accounting roles and turn a modern-day accountant into a business advisor. And a 2020 survey by Sage revealed business advisory skills like growth modelling were considered essential by respondent accountants, who also ranked tech skills as the most important attribute for future business. Strategic thinking was ranked second, followed by communication skills, customer service skills, and understanding how to grow a business. 

Source: Sage US Practice of Now report 2020

Services accounting firms provide Accounting/bookkeeping 79%

Payroll 25%

Tax 24%

Compliance 20%

Advisory 17%

What are small business owners looking to do in 2022? Xero revealed what small business owners have been doing, and are likely to continue to do this year: • Simplify processes • Rebuild cash in the business • Rethink supply chains • Reduce debt • Improve digital efficiencies • Retain staff • Boost digital marketing • Introduce cardless payments Source: Xero Small Business Trends 2022 based on surveys and reports across the US, UK, Singapore, Australia and New Zealand.

Assurance/audit 15%

Outsourced CFO 5% Source: Sage Practice Now 2019

Five for the future According to the International Association of Independent Accounting Firms, accountants need to have their eyes firmly set on five aspects of business: • Agile accounting • Blockchain • Cryptocurrency • Hiring and retaining staff • Sustainability principles

WWW.FRANCHISEBUSINESS.COM.AU | FEB/APRIL 2022 | 65

CONNECTING YOU TO THE RIGHT FRANCHISE FOR 34 YEARS. DISCOVER 1,200 BRANDS 6,400 FRANCHISES 10,000 ARTICLES

facebook.com/insidefranchisebusiness instagram.com/insidefranchisebusiness linkedin.com/showcase/franchise-business-australia twitter.com/ifranchisebus

be Subscri ! Today

ight a r t S s New nbox I r u o Y to

FRANCHISEBUSINESS.COM.AU

LOCATION

Location, location, location

The last two years have seen many changes in how and where Australians live. Population insights can help you decide on the best places to invest in a franchise.

ill the flight to the regions continue as 2022 progresses? What’s happening with Australia’s population that will influence site selection in Queensland and Victoria? Peter Buckingham, managing director at Spectrum Analysis, says, “We have to remember there have been offsets Australia-wide and the long-term position is a drop in the population forecasts that are currently in place from the ABS.” The fifth Intergenerational Report came out in June 2021. In 2020 there was a basic reduction in population caused by net migration – 97,000 more people left the country than arrived, mainly due to restrictions on immigration. “We normally see around 160,000– 190,000 p.a. immigrants settled in Australia, which basically hit zero in the last year,” says Peter. “The expectations are to reach an immigration level of 235,000 p.a. as the long-term target. “With all the economic and policy settings in mind, the expectation is for Australia’s population to reach 38.8

million by 2060–61. This is lower than previous projections – by about six years (but could still be adjusted upwards by immigration).” When it comes to predicting trends around tourism, it’s an enigma, says Peter. “All we hope for at present is for tourism to return to pre-covid rates.” Peter acknowledges the difficulty of providing realistic data on tourism numbers. Assessing the amount of accommodation and comparing it to a ratio of total population can provide some guidance. But there are caveats. “Often in areas like Byron Bay, people become over-enthusiastic because they judge the area on the dollar value of homes, or who is moving in there. But the truth is the static population of the town is quite small, and most of the tourists are backpackers – with little spending ability.” He cautions that tourism data can also be over-represented. A high number of visitors to a tourist attraction may arrive and depart directly to and from a

68 | FEB/APRIL 2022 | WWW.FRANCHISEBUSINESS.COM.AU

hotel by bus and have no opportunity to spend in the local community. Is there room for risk assessment in this or is it all data driven? “Data and models should be used to support or disprove what you feel is what you wish to do. If you like an area, and the modelling and data supports that view – then it makes for a much easier decision to proceed. “Most of us have lived most of our lives in one city – and probably get it quite right in that city. We all struggle in cities we have not lived in. If you like an area and the modelling or data says it is rather ordinary, then that is the time to either support your view with logic and reasoning, or concede and switch your search to another location.” Peter believes franchisees looking in unfamiliar areas benefit from a datadriven approach; it can focus your mind on potential areas you want to look at without being reactive to what real estate agents or others might be saying.

DATA AND MODELS SHOULD BE USED TO SUPPORT OR DISPROVE WHAT YOU FEEL YOU WISH TO DO. Peter Buckingham, Spectrum Analysis

Spotlight on Queensland Buying a business with low housing equity

“Traditionally it has been quite difficult to buy some franchises in regional areas purely because the house values are considerably lower and therefore access to equity in houses limits any purchase price. That being said, landlords are aware of this issue and in some cases are assisting in the funding of certain franchise chains.” Jon Sully, BDC Partners

BDC Partners’ Jon Sully sees a mass movement of southern Aussies heading for the sunnier climes of Queensland. “We all know that during this pandemic Australians have had a major reality check around lifestyle, work and their finances. Whilst this is a global phenomenon, in this country it is very clear Queensland for most ticks all three boxes and is subsequently benefitting from a massive interstate migration over the last several quarters. “It will be interesting when the borders open properly to see what will happen, although I think it’s pretty safe to say this trend will go through the roof for both internal and international movements.” So what does all this mean? What’s the impact on our industry in retail and franchise in the Queensland market? Let’s look at who is relocating. Millennials appear to be the dominant generation – they are tech savvy, open

and adaptive to change with a passion for learning while valuing social interaction in the workplace, says Jon. This is a group that knows what they want and they expect to be able to get it, he says. “Queensland now has an influx of new residents that need somewhere to live, need a job (or business), want restaurants and entertainment. The lifestyle they moved for is probably around the water so will be more regional and affordable rather than the inner city they have come from. “To me this reeks of opportunity for our millennial dream chasers as the demand for all these needs and wants will be massive and not likely to slow down over the next 10 years.” In many cases these facilities will need to be developed and built, he suggests, as demand for housing will outstrip supply. This will lead to job creation, more franchise opportunities, more Ø

WWW.FRANCHISEBUSINESS.COM.AU | FEB/APRIL 2022 | 69

LOCATION

shops for lease and what he describes as a “seismic shift in business and wealth” in Queensland. Of course, high-functioning franchise brands have already identified the potential and will be making headway into these markets. Jon reports good deals are happening along the coastal fringe and within strong inland towns like Toowoomba; some councils are putting incentives in place to attract major brands to the regional towns by offering support for operations. “The investment in retail real estate from shopping centres to bulky goods precincts will need to keep up to create the environment allowing retail to fill demand,” says Jon. “It won’t be long now before corporate Australia follows suit and starts relocating head office locations to where they can find the right team, because I can tell you from experience you can’t find anyone in Victoria at the moment to fill job vacancies.” Gerry Leyden, CBRE senior director, office leasing believes the Brisbane office market is showing signs of improving market fundamentals. “Encouragingly we are seeing occupiers steadily increase their attendance in their workplace, with many businesses now adopting a hybrid model of three to four days in the office. We anticipate this trend will continue into 2022 with flexibility underpinning the workplace strategy for occupiers,” he says. Gerry says much of the demand throughout 2021 has been for locally operated/managed businesses in sites of less than 1000 square metres. Precincts that offer “best-in-class amenities, immediate access to transport and a diversified retail offering” are in high demand. “As we move into 2022 the focus on the workplace experience is now more pivotal than ever in the decision-making process with landlords/developers now catering towards a product that delivers greater amenity flexibility for occupiers to utilise outside of their own workspace,” he says.

Paradise Shopping Centre The “leisuretainment” capital of the Gold Coast, Surfers Paradise has attracted 13 million tourists annually. This property occupies an entire block from Surfers Paradise Boulevard to the Esplanade and beach. The upcoming Eastern Precinct set to open winter 2022 will include a landscaped public space that connects the centre with the beach and feature eight restaurants across two levels of alfresco dining.

Top 10 hotspots In October 2021 Canstar pinpointed 10 suburbs across Queensland which are proving to be real estate rockstars:

• • • • • • • • • •

Bundaberg East Burleigh Waters (Gold Coast) Centenary Heights (Toowoomba) Dundowran Beach (Hervey Bay) Gympie Little Mountain (Sunshine Coast) Newtown (Toowoomba) Norman Gardens (Rockhampton) Paradise Point (Gold Coast) Southport (Gold Coast)

THE FRANCHISOR SHOULD HAVE TERRITORY AND LOCATIONS SORTED, THEY SHOULD BE DRIVING ALL THOSE DEALS. FRANCHISEES SHOULD NOT NEED TO DO ANYTHING AT ALL. Jon Sully, BDC Partners

Building the infrastructure Australia’s largest infrastructure project is underway. According to multinational professional services firm Arup, the South East Queensland Infrastructure Plan and Program is looking at more than $107 billion in investment to deliver the infrastructure required to manage sustainable growth across what is set to be the country’s fastest growing metropolitan region over the next 20 years. There are about 300 projects included in the plan, covering roads, rail, public transport, ports, water, energy transmission and distribution, hospitals and health facilities, schools and tertiary education facilities, correctional and justice facilities, sporting and recreational facilities.

70 | FEB/APRIL 2022 | WWW.FRANCHISEBUSINESS.COM.AU

Spotlight on Melbourne Hard-hit Melbourne has suffered particularly in retail and it’s unlikely that spending in stores will bounce back, cautions Peter Buckingham. “In my view, the strong destination shopping centres like Chadstone and the other Super Regionals will come back, but not to their pre-Covid levels for a long time – if ever. People have been retrained to purchase through other ways – online, back in more local circumstances, and definitely not visiting the CBD as much.” As a result, the shopping centres he predicts will be affected long term are the middle-sized groups, called the Major Regionals, and Regional shopping centres because they lack the breadth of retail representation likely to attract customers. At neighbourhood and sub-regional levels the centres will stay relevant, with the anchoring supermarkets providing a focal point. “I would be very wary of opening a new franchise in a shopping centre until we see how customer behaviour settles over the next 12 months or so as we readjust to life with Covid into the future.” Peter suggests neighbourhood centres will continue to pop up where strong new residential developments are occurring on the outer rim of Melbourne – areas such as Wyndham, Clyde, Armstrong Creek and Melton According to Victoria in Future, a governmental report from 2019, new suburbs in long-term growth corridors will help grow Melbourne’s population: • Wyndham (+ 204,000)

•

Casey (+182,000). Two areas will see a fast rate of growth, the report suggests: • Melton (4.3 percent) • Mitchell Shire (4.5 percent). While new development drives a lot of opportunities, many suburbs in middle suburbia are either very stable in population, or may be decreasing slightly over time, says Peter. Outside newly developing areas, which attract young families, stable neighbourhoods that tend to house mature age residents still offer opportunities – so long as there is a demand from the locals. “If you were to open a new business or buy into an existing business in these areas, I would be making sure the business was aimed at a mature population such as assisting elderly people etc, but not trying to service the younger populations unless there was obviously a real shortage of that type of business in the area,” says Peter. It’s a different story, he says, when the focus turns to regional Victoria. While there is a senior market as maturing Aussies pick suburbs like Mornington and Bellarine Peninsulas for their long-term retirement, there is also a swathe of younger families making a tree change. And that’s likely to increase with migration. “Victoria and New South Wales have for generations been the major growth areas for migrants coming into Australia,” says Peter. “There is little doubt the federal government is planning the open up migration once we are more stable with Covid, and I would

expect Victoria to take in a high share of this future immigration. “High population growth will mean a boom in building over the next 20 years and the necessities to support a new wave of skilled immigrants coming into Victoria. “This will create demand in many areas from building to day-to-day living requirements, and this is already being reflected in the price of housing and rentals in country areas as demand is outstripping supply.” He believes regional Victoria will be offering ever-increasing business opportunities. According to the Victoria in Future Report, greater Melbourne accounts for approximately 77 percent of Victoria’s population and over 85 percent of recent growth. The report suggests that another 4 million people will be resident in the city by 2056, with Victoria’s regions predicted to rise 700,000 from 1.5 million to 2.2 million. Of course, viewing the report through a Covid lens makes the outcome a little more opaque. Geelong, Ballarat and Bendigo are expected to foster half of the state’s regional growth with the population in the Geelong region boosted by over 100,000 people by 2036. There’s competition with sea/tree change local government areas such as Surf Coast, Moorabool and Baw Baw Shires, which the report projected will grow at a faster rate than Greater Geelong.¢

WWW.FRANCHISEBUSINESS.COM.AU | FEB/APRIL 2022 | 71

ASK AN EXPERT

Q & A

How can you spot true business resilience? Check what our experts say.

72 | FEB/APRIL 2022 | WWW.FRANCHISEBUSINESS.COM.AU

What are the signs of resilience in a franchise?

While surviving the pandemic looks a surefire sign of resilience our experts suggest there are specific points to consider that can help determine whether or not the business is viable for the long term.

DARRYN MCAULIFFE

ROBERT TOTH

Darryn has 30+ years in business banking, risk management and franchising. Frandata researches, reports and rates franchise systems.

Robert is an accredited commercial law and franchise specialist named as a leading franchise lawyer in Australia by Who’s Who Legal 2021.

HOW DO WEEKLY SALES NUMBERS COMPARE WITH PRE-COVID FIGURES? With all the uncertainty of the last couple of years, it is little surprise that “resilience” is now high on the checklist for many prospective franchisees. While there is no substitute for reviewing and testing financial information (especially with the help of your professional advisor), there are a few basic questions that can be asked of existing franchisees early in the process to gain some valuable insights. A good start would be to ask them how their weekly sales numbers had held up in the last two years compared to pre-Covid levels. It is also worth asking them how the business was tracking in the couple of years before Covid given some businesses were marginal heading into the pandemic and may have only survived due to the range of assistance programs and packages that have been on offer. Questions around franchisor support, customer behaviour, the impact of competitors and the effectiveness of marketing campaigns may also provide additional insights. The next step would be to probe what their recent experience had been with key expenses in the business (stock purchases, wages and rent etc). Even more importantly try to get to find out what they think is causing those changes. For example, challenges in getting stock in a timely manner, difficulties recruiting or retaining staff and issues with landlords. In isolation these answers will not tell you much, but when consistent themes start to emerge the picture may become very clear very quickly.

CHECK NECESSARY LICENSES, PERMITS AND DEBT COMMITMENTS Franchisees should ensure their franchise lawyer reviews the franchise documents and highlights any red flags disclosed in them as far as the franchisor’s financial performance over the prior two years. It is also important to closely look at the recent history of franchisees who have left. These details do tell a story about the health or otherwise of the franchise system. A brand new business is of course a higher risk than an existing business that has a track record. For an existing business, consider the following points. If there is a lease review the lease terms and rent review provisions - did the landlord provide any rent relief in the lockdown periods? When is the next market review due? There is a risk the rent may increase at that point and significantly impact on your profit. Ensure that all the assets of the business you are acquiring are clear of debt. Your lawyer can do a PPSR (Personal Property Securities Register) search to make sure there are no security interest registered over the business assets Check all of the necessary licenses and permits for the business are current and any supplier agreements are current, and the terms are commercial. At the end of the day buying any business carries risk but you can reduce that risk by getting specialist legal and financial advice before you commit. 

CEO, Frandata Australia

Special Counsel

WWW.FRANCHISEBUSINESS.COM.AU | FEB/APRIL 2022 | 73

READY TO BUY

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?

74 | FEB/APRIL 2022 | WWW.FRANCHISEBUSINESS.COM.AU

Resources AUSTRALIAN COMPETITION AND CONSUMER COMMISSION (ACCC)

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. 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

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

FRANCHISE COUNCIL OF AUSTRALIA

The FCA is the main body for representing franchisees, franchisors and service providers in the $146bn franchising sector in Australia. Becoming a member of the FCA is a voluntary and is available for any organisation or anyone involved in the franchise industry including franchisees. 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 lists franchising opportunities available in Australia. 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. 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.

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. VISIT: WWW.FRANDATA.COM.AU

FRANCHISE.ED

Franchise.ED 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. VISIT: WWW.FRANCHISE-ED.ORG.AU

THE FAIR WORK COMMISSION

Fair Work Commission (the Commission, previously called Fair Work Australia) and the Fair Work Ombudsman (FWO) are independent government organisations that regulate Australia’s workplace relations system but have different roles. 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.GOV.AU

VISIT: WWW.FRANCHISEBUSINESS.COM.AU WWW.FRANCHISEBUSINESS.COM.AU | FEB/APRIL 2022 | 75

GLOSSARY

Learning the

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

FIELD MANAGER

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

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.

ASSIGNMENT

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).

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.

FIXED SERVICE FEE

FRANCHISE AGREEMENT this is the legally binding business between the franchisor and the franchisee.

BUSINESS-FORMAT FRANCHISE

FRANCHISEE

a business model with four criteria – 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.

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

COMPANY-OWNED UNITS locations run by the franchisor rather than a franchisee.

CONVERSION an existing independent business that joins a franchise network.

DISCLOSURE DOCUMENT

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

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.

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).

DUE DILIGENCE

FRANCHISE TERM

the process of conducting in-depth research on a business before purchase.

this 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.

76 | FEB/APRIL 2022 | WWW.FRANCHISEBUSINESS.COM.AU

FRANCHISOR

OPERATIONS MANUAL

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

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.

GREENFIELD SITE a brand new site.

REGIONAL FRANCHISEE

GOODWILL

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

this is 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

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 right to use 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.

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.

LOCAL AREA MARKETING

TERRITORY

often abbreviated to LAM, this is marketing the franchisee is responsible in their territory or designated marketing area.

is the area assigned to franchisees for their business. Territories can be exclusive or nonexclusive.

MARKETING & ADVERTISING LEVY

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.

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

TOTAL INVESTMENT

MASTER FRANCHISEE

TURNKEY FRANCHISE

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.

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

MULTI-UNIT FRANCHISEE

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.

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.

WORKING CAPITAL

WWW.FRANCHISEBUSINESS.COM.AU | FEB/APRIL 2022 | 77

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.

1. MAKE AN INQUIRY

2. FRANCHISOR RESPONDS

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

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.

4. CONFIDENTIALITY

5. FIRST MEETING

6. CONDUCT DUE DILIGENCE

7. PROVE YOURSELF

8. OTHER STEPS

9. DON’T RUSH IT

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.

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.

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

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.

78 | FEB/APRIL 2022 | WWW.FRANCHISEBUSINESS.COM.AU

3. FIND OUT MORE

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 franchise-experienced professionals can save you money in the long term, so it is a worthwhile investment.

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.

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.

CHIEF FINANCIAL OFFICER

This senior executive reports to the CEO but plays a strategic role in the way the company 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.

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.

CHIEF INFORMATION OFFICER

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.

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.

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

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.

FRANCHISE RECRUITMENT MANAGER

BUSINESS DEVELOPMENT MANAGER/FIELD 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 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.

WWW.FRANCHISEBUSINESS.COM.AU | FEB/APRIL 2022 | 79

to the Inside Franchise Business Executive newsletter executive.franchisebusiness.com.au

A-Z LISTING

Contact: Shayne Boogaard, NSW & OLD Details: 0418 136 156 szh@7eleven.com.au Contact: Peter O’Hara, VIC & WA Details: 0408 175 534 pwo@7eleven.com.au Start up costs: $400,000 to $1,000,000

Contact: Chris Longley Details: franchising@ats.com.au www.appliancetaggingservices.com.au/ 1300 287 669 Start up costs: $57,000 + GST

PROFILE: 7-Eleven is the largest convenience and independent petrol retailer in Australia with more than 700 stores across VIC, ACT, NSW, OLD 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

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. 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.

Phone: 1300 097 857

Contact: Dan Snyder

Contact: Franchise Sales Team

Head of Franchise Relations & Development

Sales.au@inxpress.com

franchising@ambertiles.com.au

au.inxpress.com/franchise-opportunities

ambertiles.com.au Start up costs: Dependent on store and site: $280K-$450K plus stock. PROFILE: We are the premium supplier of quality floor tiles, wall tiles, natural stone, pavers, retaining walls, and synthetic grass to retail, trade and designer customers. The first Amber store was opened in 1973, and the first store was franchised in 1993. Today we have an enviable base of 22 franchised stores and 7 company stores. Now is an exciting time to join Amber. Amber has ambitious plans utilising the proven Amber Franchise System. So, if you’re • Highly motivated to achieve • Seeking personal and financial independence • Enjoy serving customers and enjoy working as part of a team then, an Amber franchise may be the answer for you.

Start up costs: $64,950 + GST PROFILE: InXpress is a global express logistics business with over 450 franchisees, located in 14 countries, providing consultative services and innovative software to SMEs. Founded in 1999, InXpress has a long history in managing successful businesses, with the know-how to train and support franchisees in running a sales and business management franchise. InXpress has established strong relationships with global courier partners, providing access to highly competitive rates, leaving you free to concentrate on sales and build your own successful and profitable start-up business: • • • •

Low entry and ongoing costs Proven model for over 21 years, constantly evolving Comprehensive training and ongoing coaching No inventory, warehousing, vans or trucks

Fax: 03 8699 1555

franchise@kwikkopy.com.au

Contact: Anna Goncalves

www.kwikkopy.com.au/franchise

franchising@questapartments.com.au

Start up costs: $180,000 - for a New (Greenfield) Centre

www.questfranchise.com.au

PROFILE:

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.

•

No employee base initially, opportunity to grow Potential to earn unlimited passive income Ability to work from anywhere!

Phone: 1800 809 913

Contact: Maria Chemali

and online solutions throughout Australia.

•

For more information about becoming an InXpress Franchisee, contact us now.

Phone: (02) 8962 8526

Start your franchising journey with Kwik Kopy, the leading provider of design, print

•

Start up costs: $750,000 upwards PROFILE: Quest Apartment Hotels is the largest and fastest growing apartment hotel operator in Australasia, with a network of properties across Australia, New Zealand, UK and Fiji. For over 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.

FOR A-Z LISTINGS ENQUIRIES CONTACT: Inside Franchise Business brings potential franchisees news, insights, advice and a directory of available franchise opportunities: It is your essential guide to buying a franchise in Australia.

Visit our website to find out more! www.franchisebusiness.com.au

82 | FEB/APRIL 2022 | WWW.FRANCHISEBUSINESS.COM.AU

Gerry Little Franchise Business Sales M: +61 414 455 772 gerry.l@octomedia.com.au

2022 New World New Opportunities

• Free advice from the experts • Meet the people behind the brands • Free seminars daily SAVE $10 Get your half price ticket online using code MAG at franchisingexpo.com.au

Brisbane 4-5 March 2022 | Melbourne 1-2 April 2022 Sydney 5-6 August 2022 | Perth 13 November 2022

franchisingexpo.com.au

ENDORSED BY

QUESTFRANCHISE.COM.AU

Bring your local spark of magic. Each Quest Apartment Hotel is owned and operated by a passionate local, so guests get the warmest welcome when they check in, and we know the best local delights for them to check out. Together, we’re the largest serviced apartment provider across the globe, with locations at the heart of communities in Australia, New Zealand, the United Kingdom and Fiji. We’re looking for ambitious people with that special spark to become Quest franchisees, and take on the opportunity to own a local business backed by a global brand. FIND OUT MORE AT QUESTFRANCHISE.COM.AU

Inside Franchise Business Feb/Apr 2022

Articles inside

Heavy lifting

The learning advantage

Tuning up

Diving in

Bright and shiny

COVER STORY

Fighting fit