Franchising Magazine Jul-Aug 2013 by Cirrus Media

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Franchising Jul/Aug 2013 VOL.26/No.4

Your essential guide to buying a franchise

Why you need to talk about MONEY

What is branchising?

READY TO BUY?

Get connected

IT OPPORTUNITIES

POOL TACTICS Dive in and go the distance

Check out our checklist

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THE FUTURE

PLUS: BEAUMONT TILES, PLUS FITNESS, SNAP ON, WENDYS

Franchise Opportunities Available Do you have the

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Service is our Success

Contents JUL/AUG 2013 | YOUR ESSENTIAL GUIDE TO BUYING A FRANCHISE

Opportunities 40 The sweet scoop Check out the ice-cream market

50 Pool tactics

What does a pool-focused franchise involve?

60 Sleeping easy Opportunities in bed retailing

68 Caught in the web Join the IT crowd

Inspire 10 Cover story - Vision for the future OPSM’s franchise models

16 Chocolate changes lives Chocolateria San Churro franchisees

18 A passion for beauty Blow Dry Bar franchisee

20 Creature comforts Animal passion

22 Be prepared

74 Make your dream a reality Preview of the Brisbane and Melbourne expos

Issues 86 Performance review The importance of financial benchmarking

92 It’s time to talk Essential conversations before you sign

100 Branchising Could this hybrid model suit you?

Amber Tiles franchisee

24 Learning worklife balance

ReGULARS 5

Editorial

News

128 Legal 129 Sketch 132 People 134 Opinion 136 Glossary 138 Checklist 154 Advertisers index

Lynn’s Learning franchisee

26 Building a partnership G.J.Gardner Homes franchisees eight years on

30 American Xpresso Xpresso Delight in the US: franchise story

32 A new set of wheels From travel to tools

36 The best decision Plus Fitness: a perfect match

38 Delivering the goods Fastway Couriers franchisee WWW.FRANCHISE.NET.AU

How to... 110 Build an elite team Tips for successful staffing

116 Money matters What your accountant needs from you

120 5 online tools for business Boost your marketing efforts

123 Mobile marketing How food venues can retain customers

124 Web wisdom Creating great content for your website JUL/AUG 2013 FRANCHISING | 3

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Welcome

Franchising Publisher Martin Sinclair P: 02 8484 0607 martin.sinclair@cirrusmedia.com.au editor Sarah Stowe P: 02 8484 0900 sarah.stowe@cirrusmedia.com.au Journalist Brea Carter P: 02 8484 0661 brea.carter@cirrusmedia.com.au

The comfort factor

Contributing Journalists Domini Stuart

Columnists Esther Gutnick Karli Furmage Andrew Terry Graphic Designer Rizwan Nawaz P: 02 8484 0622 rizwan.nawaz@cirrusmedia.com.au National Sales and Marketing Manager David Strong P: 02 8484 0905 david.strong@cirrusmedia.com.au Production Co-ordinator Laura Panameno P: 02 8484 0772 laura.panameno@cirrusmedia.com.au Managing Director Jeremy Knibbs jeremy.knibbs@cirrusmedia.com.au For subscription enquiries call customer service: 1300 360 126 ISSN: 1321-408X

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Cirrus Media Tower 2, Level 3, 475 Victoria Ave, Chatswood, NSW 2067, Australia Locked Bag 4700 Chatswood Delivery Centrel, NSW 2067, Australia P: 02 8484 0888 F: 02 8484 0633 ABN 80 132 719 861 www.cirrusmedia.com.au © Copyright Cirrus Media, 2013

Average Net Distribution Period ending Mar ‘13 - 7,150

SARAH STOWe Editor

t’s so tempting to revert to easy, familiar, comforting routines and habits, particularly in the winter months. When you are curled up in bed on a cold Monday morning embracing the working week might be the last thing you want to do: stepping out in to a world that demands your full attention, consistent standards, great customer service, team leadership, after-hours admin. As a franchisee you’ll be entering the world of business ownership, and all that entails. But you’ll also be embracing an exciting future where the challenge of running your own business is countered by the support on hand through your franchisor. In this edition we look at how franchisors can help you, and discuss the importance of a benchmarking process that can guide your performance. We find out how accountants think, how to build an elite team of employees, and whether a hybrid form of franchising - branchising - would suit your situation. This winter we are in the throes of showcase opportunities and the upcoming expos in Brisbane and Melbourne are highlighted in this issue - there’s plenty to see at each locatiaon, and if you come along, don’t forget to visit the Franchising magazine networking lounge near the seminar theatre - we’d love to see you! We love coming across enthusiastic franchisees at the bootcamp sessions at the expos, and following the Sydney show we just had to share the passion that Cheryl Kalham has for her

Are you ready to step out of your comfort zone and invest in your future? Lonely Pets Club franchise. Check out her story, and other franchisee experiences in our Inspire section. You can also find out why Xpresso Delight is heading for the US, and what the OPSM chain offers franchisees. As a supplement to this issue, you’ll find The Profiler, our regular showcase publication that gives you a taste of the variety of opportunities in Australia today. Are you ready to step out of your comfort zone and invest in your future?

Printed by: Bluestar Print 83 Derby Street, Silverwater NSW 2128 P: 02 9748 3411 All Franchising material is copyright. Reproduction in whole or in part is not allowed without written permission from the Editor. © 2011. Opinions expressed in Franchising are not necessarily those of Franchising or Cirrus Media.

WWW.FRANCHISE.NET.AU

JUL/AUG 2013 FRANCHISING | 5

News ONLINe NeWS | WWW.FRANCHISE.NET.AU

Management reshuffle at Retail Zoo

etail Zoo’s CEO Jeff Allis has been appointed the company’s executive chairman, while Scott Meneilly takes over his role. Meneilly has been with Retail Zoo since 2008, is the chief operating officer, and the CEO of one of the company’s brands, Boost Juice. He has more than 20 years experience in the retail, hospitality and quick service industries and is well versed on all facets of the business. Allis said “The decision to appoint Scott as CEO was based on him being pivotal to running Retail Zoo’s brands - Boost Juice Bars, Boost International, Boost Foundation, Salsa’s Fresh Mex Grill, Cibo Espresso and Chicken Central.” Allis have A D _ is F confident R V A N Jhe A will N_ 1 3 . apposidf P tive impact on the business. “Scott is, in

Janine and Jeff Allis with Scott Meneilly (centre). Image: Retail Zoo

my mind, the best all round executive I have ever worked with in my career. “There is no doubt sharing his inspiration a g eacross 1 every 4 / 1facet 2 / of 1 2the , business 3 : 5 5 P as CEO will be incredible for the Retail

Zoo,” he said. As executive chairman Jeff Allis is responsible for managing Retail Zoo’s Mbusiness platfrom; Janine Allis remains the company’s director

Due to eXtremely high demand, coffee retailing is widely regarded as one of the more attractive franchising options available. With your drive, our system and our collective belief in delivering an eXceptional coffee eXperience, you can eXpect an eXcellent return on investment. Plus you get WR EH \RXU RZQ ERVV DQG ZRUN ÁHXible hours, how eXquisite! We’ll supply you with our eXclusive ‘hit the ground running’ pack including free start up stock, marketing materials and eXpert training. For more info on a Cappuccino Xpress mobile coffee franchise, contact Carrick Robinson on 0421 048 716 or email carrick@capx.com.au and get on the road to success today.

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WWW.FRANCHISE.NET.AU

News WWW.FRANCHISE.NET.AU | ONLINE NEWS

Just Better Care expanding

ome-care franchise Just Better Care Australia has opened eight new franchises so far this year, bringing its total number of franchises to 30. More than half of the new franchises are situated in Victoria; two franchises have opened in Perth and one on Queensland’s Sunshine Coast. Trish Noakes, CEO for Just Better Care Australia, attributes the brand’s expansion to one factor in particular. “The opening of these franchises reflects the significant increase in demand for aged care and disability services throughout Australia. “However the expansion comes at a challenging time in the market for start-ups, given the changes in policy and reforms in both aged care and disability

Twenty-four hour gym chain Stepz Fitness is turning workouts into watts with the launch of a new green club on the Gold Coast. The Zambrero Group plans to open 50 new stores in WA in the next five years.

Trish Noakes Image: Just Better Care

services and the ongoing challenging business conditions,” she added. The company is currently considering franchises in South Australia, Tasmania and northern Queensland.

The latest national franchise division to join the Jim’s Group, Jim’s Glass, plans to recruit independent glaziers across Australia. Italian franchise Fasta Pasta’s first food court restaurant has been attracting more than 3200 patrons a week. New outlets in the IGA and Mitre 10 networks have helped fuel business growth for Metcash.

Pie Face in the news

The Cheesecake Shop has launched a refreshed website featuring a new online ordering system and easy store locator.

he Pie Face chain hit the news when The Australian Financial Review on 3 June indicated it had obtained leaked documents revealing the fast food chain was suffering widespread losses and was trying to sell loss-making stores. Ben Macpherson, chief marketing officer at Pie Face, told Franchising there are a number of stores available and profitability differs from store to store. “The price at which any particular store can be purchased will be influenced both by current profitability and also by the store’s potential.” He said the company is “open and transparent” about each store’s trading history. He said the document was part of an internal review of company stores and contains “incomplete, inaccurate and out of date” information. “A significant portion of our company stores are delivering profits to the group.” In other developments, the chain has signed an agreement to manage the

IN BRIEF

Quest Serviced Apartments has separated the roles of CEO and executive chairman, and appointed its former general manager to the CEO role.

Image: Pie Face

brand’s expansion into India. CEO Wayne Homschek said “The territory has a very large and growing middle class of over 170 million people, and represents a significant long term growth opportunity for the conpany.” A new menu will be tailored to meet the Indian customers’ tastes with a focus on developing an extensive range of vegetarian pies. WWW.FRANCHISE.NET.AU

Coffee franchise Zarraffa’s fell victim to a series of robberies at five of its Queensland stores in late June. Presse Café, the Canadian café franchise with locations in seven countries has just signed its first Australian franchisee. Caustic soda mistakenly sprinkled on chips at a Chicken Treat outlet has caused burning to some customers’ mouths and throats.

JUL/AUG 2013 FRANCHISING | 7

News ONLINe NeWS | WWW.FRANCHISE.NET.AU

Telcoinabox plans to go public

here are changes afoot at the Telcoinabox business as it becomes part of a new group which is taking steps to significantly grow its operations through an IPO (Initial Public Offer). There is also another acquisition in the pipeline, and the appointment of a new chairman. The newly formed Inabox Group Limited (Inabox) has opened its initial public offer of $2.9 million. Inabox was formed following the acquisition this month of the business and assets of telecommunications wholesale aggregator, Telco In A Box Pty Ltd (Telcoinabox). The proceeds from the IPO will be used to fund the growth of the Telcoinabox business, expand into new markets and complete the acquisition of an additional telecommunications wholesale aggregator specialised in VoIP, iVox Pty Ltd.

Damian Kay and Siimon Reynolds Image: Inabox

After completion of this acquisition, Inabox will support over 200 telecommunications Retail Service Providers (RSPs) Australia-wide. The Offer price per Share is $1.20 with 2,416,667 Shares on offer with the right to accept oversubscriptions of up to $500,000.

Siimon Reynolds has been appointed non-executive chairman of Inabox. A highly esteemed entrepreneur, businessman and mentor with over 25 years experience in media and marketing, Reynolds will facilitate strategic marketing and the overall business’ growth.

New cost-conscious, flexi-franchise model unveiled by Keen to Clean

he Keen to Clean Group has launched flexible franchise models designed for a lowerlevel investment that suits the current cautious market. The decision to offer the low cost, low risk flexi-franchises followed feedback gained over 12 months from potential franchisees. Brijesh Purohit, Keen to Clean Group managing director, said “We found based on the feedback that, ultimately, the initial investment will be the basis of the decision on whether a person will pursue a franchise. A larger cost, whether for a well known brand or not, will always be a concern and cause trepidation for an investor. A good name is a plus and will always be a factor, but investors have learned to see past big names alone.” The new line of franchises will offer

8| FRANCHISING JUL/AUG 2013

Image: Keen to Clean

significantly lower investment levels, starting at $13,500 + GST, that includes a guaranteed roster of fixed, ongoing regular work as well as all the costs of equipment. Depending on the level of investment, WWW.FRANCHISE.NET.AU

the guaranteed established roster of jobs will increase or decrease, meaning franchisees will have the ultimate say in their workload. “Ultimately it is a win-win for both parties,” said Purohit.

Inspire | Cover Story

VISION FOR THE FuTuRE OpSM is on the lookout for new franchisees – and they don’t need to be optometrists

re you keen to join forces with a household name? There are a host of wellknown brands that opt for the franchise model as their busines structure, from lawn-mowing operations to fast-food chains. But what about eyecare? Traditionally the reserve of highly trained optometrists, eyecare might not immediately come to mind as a business opportunity. But OPSM aims to change that. And heading up the move into franchise territory is Peter Baily, director of development Asia-Pacific. According to Baily, the Luxottica business – the Italian based parent company behind OPSM – has recognised the need for franchisee expertise in its expansion plans. So what’s in the company’s sights? Three different models offer opportunities for business and require varying levels of skill and experience. The alliance model is essentially a ‘try before you buy’ says Baily. This suits naturally risk-averse optometrists who might not have business experience. After 12 months running the business as a franchisee, with no investment from them, the optometrist can choose to buy the business or revert back to being an employee. Optometrists can also purchase an optometry franchise, which is a franchise of the eye-testing portion of the business only, and has a five-year term with one option to renew for a further five years. 10| FRANCHISING JUL/AUG 2013

This business model has a four percent royalty fee and is run within a company owned outlet. The third and most ambitious model is a full franchise - the model was launched two years ago but Baily admits it has “had some stutters”. However there are now 85 franchisees who have invested in this model, and 29 further individuals undertaking the franchising process now. The 100th store is set to open soon. In two years that’s quite a boost to the network and independent optometrists have been targets for the company. “Quite a few have rebadged,” says Baily. “We know where the good businesses are.” And expansion is not just focused on the Australian market. New Zealand is a major focus for 2013 – there is a sizeable corporate presence but franchising is relatively new, Baily points out. The global corporation also has significant company owned business in China. “There are some amazing opportunities if you get it right,” says Baily. “We’re not a pure franchise. We started out as a corporation, and we’re using franchising for growth and optimising our business. We don’t have targets for the franchised/corporate mix. “It’s fair to say though that most growth comes through franchising. But our good corporate business always works hard, striving for high standards to be the best – and that’s a great dividend for the franchisee. “The bottom line is benefit for all.” » www.FRANCHISe.Net.AU

pETER bAILY OPSM director of development Asia-Pacific

Cover Story | Inspire

Sight selection More about the OPSM business • the OPSM business was named emerging Franchisor of the Year 2012 bythe FCA, and it has been cited as a bRw Fast Franchise of the Year. • the company has recorded 24 months of consecutive growth. • the like for like growth rate in FY12 of different franchise models for OPSM was 19.5 percent for the optometrist and 22.8 percent for the full franchise model.

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AEST All images: OPSM

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Inspire | Cover Story

teCHNOLOGY In eyecare technology counts. “We’ve had double digit continual growth for 24 months and that’s down to innovation, focus and investment,” Baily says. The role of market leader requires innovation, he adds, such as the frame fitting service Accufit introduced earlier this year. Then there is the Optos Daytona Ultra Wide Retinal Scanner, exclusive technology that can detect issues in eyes that may have not been easy to detect or could be missed by a standard digital retinal scan. “OPSM is committed to raising the standard of eye care and with leading eye care and health technology, it’s one great way to differentiate the business in the the marketplace,” says Baily. Due to its success the initial order of 160 machines has increased to 400 so that every store across Australia and New Zealand will have one. “Franchisees are loving it,” says Baily.

RetAIL ReLAtIONSHIP Baily says the business is in the process of developing a true omni-channel experience which involves a number of initiatives using all channels from store to A D _ F R J A N N Oonline V _ 1 marketing, 2 . p d f with P athe g eaim1of giving 1 1 / customers 1 0 / 1 2 , the best experience and service possible.

Retail and technology mix at OPSM

“We want to facilitate and educate people about what style will suit, what eyecare services will help People are willing to pay to get the best service and experience they can “ The customer experience starts with web engagement. Customers book online, choose the 1centre 2 : 5and 1 get P Mrelevant information before they step out of the door. »

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Inspire | Cover Story

FRANCHISe OPPORtUNItIeS

Customisation

There are great opportunities but, says Baily, “we’re a bit fussy. We’re looking for business skills – we can deliver a good return on investment, we supply everything - it’s about selling and marketing your business.” Even before a franchisee is installed there’s help on hand. The support team works with a franchisee to find the right location and help them partner with an optometrist. There is also full training available for staff through Learning and Development and Institute of Learning teams. “All the hard stuff has been taken away. A huge marketing department is behind you running a OPSM’s spacious sophisticated multi-channel program. George Street store “This has good margins. We’re in high rental areas but there’s a latent demand. We’ve done a lot of OPSM aims to keep the processes for customers work to identify opportunities, and will use and franchisees simple. When it comes to the supply franchising to fill these areas.” chain that forms the foundation of the retail offer, Many of these locations are regional but there are franchisees have an assorted stock that is on still opportunities in major cities, Baily insists. auto replenishment. OPSM is seeing the advantages of multiple unit An integrated system also performs the tasks of ownership among its franchisees and is encouragordering lenses and frames by sharing the informaing multi-unit franchising he says. ”It’s something tion digitally from the optometrist and the dispenser we want to foster as we go forward. There are quite operators with a group of stores A D _ F R Y B M I Cwith _ 1 the 3 . manufacturer. pdf P a g There e 1 is a1minimum 2 / 0 9 / turna1 2 , 4 :a few 2 8 individual PM round of two to three day delivery on glasses. seeing this as a better way.” F

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Inspire | Franchisee

CHOCOLATE CHANGED THEIR LIVES Husband and wife team Neil and Sharon Menzies have been with the San Churro brand for three years.

hey currently own two franchises, one in Fremantle and the other in Subiaco, and they plan on eventually opening a third store. Their Freemantle site received the Best Merchandised Store award at San Churro’s annual franchise awards in March. Neil and Sharon decided to consider franchising after their own company collapsed. “It became obvious there was no such thing as a safe job or career. We needed to take things into our own hands and not rely 100 percent on other people,” they explain.

Be prepared for a lot of hard work and late nights to begin with The pair engaged in various types of research to better understand the San Churro brand and determine whether it was suitable for them. “We visited our local store frequently, spoke to the then owner, and called as many of the east coast franchisees as we could. Watching the customers in the Fremantle store was also a big factor,” say Neil and Sharon. While their research was extensive, there are a few things Neil and Sharon would change if they 16| FRANCHISING JUL/AUG 2013

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had their time again. “We would do more research into the practicalities of running a small business and [learn more about] how we can fund and pay it off.” The pair say they opted for the San Churro brand for multiple reasons. “We had thought about having a coffee shop for a long time. This morphed into a coffee/chocolate shop idea (before we had heard of San Churro) based on our experience of the European style hot chocolate in Italy. “When we discovered the idea was already successful it seemed silly to try and reinvent the wheel.” Neil and Sharon acquired the funds they needed to invest in the two stores in different ways. “We took out a bank loan for the first one and the second we funded with personal funds and a loan.” It seems there are three key things Neil and Sharon have learned since becoming franchisees. “Pay the business off as fast as you can. Keep the customers happy. Keep the staff happy,” explain the pair. The primary challenge they have faced as franchisees? Managing their time. “We didn’t realise the extent of the time commitment,” they say. Neil and Sharon have several pieces of advice for potential franchisees “Be prepared for a lot of hard work and late nights to begin with. Dealing with the realities of employing people also has its challenges. “Be prepared to be very understanding when it comes to staff issues” add the husband and wife team. F

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Image: Blow Dry Bar

Inspire | Franchisee

A pASSION FOR

bEAuTY

blow Dry bar franchisee tammie Foster is always on the look-out for a new challenge. She co-owns Sun 7 Tanning Studio and opened her ﬁrst blow Dry bar salon in December last year.

t the beginning of her career Tammie held sales, service and later marketing positions in the insurance and finance industries. When she moved from Adelaide to the Gold Coast in 2007, Tammie took on a role as the public relations and marketing manager at The Clock Hotel in Surfers Paradise, however she was looking to open up her own tanning salon in the area. 1. Tell us a little about your work life before becoming a franchisee? I was and still am co-owner of Sun 7 Tanning Studio, which is a tanning salon consisting of six solariums and a spray tanning room in Queensland. I had the idea of opening a tanning salon when I first moved to the Gold Coast from Adelaide in 2007, however while I was doing some market research I came across Sun 7 Tanning Studio. At the time the company had two salons on the Gold Coast and the fit out and concept was what I had envisioned. Instead of trying to compete with this brand I contacted the owner through the company’s website to set up a meeting and we went from there - my first salon was up and running in Robina on 13 June 2009. Leading up to the opening of the business I took a lot of day courses. They covered all areas of business and were provided through the Gold Coast City Council. Before moving up to the Gold Coast from Adelaide, I worked as a sales and service consultant in personal insurance as well as consulting and selling general banking and loans. It was during this time I discovered my interest in marketing; I began a marketing course through 18| FRANCHISING JUL/AUG 2013

www.FRANCHISe.Net.AU

TAFE. and finished up as marketing officer in the company’s creative department. 2. What brought you to invest in a franchise? After owning Sun 7 for around two and a half years and watching it grow through new partnerships on the Gold Coast and Brisbane I wanted to branch out on my own. For about six months I was racking my brain for a new idea but was still keen to remain in the beauty services industry. I believed express service, flexible trading hours and an affordable price point were most important to me and my customers. Being a female enjoying these luxuries myself, I thought about how much I spent when I wanted a blow dry and how I would only book in for one if it was a special occasion or event as they always cost between $70 and $90. I had always wished I could afford regular blow dries so I could maintain the same style at home however I could never justify the price. Through online research I discovered this concept had already been established in America with a franchise called Blo. As I kept researching I found the concept had reached Australia with a franchise called Blow Dry Bar! I contacted the franchisor Nathan Cuneen right away (which was in November 2011) and he got back to me the next day and we proceeded to go through the application process. 3. Why did you choose this brand in particular? I chose Blow Dry Bar because this was the first brand to bring the concept to Australia in 2008 and there was already so much hype around it.

Franchisee | Inspire

I felt confident that this was the idea I believed in and I could see its potential for growth in Australia. I also admire Blow Dry Bar’s fresh and innovative approach and I think the biggest draw card for me was the fact that unlike the owner-operator model that many franchises offer, Blow Dry Bar offers franchisees a unique owner-investor model, which means I didn’t have to give up my current commitments or involvement with Sun 7. 4. What skills did you bring to the business? Being a part of a successful tanning salon for three and a half years prior to this meant I already had knowledge of every aspect of running a business. In saying that, I must admit I definitely continue to learn new business skills through Blow Dry Bar but that is because there is so much support from the brand’s head office. I also believe my marketing background was a great help in starting up the first salon on the Gold Coast.

now as I receive so much support to make my business the very best it can be. The hairdressing business is very different to a tanning salon as you are dealing with staff who are passionate and this is their life long career, whereas we hire young, casual staff at my tanning salon. 6. How has the franchisor helped you gain confidence in your business?

Blow Dry bar offers franchisees a unique owner-investor model The head office team has been a great help. Blow Dry Bar ensures all franchisees are fully trained in all aspects of the business and there is an ongoing education program which has been really useful.

5. What has been the biggest challenge? Being a franchisee when I am used to being a 7. What will you do with this business? co-owner has been the biggest learning curve for me. My plan is to open multiple salons on the Gold Coast There and keep A D are _ Fso R many O U T other 2 J Athings N _ 1 you 3 . have p d f to consider, P a g e 2- at 6least / 1 two 2 / more 1 2 , in the 3 : next 0 2 two P years, M although I am finding this to be a very positive thing building up from there. F

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Contact: Head Office 07 5532 7071 franchising@outbackjacks.com.au www.outbackjacks.com.au

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www.FRANCHISe.Net.AU

depending on location

JUL/AUG 2013 FRANCHISING | 19

Image: Lonely Pets Club

Inspire | Franchisee

CREATuRE

COMFORTS Animal lover Cheryl kalman is a newbie franchisee and she’s loving every minute of her new life.

n my previous life I did many things always trying to find my niche where I could fit in and be happy. I had previously worked in sales, marketing, project management, event management, administration, vet nursing, health food stores, pharmacies… the list goes on. I have always wanted to own my business but I knew I couldn’t just do anything; it had to be something I am passionate about. And the one thing I am most passionate about is animals and their care, wellbeing and happiness. Pets have always played a major part of my life and family. As a young girl, growing up in Johannesburg, South Africa, my doggie family members were some of my best friends and companions. I had been looking at various businesses over many years and nothing really jumped out at me, until the day my husband emailed me an article about Lonely Pets Club. I wanted in and I wanted in now! And so my story with Lonely Pets began.

wHY tHIS FRANCHISe? The business cares for all sorts of animals and has a fantastic business model. I looked into the support and IT systems and was impressed. I had a lot in common with the franchisor and I knew I would be able to settle in here and be happy and fulfill all my dreams. That’s not to say there aren’t challenges! The bookkeeping side of things for a start; I suddenly 20| FRANCHISING JUL/AUG 2013

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find the most extraordinary things that must get done before the books. And my poor accountant has to put up with me asking a million questions. But there are so many highlights. I have a passion for healthy, natural and positive living and that passion is evident in my natural pet care. I have an Advanced Diploma of Homeopathic Medicine and always prefer to reach for natural treatments first. More recently, I’ve begun studying Animal Homeopathy and started to delve into what makes and keeps animals healthy and happy. Now I get to work with animals every day, I am truly blessed. I get to walk them, play with them, cuddle them and make sure they are safe and happy. When I’m not caring for pets, my husband and I are enjoying our love of underwater life during our scuba diving adventures. Observing the rare and exquisite beauty of the many ocean sea creatures up close and through the camera lens is something we never tire of. As an animal lover, I truly feel there is nothing more rewarding than working daily with animals. My friends and family often comment on how lucky I am to have found a business that allows me to work at something I enjoy so much I am never greeted with a grumpy face; I am only ever greeted with happiness. I get kisses or licks and I am often begged for more scratches; now who doesn’t want a job like that? F

Image: Thinkstock

Inspire | Franchisee

bE pREpARED Store manager Luke Stevens still did his homework before becoming a franchisee

uke Stevens is an avid supporter of the Amber brand. He previously managed one of the company’s stores and invested in its Kotara franchise in April 2009. It seems the company was impressed with Luke’s performance when he was store manager, as head office actively sought him out. “I was approached by head office to see if I was interested in trying to turn around a store that had been somewhat run-down. We jumped at the opportunity!” he says.

ReSeARCH While Luke was obviously familiar with the brand, the role of store manager and franchisee are very different, so he devoted much of his time to researching the brand from a franchisee’s perspective. “I was unsure about the changes involved when a franchise goes from a private ownership to being owned by an equity group. “I approached several of the existing franchisees and had one-on-one discussions with them in order to gain an extensive franchisees’ perspective on the issue. The feedback I received from the talking to other franchisees was honest - warts and all,” he explains. Luke worked in the store for one month prior to investing in it, an invaluable experience that helped him determine whether the move was a good idea. “It allowed me to have a thorough look through the books and understand how the store functioned. The process I underwent before committing to purchasing the franchise and putting the pen to paper was excellent,” he says. In the end a number of factors influenced his decision. “Amber presents itself to the public as a much larger group than it actually is. This is a huge advantage of the company and a credit to its hardworking marketing team. “Also, knowing and being employed with the brand for some time gave me peace-of-mind as I already had a thorough understanding of the brand and its systems,” he explains. 22| FRANCHISING JUL/AUG 2013

CHALLeNGeS While Luke describes himself as “a born salesperson” those less exciting, yet equally important administrative tasks are not his strong point. “The biggest challenge was realising that I am not an expert at everything! Accounting is not my strong point so employing a good book-keeper was crucial to the success of the business. “Make sure you are aware of your own areas of expertise and utilise them to your benefit. If necessary, seek expert advice to help manage areas that you recognise as a weakness,” says Luke.

ADVICe He advises new franchisees to think about how the structure of ther business from the very beginning. “Make sure your initial set-up, whether it is a trust, pty ltd company or other, is best for you. In our case, my wife works outside the business meaning it was not essential for her to be a director. As a result we could have streamlined a majority of the paperwork if we had structured our franchise differently,” he explains. He encourages franchisees to go above and beyond when they conduct their research. “Speak to existing franchisees beyond the list the franchisor provides you in order to obtain as many different franchisee perspectives as possible. “Also, have a significant discussion with your solicitor regarding the franchise agreement and how to structure your company to suit your personal situation,” Luke adds.

GOALS Luke has kicked a number of goals since he took the struggling store over four years ago. “We renovated the store and have managed to maintain a strong and experienced core team of staff. I believe keeping good and trustworthy employees is a sign that the business is going well and you are headed in the right direction,” he explains. Luke will continue to rebuild and improve the store, and he hasn’t ruled out investing in another. F www.FRANCHISe.Net.AU

LuKE STEVENS Amber franchisee

Energy Passion Innovation

Digital Domination

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Image: Thinkstock

Inspire | Franchisee

LEARNING A WORKLIFE BALANCE Flexible hours suit franchisee Travis Barker

ravis Barker is a Lynn’s Learning franchisee who began operating his business in April last year When he was searching for a franchise opportunity, there were three questions uppermost in his mind: would the franchise give him the ability to work flexible hours to support the lifestyle he wanted, how quickly could he make a profit and what would be the initial investment into the franchise system?

I have been able to make significant profits in my first six to nine months FLEXIBLE LIFESTYLE When he came across the Lynn’s Learning franchise Travis recognised the system fulfilled his requirements, allowing him to concentrate on other commitments during the day while still earning an income. “Not only am I able to run my lifestyle the way I want, I also get all school holidays off; which allows me to go camping with my partner and dog more 24| FRANCHISING JUL/AUG 2013

often, and travel overseas!” The Melbourne based education and training business founded in 1990 provides maths and English tuition to children through from prep school to high school and is geared to developing a child’s enthusiasm for learning, their classroomconfidence and self-esteem. In turn, franchisees need patience, enthusiasm and the energy to bring out a child’s potential.

EXCEEDING EXPECTATIONS Travis found setting up his franchise was a simple and stress-free experience thanks to the training program provided to ensure franchisees are comfortable with the business start-up. And the training continues with ongoing learning and support on offer as the business develops. “The fact that Lynn’s Learning kick starts you with an advertising campaign is a huge added bonus. I had students from day one of operation,” says Travis. And the results so far have been rewarding, with the business exceeding his expectations. “Experts told me to expect to make a loss on my business in the first two to three years. However, I have been able to not just break even, but make significant profits in my first six to nine months.” Travis says. F WWW.FRANCHISE.NET.AU

TRAVIS BARKER Lynn’s Learning franchisee

Inspire | Franchisee

buILDING A

pARTNERSHIp Kris Gill and Danny breen, still loving the brand eight years on

ris Gill was looking for a career change when he came across a G.J. Gardner Homes advertisement in a magazine. He sent it on to friend Danny Breen and the pair invested in the brand in 2005.

OUR QUeStIONAIRe 1. Why did you decide to buy a franchise? Kris: I had reached a point in my own building company where I had to either grow my business or revert back to being a subcontractor to the larger building companies. By joining G.J. Gardner Homes I immediately gained the buying power and marketing support of a volume building company. Danny: Kris sent me an advertisement he had seen in the Master Builders magazine detailing franchise opportunities with G.J. Gardner Homes and so we went and had a meeting to explore it. I was keen on the idea of running my own business after working for companies in a series of operations and account management roles. We liked that opening a franchise with G.J. Gardner Homes meant we had the freedom to choose where we would open our business. We selected Bendigo as our wivesâ&#x20AC;&#x2122; families are from there and we also realised great potential for growth in the area. 2. How long have you been in the system? Kris: Eight years. Danny: G.J. Gardner Homes Bendigo was incorporated in October 2005.

Franchisees Kris Gill and Danny Breen. All images: GJ Gardener Homes

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3. How did you come to decide on this brand? Kris: Danny and I looked at three or four different companies before selecting G.J. Gardner Homes. We decided on the brand as it offers the best support from head office. The other companies we investigated were more like buying groups - where you traded under your own building company name with an add on company that you used to get your buying power through.

Franchisee | Inspire

They didn’t offer much support with marketing or collaboration with other franchisees within the group. Danny: There were a number of reasons we chose to open our franchise with the brand, including: • The level of support provided by head office. • The brand’s potential and its reputation, particularly from a global perspective. • The offer of a fully integrated computer package specifically developed for the building industry, as well as comprehensive training. We also had a great feeling about the brand when we were discussing it with other franchisees and the Victorian head office. We were excited by what they had achieved and how it had benefited them personally. So far for us it’s been hard work, but also a lot of fun. 4. What surprised you about the business? Kris: I am surprised by how much I have changed from a tradesperson who was running a small building company to a businessperson running a larger building company.

the multiple personalities over the past eight years. Although it can have its moments at times, it’s been great to share these experiences. 5. How do you spend an average working day? Kris: Good question! Between phone calls, emails, questions from staff, as well as meetings with clients, suppliers and staff, I usually get some work done between 8:30 and midnight (after the kids are in bed).

Owning a G.J. Gardner Homes franchise has provided opportunities that I would never have had as a small business owner

Danny: My day is almost entirely spent dealing with staff and clients. I spend 80 percent of my day with the sales staff helping them provide quotes, 10 Danny: Like all businesses, you are only as good as F R 0 7 1 3 _ 0 2 7 _ WA T 1 2 0 1 3 - 0 6percent - 1 9 Ton1 the 1 : business 1 9 : 2 itself, 9 + 1 including 0 : 0 0 financials and improvements, and 10 percent with other staff. » your staff and it has been interesting dealing with

Picturing a career change? Interested in real estate? Passionate or keen to learn about photography? Then a Top Snap property photography franchise could be for you. Property photography is an exciting and diverse industry, where no two days are the same. Each day you’ll be out and about photographing different properties and meeting lots of new SHRSOH DORQJ WKH ZD\ 7KLV LV GHÀQLWHO\ QRW D GHVN MRE Here’s some other reasons why you might choose Top Snap: No need for an expensive retail presence. All you need is your photography gear, vehicle and computer and you’re set to go. We work in a growth industry. Our services are in high demand with the residential and commercial real estate industry. We’ll help you succeed. You’ll get the usual intensive training, plus dedicated support with sales and marketing, that you’d expect from a high quality, established franchise system. “As a Top Snap franchisee I now have a great work/life balance. I work from home and see more of my family, and going to work and meeting lots of great people is fun and different every day. This has given me the career change and lifestyle I was looking for. I love it!” John Woolley, Mornington Peninsula, Victoria

Territories are available across Australia, please contact Rob Watkin on 14 217 019 or email rob.watkin@topsnap.com today for more details. www.topsnap.com

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JUL/AUG 2013 FRANCHISING | 27

Inspire | Franchisee

A GJ Gardner Homes design

6. You’re in a partnership so how do you manage the roles? Kris: Danny and I married sisters. I had come from a building background and Danny was from a business/marketing background. It has been a good combination as I manage the building side and Danny is the business and marketing guru. We share the administration of the business. Danny: We operate a pty ltd company structure, with Kris and I owning 50 percent each as managing directors. 7. How has the franchisor training helped you in business? Kris: The training provided by G.J. Gardner Homes has pushed my thinking further into the business side of things. I’ve also gained a lot of confidence, for example, I am not what you would describe as a great public speaker, but I have been to America to speak at the annual G.J. Gardner Homes conference and I have also spoken at conferences in Victoria and Tasmania.

8. How do you raise your brand’s profile in the community? Kris: We support several local sporting clubs and are involved in raising money for local charities. We also place ads in the local newspapers. Danny: Quite a few local entities have benefited from our support over the years - from footy clubs to charities and many in between. We support clubs and groups we are associated with and ones that we just consider to support a good cause. 9. What are your goals for the business? Kris: I would ideally like to get the business to a point where I don’t have to work in it everyday. Danny: I agree with Kris. This is a challenge, though, as we need to get it to operate as efficiently as if we were here. 10. How has franchising changed your life? Kris: Owning a G.J. Gardner Homes franchise has provided opportunities that I would never have had as a small business owner.

I am surprised by how much I have changed from a tradesperson who was running a small building company to a businessperson running a larger building company Danny: Head office is there when we need help with anything. There was a lot we needed help with at first, but now it is to support us to drive our business harder and challenge us to operate at our optimum both financially and in regards to clients’ feedback. 28| FRANCHISING JUL/AUG 2013

www.FRANCHISe.Net.AU

Danny: Kris and I have had some wonderful experiences (including lots of travel). We have found a group of like-minded business people, which has been both entertaining and memorable. It’s been an action packed eight years! F

Image: Thinkstock

Inspire | Franchise Story

AMERICAN

XpRESSO Where next for Xpresso Delight? The uS, of course

hen Stephen Spitz and Paul Crabtree spotted an opportunity to provide office-workers with a bench-top espresso machine that freshly ground beans at the press of a button, the pair had no idea it would lead to an export market in the US. The Xpresso Delight brand was born in 2003 and from the start there has been a clear focus on providing systems to ensure maximum efficiency for franchisees. The network has grown around Australia and New Zealand and is now underway in the US. But while this American focus is all new, it hasn’t been a speedy decision. Let’s take a step back to 2009 when the Xpresso Delight owners started talking about expansion in the American marketplace. Established franchise consultancy DC Strategy was brought on board to give the franchise business a thorough check and conducted what Spitz describes as “a very sophisticated analysis” of various overseas markets – north America, Europe, Asia. While Europe emerged as the number one market in terms of product and service demand, there were other considerations – such as an English speaking population, and how could the company best best align itself. “Paul and I came to the conclusion the US is

The feedback was that 83 percent love the coffee and the system 30| FRANCHISING JUL/AUG 2013

where we want to be,” says Spitz. With destination resolved, the next consideration was how to get there: what would be the business model? Spitz and Crabtree had appointed master franchisees in each state in Australia. Would this approach be appropriate for the US?

tHe AMeRICAN MODeL In comparison to the combined population of 26 million across Australia and New Zealand, the 300 million residents in the US are more than just a step up in business potential. There are significant challenges too. Spitz and Crabtree approached the new market systematically and carved the massive US land mass into five major territories. In the US a detailed system of trademarks and business registration is required in different states – “you can’t talk about selling a franchise without being registered”, says Spitz – and both California and New York were set up for business. Says Spitz, “We spent a lot of time and money and did analysis, telemarketing, identifying the appropriate cities and finding out what coffee facilities existed – for about 95 percent there was no bean to cup facility.” Of course US palates are accustomed to the percolated coffee popular across the country, but backed up by Xpresso Delight’s success in New Zealand despite the taste for instant coffee, Spitz and Crabtree are confident in their concept. “We found a coffee roaster who knew the specifications in the café market, gave him our blend and roast, and he got a blend made up. Then we went to the US, identified 10 companies to trial the product for a week, and the feedback was that 83 percent love the coffee and the system.”

www.FRANCHISe.Net.AU

STEpHEN SpITZ Co-founder of Xpresso Delight

pAuL CRAbTREE Co-founder of Xpresso Delight

Franchise Story | Inspire

PICkING tHe PeOPLe Now the next stage of development comes down to getting the right people. In this the pair were doubly lucky: Spitz junior is a college student in the US and a franchisee in the system while uber franchisee Nigell Lee in Western Australia was set for a new challenge. The 26 year old went from being an electrician’s apprentice to heading up his own business and within two years doubling his network. He had the get up and go a new venture required. Lee has taken up his role as regional franchisor, and will oversee area reps. He has the sole rights for the north east region, will recruit two franchisees and has the ambitious target of appointing 10 master agents who will recruit their own franchisees. The challenge for any non-US brand is credibility and concessions will be made to early adopters in the network. “The first two franchisees will be fee-free, but we also have a franchise fee guarantee,” explains Spitz.

Franchisee support A $1,000 weekly income is the golden number for franchisees, says Spitz. “with two days work, you can earn $50,000. If you haven’t got 50 percent of revenue on capital, we’ll give the franchise fee back, but you stay in the system, and go through training, five days a week for six hours. “we’re constantly looking at improving our systems. because Paul and I are very flat management we can improve within 48 hours. “Sometimes people will try and not follow the system but with us, because we monitor their activity so closely and have very comprehensive training methods, this makes sure they don’t fall through the cracks. “People come in because of the systems and support. For us, I believe we’re well set up and are probably ahead of US systems that are known for their upfront sales but can struggle at times with support. “this is world best practice from Australia.”

remotely. “I can be anywhere and know what is going on,” he says. However, he adds, “We are considering if Generating brand awareness will be an important one of us may go to the US next year. part of the US expansion and Xpresso Delight has “The US target is to develop over two years, three just started a marketing campaign, promoting its regional franchisors. We expect each to put on up to six brand through magazines, newspapers and websites. master agents, each agent putting on six franchisees a The key to the company’s success will be its year. The longterm goal for us is to be able to get five ability to foster a new stream of income and strong regional franchisors and then have a trade buyout network in the US, without taking focus away from and then concentrate on the domestic market. the Australian market. “It’s a good exit strategy and will boost the value The business has purpose built reporting that of our domestic market. It gives us the ability to allows for all levels of the franchise system to view accelerate progress through franchisors. their own performance and for the master “Global expansion through the US will come franchisees toAoversee those AD_ F R LS2 M A Rin _ their 1 3 .region. p d f It also P a g e 1down 7 / to0 our 2 / passion 1 3 , and 1 1 enthusiasm : 0 8 A Mto take this to means Spitz can keep up to date with business the next level. F

tHe bIG PICtURe

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All images: Snap on Tools

Inspire | Franchisee

A NEW SET OF

WHEELS When belgian kris Van waes pulled up behind a Snap-on Tools truck it would change his career and his life.

ris Van Waes is a man of many talents. A former Contiki Tour guide and pharmaceutical sales rep, he speaks six languages including French, German, Dutch and Italian and regularly uses his carpentry skills to restore his 1920s home. But a chance encounter with a Snap-on truck saw Kris trade in one set of wheels for a franchise in late 2012. After unexpectedly meeting his wife on one of his tours in 2004, the Belgian expat followed her to Australia and began working as a pharmaceutical sales representative. Kris excelled at his job and was the company’s top sales person for six years in a row. He decided he wanted more autonomy over his work and began looking into franchising as an option. “I was parked behind a Snap-on truck one night after work and saw they were recruiting franchisees, so when I got home I looked them up and immediately submitted my application. A recruitment manager came to visit me the following week and it wasn’t long after that my territory in Artarmon became available,” Kris explains.

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“I didn’t have any previous experience in the automotive industry, apart from driving coaches, but I liked the idea of being on the road again and being my own boss. So once I was approved Snap-on sent me for training at their headquarters in North America.” Kris was one of the first to take advantage of Snap-on Tools’ own credit program that aims to finance franchisees. The Australian subsidiary of the US tool giant in 2012 started extending a $37,000 line of credit to get new franchisees on their feet. The program was developed as a response to the major banks losing their appetite for small business lending with many franchisees unable to get finance for their new business venture. To date almost 80 percent of new franchisees who have joined the Snap-on network have elected to be financed by the franchisor, significantly reducing their reliance on the big four banks. “I spoke with my solicitor and accountant and both said the franchise agreement was one of the best they’d ever seen, so I knew I was in good hands.” Following his training in the US, Kris hit the road in his mobile truck in October 2012. His territory

Franchisee | Inspire

in Artarmon, NSW was previously surveyed by Snap-on Tools to ensure it had room for growth and a solid existing customer base. Kris was provided with a list of potential customers and for the first two weeks a sales development manager rode on the truck with him every day to show him the ropes. “Snap-on’s franchise model is very well laid out and easy to follow. Once I got on the road, my custom-

I liked the idea of being on the road again and being my own boss.

Franchisee Kris Van Waes has

Fhad R a0busy 5 1 first 3 _ few 0 7months 3 _ A MS

ers were thrilled to have a new franchisee in the area and couldn’t wait to get on the truck. And even though I don’t have an automotive background, the support from my field team and even my customers has really helped me get my head around all the tools. “It’s been a busy few months, but I am really enjoying it. Initially it was a bit daunting because you’re making a complete life change, but I’ve into love of 2 0 1 3 - 0 4settled - 1 5 T 0 9a :routine 4 2 : and 4 3 + 1 0the : 0independence 0 being my own boss.” F

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JUL/AUG 2013 FRANCHISING | 35

Image: Plus Fitness

Inspire | Franchisee

THE

BEST DECISION Plus Fitness has proved the perfect match for franchisees Billy and Paula

illy and Paula Van Der Kooi invested in their first Plus Fitness gym in 2010. The couple now owns three gyms in the Sydney suburbs of Thornleigh, Carlingford and Alexandria. While Billy and Paula had always wanted to own their own gym, they were apprehensive about starting a new business entirely from scratch. They came across Plus Fitness and it seemed to tick all of the boxes.

BILLY TAKES UP THE STORY… We always dreamed of owning our own gym. After careful research and considering the many factors that could potentially go wrong [if we started up our own business], we decided to buy into a franchise with a proven track record and systems already in place.

It’s the best decision we had made and we couldn’t imagine doing anything else We looked at several franchises. Once we reviewed the systems and level of support with Plus Fitness, the choice was easy and we’ve been in the system almost three years now.

BUSINESS STRUCTURE I am the director, however my wife is my business partner and we specialise in different areas, so we really complement our business. 36| FRANCHISING JUL/AUG 2013

WWW.FRANCHISE.NET.AU

We’ve found the franchisor systems are flawless and continue to improve and the training is very effective and bulletproof. The amazing growth over the past two years has really surprised us. We are very happy with three gyms for the time being and want to ensure that we continue to provide a fantastic facility along with great customer service and retention. We like to get involved with, and sponsor, local charities, rotary clubs, sports teams and schools. This gives us an opportunity to build relationships and generate awareness [of our business] in the community.

DAY TO DAY An average day starts with us getting out of bed when we choose and enjoying breakfast with our family. We then go for a walk and wait for peak hour traffic to pass. We travel around to our three gyms two days a week to ensure everything is running smoothly, and most days we have the option to work from home as the business can be operated remotely. Last year we were running our gyms from Canada and Hawaii. Who knows, there may be gym number four around the corner if the opportunity presents itself.

THE FUTURE On the opening morning of our first gym, we found out we were having our first child. A great omen. We work hard, play hard, have flexibility in our lives and are very comfortable financially. It’s a great feeling to have so much freedom. It’s the best decision we made. F

AS A KID YOU WORLD’S LARGEST ICE CREAM BRAND Brand heritage - 67 years young New restaurants delivered as a turnkey operation ANZ accredited - ﬁnance now available Comprehensive training & ongoing ﬁeld support Restaurant opening marketing package Operational simplicity Product innovation Global exposure

Sites now available across Australia Call Michael 0417 077 633 www.baskinrobbins.com.au

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Inspire | Franchisee

DELIVERING THE

GOODS Fastway Courier franchisee John Young was no stranger to the industry when he invested in his business

ohn Young has been involved in the courier industry for quite some time, having worked for a competitor prior to investing in the Melbourne regional Fastway Couriers franchise. John believes Fastway has a strong product offering and he would invest in the brand again, particularly as online retailers continue to proliferate. He says the move from competitor to Fastway franchisee was a gradual one. “I had worked for a competitor of Fastway and it was always difficult to win business from them. “I was then in a position to work with Fastway as a potential customer and got to know more about the business and the network. When the Melbourne franchise became available, I saw it as my opportunity to return to my original home town and become involved in a reputable company,” he says.

ReSeARCH While John was already very familiar with the brand, he nevertheless took the due diligence process very seriously. “I had experience of Fastway for many years, as a competitor, then as a customer. I spoke to other regional franchisees on several occasions and as I became more interested in purchasing the franchise, I made the extra effort to talk to the courier franchisees. “I read various franchising magazines and searched online for stories and interviews about the company, and I also did additional research through 38| FRANCHISING JUL/AUG 2013

the Chamber of Commerce and other business organisations,” he adds. John also took the time to explore the state of the franchise. “I sought advice from fi nancial and legal experts to ensure the franchise was in order before purchasing. “The assumptions made will sometimes be different to the actual. The degree they vary is always the key to a successful deal or not,” he says.

wHY FAStwAY? John came to realise Fastway was a market leader during his time both as a competitor and customer, however he opted for the brand for a number of other reasons. “It was an established brand with a good reputation and credibility in the market place, and it had a history of competitive pricing and I knew it offered a quality service. “I valued the tiered franchise structure as opposed to employer/employee model, as working with the national master and courier franchisees, who are motivated business owners themselves, helps ensure the growth of the business.” The brand’s active role in the booming online retail sector also played a part. “Fastway had made great strides in the emerging online retail space. Through their great service levels, many of the new online retailers were choosing Fastway as their delivery partner. “This was a great industry to invest in as the www.FRANCHISe.Net.AU

JOHN YOuNG Fastway Courier franchisee

Franchisee | Inspire

online retail market has been growing and is expected to continue growing,” he says.

CHALLeNGeS John says identifying and developing relationships with new customers can be a challenge. “We have a large customer base and we’re trying to find the shortest route possible to identify major potential customers. We then seek to build a relationship with the key decision maker in each business. “We have local area marketing programs which we utilise at a courier franchisee and SME level, but we are always looking for ways to target decision makers in the large businesses and home based businesses,” he adds.

It seems John’s hard work has paid off, as he explains the business has both earned itself more customers and enjoys an improved ability to attract new courier franchisees.

An established brand with a good reputation and credibility in the market place ADVICe

John strongly advises potential franchisees take the time to engage in the due diligence process and seek GOALS professional assistance. When he first took on the franchise, John had two “As with any investment, I’d advise that a primary goals for the business. “I wanted to potential franchisee seek quality financial and stabilise our existing customer base and improve legal advice. It’s important to have a full underour service levels. standing of the capital required and estimated “Through working with the existing courier running costs. franchisees in the region, I reinforced the “They should also thoroughly research the importance of building customer loyalty and providmarket F R0 7 1 3 _ 0 0 0 _ CAF 2 2 0 1 3 - 0 6 - 1 3 Tsize 1 4and : 0potential 3 : 1 2 so + 1they 0 : know 0 0 where future ing customers with the best service levels possible.” growth can be obtained,” he says. F

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JUL/AUG 2013 FRANCHISING | 39

Opportunities | Food

the sweet

scoop who doesn’t love a taste of ice-cream now and again? And if you want a business opportunity that taps into this firm Aussie favourite, there are plenty of choices to choose from.

Image: Thinkstock

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ce-cream – vanilla, chocolate, strawberry, raspberry – gone are the days when the menu was limited to these family favourites; nowadays innovation in flavours is an accepted and hugely important part of the market. It’s a market with broad customer appeal, from youngsters to mature adults, the product an affordable treat whatever the economic conditions. On top of the zest for ever-more exotic flavours, ice cream franchises are offering up a brand vision – whether that’s the sugar-loaded, fun-filled mix-in system at Cold Rock Ice Cream or the ‘Peace, Love and Ice Cream’ mantra at community-focused Ben & Jerry’s, one of the more recent American imports.

Food | Opportunities

Potential franchisees can follow the American way with companies such as Baskin-Robbins, adopt a European approach with Movenpick, or look for a home-grown brand to invest in. Think New Zealand Natural Premium Ice-Cream, Trampoline, or Gelatissimo, the latter focused on the artisan gelato experience – and a celebrated exporter to the home of gelato, the city of Florence in Italy. The addition of gelato to the franchise line-up serves to emphasise how hugely competitive is the frozen dessert market. And that’s without factoring in the latest trend – frozen yogurt outlets. A recent report by analysis fi rm IbisWorld notes the consumers’ conscious efforts to adopt healthier eating habits and observes these in the growing awareness of frozen yogurt as an option. While some view this relatively new food choice as a novelty, the trend is following on from the US where frozen yogurt has become commonplace. However the report [Ice Cream Manufacturing in Australia April 2013] predicts the taste for ice-cream will continue, particularly as today’s Aussie consumers are more constant snackers than in the past. This works both for supermarket chains that are broadening their ranges, stocking up on premium brands and have single-serve offers in their freezer cabinets, and for the stand-alone outlets in the high street and food courts. While those snack-attack moments might be pricesensitive [step up McDonald’s single serve] other customers are prepared to pay for a gourmet taste. So how are franchised ice-cream chains positioning their stores and their brands in today’s busy marketplace?

WENDYS Chief executive officer Rob McKay answers our questions about Wendys. Can you describe your brand for us? Our brand philosophy Yummology sums up everything we do at Wendys. It’s a philosophy that’s about defining and celebrating the quality which makes people of all ages love Wendys. It involves everyone at all levels, and impacts on everything from our products through to our people. This is a deliciously simple business formula which has seen Wendys serving treats to thousands of customers every week for 33 years. And this is endorsed everyday by more than 100,000 of our Facebook fans and Yum Club members. »

What the IbisWorld report highlights Innovation is key: “Given the saturated nature of the industry, future growth is tied to innovation and new product development. The emphasis on health and nutrition is expected to continue to drive new product choices, with an increase in organic, soy, gluten-free and low-fat ice creams.” Increased competition: “locations such as convenience stores and petrol stations… expected to increase over the five years through 2017-18.” Premium products: “Production of premium and super-premium ice cream is expected to increase, driven by the economic recovery and increasingly fragmented consumer tastes.” Growth of niche outlets: “Niche ice cream establishments such as gelato houses or businesses specialising in organic or natural ice creams are also expected to increase as consumers continue to expand their palates.” Source: IbisWorld Ice Cream Manufacturing in Australia April 2013

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JUL/AUG 2013 FRANCHISING | 41

Opportunities | Food

play an important part in attracting customers to a centre or strip â&#x20AC;&#x201C; and the higher the passing foot traffic, the better. Many other factors, including the local demographic, rent and size of the centre are also an important part of the location equation. What changes are coming in your particular business? We are in the process of rolling out a new tiered Image: Wendys offering which provides three different entry levels to become part of the Wendys system â&#x20AC;&#x201C; the Mini, Midi and Maxi. The new Mini store concept is particularly exciting because it will appeal to new franchisees who are starting out and looking for a more accessible entry option. However, itâ&#x20AC;&#x2122;s also a great additional investment for existing franchisees that are keen to Whatâ&#x20AC;&#x2122;s a good location? become multi-store owners but might not be ready Our property teams look at a range of factors when for a standard sized second store. determining sites for potential store locations. The Beyond that, if a business has some extra space in existing and planned mix of food retailers is a crititheir tenancy, this concept has the ability to be cal aspect to consider, as this will ensure Wendys has incorporated into their existing scope of trade. a competitive and compelling place in the strip or At only 8-10sqm in size, the Mini concept is all about centreâ&#x20AC;&#x2122;s overall food offering. going back to basics â&#x20AC;&#x201C; selling our simple, tasty core a major A D _ F R A C E 1 N O Proximity V _ 1 2 . to pd f P trader a g e is 1another 1 1 /important 1 0 / 1 2 , range 1 2 treats : 4 8 which P Mrepresent more than 80 percent of feature of a good location as these retailers generally sales at our traditionally sized stores. Âť

We are rolling out a new tiered offering which provides three entry levels

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Opportunities | Food

take a bite Other franchised ice-cream brands include: Baskin-Robbins the established American brand founded in 1945 now has more than 5000 restaurants across 50 countries. the ice-cream menu has included flavours reflecting trends and fads such as Lunar Cheesecake for the first walk on the moon. Read more about the brand in our supplement, The Profiler. Ben & Jerry’s In 1978 Ben and Jerry founded the business after doing a $5 ice cream making course. the pair developed a signature ‘chunks and swirls’ ice cream. the brand launched In 2009 in Australia. there’s a dual distribution strategy that includes scoop shops and pint freezers in specially selected retailers and grocers. the brand is focused on premium sites that maximise exposure and drive sales for the business. Gelatissimo At the heart of this business are a family recipe and a commitment to premium products enhanced by a simple in-store production system. the artisan approach means the gelato is differentiated from ice-cream in its air and fat content, texture, the temperature it is served at, and the serving method. the gelataria concept was launched 11 years ago and franchising started in 2004; since then the company has grown across Australia and overseas.: in South east Asia, the Middle east and in Italy. Movenpick twenty four ice-cream and sorbet flavours are on the menu at Movenpick, which also include milkshakes and gourmet beverages. this ice-cream range which started in the kitchens of fine Swiss restaurants in the 1960s continues to have gastronomy as its guiding passion; the recipes feature top quality ingredients from around the world. there is a boutique outlet in Sydney at Bondi Beach. New Zealand Natural Premium Ice-Cream Founded in Christchurch in 1984 and franchising began in 1990. today the Auckland factory produces almost all the ice cream for the franchised network of more than 700 branded outlets in 22 countries. the award-winning brand has diversified to include a range of ice-creams for retail, grocery and foodservice. trampoline Gelato trampoline opened its first retail store in 2004 on Melbourne’s Fitzroy St Brunswick. It’s now across three states. the gelato is made fresh daily using premium ingredients to create a smooth, creamy low fat product in 35 flavours but the menu also includes handmade cakes, shakes, sundaes and smoothies. there are three franchise options: traditional retail stores, mobile stores for a seasonal business, or a combination of the two.

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We are receiving an increasing number of enquiries from a younger demographic who are interested in running their own business and the Midi is an important part of our response to this trend. These potential franchisees are aged in their 20s and 30s and many of them don’t have the necessary capital when starting out – the Midi concept is a much more affordable entry point and a great place to start. The Midi store is 20 sqm and is designed to offer the full range of Wendys core products. This means the store concept can work in locations where existing non-compete arrangements are already in place with other retailers. The Maxi stores range from 20-24 sqm and generally include the full Wendys product range with a number of additional ‘flex’ offerings that can be tailored to suit the franchisee’s requirements, such as coffee, donuts and customer seating We are looking to open 18 new Mini/Midi stores in the coming financial year and are very excited about the early feedback we’re getting from the market. The mobile nature of this concept recognises that we need to be where people are, particularly given the changing social and shopping habits of consumers. As part of this, digital and online is already an important part of our strategy and we’re very excited about where this will take us in the future. What trends are you following/predicting in the sweet treats market? Salted Caramel is a flavour trending throughout the world and Wendys has just launched a new Salted Caramel scoop ice cream – caramel flavoured ice cream, a salted caramel ripple and toffee pieces. Health conscious consumers are also continuing to drive product innovation with a shift towards using natural flavours and colours as well as options that are lower in kilojoules or fat. We recently launched a new, healthier range of smoothies and this delivered a 40 percent increase in category sales for our franchisees, which is a compelling result. We’re certainly not moving away from our core business of indulgent treats but, for a business that has been traditionally built on sugary and decadent treats, we’re very conscious of the trend towards looking at alternative options. What makes this a good market to invest in? We have seen a challenging retail environment for some time but we’re very optimistic about the year ahead because there are certainly opportunities for success if you’re committed to understanding what your customers want and expect – and at Wendys that remains a constant focus. »

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nchise

Opportunities | Food

How do you help with location and lease negotiation? Wendys handles all of the lease negotiations on behalf of franchisees and experienced members of our property and leasing team work hard to secure the best terms possible. Occupancy costs remain the single most critical factor for franchisee profitability and this area is a constant focus of ours to help our franchisees achieve success. With regards to location, we’re always exploring and developing sites for new stores. There is a lot to consider when selecting store locations and our property team members are very experienced when it comes to identifying the key features that will make a site successful. the DetAILs No of stores: Wendys has 226 stores in Australia. Turnkey cost: New store costs range from $100,000 ex GST nationally. This includes the initial franchise fee, shop fit costs, all equipment and five weeks of training. We recommend that potential franchisees allow approximately $15,000 for start-up working capital. Franchise term: Five years

COLD ROCK ICe CReAM Stan Gordon, CEO of Franchised Food Company, takes our Q&A.

Stan Gordon Image: Franchised Food Company

How can you differentiate yourself in the market? All of our brands under the Franchised Food Company banner — Cold Rock Ice Creamery, Pretzel World, Nutshack and Mr Whippy — make our customers happy by providing them with an experience when they visit any of our stores. Take Cold Rock for example… we don’t just offer an ice cream but we invite customers to be involved with our brand experience, to be a part of the theatrical process and tailor the product to their individual taste. We differentiate ourselves by offering something yummy that makes people feel good. What we have 46| FRANCHISING JUL/AUG 2013

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is a treat. It’s not a necessity, but it’s fun, and it brings a smile to people’s faces. I mean, who doesn’t love ice cream or a freshly baked pretzel, or some moorish nuts, or even remember the tune Greensleeves? What’s a good location? Depending on the brand, areas with relatively high foot traffic are the obvious ingredients for a successful site. In the instance of Cold Rock, a prominent street location that is surrounded by restaurants means our store automatically becomes the dessert option experience – so it’s finding these locations and making sure we have a presence. It all comes back to convenience and ease: think about times when you haven’t been able to get a park somewhere, or can’t find a store because it’s hidden away somewhere tricky… You simply move on to the next best thing. When assessing a location, it’s important to ask the simple questions like is the space a place people are familiar with, and is it easy enough to park? What other drawcards are in the area that might entice customers? The more reasons they have to visit the store, the better. What changes are coming in your particular business? I think for Franchised Food Company and our brands, the most poignant change in our business is the adoption of the co-branding model and the increase in the number of franchisees opting for a Cold Rock xpress, rather than a traditional store. Simply put, why wouldn’t you want to benefit from finding another source of revenue with the same basic overheads? It’s definitely becoming more and more obvious that the whole retail experience is shifting. People are changing their shopping habits and looking for the easiest options when it comes to purchasing; whether it be clothing, gifts or groceries. Retailers simply can’t see the benefit in constantly climbing labour and rental costs. Many consumers are spending more heavily online than ever before, but luckily for us our brands are somewhat protected because you can’t buy an ice cream online. What trends are you following/predicting in your particular business? As a franchisor, we’re always researching, keeping on top of international trends and introducing to the Australian market the best of what’s available in the world treat franchising sector. In terms of trends for the sweet treats market, the most obvious would have to be the number of yoghurt bars popping up all over the place. While they’re perceived to be a healthier dessert option, history and indeed my experience tells me that they won’t be here

Food | Opportunities

for the long haul… ice cream on the other hand, will never be out of favour. It was here long before I was born, and will be here long after I am gone. What makes this a good market to invest in? What we’re offering is a fun experience. It’s not an expensive purchase but one that makes us feel good. We like to compare the treats market to the marketing lipstick theory; when times are tough lipstick sales escalate because people like to make themselves feel good... if even just for a short time. Just like you would enjoy an ice cream for a bit of a pick me up. How do you help with location and lease negotiation? With prospective franchisees, we believe it’s really important to assist as much as we can with lease negotiation. Shopping centres can be a little complicated so we tend to look after all lease negotiations. When it’s a strip shop we give as much advice as we can in terms of area and location. We provide advice to potential franchisees every step of the way, but of course we can’t be the ones to make the final decision on the location and lease. By taking F R 0demographics, 7 1 3 _ 0 4 7surrounding _ G J G - competition, 1 2 0 1 and 3 - 0 other factors into consideration and using market

intelligence, we offer as much guidance as we can to advise potential store owners accordingly, in the hope that they can make the best decision possible and come to own a thriving business. After all, the more successful our franchisees are, the more successful we are.

It’s not an expensive purchase but one that makes us feel good the DetAILs No. of stores: Across all of our brands we have about 160 stores in Australia. Turnkey cost: This is dependent on a number of factors including the system, location and the chosen brand, and can be anywhere between $80,000 and $300,000. Franchise term: Franchise terms vary. Often in a shopping centre the first part of the term mirrors the term of the lease, usually five or six years, with the same 6term - 1 as 8 an T 1option. 0 : 4 Strip 9 : 0shops 2 + usually 1 0 : 0get 0 a 10 year term, again with the same term as a further option.

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Call Matthew Hope on 0432 597 157 or email matthew.hope@gjgardnerhomes.com.au Photographs may depict fixtures, finishes and features not supplied by G.J. Gardner Homes. These items include landscaping – including planter boxes, retaining walls, water features, pergolas, screens and decorative landscaping items such as fencing and outdoor kitchens and barbecues.

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ΨϯϱŬ ΨϯϱϬŬн

ƌŽĐ͛Ɛ WůĂǇĐĞŶƚƌĞ

ǆĐĞƉƟŽŶĂů ŝŶƚĞŐƌĂƟŽŶ ŽĨ ďƌĂŶĚŝŶŐ͕ ĐĞŶƚƌĞ ĚĞƐŝŐŶ ͕ ŵĂƌŬĞƟŶŐ Θ ŵĂŶĂŐĞͲ ŵĞŶƚ ƐŬŝůůƐ͘ ƌĂŶĚ ůĞĂĚĞƌ ŽĨ ĐŚŝůĚƌĞŶ͛Ɛ ŝŶĚŽŽƌ ƉůĂǇ ŝŶ DĞůďŽƵƌŶĞ͘ 'ƌĞĂƚ ĐĂƐŚŇŽǁ ĂŶĚ ƉƌŽĮƚƐ͕ ŶŽǁ ĨƌĂŶĐŚŝƐŝŶŐ ƵƐƚƌĂůŝĂ ǁŝĚĞ͘

dĂƐƚĞ ŽĨ ƵƌŽƉĞ

ŽŶĐƌĞƚĞ ƵƩĞƌ

dŚĞ /ƌŽŶŝŶŐ ůĨ

dŚĞ ŵŽĚĞƌŶ ǁŽƌůĚ ŝƐ Ăůů ĂďŽƵƚ ĐŽŶǀĞŶŝĞŶĐĞ͘ /ƌŽŶŝŶŐ ůĨ ƉƌŽǀŝĚĞƐ Ă ƉŝĐŬƵƉ ĂŶĚ ĚĞůŝǀĞƌǇ ŝƌŽŶŝŶŐ ƐĞƌǀŝĐĞ͘ &ƌĂŶĐŚŝƐĞ KǁŶĞƌƐ ĚŽ ŶŽƚ ŝƌŽŶ ƚŚĞŵƐĞůǀĞƐ ďƵƚ ƌĂƚŚĞƌ ŵĂƌŬĞƚ͕ ŵĂŶĂŐĞ͕ ƉŝĐŬ ƵƉ ĂŶĚ ĚĞůŝǀĞƌ͘ ǆĐĞůůĞŶƚ ŶĞǁ ďƵƐŝŶĞƐƐ͘ ŽƉƉŽƌƚƵŶŝƚǇ͘

ĂďǇ ĞƋƵŝƉŵĞŶƚ ŚŝƌĞ ĨŽƌ ŽƵƌ ĐƵƐƚŽŵĞƌƐ ŚŽŵĞ Θ ƚƌĂǀĞů ŶĞĞĚƐ͘ ŶǇƚŚŝŶŐ ĂďǇ ŽīĞƌ ƐŚŽƌƚ Θ ůŽŶŐ ƚĞƌŵ ŚŝƌĞ ŽĨ ŚŝŐŚ ƋƵĂůŝƚǇ ďĂďǇ ĞƋƵŝƉŵĞŶƚ ƐĞůĞĐƚĞĚ ĨƌŽŵ ůĞĂĚŝŶŐ ŵĂŶƵĨĂĐƚƵƌĞƌƐ ĂŶĚ ƌĞƚĂŝůĞƌƐ͘ ^ŝŵƉůĞ ƚŽ ůĞĂƌŶ Θ ŽƉĞƌĂƚĞ ǁŽƌŬŝŶŐ ĨƌŽŵ ŚŽŵĞ͘

ΨϭϱϬŬ

dŚĞ ƵůƟŵĂƚĞ ŝŶĨƵƐŝŽŶ ʹ ƌĞƚĂŝů ĂŶĚ ƚĂŬĞ ĂǁĂǇ ƚĞĂ͘ KƵƌ ƌĞƚĂŝů ƐƚŽƌĞƐ ƐĞůů ƵƉ ƚŽ ϯϬϬ ƚĞĂƐ ĂŶĚ Ă ŚƵŐĞ ƌĂŶŐĞ ŽĨ ƚĞĂǁĂƌĞ͘ dŚĞ ƚĞĂ ĞǆƉƌĞƐƐŽ ĐŽŶĐĞƉƚ ďƌĞǁƐ ŚŽƚ͕ ĨƌĞƐŚ͕ ůŽŽƐĞ ůĞĂĨ ƚĞĂ ŝŶ ƐĞĐŽŶĚƐ͘ dĂŬĞ ĂǁĂǇ ƚĞĂ ʹ ŵĂĚĞ ǁŝƚŚ ƌĞĂů ƚĞĂ͕ ƌĞĂů ĨĂƐƚ͘

ΨϰϬŬ

ΨϭϮϬŬ

ĚŽƌĞ dĞĂ

KīĞƌŝŶŐ ĂŶ ǆĞĐƵƟǀĞ >ŝŵŽƵƐŝŶĞ ĨƌĂŶĐŚŝƐĞ ƚŚĂƚ ĐĂƚĞƌƐ ĨŽƌ ƚŚĞ ƚŽƉ ĞŶĚ ŽĨ ƚŚĞ ŵĂƌŬĞƚ ŝŶ ƚŚĞ ^ǇĚŶĞǇ ŵĞƚƌŽ ĂƌĞĂ͘ ůů ĂĚŵŝŶ ĂŶĚ ďĂĐŬ ŽĨ ŚŽƵƐĞ ďŽŽŬŝŶŐƐ͕ ĚŝƐƉĂƚĐŚ ĂŶĚ ŝŶǀŽŝĐŝŶŐ ĚŽŶĞ͕ ĞŶũŽǇ ƚŚĞ ĚƌŝǀŝŶŐ͊

EnSalada

Ŷ^ĂůĂĚĂ ŽīĞƌƐ ĞǆĐŝƟŶŐ͕ ŚĞĂůƚŚǇ ŵŽƵƚŚͲǁĂƚĞƌŝŶŐ ƐĂůĂĚƐ ĂŶĚ ŚŽŵĞŵĂĚĞ 'ƌĞĞŬ ŇĂǀŽƵƌĞĚ ǇŽŐŚƵƌƚƐ ĚĞƐŝŐŶĞĚ ďǇ ŽƵƌ ,ĞĂĚ ŚĞĨ͘ <ŝŽƐŬƐ ĂŶĚ ĐĂĨĞƐ ĂǀĂŝůĂďůĞ ŝŶ ƵƐƚƌĂůŝĂ ĂŶĚ E ͘ DĂƐƚĞƌ &ƌĂŶĐŚŝƐĞ ĂůƐŽ ĂǀĂŝůĂďůĞ ŝŶ ƵƐƚƌĂůŝĂ͘

^ƚƵŋĞƌƐ

tŚŽůĞƐĂůĞ ƐĂǀŝŶŐƐ ĐŽŶǀĞŶŝĞŶƚůǇ ĚĞůŝǀĞƌĞĚ͘ &ĂŝƌĚŝŶŬƐ ƉƌŽǀŝĚĞƐ ŝƚƐ ĐƵƐƚŽŵĞƌƐ ƚŚĞ ƐĂǀŝŶŐƐ ŽĨ ďŝŐ ďŽǆ ƌĞƚĂŝů ǁŝƚŚ ƚŚĞ ĐŽŶǀĞŶŝĞŶĐĞ ŽĨ ŚŽŵĞ Žƌ ŽĸĐĞ ĚĞůŝǀĞƌǇ͘

ΨϱϬŬ

ΨϲϬŬ

&ĂŝƌĚŝŶŬƐ

tŽƌůĚ͛Ɛ ůĂƌŐĞƐƚ ďĞĂƌ ĂŶĚ ƐƚƵĸŶŐ ĨƌĂŶĐŚŝƐĞ͘ 'ƌĞĂƚ ƉĂƌƚͲƟŵĞ ǁŽƌŬ ĨƌŽŵ ŚŽŵĞ ďƵƐŝŶĞƐƐ ĨŽƌ ŵƵŵƐ ƚŽ ĂĚĚ ƚŽ ƚŚĞ ĨĂŵŝůǇ ŝŶĐŽŵĞ Θ ƐƟůů ŚĂǀĞ ƉůĞŶƚǇ ŽĨ ƟŵĞ ĨŽƌ ƚŚĞ ĨĂŵŝůǇ͘ EŽ ǁĞĞŬĞŶĚƐ͘ ϴϬ͕ϬϬϬ ďĞĂƌƐ ƐŽůĚ ůĂƐƚ ǇĞĂƌ͘

ΨϯϬϬŬн

made by you ^ĞƌŐŝŽƐ ĂŬĞ ^ŚŽƉ

^ǇĚŶĞǇ͛Ɛ WƌĞŵŝĞƌ ĂŬĞ ^ŚŽƉ ĐŚĂŝŶ ŶŽǁ ĂǀĂŝůĂďůĞ ĨŽƌ ĨƌĂŶĐŚŝƐŝŶŐ͘ ǆĐĞƉƟŽŶĂů ƉƌŽĮƚ ŽƉƉŽƌƚƵŶŝƚǇ͘ ^ŝŵƉůĞ ƚŽ ƌƵŶ ǁŝƚŚ Ăůů ƉƌŽĚƵĐƚƐ ĚĞůŝǀĞƌĞĚ ĨƌĞƐŚ ŝŶƚŽ ǇŽƵƌ ƐƚŽƌĞ ƐŽ ŶŽ ďĂŬŝŶŐ ĞǆƉĞƌŝĞŶĐĞ Žƌ ĞƋƵŝƉŵĞŶƚ ƌĞƋƵŝƌĞĚ͘

EŽƚĞ͗ ůů ƉƌŝĐĞƐ ĂƌĞ ĂƉƉƌŽǆŝŵĂƚĞ ĂŶĚ ƐƵďũĞĐƚ ƚŽ ĐŚĂŶŐĞ н ŝŶĚŝĐĂƚĞƐ ƉƌŝĐĞƐ ƐƚĂƌƟŶŐ ĨƌŽŵ

1 EXPERIENCE EX XPE X PERIEENC CE

PREM P MIUM PREMIUM QUALITY QUALLITY AT AT LOW PRICES PRI RICES

AN ND D EX XPER RTISE AND EXPERTISE

LEADING G FULL SE SERVICE SERVIC ICE CEE CONSULTANCY CON ONSULTA TANCY

hŶƐĐƌĂƚĐŚ ƚŚĞ ^ƵƌĨĂĐĞ ĂƌĞ ƚŚĞ ŐůĂƐƐ ƐĐƌĂƚĐŚ ƌĞŵŽǀĂů ƐƉĞĐŝĂůŝƐƚƐ͘ &ĂŶƚĂƐƟĐ ŽƉƉŽƌƚƵŶŝƟĞƐ ƵƐƚƌĂůŝĂ ǁŝĚĞ͕ ƉƌŽǀŝĚŝŶŐ ĐŽƐƚ ĞīĞĐƟǀĞ ƌĞƉĂŝƌ ŽǀĞƌ ŐůĂƐƐ ƌĞƉůĂĐĞŵĞŶƚ͘

WƌĞƐƐƵƌĞ &ŽƌĐĞ

WƌĞƐƐƵƌĞ &ŽƌĐĞ ŝƐ Ă ƉƌŽĨĞƐƐŝŽŶĂů ƉƌĞƐƐƵƌĞ ĐůĞĂŶĞƌ ĨƌĂŶĐŚŝƐĞ͘ tŚŽ ƉƌŽǀŝĚĞ Ă ĨƵůů ƌĂŶŐĞ ŽĨ ŝŶĚƵƐƚƌŝĂů͕ ƌĞƐŝĚĞŶƟĂů ĂŶĚ ĐŽŵŵĞƌĐŝĂů ĐůĞĂŶŝŶŐ ƐĞƌǀŝĐĞƐ͘

&ƌĂŶĐŚŝƐĞ

^ŚŝŚůŝŶ dĂŝǁĂŶ ^ƚƌĞĞƚ ^ŶĂĐŬƐ

^ŚŝŚůŝŶ dĂŝǁĂŶ ^ƚƌĞĞƚ ^ŶĂĐŬƐ ĨƌĂŶĐŚŝƐĞ ŽīĞƌƐ ĂŶ ĞǆĐĞůůĞŶƚ ďƵƐŝŶĞƐƐ ŵŽĚĞů ŝŶ ƚŚĞ ƌĞƚĂŝů ĨŽŽĚ ŝŶĚƵƐƚƌǇ͘ ƐƚĂďůŝƐŚĞĚ ĂŶĚ ůŽǀĞĚ ďǇ ŵĂŶǇ ŝŶ ^ŝŶŐĂƉŽƌĞ͕ DĂůĂǇƐŝĂ Θ /ŶĚŽŶĞƐŝĂ ŶŽǁ ĂǀĂŝůĂďůĞ ŝŶ ƵƐƚƌĂůŝĂ͘

ĞŶŶǇ͛Ɛ

$5m

ΨϮϱϬŬн

DĂƐƚĞƌ DĂƐƚĞƌ ĨƌĂŶĐŚŝƐĞ ĨŽƌ ƵƐƚƌĂůŝĂ ŶŽǁ ĂǀĂŝůĂďůĞ͘ ĞŶŶǇ͛Ɛ ŝƐ ƌĂŶŬĞĚ ĂƐ ŽŶĞ ŽĨ ƚŚĞ ƚŽƉ ϭϬ h^ ĨƌĂŶĐŚŝƐĞƐ ŝŶ ƚŚĞ h^ ďǇ ͚ ŶƚƌĞƉƌĞŶĞƵƌ͛ ŵĂŐĂǌŝŶĞ͘ ϭϬ ƵŶŝƚ ůŝĐĞŶĐĞ ĂǀĂŝůĂďůĞ ǁŝƚŚ ƐĞǀĞƌĂů ƐƚǇůĞƐ ŽĨ ƌĞƐƚĂƵƌĂŶƚ ĨŽƌŵĂƚ ĂǀĂŝůĂďůĞ͘

<ĞĞŶ ƚŽ ůĞĂŶ Ŷ ƚŽ ůĞ

ΨϮϵŬн

&ƌĂŶĐŚŝƐĞƐ ĨŽƌ ĞƐŝŐŶ Θ ŽŶƐƚƌƵĐƟŽŶ͘ &ŽĐƵƐŝŶŐ ŽŶ ƐĂůĞƐ Θ ŵĂŶĂŐĞŵĞŶƚ ƌŽůĞ ǁŝƚŚ ŶŽ ŽŶƐŝƚĞ ůĂďŽƵƌ͘ ^Ƶŝƚ ƐĂůĞƐ ďĂĐŬŐƌŽƵŶĚ ǁŝƚŚ ƐŽŵĞ ďƵŝůĚŝŶŐ ŝŶĚƵƐƚƌǇ͘ &ƌĂŶĐŚŝƐĞ ŽǁŶĞƌƐ ƐƵƉƉŽƌƚĞĚ ďǇ ƐƚƵŶŶŝŶŐ ƵŶŝƋƵĞ ƐŽŌǁĂƌĞ ƐƵŝƚĞ Θ ƐǇƐƚĞŵƐ͘

WĂƌ ϯ /ŶĚŽŽƌ 'ŽůĨ ŝƐ ĂŶ ŝŶĚŽŽƌ ŐŽůĨ ĨĂĐŝůŝƚǇ ĨĞĂƚƵƌŝŶŐ ƐƚĂƚĞ ŽĨ ƚŚĞ Ăƌƚ ŚŝŐŚ ĚĞĮŶŝƟŽŶ ƐŝŵƵůĂƚŽƌƐ͘ ƉůĂĐĞ ǁŚĞƌĞ ĂŶǇŽŶĞ ĐĂŶ ĐŽŵĞ ƚŽ ĞĂƚ͕ ĚƌŝŶŬƐ ĂŶĚ ŽĨ ĐŽƵƌƐĞ ƉůĂǇ͊

ƐƉƌĞƐƐŽ >ĂŶĞ ƌŝǀĞ dŚƌƵ ŽīĞĞ

ƐƉƌĞƐƐŽ >ĂŶĞ ĨƌĂŶĐŚŝƐĞĞ͛Ɛ ĮŶĚ Ă ŐƌĞĂƚ ůŽĐĂƟŽŶ ĨŽƌ Ă ŐƌĞĂƚ͘ ^Ɵƌ ŝŶ ƐŽŵĞ ŵĂƌŬĞƟŶŐ ƐƵƉƉŽƌƚ ĂŶĚ ƚƌĂŝŶŝŶŐ ĂŶĚ ǇŽƵ ƋƵŝĐŬůǇ ƐĞĞ ƚŚĂƚ ƐƉƌĞƐƐŽ >ĂŶĞ ŝƐ ƚŚĞ ĨĂƐƚ ůĂŶĞ ƚŽ ĐƌĞĂƟŶŐ Ă ƐƵĐĐĞƐƐĨƵů ĂŶĚ ƐŵĂƌƚ ďƵƐŝŶĞƐƐ͘ ͘

ZŝƚĂ͛Ɛ

ΨϱϬϬŬн

dŚĞ ǁĂƌĚ ŽŽŬŬĞĞƉŝŶŐ ŽŵƉĂŶǇ ŝƐ ŽŶĞ ŽĨ ƵƐƚƌĂůŝĂ͛Ɛ ŵŽƐƚ ĞǆĐŝƟŶŐ Θ ĨĂƐƚĞƐƚ ŐƌŽǁŝŶŐ ŶĞƚǁŽƌŬ ŽĨ ďŽŽŬŬĞĞƉĞƌƐ͘ ƉƌŽǀŝĚĞ ĨƵůů ƚĞĐŚŶŝĐĂů Θ ŵĂƌŬĞƟŶŐ ƐƵƉƉŽƌƚ ƚŽ ŽƵƌ ĨƌĂŶĐŚŝƐĞĞƐ͘

ΨϱϬϬŬн

ΨϯϱŬ

ǁĂƌĚ ŽŽŬĞĞƉŝŶŐ

WĂƌ ϯ /ŶĚŽŽƌ 'ŽůĨ

ZONE

ƌŝŐŚƚ^ƚĂƌ

&ŽƵŶĚĞĚ ŝŶ ϮϬϬϮ͕ ƌŝŐŚƚ^ƚĂƌΠ ĂƌĞ ŝƐ Ă ŚŝŐŚ ŐƌŽǁƚŚ h͘^͘ ĨƌĂŶĐŚŝƐĞ͕ ƉƌŽǀŝĚŝŶŐ Ă ĨƵůů ƌĂŶŐĞ ŽĨ ŵĞĚŝĐĂů ƐƚĂĸŶŐ ƐĞƌǀŝĐĞƐ͕ ŚŽŵĞ ůŝĐĞŶƐĞĚ ŶƵƌƐŝŶŐ ĐĂƌĞ͕ ĂŶĚ ŶŽŶͲŵĞĚŝĐĂů ĐĂƌĞ ďǇ ƚƌĂŝŶĞĚ ĐĂƌĞŐŝǀĞƌƐ͘ ηϮϭ ŝŶ ŶƚƌĞƉƌĞŶĞƵƌ DĂŐĂǌŝŶĞ͛Ɛ ͞&ĂƐƚĞƐƚ 'ƌŽǁŝŶŐ͟ &ƌĂŶĐŚŝƐĞƐ͘

ŽŵĞƐƟĐ͕ ŽŵŵĞƌĐŝĂů͕ Θ ĂƌƉĞƚ ŵĞƐƟ ĐůĞĂŶĞƌƐ ƐŝŶĐĞ ϮϬϬϯ͘ ŝīĞƌĞŶƚ ŝŶǀĞƐƚŵĞŶƚ ůĞǀĞůƐ ƚŽ ƐƵŝƚ ĞǀĞƌǇŽŶĞ͘ 'ƵĂƌĂŶƚĞĞĚ /ŶĐŽŵĞ͘ <ĞĞŶ ƚŽ ůĞĂŶ ǁĞƌĞ >ŝƐƚĞĚ dŽƉ ϱ Zt ĨĂƐƚĞƐƚ ŐƌŽǁŝŶŐ ĨƌĂŶĐŚŝƐĞ ĂŶĚ Zt ĨĂƐƚ ƐƚĂƌƚĞƌƐ ϮϬϭϮ͘

ΨϰϬϬŬ

ΨϱϬŬ

hŶƐĐƌĂƚĐŚ ƚŚĞ ^ƵƌĨĂĐĞ hŶƐĐƌĂƚĐŚ ƚŚĞ ^ƵƌĨĂĐĞ

ďŽĚĞ ĞƐŝŐŶ ĂŶĚ ŽŶƐƚƌƵĐƚ

POA

<͛Ɛ dĂŬĞĂǁĂǇ ŝƐ Ă ƌĞƚĂŝů ĨŽŽĚ ŽƵƚůĞƚ ƐƉĞĐŝĂůŝƐŝŶŐ ŝŶ ŚŽƚ ĂŶĚ ƚĂƐƚǇ ƌĞĂĚǇ ƚŽ ŐŽ ĨŽŽĚ͘ dƌĂĚŝƟŽŶĂů ƵƐƚƌĂůŝĂŶ ĨĂƌĞ͘ >Žǁ ƌĞŶƚ͕ ,ŝŐŚǁĂǇ ůŽĐĂƟŽŶƐ͘ KƵƚƐƚĂŶĚŝŶŐ ƉƌŽǀĞŶ ďƵƐŝŶĞƐƐ ŵŽĚĞů ƌĞƚƵƌŶŝŶŐ ĞǆĐĞůůĞŶƚ ƉƌŽĮƚƐ͘

ΨϴϬŬн

<͛Ɛ dĂŬĞĂǁĂǇ

$POA

ΨϭϲϱŬн

>>Ğƚ ƵƐ ĐŽŵƉůĞƚĞ ƚŚĞ ŶĞǆƚ ƉŝĞĐĞ ŽĨ ǇŽƵƌ ƉƵǌǌůĞ͘͘͘ >Ğƚ ƵƐ >Ğƚ ƵƐ ƵƐ Ɛ ĐŽŵ Ɛ ĐĐŽ ŽŵƉůĞ ŽŵƉůĞƚĞ ĞƚĞ ƚŚĞ ŶĞǆ ƚŚĞ ŶĞ Ğǆ Ğǆƚ ǆƚ ǆƚ ƉŝĞĐĞ Ž ƉŝĞĐĞ Ğ ŽĨ Ğ ŽĨ Ǉ ŽĨ ǇŽ ŽƵƌ Ƶƌ ƉƵ ƉƵǌǌ Ƶǌǌ ǌǌůĞ͘͘͘ ǌǌůĞ ůĞ͘͘͘

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Opportunities | Pool & Spa

pooL tActIcs

Before you investigate individual franchises, you want a good idea of what the system entails and how your working life will shape up. so we asked the questions for you.

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Pool & Spa | Opportunities

he Australian love of water and swimming is not only a healthy pursuit but it provides a great business opportunity, whether the service is creating and installing a dream pool, servicing the familyâ&#x20AC;&#x2122;s backyard pool or advising on poolcare product purchases. We asked two of the franchise systems in the pool market in Australia to take our Q&A, and have a franchisee perspective on the questions too!

NAReLLAN POOLS 1. whatâ&#x20AC;&#x2122;s the day job? Bringing dreams to life! Meeting with potential clients to plan their pool, arranging quotes, and liaising over pool installation including council requirements and any sub-contractors. Your level of operational involvement will depend on how many staff you employ. You will be involved in developing your business strategy, in setting and managing your budget, local marketing activities, paying wages, attending relevant franchisee training and liaising with support staff at the support office and of course you will be actively involved in operations to make sure your objectives are achieved. 2. what else will I be doing? As a franchisee you will attend regional meetings, sales meetings and conferences. You will also learn about our 40 yearsâ&#x20AC;&#x2122; worth of manufacturing excellence and our cutting-edge processes. Ultimately you will be giving yourself the opportunity to build your own wealth and build a saleable asset; you will also have the ability to build the brand in your local area and community with support, direction and a range of tools from our marketing team. 3. who will support me from head office? You will have access to the whole team, including a general manager, national sales manager, national marketing manager, national franchise support manager and client relations manager. Our training programs are officially mapped to National Qualification standards. What makes us different is the significant time we spend coaching our franchisees in financial management and leadership. We are so committed to your success we guarantee you $1000 a week for the first 20 weeks (only available for new territories). Once your initial training is completed you receive ongoing training and support which includes business coaches who work with you on a one-toone basis. An intranet portal includes the operations manual, all tools, templates, forms, resources and online training to succeed in your business. It is also our communication hub where you can share ideas, successes and ask questions. You will also have access to our specialised lead management program, which enables you to track all elements of client www.FRANCHISe.Net.AU

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relationships and identify how you are tracking on a month-to-month basis. You will also be partnered with a franchise buddy who will assist you with more specific on the job training as you get your business up and running. 4. can I do this by myself or do I need staff? Installing a pool cannot be done singlehandedly by one person, so even as a smaller operator, you will need sub-contractors to assist you in the day-to-day running of your business. All franchisees operate their businesses differently, some hire staff directly, others sub-contract depending on the territory, your business objectives and growth plans. You do need support from your family who will be able to ensure you retain a work life balance and remind you of the reasons you went into your own business in the first place! 5. what do I need to know before I start trading? All franchisees need a business licence before trading and a builderâ&#x20AC;&#x2122;s licence, however pool building experience is not necessary as this is provided during the six week induction program. A three tiered recruitment process ensures you will know what lies ahead of you A D _ F R J E MN O V _ 1 2 . p d f Pa ge 1 1 9 / 1 0 / 1 2 , before signing any agreements.

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6. what costs will I have to bear each month? Overhead costs are reasonably low, with monthly costs including fixed business costs such as wages, rent, utilities and car expenses. Other costs include Costs of Goods (COGS) that come with the installation of each pool. 7. can you help with marketing my business? Absolutely. Narellan Pools gives new franchisees a business template that helps them structure their business as well as assist with your business and 4 : 1 3 PM marketing plans. We run a national marketing

Opportunities | Pool & Spa

calendar with a wide variety of campaigns designed to create brand awareness and drive client enquiries, which franchisees then execute in their local territory. Franchisees are encouraged to develop ideas for their local area, and can then liaise with our national marketing manager who can review and further develop concepts.

We have relationships with suppliers who are the best in their field 8. how will I get customers? Our marketing initiatives are focused on driving enquiries for our franchisees. This includes a mix of digital, television advertising, radio and print campaigns. A call centre collects and distributes all leads to franchisees and a customised client management tool can track and measure leads. We also place a strong emphasis on sales to assist you with converting a lead into a sale; we have a range of world-class tools to assist in this area. Image: Narellan Pools

backed by our impressive 25-year warranty. We have long standing relationships with suppliers who are the best in their field, which means you and your clients have access to very competitively priced products of the highest quality. We aim to provide you with complementary products, which work to enhance our brand values and assist us in becoming the best.

POOLweRX 1. what’s the day job? PoolWerx franchisees maintain pools and spas for residential and commercial clients. This consists of pool servicing, water testing and equipment installation. 2. what else will I be doing? Other activities include product purchasing, invoicing, scheduling and marketing to potential and existing clients. With the support of your regional manager, you will develop and execute a year-round business plan. This process involves planning for ways to grow your business and how to execute day-to-day jobs. 3. who will support me from head office? PoolWerx’s national support office (NSO) is dedicated to providing you with support in all areas of your business from new business generation through to financial reporting. Your regional manager is your first point of contact for all day-to-day jobs and planning, while NSO provides support with marketing, legal, HR, retail, training, recruitment and supplies up-to-date information relevant to the pool and franchising industries so you can concentrate on running your business. 4. can I do this by myself or do I need staff? The ‘man-in-a-van’ mobile entry-level franchise option is suitable for a single operator. However, because PoolWerx has a career path to grow your business into multi mobile and retail, there is potential for franchisees to take on extra service vans and team members.

9. what will happen if I can’t make the turnover I expect? If the business is not performing we will work with you to understand what some of the barriers may be and then put in place procedures and programs to try and assist you in these areas. We try and make sure that going into the business each franchisee is aware of growth potential as well as any challenges, so we work individually with you to develop any areas we anticipate could restrict growth. 10. what choices do I have over the services and products on offer? Narellan Pools offers our franchise network exclusive access to a large range of fibreglass pool shapes and sizes to suit any family and any lifestyle - all 54| FRANCHISING JUL/AUG 2013

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5. what do I need to know before I start trading? When you start the PoolWerx journey, you undertake a three week training program – known as Pool School – that covers all areas of business management and pool and spa care. This gives you all the basic necessary competencies and skills required to operate your business successfully. Everything you need to know about running a successful PoolWerx business is covered during PoolWerx’s Pool School induction program and through the business planning process. 6. what are the costs each month? Monthly overheads include stock, operational costs to run your store and vans, royalty and advertising. The

Pool & Spa | Opportunities

PoolWerx royalty fee structure rewards growth with reducing fees depending on sales volume. 7. can you help with marketing my business? PoolWerx franchisees are supported with national, regional and local marketing activities. Nationally, these include sponsorships, national television advertising, digital advertising, public relations, national website and e-commerce platforms. At a local level, franchisees are supported by telemarketing campaigns, a digital marketing platform allowing individual businesses to send out branded emails and SMS messages to their clients, and public relations to leverage national activity at a local level. Individual franchisees also have their own localised webpage they can manage. 8. how can I grow my client base? When you first start on the road a number of marketing activities are focused on assisting you to grow your database and client acquisition. This activity is supported by the NSO, with ongoing inbound and outbound local area marketing training available. One of the benefits of PoolWerx is the constant flow of_repeat AD F R Fclients C B N due O V to _ 1the 2 need . p dtof look P after a ge their pools on a regular basis.

A retail store is just one franchise option with PoolWerx Image: PoolWerx

9. how do you ensure my business success? Along with quarterly and annual reviews to ensure franchisees are on the right track to achieve their business and personal goals, ongoing training and business development is a major focus for new franchisees. PoolWerx has also invested heavily in an online learning platform called Learning Seat that allows franchisees and their team members to undertake training modules in areas such as OH&S, supplier 1 product 2 / 1 0training, / 1 2 , chemical 4 : 3 handling 5 P M and marketing. Learning Seat allows training to be completed at a time

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convenient to the learner and helps foster the growth of our people as small business operators. 10. what are the income streams available to me? PoolWerx has four income streams that contribute to annual turnover. Mobile: domestic pool or spa maintenance and equipment supply is the staple of your business. Retail: PoolWerx has dedicated systems in place to assist franchisees in moving to a retail shop if they so choose. PoolWerx retail stores carry a full range of pool equipment and chemicals from industry leading suppliers. B2B: commercial client relationships are built at a national and regional level. By developing our services and processes to meet the needs of commercial

2. what else does the job entail? A lot of my time is also spent reviewing and managing the financial health of my franchise. Each week I refer to a number of different reports, including KPI reports [reviewing items such as the store’s gross profit margin to ensure that the business is on track to meet budget targets], the balance sheet, profit and loss and store performance reports. 3. who provides support from head office? The general manager, business development manager, marketing manager, local area marketing manager and pool and pool category managers who Narellan Poolsif required; I I can speak to directlyImage: on a daily basis also have quarterly meetings to track the business’ progress against its annual goals. Having franchisor personnel come in-store like this also helps us gain extra perspective, and it’s always helpful to have a fresh set of eyes looking over the business objectively. Our product category managers send up to date information about our suppliers, any new product ranges, upcoming promotions and any potential pricing changes.

Sigrid Peterson and Greg Jones, PoolWerx Greenvale Image: Poolwerx

partners, we have developed a strong offering that sets us apart from competitors. We give extensive training to franchisees in this space to contact various commercial pool operators including real estate, strata and hospitality to help them grow their business. Online: PoolWerx’s e-commerce platform (available at poolshop.poolwerx.com.au) and the PoolWerx eBay account aim to improve market penetration and improve franchisee turnover both on and offline. All sales made online are passed onto the respective local franchisee.

CLARK RUBBeR Roly Humphries is the Rockhampton and Mackay franchisee and the 2013 Clark Rubber Franchisee of the Year. 1. what’s the day job? Considering the countdown has begun for us to officially re-open our second Clark Rubber store in Mackay, my day job at the moment is quite varied. Between our weekly visits to Mackay, most of a normal day in the Rockhampton store is dedicated to staff rostering, back office tasks, stock management, and the pool shop and servicing business. I’ve employed a store manager to oversee day-today operations so I can focus on strengthening 56| FRANCHISING JUL/AUG 2013

particular areas of the business like our pool servicing business. I am very hands on in this area of the business – whether it is testing water samples for customers, helping them find the right products or parts for their pumps or giving them advice on the best chlorinators and chemical to use.

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4. can you do this by yourself? Having grown our business over the years we are now in the position to hire three pool experts in our Rockhampton store. In saying that, all of our 12 staff members are skilled to test water samples and provide general assistance in pool retail trade. I would advise when starting out, to make an effort to get a feel for the pool component of your business and understand the local need before investing in additional resources. 5. what tips do you have? While pool trade is quite seasonal, it is crucial to develop good relationships through the summer months and educate customers on the importance of pool maintenance/care during winter. 6. what costs do you have to bear each month? Investing in additional staffing resources is a significant cost to bear each month in the early stages of establishing a business. Another factor to consider is maintenance vehicle costs, insurance and also what I term ‘unproductive downtime’ – the additional un-billable services you provide in goodwill to maintain good customer relationships.

Pool & Spa | Opportunities

7. Can the franchisor help with marketing the business? Our local marketing strategy is drawn from the franchisor’s national 12 month marketing plan. We can also call upon our local area marketing manager to develop marketing initiatives at a local level that support our business goals. We are more active by way of local area marketing when there are no national campaigns being implemented by the franchisor. 8. How do you get customers? Wherever possible we try to participate in a number of local area marketing initiatives such as advertising, promotions, catalogue drops and direct marketing. This helps drive people through the door, however it is important to remember the number one rule of retail – quality customer service! 9. What happens if you don’t make your expected turnover? In the case that I might be struggling to meet my sales/turnover targets for a month there are a few processes that I implement straight away to ensure that I can turn things around as soon as possible. I review stock levels and KPI reports, I utilise the network and speak to other Clark Rubber

Clark Rubber’s award winning franchisee, Roly Humphries (centre) Image: Clark Rubber

franchisees: is it a retail, industry or local issue that might be affecting this? I also review marketing plans and upcoming milestones. 10. What choices do you have over the services and products on offer? At Clark Rubber we have the benefit of having access to the network’s full product range. The buying power of the network helps my franchise make efficiencies with costs, stock management and freight. We are spoilt for choice. F

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When Passion and Persistence Pays off Newest McDonald’s Australia Licensee Shares Her Success Story

TANYA MANTEIT – MULCAHY When 45 year old Tanya Manteit - Mulcahy started her journey six years ago to become a franchisee for one of the world’s most recognisable brands, she made it her business to be fully prepared for the road ahead. Although the journey may have taken her longer than expected, she never lost sight of her goals and embraced the experience from day one. Tanya is now the proud owner and operator of McDonald’s McWhirters, in Fortitude Valley, Queensland, after taking over as franchisee last March 2013. She is looking forward to implementing her big plans for the restaurant and her crew, including growing her business and developing the team to be the best they can be. Sharing her experience with Franchising Magazine, Tanya hopes to inspire other entrepreneurs to follow their passions and consider a future with McDonald’s. From Medicine to Macca’s Despite her background as a medical technologist, working 17 years for Queensland Medical Laboratories, Tanya’s passion has always been in hospitality and food service. Her dream to work with people and food finally became reality when she took over New Farm Deli & Café, in Brisbane, which she

operated for eight years. The success she achieved as a small business owner made her hungry to grow her business further. “I have several friends who are McDonald’s Licensees and the more I learned about the business from them, the more I realised I needed McDonald’s to

achieve my goals for business expansion. I applied to become a franchisee in 2007 but they were not taking in applications at that time. Two years later when the opportunity presented itself, we jumped straight in and were successful in joining the organisation.” Although it did not take long for Tanya’s application to be accepted, it took another two years to sell her business after being affected by the 2011 Queensland floods. Following this, she completed a year of intensive training and then waited for a site to become available in Brisbane. The site turned out to be McWhirters, a bustling shopping centre in the heart of Fortitude Valley.

Is McDonald’s for you? Tanya’s story is one of many in the McDonald’s system. In just over 41 years, the McDonald’s brand has grown to become a household name synonymous with excellent customer service and marketing success. Now with over 890 restaurants across the country, with almost three quarters owned and operated by Australian small business people, the company’s growth and success has been built on its people’s drive and ambition. “In the last three years, there have been 38 new McDonald’s franchisees, 23 of those came from outside the business. We are always on the lookout for driven and successful business people, like Tanya, who can help us grow our business now and in the future,” said Lilian Tartaglia, McDonald’s National Franchising Manager. “We’ve had franchisees from all walks of life gym owners, engineers, property developers, even an environmental scientist. Regardless of where someone’s career has taken them, we need someone who not only possesses strong business acumen, but has the passion to personally immerse themselves in the business and contribute to the local community,” Tartaglia concluded. To find out more, visit: http://mcdonalds.com.au/franchiseopportunities

Ticking all the Boxes

Words of Wisdom

In making her decision to apply for a McDonald’s franchise, Tanya was impressed that McDonald’s was particularly looking for people with the business experience and ability to operate multiple restaurants, but still be involved in the day-to-day operation of the business.

When asked what advice she would give to anybody interested in becoming a McDonald’s Franchisee, Tanya had plenty of wise words to share.

“I am a very hands-on operator and firmly believe you need to lead by example and set very clear expectations derived from a strong business plan. I was attracted to the McDonald’s system because I knew I wouldn’t have to reinvent the wheel, allowing me the freedom to focus on growing and placing my business in a strong position for expansion.” “At the same time, I value the collaborative approach that McDonald’s offers its franchisees. The corporation has allowed me the freedom to develop at my own pace, but also provided me with strong support, encouragement and training to ensure my success.”

Be prepared for the 12 months of training and get ready to roll your sleeves up, learn everything you can and lead by example. Embrace every day of your training as this is the perfect opportunity to be fast tracked in the McDonald’s system. You need to enjoy and understand people and be able to embrace the benefits of operating under the McDonald’s banner.” “I was very fortunate to have had nothing but support from McDonald’s and fellow franchisees who have acted as mentors in my transition from Registered Applicant to a fully operating Licensee. The training was extensive and exhausting yet vital to putting me in the best possible position for success.”

McDonald’s would like to partner with you to create the next success story. If this sounds like the next chapter in your life, check out all the information at www.mcdonalds.com.au or email us at franchising@au.mcd.com

Opportunities | Retail

z z

sLeepING

eAsY the retail industry continues to struggle in the aftermath of the global economic crisis, however it seems bedding retailers remains largely unaffected. By Brea Carter

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Retail | Opportunities

n a bid to save their hard-earned dollars consumers are skimping on non-essential items such as fashionable clothing and new televisions as they focus their attention on life’s necessities. To achieve optimum health we need a good night’s sleep, and an old or uncomfortable bed will fail to fulfill this essential human need. People are still investing in a good night’s sleep - and that’s where a bedding franchise can have an advantage.

BeDSHeD Gavin Culmsee, CEO, Bedshed is in high spirits despite the poor state of the economy, and he says this is not the first time the 30 year old company has “seen a bit of a tough market.” Rather than worry about matters that can’t be controlled, the Bedshed team has adopted a more positive approach. “Our focus has been to not get bogged down in the doom and gloom. The market is actually not that

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bad regardless of what you read or what we see, and people are still buying beds so let’s get on with business,” says Culmsee. Bedshed is not only continuing to operate as usual, it has introduced a number of new initiatives in a bid to drive sales further. “Our point of view it to keep moving towards where we want to see Bedshed in the future rather than battening down the hatches. “We have certainly continued with our marketing campaigns and probably got a bit more aggressive in terms of marketing. We are also rolling out a new store fit-out and we have internet touch screen kiosks in some of our stores now,” adds Culmsee. The new store-fit out reflects Bedshed’s firm focus on the future, along with its desire to project a more modern image. “It is about future proofing the network, a new store fit out means the stores look modern and up to date now and into the future. We have changed our product range to be a bit more contemporary and we wanted our stores to reflect that look as well.” One company-owned and one franchised store have been re-fitted internally, and Bedshed is now rolling the re-fits out across its entire franchise network. Bedshed introduced its touch screen kiosks to selected stores in February, and customers seem to be gradually embracing them. “We started out with one in 10 customers using the kiosks and that is growing every week, and the time they are spending on it is starting to grow too,” says Culmsee. The kiosks are proving incredibly beneficial for franchisees as they provide in-depth information about customer buying habits. “We get exactly the same type of analytics on the

Our focus has been to not get bogged down in the doom and gloom touch screen kiosks as you have on a website, so we know what products customers are looking at and how long they are looking at them for. We also know if they are sending the information off to someone else so it is really quite useful in terms of product ranging as well.” The kiosks also help franchisees and their staff close sales, as they allow customers to communicate information about the products they see to their partners in a simple and efficient manner. “Previously one of our big objections in store was customers would say ‘oh I need to go and show my 62| FRANCHISING JUL/AUG 2013

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Gavin Culmsee Image: Bedshed

husband or wife what this product looks like.’ What the kiosks allow you to do is to send a brochure via text message or email. “You can send a high resolution photo with dimensions and all the store’s contact details in a nicely branded brochure and it is instantly on someone’s desktop or smartphone, and they can look at it and go ‘yeah I love the colour, we can buy it now.’ “This allows franchisees a better conversion rate so they are selling to more customers who are coming through the door, which is absolutely ideal from a franchisee point of view,” explains Culmsee. The kiosks cater to different customer preferences, and they make it much easier for them to locate the product that suits their requirements. “You get some people who don’t want to speak to a salesperson immediately when they walk into a store. The touch screen kiosks allow them to go through four key questions and then it gives them a shortlist of three or four mattresses to go and try.” Interestingly, Culmsee is finding that rather than curb their spending habits in a bid to save, customers are spending more on bedding products because they want them to stand the test of time. “What we are seeing is our top end in mattresses has been very resilient and it is in fact growing now. I think people are more thoughtful about their purchases, they are doing more research about what they want to buy, but they are buying a product that they want to last. »

Opportunities | Retail

“You spend one third of your life in bed so you want to wake up feeling refreshed and having made the right choice,” he adds. Culmsee says the company’s Franchise Advisory Council (FAC), its franchisees and other stakeholders are heavily involved in envisioning and implementing new initiatives. “In a franchise network you really don’t get any initiatives off the ground unless you have buy-in at every stage with your franchisees, beca use you are asking them to invest their money. If they don’t believe in it they will be reticent and not so interested, whereas if you involve them in the process they will be as excited about it as we are.” Culmsee says the FAC played a key role in the newstore fit out. “From the point of selecting a designer to writing the brief we wanted the designer to work on, our FAC was involved in the entire process.” If a recent survey if anything to go by, Bedshed franchisees are incredibly pleased with their businesses despite what many perceive to be uncertain economic conditions. “We did a survey of our franchisees through the Franchise Relationships Institute last year and 84 percent of our franchisees were very satisfied with their financial return, which is far above what the franchise sector average is. “Our guys are engaged and on board and that shows in the results they achieve as well.”

BeDS FOR BACKS At Melbourne-based bedding company Beds for Backs franchise operations manager Evan Drakos is similarly unfazed by the current economic climate. “Beds are a necessity - they are like food and water, and if a customer is in pain they can’t really put off buying a new bed.” While other bricks-and-mortar retailers may be struggling as consumers choose to shop online, Drakos explains mattresses are one of those things that must be purchased in-store, particularly as people like to test them out for comfort. “We are pretty much recession proof, and more importantly beds are not a product that you can buy off the internet.” Drakos says Beds for Backs continues to flourish in the market because there are many things that set it apart from its competitors, the benefits of which flow back to franchisees. He says the company’s beds are classified as an essential medical aid because they fulfill a strict set of criteria outlined by the government. “Our beds provide a medical benefit so our customers don’t pay GST on them, which means our franchisees are able to offer customers a 10 percent discount but it isn’t out of their pocket; it is the 10 percent that we don’t give the government.

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“Our products also qualify for a government initiative where if you spend more than $2,060 in any financial year on out of pocket medical expenses you are entitled to a 20 percent rebate,” he adds. This means franchisees are able to offer customers a 30 percent discount on bedding products, yet it doesn’t affect their bottom line. “Any business can run a 30 percent stocktake sale; however that 30 percent is going to hurt the business because traditionally it would cover their running costs. The 30 percent that we offer 365 days a year is not 30 percent from our margin; it is from the government’s margin,” explains Drakos. These concessions apply to the company’s ERGO-posture health bed range, which includes three products: the ERGO-line, ERGO-shape and ERGO-slat.

We are pretty much recession proof and beds are not a product that you can buy off the internet Beds for Backs does not deal with bedding manufacturers, rather Mario Piraino, the company’s managing director, owns the patented health bed range, which means franchisees are not required to pay a license fee every time they sell a bed. “For every Sealy bed that is sold, bedding retailers must pay Sealy a licence fee. We don’t have that because we have our own brand, which is why our prices are very competitive,” Drakos says. In Australia the range is exclusive to Beds for Backs. “There is an agreement that Mario can’t sell the products to any other Australian bedding company,” he says. This helps franchisees get sales over the line as customers cannot purchase products in the range anywhere else. Drakos explains Beds for Backs has a high stock turnover because it manufactures beds on a made to order basis. “Having made to order, we don’t hold excess stock. This means our franchisees’ money is not tied up in stock and our beds have a stock turn of about 20, so we will sell 20 of those before we sell the floor stock model.” In contrast, bedding retailers who pre-purchase stock and hold it in their warehouses typically have a much lower stock turnover. He says the company’s Back Care Program drives business because it aligns each store with local health professionals. “We encourage the customer to go for a couple of visits before they start to use the bed. When the bed arrives they are advised take another one or two visits, and we will pay them up to $150 in out of pocket expenses. “This does two things – it improves our customers’ health and the health professional will start to encourage their clients to come and see us because they are going to get three or four more appointments out of that bed sale,” he adds. Approximately three weeks after the customer has started GBC 0006 230mm x 85mm w-FINAL_ol.indd 1 www.FRANCHISe.Net.AU

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using their new bed a technically trained staff member will pay a visit to the customer’s home to ensure they are using the product correctly. “This helps the franchisee build a great relationship with the customer and they can seek out other customers from that one bed sale,” says Drakos. So have customers’ buying habits changed in the face of the struggling economy? No. In fact, Drakos is noticing the same trend as Culmsee – the consumer is choosing to spend more because they want a high quality product that is built to last. “Our customers average dollar spend is increasing because they see the benefits and value in our products.” While all retailers flourish during times of prosperity, many tend to struggle when times get tough. However a bedding franchisee may experience a constant flow of business as customers at different stages of their lives seek to upgrade their beds. Rather ironically, the flow on effect of economic uncertainty can in fact benefit franchisees, as both Culmsee and Drakos attest consumers tend to spend more, rather than less, on bedding products A D _ F R J U S S EasP they _ 1 2seek . p to d fmake P awell-informed g e 1 1 4decisions / 0 8 / 1and 2 , invest in something that is built to last. F

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9 : 4 1

Evan Drakos Image: Bed for Backs

le ed b ck ila b a va y a o r ow ct n Fa ing as

“I CHOSE A 20% RETURN ON MY INVESTMENT.” When Phillip V. chose to invest in Speed Queen laundry, it was to bank on the proven performance of an industry leader. Sure, he likes the average 20%* ROI in a nearly recession-proof industry and the fact that he will likely break even in less than a year. But, what does he like most? Being backed by the world’s largest distributor network and the freedom to do business his way. Visit speedqueen.com.au/invest or call 1300WASHER (927 437) to get started. *According to the Coin Laundry Association.

All Images: Thinkstock

Opportunities | IT

CAUGHT UP

IN THE

NET One of the most exciting and fast-paced industries in today’s multi-media world is the information technology sector. And you can be a part of this.

he need for net-based services and IT support continues apace as businesses connect with customers through today’s ever-changing, innovative, highlynetworked channels. Small businesses without resident experts on hand to guide them look to external firms for the advice and services required to stay competitive. And this is where the role of a franchisee in an IT services business comes into its own – whether the service on offer is web design, computer repairs or IT support. Here two franchisors talk about the market demands and their franchisee focus. »

“The internet is changing at a rapid pace.”

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set your sights on an

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To explore the opportunites contact us today Phone: 1300 961 588 Email: franchising@luxottica.com.au Web: luxottica.com.au/franchising

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Opportunities | IT

BlOOMtOOls What’s the turnkey cost of a franchise? $40,000 + GST. How long is a term? Five years.

TrACEy VOyCE director, Bloomtools

“The biggest challenge when starting any new business is beginning from scratch, as you have a lot to learn as a business owner you need to be an expert in so many areas, set up multiple systems and then it takes time to build that business from the bottom up,” says Tracey Voyce. But, she adds, the great thing about buying a franchise, is a lot of those normal challenges are overcome for you. “It still takes time to build your business, but at least you don’t need to learn from your own lessons as there is a system already there that has been tried and tested, so all you need to do is just follow it.”

Franchisees have weekly sessions with a business coach to guide them through the system So how do you juggle it all and make sure it is done right? Voyce believes the Bloomtools system makes multitasking really easy for franchisees who need to focus most of their attention on sales and the small to medium business clients – the company does all the design and development. “We have built them a sophisticated yet very simple to use internet based business administration system that manages everything for them from managing a lead, through to sale (eg. quoting to ordering, invoicing, agreements, briefs - all from the click of one button), to project management, ongoing client management etc so it all happens seamlessly and like clockwork, so they need not worry about what they need to do when. “This is really important in our business, not only from our franchisees’ perspective for managing their business, but it is really important for delivering a project on time and to expectation which creates a massive point of difference for our franchisees in the market.” Franchisees start their business with a week of intensive training at head office on the Gold Coast, and then have weekly sessions with a business coach to guide them through the system to set up and build their business from the sales and marketing side as well. The other challenge for franchisees is around lead 70| FrANCHisiNG Jul/AuG 2013

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Opportunities | IT

generation, particularly when moving into a greenfield area and so Bloomtools has developed a number of strategies to assist.

delivers more products, but as one that delivers a complete business solution - that just happens to use the internet to deliver it.”

The IT scene is changing. Just think about the increased use of tablets and mobiles. So how is this affecting business? Voyce says, “We actually love this, as our franchisees use tablets in their sales presentations, and at present we are one of the few companies offering mobile websites as part of the package for clients that they can manage their dedicated mobile website from the same location as their standard website. “The internet is changing at a rapid pace, and our SaaS model is keeping us, our clients, and our franchisees ahead of this in the market. “The internet is no longer just about having a presence online (brochure website), it is way to generate leads, convert more sales, keep clients longer and buying more, streamling their business and more. “And even though the market is not quite there yet, our clients have the opportunity to start moving down this path as we educate them on what they can achieve in other areas of their business. “What seeAasN the A D _ Fyou R Lwill E WJ _ 1market 3 . p dcatches f P up a gise 1 we will be known not as a website company that

AustrAliA Wide it What’s the turnkey cost of a franchise? A typical Australia Wide I.T. (AWIT) franchise costs $25,000 plus G.S.T. for a complete turnkey businessin-a-box. This includes all equipment, software, licensing and training. How long is a term? Franchise terms are for five years with perpetual five year renewals.

AdAM GOUdGE director, Australia Wide i.t.

Adam Goudge describes Australia Wide IT’s market. “Our ideal customer is a business with 20 to 50 computers. Businesses of this size have a need for fast, efficient and professional IT services but are not yet big enough to hire internal IT staff and that is where Australia Wide IT fits in, we are the IT department for small and medium businesses who don’t have an IT department. “Our customers come from all industries but we are especially strong in the manufacturing, accounting and legal services sectors.” 1 For 2 / first-year 1 2 / 1 2franchisees, , 1 1 : 1business 6 A Mis a huge learning curve with business ownership and new

HEALTHY. FRESH. TASTY. GRILLED.

Established in 2005, LeWrap is Australia’s healthy fast food alternative. LeWrap is a unique food offering, capturing the shift toward healthy eating and a healthy lifestyle for all customers.

If you believe it is time for Australia to embrace healthy, tasty and fresh food, we would love to hear from you!

T 02 9687 7700 F 02 9687 7706 E peri@lewrap.com W www.lewrap.com

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IT | Opportunities Pa ge 1 2 1 / 1 1 /

A D _ F R WI S J A N _ 1 2 . p d f

Wisewould Mahony Lawyers

Our initial training is focused on the intricacies of the business systems to embrace. At Australia Wide IT, start-up franchisees are often most concerned with the unknown, says Goudge. “Our franchisees are usually people who have not been in business for themselves before and they don’t know what to expect, because of this a large portion of our initial training is focused on the intricacies of the business and the day to day running of it. “By the time training is completed our new recruits have much greater confidence in themselves and are ready to build their business in to a professional and profitable business that works with or without the business owner being present 100 percent of the time. “For the entire duration of the franchisees business, but particularly during the first 12 months, we offer ongoing training covering all sorts of topics.” AWIT is a Melbourne based company with franchise opportunities available around the country. “Once we have expanded in to those areas we plan to move in to other countries beginning with New Zealand and other countries in the Asia-Pacific region,” says Goudge. F

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Opportunities | Brisbane & Melbourne Expo Preview

MAkE THE

drEAM A

rEAlITy

Image: Thinkstock

Get serious about owning your own business - go along to an expo and get started on your path to independence

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Brisbane & Melbourne Expo Preview | Opportunities

ave you booked your tickets for the upcoming expos in Brisbane and Melbourne? Both these events will be showcasing a number of established and emerging franchise systems and provide a great opportunity for people looking for a business investment to discover more about franchising. There’s hardly a sector of business or services today that isn’t represented by a franchise brand, whether that’s a household name such as McDonald’s, or a newbie like Crave Australia. The franchising sector is a major contributor to the Australian economy; with 1180 franchise systems achieving $131 billion in annual turnover, and earning $300 million each year in export income. There are around 73,000 franchisees, which employ more than 400,000 people. In addition the indirect economic impact of franchising has been estimated at almost $4 billion annually. “Franchises dot our landscape and meet thousands of our goods and service needs every day,” says Suzanne Jarzabkowska, CEO of DC Strategy, a multi-disciplinary consulting, legal and recruitment firm that specialises in franchising. “Australia is one of the most heavily franchised countries per capita in the world,” she says. “And maybe that’s because we are also one of the most risk-averse nations globally, which combined with the fact that Aussies really like to be their own boss, makes franchising such a winner.” Jarzabkowska explains that a franchisor’s proven profitable concept, supported by their training, systems, marketing, brand and often product, takes a lot of the risk out of running your own business. “And despite the prevalence of the Golden Arches and other international concepts such as Shell and 7-Eleven, over 90 percent of Australian franchises are home grown, with increasing numbers such as Boost and Pie Face taking their place among the 10,000 odd global franchise brands,“ she adds. So whether you have your heart set on a food

Brisbane expo

Brisbane Convention exhibition Centre Saturday 20th - Sunday 21st July

melbourne expo

Melbourne Convention Centre Friday 30th August - Sunday 1st September Both events run from 10am to 5pm daily Go to www.franchisingexpo.com.au for tickets

and beverage business, want to tap the potential of the home services sector, can see yourself making a success of retail or want the out-of-office experience of a mobile franchisee, you’ll find something to whet your appetite at the Franchising & Business Opportunities Expos. Once through the doors at the show you will have the opportunity to meet some of the people behind the brands, find out just what it takes to be a franchisee in the various systems, and take advantage of the seminars, talks and advice on offer. A seminar program includes franchisors, business advisors and franchising experts such as Jarzabkowska and DC Strategy chairman Rod Young who will be sharing their expertise and understanding of the sector, with free sessions running throughout the three days of the show. The Franchise Council of Australia will also provide further insight into the franchising industry to help visitors decide whether franchising is right for them. So who’s exhibiting? Check out just some of the businesses who are participating at the expos - for an up-to-the-minute listing of exhibitors, visit www.franchisingexpo.com.au»

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Opportunities | Brisbane & Melbourne Expo Preview

@ Brisbane and melbourne A privately listed, member-owned automotive parts and accessory business, Auto One has 60 outlets operating across Australia. Being a member-owner means having an equal say in the decision process where everyone has the same opportunities to contribute to the growth and development of the business and works together to achieve mutually beneficial results. Not only will members receive complete business, financial and marketing support, they will be given opportunities to attend annual conferences, network with other members, participate in personal development workshops and invite customers and staff to trade nights and corporate functions. New members receive assistance and support with store plan layouts and designs, store opening launch, monthly business programs and trade and loyalty incentive schemes.

Image: Chemdry

CHeM-DRY AUStRALIA @ Brisbane and melbourne Since 1977, Chem-Dry has been providing professional, environmentally safe services and cleaning by using a hot carbonated water extraction method that uses little water and delivers fast drying time. Chem-Dry is looking for motivated, hard working and passionate people to join their team in servicing its domestic and commercial customers. Franchisees will be given training and support in the areas of cleaning, business ownership, marketing and operations Chem-Dry assists franchisees to build their business by devising a business and marketing plan and a realistic cash flow projection. A business coach is also organised to support each franchisee, along with opportunities to attend national and international conventions, state seminars, webinars, training days and one-on-one coaching sessions. Franchisees have access to products that are designed by Chem-Dry’s own chemist and are 76| FRANCHISING JUL/AUG 2013

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required to complete training in cleaning carpets, upholstery, tile and grout, rugs and mattresses. Chem-Dry will be focussing on expanding its commercial division this year with the launch of its new equipment, the XTS unit that has been designed to reduce costs, maintenance and repairs for franchisees. New franchisees are required to pay a flat fee royalty but are not expected to contribute to a national marketing fund. A turnkey cost of $24,990 plus GST provides franchisees with ongoing support and training, uniform, operation manuals, training DVDs, a three day training course, a promotional pack, an online package and business coaching.

CRAVe AUStRALIA @ Brisbane and melbourne Crave Australia has entered the fast growing frozen yoghurt market with a low entry cost and a product that focuses on flavours designed for the ‘Western’ palate. A franchisee also has the potential to provide more flavours per store in a smaller footprint due to the exclusive rights to the only seven-flavour machine - and this also saves in set up fit out and equipment costs. The Crave Australia frozen yoghurt franchise model has been set up with the focus on return on investment. Franchisees do not necessarily need experience in the food industry but could be looking for an investment opportunity with low entry and operational costs. The Crave franchising model has been automated and systemised so that a franchise may view this as a part time business opportunity. Franchisees get direct access to Crave’s machine service, warranty and maintenance team, a dedicated training and operations manager, leasing and locations team and a business skills and education manager. The company is looking to expand to New Zealand and Western Australia to add to its new secured locations in Queensland and hopes to have up to 30 franchised stores by the end of 2013. A Crave frozen yoghurt franchise offers a total turnkey solution for less than $250,000 and with the

A franchisee may view this as a part time business

Image: Crave

AUtO ONe AUStRALIA

Opportunities | Brisbane & Melbourne Expo Preview

addition of leasing arrangements for equipment this cost can be significantly lowered. Crave can also assist potential franchisees with securing a franchise loan.

FiFO CAPitAl @ Melbourne Fifo Capital is involved in invoice finance; it provides funds to small businesses by making advances against invoices that they are waiting payment for. This is a $60bn industry and most of the banks operate in this space. What makes Fifo Capital different is that the product offering is a lot more flexible than with the banks and the franchisees understand the customers challenges. Franchises make returns in excess of 60 percent ROI - the company maintains the risks are extremely low as the advances made are always insured. Becoming a Fifo Capital franchisee provides numerous benefits including the ability to work from home with no stock holding required, no premises or staff to manage. Franchisees have the ability to work the hours to suit their lifestyle. A franchisee is supported by a dedicated support manager and access to Fifo Capital’s credit and risk team. Franchisees will also undertake an initial five day training course and receive three months business coaching. A Fifo Capital franchise has a turnkey cost of $49,500 plus GST and an additional $150,000 is required in working capital. A franchisee is also offered the security of a 10 year franchise term with additional five year options.

HidOW AustrAliA @ Brisbane and Melbourne HiDow Australia designs, manufactures, imports and distributes a medical device called a TENS machine which is a drug-free form of pain relief, and perfectly mobile. The franchise opportunity is to market and distribute these medical devices. Training and support will be provided and there is an online portal to ensure all the collateral, print and promotional materials and stand elements are on hand.

Image: HiDow Australia

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There are a number of new products in research and development and the franchisor will start a series of TV campaigns as well as supporting the franchisee with their own marketing and events. HiDow also hosts an annual networking event with other HiDow franchisees. This is an opportunity to make a difference to the lives of others while undertaking a venture that allows a franchisee flexible working hours, a low entry cost and the reward of assisting people who live with pain every day. The cost of investing in a HiDow franchise is less than $15,000 including GST dependant on locations and start up elements.

JiM’s diGGers @ Brisbane

Image: Jim’s Digger

Jim’s Diggers, a division of Jim’s group, is the only national earthmoving franchise in Australia and has experienced rapid growth since launching two years ago. An energetic, practical and business minded franchisee can leverage a well known brand to work flexibly to suit themselves - where they want, when they want - and join more than 3200 other Jim’s franchises across Australia, owning their own territory or taking on a master franchisor role. Jim’s Diggers offers a comprehensive training program including initial training [prior to starting out in business] at Jim’s National Training Centre in Melbourne where franchisees will receive a Certificate IV in Business. A franchisee then undertakes further training at Jim’s Diggers head office in Adelaide, covering a range of topics including on the job tricks and tips, quoting, marketing, OH&S induction and system training. In the first week of starting a Jim’s Diggers franchise, franchisees will complete the five day On The Road Induction Program where an experienced franchise trainers assists new franchisees with everything they need.

Brisbane & Melbourne Expo Preview | Opportunities

The initial franchise fee is $33,000 including GST and the Business Start Up package is $11,000 including GST. The Business Start Up Package includes all training, sign writing, stationery, uniforms, an iPad, legal documents and sign up, manuals, vehicle and equipment advice and access to all the Jim’s systems.

their return on investment. MSI Taylor offer a flexible structure for investments with - whether clients need billing by the hour, to pay in monthly instalments, or an upfront pricing agreement, the company will tailor a solution to suit the preferred budget. Image: Rent4Keeps

MSI tAYLOR BUSINeSS SeRVICeS @ Brisbane MSI Taylor provides innovative solutions to the many challenges businesses are facing today - offering total financial solutions to clients through a broad range of services including accounting and taxation, auditing, bookkeeping, business intelligence, financial planning, SMSF and R&D grants and incentives. Every franchise will pass through a cycle of events during their lifetime. MSI Taylor believes it has the expertise and knowledge to advise, guide and assist franchisees through each and every stage and work alongside business owners to ensure their franchise strategy is robust. Franchisees can get assistance formulating a road map which will help them to find the answers, information, resources and skills required to drive them in the direction of success. MSI Taylor’s franchise clients can expect support in structuring and setting up franchise systems, assisting both franchisors and franchisees to grow their businesses, access to performance monitoring tools, industry benchmarking, tax services, annual strategic planning sessions and quarterly meetings to ensure the franchise is on track as well as assisting business owners in evaluating initial franchising opportunities. The firm has many years’ accounting and consultingFexperience top-notch R 0 7 1 3 with _ 0 0a 0team _ T of FC P CPAs a g e whose 1 2 wealth of knowledge can help franchisees achieve

ReNt4KeePS @ Brisbane Rent4Keeps is an easy to use appliance and furniture rental solution providing customers with as many options as there are products on the market. With great demand for rented goods, Rent4Keeps services people in many different financial and social circumstances who find it more convenient and prudent to rent rather than buy. A Rent4Keeps franchise is a lifestyle business which is easy to run either from home or an office. Most importantly, the company reports a huge customer demand and very low overhead costs. A franchisee will 0receive 1 3 - franchisor 0 6 - 1 3 support T 1 4 : from 2 8 :a dedicated 3 5 + 1 0 support : 0 0 person to ensure the franchisee understands the

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Opportunities | Brisbane & Melbourne Expo Preview

Get free advice If you have any legal or financial questions about buying and starting a franchise and don’t know who or where to ask, the Franchise Advice Centre at the expo is a popular stop with visitors who will be able to discuss legal issues with an expert from DC Strategy, or explore finance options with a wealth manager from Yellow Brick Road. the ACCC (Australian Competition & Consumer Commission) will also be exhibiting and can help you understand the rights and obligations of franchisors and franchisees under the Franchising Code of Conduct and relevant legislation. Franchising Networking Lounge And don’t forget to pop on to the Franchising Networking Lounge and say hello to the Franchising team [pictured below]. we’ll be on hand to chat about the franchise sector and answer any questions you might have. taking stock of the opportunities is an important process, and shouldn’t be rushed – perhaps visiting the expo will set in motion a whole new business plan. exhibition Manager Fiona Stacey adds that visitors who decide a traditional franchise operation is not right for them, can still learn about a wide range of other opportunities to earn additional income. “entry is free if you pre-register online, and there is an abundance of information on every aspect of being your own boss,” she says. “It’s really time to stop dreaming and start doing.”

system and continually improves operations. Rent4Keeps Queensland is focused on building upon the solid, and significant, growth experienced across Victoria over the past couple of years. The Rent4Keeps franchise term is 15 years with a turnkey cost of about $160,000.

ROUSe LAwYeRS @ Brisbane Rouse Lawyers provides premium commercial legal services to small to medium sized businesses by demonstrating the value that strategic legal advice can add to growing businesses. The lawyers provide their clients with both legal and commercial advice, and work closely with them as a trusted business partner, and not just their lawyer. The fi rm has many years’ experience preparing and reviewing franchise agreements and disclosure documents, and advising on Code compliance 82| FRANCHISING JUL/AUG 2013

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and franchise disputes, and can also assist with establishing new franchise systems, provide business structuring advice, prepare exclusive dealing notifications to the ACCC and advise on IP protection and management. Rouse Lawyers is focused on establishing strong relationships with clients, being proactive and responsive to client needs, and producing a high standard of work at excellent value. The firm’s efficient size and innovative approach helps the lawyers to deliver commercial outcomes for their clients. The law firm is a member of the Franchise Council of Australia, and has a specialist team with extensive experience in franchising; it recently recruited a number of highly experienced senior lawyers to enhance its franchising, IP and technology, and tax offerings. Most of the senior lawyers have worked for significant periods in Australia’s top-tier law firms. The head of Rouse Lawyers franchising team is a member of the Queensland Law Society’s franchising sub-committee, and understands current issues affecting both franchisors and franchisees.

SALtS OF tHe eARtH @ Brisbane and melbourne Salt therapy franchise Salts of the Earth specialises in the facilitation of salt therapy, a complementary medical therapy that provides relief to people who suffer from a range of different respiratory conditions such as asthma, bronchitis, cold and flu, cystic fibrosis, hay fever, sinusitis and emphysema. Salt therapy can also be used to manage emotional conditions including anxiety, stress and depression. A NAB report released in December 2012 uncovered Australia’s private medical sector is on the rise, and it predicts the industry will continue to grow in the future as people choose to spend more money on their health and wellbeing than ever before. David Lindsay and Kath Micalizzi founded the business in 2010, and the first Salts of the Earth franchise opened in the Melbourne suburb of Essendon. The business has five franchises, and former Boost Juice general counsel Kristie Piniuta as well as former Jim’s Group COO Richard Reid have been assisting Lindsay and Micalizzi to perfect their franchise model. The new model offers franchisee support in the areas of professional development, local area marketing and staff recruitment. A website that is equipped with back end e-marketing capabilities and delivers education to customers and leads to franchisees has also been developed. Salts of the Earth is looking to expand its franchise network in Queensland, South Australia, New South Wales and New Zealand.

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Opportunities | Brisbane & Melbourne Expo Preview

SILVeR CHeF

flexible equipment funding in the Australian hospitality industry; Silver Chef is passionate about offering customers an alternative to traditional finance options. The company has seen rapid growth in the franchise industry and members of the dedicated franchising team have owned and operated their own franchises and understand the unique Silver Chef can help with equipment funding challenges that both franchisors and franchisees Image: Silver Chef face. Whether the franchise is planning a complete refurbishment, upgrading a few pieces of equipment or something has broken down and needs replacing at short notice, funding kitchen equipment as opposed to purchasing outright can make a huge difference. The unique Rent-Try-Buy® Solution allows you to free up your working capital and keep your money where it should be – in your pocket. Silver Chef caters for all hospitality ventures, from start-ups to existing businesses, including restaurants, cafés, takeaways, pubs, clubs, hotels enjoying the stability of a proven business model. and franchises. The Franchise Accreditation can However financing your franchise can prove to help franchisors attract the right franchisees to be an issue, particularly if you have minimal credit their business and assist by offering pre-approved history or no prior hospitality experience. F R0 7 1 3 _ 0 0 0 _ T EL 1 2 0 1 3 - 0 6 - 1 3 T 1 5 : 0 4 : 2funding 9 + 1 0for : 0all0existing and prospective franWith more than 25 years’ experience providing chisees. The accreditation program is predicted @ Brisbane and melbourne Franchises within the hospitality industry are part of one of the fastest growing sectors in Australia today. More and more people want to be their own boss while

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to grow to more than 75 franchise systems in Australia in the next 12 months. Silver Chef’s Rent-Try-Buy model offers customers a short 12 month agreement, and they can upgrade their equipment or purchase at any time. What’s more, customers are entitled to a 75 percent net rental rebate if they choose to purchase within the first year, so the rent money is never dead money.

standard, textured, 3D or interactive floor plans, virtually furnished rooms, online tours and copywriting as well as Top Snap’s unique custom built image-management system. To become a Top Snap franchisee requires a Image: Top Snap

tOP SNAP @ melbourne Recognised in the top 50 fastest growing small to medium business enterprises for the last two years, Top Snap continues to expand as a major national property photography franchise. Franchisees will be servicing a rich database of clients including real estate professionals, home owners, builders, architects and property developers. All that is required is a keen interest in owning and building a professional photography business. A franchisee will receive full support for the technical aspects of photography and camera equipment to ensure they present the client’s property at its best. A franchisee will also receive access to property marketing tools including 360-degree virtual tours,

turnkey cost of $39,950 plus GST and equipment; this provides franchisees with extensive support in sales, marketing and business management, and technical training to help them maximise their return on investment.

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Issues | Benchmarking

PerformanCe

revieW

All images: Thinkstock

Why is financial benchmarking so important for franchisees? Domini Stuart finds out how sharing the figures can boost business

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Benchmarking | Issues

ne of the outstanding benefits of belonging to a franchise is that you’re not working in isolation. However, if you don’t have access to financial benchmarking, some experts suggest you might as well be an independent business. “Without benchmarking you’re flailing around in the dark,” says John Post, training and development manager at Kwik Kopy Australia. Financial benchmarking provides individual franchisees with points of comparison outside their own previous results. Data that affect financial performance are collected, compiled and ranked to show the medians across the organisation as well as the results of the most successful businesses. This can pinpoint specific opportunities for franchisees

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to improve their own performance and, over time, to measure that improvement. “The data will include things like sales figures, costs and expenses but it’s not just about dollars,” says Tim Kilham, director of Lanyon Partners. “You also need statistics on things like the number of people coming through the door or the average sales per square metre of floor space.” Benchmarking can also draw attention to areas of concern. “In a food franchise, for example, the unit cost of food is unlikely to vary by more than one or two per cent from store to store,” Kilham continues. “If it goes beyond that, there’s either theft or wastage. And, if you’re not measuring and

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Issues | Benchmarking

John Post Training and development manager at Kwik Kopy

tim Kilham Director of Lanyon Partners

comparing your performance, these kinds of issues can be hard to identify.” “Financial benchmarking presents an unexcelled opportunity for networks to do what everyone talks about: work together,” says Seattle-based Steve LeFever, who was recently in Australia to present a two-day workshop focusing on financial management for franchisors and franchisees. “Producing a financial benchmarking study cuts through the rhetoric, provides a performance report card for the network, profiles the top performers and provides a reliable framework to measure best practices. Franchisees within the systems that produce timely, meaningful benchmarks consistently experience measurable increases in performance – and they regularly report these benchmarks as among the most valuable resources provided by the franchisor.” Financial benchmarking is also of value to the franchisor. “It shows the financial strength of each franchisee and allows us to see trends in the business,” says Post. “Without it the only thing we’d be measuring is sales, and sales growth is not necessarily an indicator that profits are increasing. Benchmarking enables us to give our franchisees guidance on product mix, margins and the other variables they need for profitable sales and an efficient business.”

MAKING SENSE OF THE FIGURES KwikKopy has been benchmarking for over 25 years. “Our chairman, who was then the managing director, was very interested in why some businesses perform better than others,” says Post. “He started the process of getting owners together to compare their figures and results and this evolved into a more formal document that has continued to improve every year.” Every Kwik Kopy franchisee submits financial

It’s vital that people have help interpreting financial information and connecting it to operational activity so that they can actually use it to improve their business

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Benchmarking | Issues

information which is then processed into an individual report. “Understandably, some owners are very cautious about sharing their business information so all of this is confidential,” says Post. “There’s no indication of who owns the various centres.” However, there’s a lot more to successful benchmarking than presenting franchisees with rows of figures. “Most people in business don’t have a financial background and simply can’t make sense of the numbers they see,” says Kate Groom, who developed the original KwikKopy systems and now works as a financial educator at Smart Franchise. “It’s vital that people have help with understanding and interpreting financial information and then connecting it to operational activity so that they can actually use it to improve their business.” At Kwik Kopy, the field support team is trained to help franchisees identify areas for improvement and then create an action plan. ”The last thing we want is for them to glance at the benchmarking document then file it away,” says Post.

A MATTER OF LEADERSHIP Despite the benefits, benchmarking isn’t a widespread practice. “Virtually every franchise agreement mandates franchisees to provide financial statements at least annually, yet this this requirement is rarely met and virtually never enforced,” says LeFever. “Furthermore, in the relatively rare instances where financial data is submitted, it is rarely cumulated and, even rarer, returned to the franchisees in the form of benchmarks.” Cost could well be a roadblock, particularly as the return on investment is not easy to quantify. “Benchmarking costs money, so the board and management must understand the long-term nature of the benefits and be prepared to commit resources to ensure it becomes embedded in the

Bench talk “Benchmarking is wonderful – it tells you almost everything that you need to know as to where your business has been, is now and is heading.” - Franchisee talking to Kate Groom “I look forward to seeing my benchmarked figures so I can set my goals. In isolation, I can see my results, but I can’t see what my peers are achieving. If they can achieve a certain Cost of Goods Sold then why can’t I? If operating expenses are at this level, then what am I doing? How are my wages? what is the level of my lease? Am I making as much money as I could? The benchmarks help me set the right goals and get me on the move to meeting them. I can’t imagine thinking strategically without them.” - Franchisee talking to Kate Groom “The proof of the pudding is in the eating and I am pleased to report that, since you trained over half of our franchisees on how to use financial information to manage their business, their discretionary income increased by 30 percent.” - Franchisor talking to Steve LeFever

Kate Groom Co-founder of SmartFranchise

steve lefever Chairman of Profit Mastery

culture,” says Post. Groom agrees that good leadership is fundamental to success. “You can’t just tell franchisees they have to start sharing information,” she says. “They must feel inspired and confident that this can help them to improve their business. "If I were buying into a franchise I’d definitely be asking whether they benchmark, firstly because it’s a fantastic tool for helping you keep your business on track but also because it says a lot about the maturity and the culture of the franchisor if they’re prepared to stick at this process and make it work.” People give many different reasons for going into business but, as Kilham points out, they’re generally predicated on making money. “You can only enjoy other objectives such as a better lifestyle or more time with the family if your business is profitable,” he says. “Franchisees who make money also stay in the business, which is what a franchisor wants. Without benchmarking, it’s the blind leading the blind.” F www.FRANCHISE.NET.AU

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Issues | Due Diligence

it’s time to

talK

six questions for your partner 1. 2. 3. 4. 5. 6.

How much money do we need to buy the business? How much income do we need each month to live? What is the upside of taking on this business? What are the downsides, what are the risks, what could go wrong? What will be the impact on the family budget? What flexibility do we have if we need to trim somewhere?

Do you want to buy a franchise but feel there are financial roadblocks in your way? take heart, you’re not alone – and your franchisor can help.

aking the leap into buying a franchise can be daunting so it’s wise to be as prepared as possible for the responsibilities and realities of business ownership. Yes, we know actions speak louder than words, but before you charge ahead, take time to talk – and listen. Most new franchisees have little experience in buying a business. As a result, many are left

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floundering with how to deal with obstacles they encounter. There are many questions to ask and conversations to have. One of the most critical areas to address is finance. Most franchisees simply have no idea how to approach this topic and deal with it constructively. As a result, the financial aspects of franchise assessment can become something of a roadblock as you take the path towards your chosen franchise. »

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With Kwik Kopy you get a tried and tested system that removes the usual start up headaches and helps you establish your business sooner. As part of the Kwik Kopy network, you tap into a highly established and recognised brand, giving you plenty of leverage in the market. What’s more you’ll have an extensive support network all focused on your success.

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Due Diligence | Issues

CONVERSATION PEACE Financial conversations are very much part of buying and owning a business. They include the obvious discussions with your franchisor, bank and accountant. But they also include the conversations you need to have with your spouse, or partner. It’s important not to ignore these discussions, even if finance is unfamiliar to you. Talking about the financial side of business shouldn’t put you off the idea of buying a franchise. It will help you assess whether you can afford the business and if it can provide you with the income you need. These conversations will also help you

family time

How to make the conversation work One of the best ways to start this conversation would be to ask “If I were to tell you I was thinking of buying a franchise, what sort of questions come to mind?” Then give your partner time to answer. write down their questions and concerns so you can address them later. Don’t fight or get into an argument over it. Taker your time to alk through the questions. Try not to get defensive or sulky if they don’t seem as excited as you. you may need to take some time out to let the dust settle or the air clear if things get difficult. That’s okay, that’s part of the process

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understand the risks and make informed decisions about how to finance your business. Your franchisor should be able to give you guidance on how to go about having these important conversations. How the franchisor helps at this early stage will give you a valuable glimpse into their approach to the financial side of business. Here are the areas to cover in your discussions before you commit to a franchise.

FAMILy CONVERSATIONS Family financial conversations play an important part in the ownership of a business. They should start long before the doors of your franchise open. You’ll probably find that mixed in with enthusiasm for the franchise are some questions about money. For instance, • How much will the business cost, and where will the money come from to pay for it? • Will we be able to make enough to pay the mortgage and the bills? • What about our holidays? • What if it doesn’t work out? People often ignore these questions, but we think that’s a big mistake. You see, owning a franchise will certainly have financial implications for you and your family. It will affect your income, what you spend your money on, and how much you can save and put into superannuation. Your home is likely to be required as security for JUL/AUG 2013 FRANCHISING | 95

Issues | Due Diligence

any business loans. There are also financial implications when you sign a franchise contract and leases. Just highlighting these considerations shows how important it is to address your financial questions through a structured process of conversations. Talking about these issues will help resolve any concerns you have and give you confidence to proceed. Of course it’s possible that you will find there are issues you cannot resolve, in which case don’t proceed. This approach will help you avoid making costly mistakes.

Talking about these issues will help resolve any concerns you have and give you confidence to proceed NETwORK PERFORMANCE Part of your due diligence is to check out the performance of other franchisees. You are looking for evidence from existing owners to validate your decision. Of course, what happened to others is no guarantee of your success. The results you achieve will depend on many factors; these include your own ability in sales and how you manage costs. Ultimately, it’s all up to you! Questions you may wish to ask franchisees in the network include: What have their sales results been, 96| FRANCHISING JUL/AUG 2013

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what are their costs, how much do they make and how long did it take them to make a profit? What are the busy times of year and when is it quiet? What does it take to succeed? The franchise disclosure document is also a great resource. It will include information about the costs of running the business. Some franchise systems also include details of sales achieved by their franchisees. how can the franchisor help? Once you have this information you should discuss the performance of the group with the franchisor. This gives you the opportunity to address any questions you have, or concerns regarding the performance of the group.

ACCOUNTANTS We recommend that you obtain advice from an independent accountant as part of your evaluation process. The Franchising Code of Conduct also recommends this. To us, ‘advice’ goes beyond simply getting recommendations on business structure and asset protection. Your accountant should help you get an indication of how long it will take to start trading profitably and how much profit you can make from the business. They can also assess the financial risks and suggest ways to finance the business. It’s important to remember that the role of the accountant is to test and challenge assumptions, and point out the risks associated with business. This can

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be very helpful, as it makes clear what needs to be done so you achieve your financial goals [see p116 for more on what accountants look for]. To prepare realistic projections, your accountant will need to understand the costs of setting up the business, how the business works and makes money. For instance, how you will get customers, what they spend, and the costs of operating the business. how can your franchisor help? Ideally, your franchisor will provide you an information package to help your accountant understand the business and assist with your evaluation.

loan will loan will be repaid and whether they can have confidence in you as the business owner. This means you need to make a case for them to lend to you. They will be looking at whether you can afford the repayments, the security you are offering and the reliability of the franchise system. You’ll need to provide them with enough information to make a decision. This includes demonstrating to them that you understand the business, can operate it well, and have sufficient security to cover their risk.

how can the franchisor help? The better prepared you are, the better your chances. BANKERS This is where the franchisor can assist by giving you Banks are in the business of making loans and for the information you need to provide the bank. This them to be repaid. They regularly tell us that money is will make it easier for the bank to assess your appliavailable, but people don’t approach them in the right cation and make a decision. way! They want to know about the business, how the Thorough consideration of the financial side of owning a franchise is a very important part of your franchise assessment. It can increase the chance you’ll achieve your goals and reduce the risk of financial difficulties. To help in this process, look for a franchise system that provides resources that help you your AD_ F RUNI SEP_ 1 2 . p d f Pa ge 1 3 / 0 8 / 1 2 , 3 :address 5 5 P M own financial questions and those of your accountant and bank. F

Banks want to know about the business, how the loan will be repaid

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Are We A Good Fit?

franChisee tiPs when it comes to researching the franchise investment you are considering, who better to give guidance on where to go and what to ask than franchisees themselves? Here is how some franchisees approached their due diligence:

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Visit the franchisees For Mike Smart, who with his wife Lissa has been the franchisee of Pack & Send Pyrmont in Sydney for five years, nothing was too much trouble when doing his due diligence, despite clocking up considerable experience as a Bedshed franchisor before investing in the logistics retail chain “we visited Pack & Send franchisees in western Australia, Queensland and Victoria,” Smart says. And what he found just reinforced his opinion that the brand was a good investment. Get a second opinion Ann King, a franchisee with bookkeeping business First Class Accounts, knew how to look at a spreadsheet when she started researching the franchise system but still took the time to get another financial opinion before signing up. “I spoke with my accountant, mostly to get his thoughts on purchasing a franchise as opposed to starting my own business from scratch. “He thought it was a lot of money to buy the franchise but as he began to understand what I was getting for my money, he acknowledged that he had probably spent a similar amount when he started his own business.” Find out about the management Graham Gibson opened his Bedshed franchise nine years ago. ”I researched the brand very thoroughly, visited the head office in Perth, spent time with the management team and also conducted store visits. “It’s essential that potential franchisees do their homework and do it well. Find out about the people behind the operation and everything possible about how the business operates. Talk with people in the know and learn as much as you can to ensure you have a high degree of comfort in your decision.”

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Peter Knight, FCPA and Kate Groom are founders of Smart Franchise: business advisers who specialise in the financial side of franchising. They run workshops and provide advice that helps people use financial and business information to grow and improve their franchise. www.FRANCHISE.NET.AU

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Issues | Branchising

BRANCHISING Could branchising be a viable alternative to the traditional franchise model? Robert Toth shares his personal view on this hybrid business structure.

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All images: Thinkstock

ranchising has proved over decades to be a popular channel for individuals to achieve business ownership and success. Yet over the years there have been regular attempts to fine-tune the franchise relationship to ensure the best outcomes for all. In fact the latest review has just taken place. But what about a business structure that takes the best of franchising, and adds shared ownership? Enter branchising – an alternate business structure based on a horizontal relationship between franchisor and franchisee. Let’s take a look at the environment that this model fits in to. » WWW.FRANCHISE.NET.AU

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Branchising | Issues

Franchising has been operating in one form or another for the past 40 years in Australia. It became a regulated industry under the Franchise Code of Conduct in 1998. The industry was regulated to protect individuals and small business operator (franchisees) by requiring mandatory disclosure of material information by franchisors to prospective franchisees at least 14 days before a franchise agreement is entered into.

What is branchising? Establishing new units in conjunction with a franchisee in which both the franchisee and the franchisor each retain equity. The franchisor can sell the company owned outlet or a part of it and recoup some capital for further growth while retaining some degree of control and ongoing profit from the franchised unit.

THE CODE REVIEW The industry as a whole has underdone major and rapid change over this period with a number of reviews of the Franchising Code by the Government over the years to address the imbalance of power and control between franchisors and franchisees. The most recent review with the appointment of Alan Wein has just been completed. Wein reviewed issues such as good faith in franchising, the rights of a franchisee at end of term including recognition for any contribution made to building the franchise and the operation of the provisions of the Competition and Consumer Act 2010 regarding enforcement of the Code more F R[you 0 7 can 1 3 read _ 0 0 0 _about T C Hthe Code 1recommenda2 0 1 3 - 0 tions on p130 in our Sketch column].

The business format franchises and franchise models that currently exist are based on traditional franchise models whereby the franchisee operates under a brand, system and controls determined by the franchisor. So what has changed? There have been major changes to business and the economic climate as we are all well aware over the past four to five years with the global financial crisis, increased competition in certain market segments and reduced margins on sale 6of- goods 1 3 T 1services 4 : 2 6due : 0 to 0 aggressive + 1 0 : 0 0competition and marketing. Âť

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In addition to this we have seen: • changed expectations by franchisees as to the support, training and systems to be provided by a franchisor; • the significant and rapid move from retail sales to online marketing; • increased cost to franchisors in providing point of sale and software systems to support and monitor franchisees; • increased costs to franchisees - set up costs, labour and rental; • rapid changes in social media leading to different avenues to market; • increased disconnect between franchisor and franchisee expectations; • increased costs of regulatory compliance whether to do with the ATO, the Workplace Ombudsman, occupational health and safety issues In the midst of all of this change, the traditional franchise model by which franchisees pay a royalty and marketing fee based on percentage of their gross revenue or a fixed monthly franchise fee has not changed. Meanwhile, there are some franchisees who struggle to make ends meet and draw a reasonable salary for their efforts and these franchisees are unlikely to see a return on their investment. This led me to think that with all these changes surely we must, as franchisors and franchisees, engage differently and find a franchise model more suitable to current economic conditions; a model that is more transparent and which equitably shares the risks of doing business. John F Kennedy said “change is the law of life and those who only look to the past or present are certain to miss the future”. What this says to me is that you cannot expect to meet the challenges that confront business today using yesterday’s mindset and expect to be at the forefront of business tomorrow.

Is branchIsIng a whole new world? I should first state that the term branchising is not new, and was a term coined by author David. D. Seltz in a text entitled “Branchising – Proven Techniques for Rapid Company Expansion and Market Dominance” first published about 50 years ago. It is a term used to cover business franchising and traditionally referred to the conversion of existing company owned outlets to franchised or licensed units. It includes establishing new units in conjunction with a franchisee in which both the franchisee and the franchisor each retain equity. The franchisor can sell the company owned outlet or a part of it and recoup some capital for further growth while retaining some degree of control and ongoing profit from the franchised unit. A branchise is a franchise and will be governed by the Franchising Code with obligations of disclosure and subject to the mandatory obligations.

A branchise is a franchise and will be governed by the Franchising Code with obligations of disclosure and subject to the mandatory obligations The resurrection of the concept of branchising in Australia arose from my recent discussions with a number of consultants and due to the increased level of disputes and disenchantment by franchisors and franchisees with the existing traditional franchise model. At this point I must acknowledge the contribution of Glenys Crawford of Crawford www.FranchIse.net.aU

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Branchising | Issues

Kaye Ptd Ltd in my developing what I now call “Branchising for Australia” as an alternate business franchise model.

what exactly Is branchIsIng? Is it just a fancy and clever name or does it truly reflect a different relationship between the franchisor and franchisee?

the tradItIonal Format The traditional franchise relationship tends to be a vertical relationship whereby the franchisee is under the control and power of the franchisor rather than truly working in partnership. The use of the term franchise partner by a franchisor does not change this feeling of top-down control and power that a franchisee experiences. While not every franchise system shares the following features, in my view these are the key elements of the traditional vertical franchise relationship: • onerous obligations on the franchisee; • little real obligation on the franchisor; • power and control rests with the franchisor; • the goodwill and ownership of all intellectual property and goodwill developed over the franchise term remains vested in the franchisor.; • the payment of franchise fees from gross revenue (not profit); • no sharing of risk or profit; • default provisions with threat of termination; • all capital costs funded by the franchisee.

the branchIse strUctUre The branchise model is a horizontal relationship representing a more equitable relationship whereby the franchisor and franchisee own the business together and work for mutual benefit. Each party has equity in the enterprise and therefore a vested interest in ensuring its success.

At the conclusion of the arrangement and/or sale of that business, the franchisee will recover (based on their equity) its share of good will and along the way a share of profit. As a true partnering relationship it addresses the issues of the traditional franchise model in relation to the feeling of power and control held by the franchisor over the franchisee. Each of the parties contributes financially and operationally to the business. The franchisee continues the day-to-day management of the business with the support and of the franchisor who is likely to be more attentive as they have equity in the business. The franchisor relies on the energy and enthusiasm of the franchisee.

The branchising model already operates successfully in real estate and retail franchise models but is suitable for any market segment A branchise outlet is not subject to unnecessary and undisclosed fees and costs. There is generally no marketing fund. The franchisor and franchisee work together and the franchisee directly accesses management financial support and systems. The company becomes the franchisor upon each retail unit being sold to an independent operator, who then becomes a franchisee. As each company unit is sold to a qualified franchisee the company recovers their cost for the fit out, inventory, equipment and good www.FranchIse.net.aU

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Issues | Branchising

will in the form of a franchise fee. The company can transfer the lease to the newly appointed franchisee. As with a traditional franchisee, the owner/operator franchisee is generally a more self-motivated individual than the salary manager. It is a model that has been adapted in the

sUmmIng Up In the US it has been found that branchising results in a higher sale price per franchise unit than the traditional franchise unit. The branchising model already operates successfully in real estate and retail franchise models but is suitable for any market segment.

We must, as franchisors and franchisees, engage differently and find a franchise model more suitable to current economic conditions Let’s be clear - I am not saying that branchising pharmacy sector where the older generation of should take over the traditional franchise model. pharmacists who may wish to take a step back or What it does provide though is an alternate model retire, cannot readily sell their pharmacies as young worth considering. pharmacists who may be working in the business do We’d love to hear your thoughts – you will find this not have capital sufficient to purchase the pharmacy. article on our website www.franchise.net.au where you The parties enter into a partnership arrangecan add your comments. F ment: the young pharmacist as a manager builds up equity over time and acquires the older pharRoberth Toth is a partner, corporate and commercial, macist’s interest. The older pharmacist may retain Mahoney. some limited equity and continues on as a mentor AD_ F RACE 2 NOV _ 1 2 . p d f P a g e 1 1 9 / 1 0 / 1 2 , at2law : 2firm 6 Wisewould PM You can contact him at: robert.toth@wisemah.com.au. and an advisor.

Are You looking for... • The chance to establish yourself with minimal capital outlay. • An opportunity in sales. • Unlimited earning potential. • A company that rewards effort. • in-house and in-field training provided. • An opportunity to provide personalised service and advice on an on-going basis. • Be your own boss!

If the answer is YES...

Combined Insurance’s Representatives enjoy an opportunity to utilise a highly structured system that, when correctly applied, can provide an opportunity for high commissions and eligibility for bonus payments. Many of our highest achievers have no previous sales experience however, with our in-house and in-field training, Combined Insurance offers to unlock your potential regardless of your background. Established in 1922, Combined Insurance operates in Australia as a division of ACE Insurance Limited which is part of the ACE Group of Companies®, one of the leading global providers of insurance and reinsurance. If you enjoy meeting people and would like to assist them with their personal insurance needs, please call 1300 300 480, email Richard.stewart@acegroup.com or visit www.combined.com.au

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How to... | Staffing

BUILD AN

ELITE TEAM The challenge of stafﬁng will face any new franchisee investing in a business that is more than a one-man/one-woman operation. Here are some tips for how to build a top-level team of employees.

he S.A.S (Special Air Service) is an elite team in the Australian Military Defence Force. Its motto is telling: “Who Dares Wins”. Team members constantly push “the envelope”. That is, go beyond set parameters. In business, countless parallel elite companies, entities and individuals strive for and achieve high performance goals. Many embrace the underlying principle and belief, “Think, believe, then do”. Elite sportspeople repeatedly refer to visualisation, in which they see themselves being “in the zone” and fulfilling their own high standards. “P.B.” – Personal Best, is both a goal and a badge of honour. So, it is reasonable to conclude that “elite” is a way of thinking, before it is a way of doing. Countless parallels exist in business. Companies, entities and individuals strive for high performance goals, just like an elite athlete works towards getting a P.B. or dominating the competition. Competitive

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advantages are natural consequences for businesses which can and are effectively positioned in the marketplace and within professional and trading groupings as being “elite”. Competitive advantage is a natural want for any small business and staff have significant impact on when, how and if you achieve that goal. Here are the four cornerstones of building an elite small business team:

FOUR FOUNDAtION BLOCKS 1. Recruit selectively Always remember the adage: “Recruit for attitude, train for aptitude”. When hiring, each job description should be complemented with a well-documented “job specification” that details the human characteristics the applicant requires to meet the expectations of you, your staff, clients and customers. »

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Such documents are effective in the self-screening of applicants and promote confidence and pride, while also contributing to workforce stability.

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2. Induct people into company values An integrated induction process exposes new recruits to the values and beliefs which are important to the entity and its people. Understanding philosophies, corporate cultures, mission statements and driving forces ensures adherence to the elite standards and expectations. The need for supervision is minimised when team members understand the statement: “Why we do the things we do”. Elitism does not tolerate shortcuts or compromises. This should be made clear in the induction process. 3. Conduct ongoing training sessions In the military, in the sporting arena and in business, high performers inevitably “go the extra mile”. Tiger Woods is a world champion golfer because, reportedly, he hit more than 30,000 golf balls before he won his first major tournament. There is a lesson in that for business people: practice makes perfect. Training needs to be scheduled, formal, informal and extensive, utilising internal and external resources and sources.

In the sporting arena and in business high performers inevitably go the extra mile

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4. Plan to plan To aspire to optimal performance, whether it’s scaling Mount Everest or reaching business key performance indicators (KPIs), planning is imperative. Remember to plan to plan. Plans set benchmarks, enable measurement of performance, monitor progress and provide the framework to identify the need for contingency initiatives. Unforeseen contingencies do arise. So too do innovations and creativity. Fewer than 16 percent of small business, that is one in six, have an updated, integrated and documented business plan. It is important to involve all team members in the planning process, for they think they have much to contribute and usually they do.

CONCLUSION Undertaking these four essential steps will help remove you and your business from the “norm,” to the elite. F Barry Urquhart is managing director of Marketing Focus, Perth. He is an internationally recognised business strategist and analyst, author and conference keynote speaker and has been a lecturer in management and marketing at Curtin University, Perth. You can contact him at Urquhart@marketingfocus.net.au or visit www.marketingfocus.net.au

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How to... | Find an Accountant

Y E N MO

$ R E T T A M

Ready to buy a franchise? Time to pay a visit to your accountant. Here are some tips on what they want to see...

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o you need an accountant? Getting the right number cruncher is essential before you invest in a business, and as you look to grow your investment. But who to choose? As Peter Knight from Smart Franchise to points out, there are three types of accountants, each with their speciality: tax accountants, business accountants and franchise accountants. You might already have a friendly accountant in mind, you might need to source one; in either case, the majority of the 10,000 plus accountants in Australia deal mostly with tax and GST issues. So itâ&#x20AC;&#x2122;s worth bearing in mind that a franchise-experienced accountant will have a depth of knowledge on franchise business matters that a more generalist

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Concentrate on building your business by outsourcing the daily grind of administrative tasks!

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accountant will lack - he or she will be familiar with the particulars of the franchising relationship and how these might effect business and tax planning. Whether or not you decide to find a new accountant or employ an existing contact, all accountants will look at the proposition you present them with in a similar way. It’s their job to look at the detail. What do they want to see? • Structure of the franchise business • Whether your business should be a company, a partnership, or a trust • Tax • GST • Risk management • Capital gains tax The job of your accountant is to test your assumptions. They will look at the downside of the prospective business, and this is what they are good at, says Knight. Checking the numbers Accountants need facts and figures. Some of the questions they will ask about your franchise choice include: 1. What is it? 2. How does it work? 3. How does it make money? 4. How does cash move through the business? 5. What’s the upside? Your accountant can help you understand the franchise offer you are set on, if presented with the right financial information. If you don’t have it, go back to the franchisor. F

Professionally prepared by qualiﬁed accountants and book-keepers. Prepared in a timely manner to meet the franchisor/franchisee’s requirements. Fully compliant with statutory requirements eg Fair Work Australia, BAS, PAYG, etc. ‘The Cloud’-based reports are readily accessible at all times. Available Australia wide.

To ﬁnd out how we can assist you in minimising the administrative costs and maximise the bottom line of your business contact us:

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JUL/AUG 2013 FRANCHISING | 119

5BETTER BUSINESS ONLINE TOOLS FOR

New to franchising and running your own business? Some online tools can help boost your performance.

s a franchisee, you will probably wear many hats in your business, including that of a marketer. And being a marketer of your business, you’ll need to include online marketing or the Internet in your mix. Today, there are a plethora of online marketing tools available that make life easy. What’s more, a lot of these tools are free to use online. We’ve compiled a list of tools you can use to boost your marketing efforts. Let’s look at some of these below:

1 SOCIAL MeDIA – HOOtSUIte Undoubtedly, social media has become one of the best-known ways to market your business today. New Facebook business pages are mushrooming as you read this, and Twitter peeps are busy tweeting away juicy posts. Then of course, there’s LinkedIn and Google +. With so many platforms available to use, entrepreneurs get overwhelmed with the enormity of social media and the nagging question “How can I find the time to be on all these platforms that are relevant to my business”? The answer is Hootsuite. It’s a free tool that brings together all your social media accounts in one place, and makes it easy to compose and schedule new posts. With the free account, you can add social networks including Facebook, Twitter, Google +, LinkedIn, FourSquare, WordPress, MySpace, and mixi. The layout is easy to understand and simple to use. You can also add “streams” such as Mentions, Direct messages (Inbox + Outbox), Sent Tweets, Favourite Tweets etc. “Mentions,” for example, will allow you to enlist your brand mentions in each of the social media. With paid options, Hootsuite also allows you to integrate Google Analytics and Facebook Insights and track your social media performance. 120| FRANCHISING JUL/AUG 2013

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2. eMAIL MARKetING – MAILCHIMP If social media is the latest fad, email marketing is the ol’ tried and tested method. Email marketing is arguably more personal because your email lands right in your prospect’s inbox. MailChimp is an email-marketing software with more than 400 templates to choose from. There’s a recent addition of the drag and drop editor, which makes life so much easier for the busy entrepreneur. The software uses an open API and other apps like Paypal, SurveyMonkey, Shopify etc can be integrated with it. Signing up is free, and so is sending 12,000 emails per month to a database of less than 2,000. But if you’re above that mark or want to use the Autoresponder feature, you’ll have to opt for a paid plan.

3. SeO – GOOGLe KeYwORD tOOL Market research is an ongoing effort. Google’s free Keyword Tool allows you to understand customer behaviour to quite an extent. The tool also helps you to find new market and niches that may be profitable to explore. Mainly, the keyword tool is used for two purposes: • for on-page SEO of company websites • research tool for pay per click (PPC) or Adwords ad campaigns. You can search for high-traffic keywords, gauge the competition and cost of acquiring new customers, look for the most commonly used keywords for your industry (and optimise your website for those), and analyse data geographically.

Images: HootSuite, MailChimp Google & DropBox

How to... | Online Tools

Online Tools | How to...

4. ONLINe RePUtAtION – GOOGLe ALeRtS You’ve probably heard of Google Alerts, but have you set it up for your business yet? Google Alerts is another free service from Google that emails you every time there’s a piece about your brand published online. Google Alerts is simple to set up and takes a few minutes, and in return you don’t have to scour the web searching for what people may be saying about your business. The fi rst alerts should be obviously in your or your company’s name as keywords. If there is a blog post or a news item published with the keywords, Google will notify you via email. A neat way to keep track of and maintain your online reputation! You can respond to negative or misleading information out there, as well as thank others for any positive feedback. Google Alerts can also be used to keep up with the industry. As an expert, you want to remain up to date with the latest news and happenings. The tool A makes D _ F RitVeasy I P for J Ayou N _ by 1 3delivering . p d f itPright a g ein 1 your inbox or via RSS feed.

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5. SAVe ON tHe CLOUD – DROPBOX In the age of technology, you have a gazillion gadgets that can save data for you. Liked a cool idea for your master bedroom interior? Click a pic with your smartphone and save. Got all your music on the iPod and a bunch of important documents safely saved on your work laptop? Great! But what if you want to bring it all together? Dropbox allows you to do just that. Like a multitasker’s true friend, it lets you save all your data – personal or professional – “on the cloud”, which simply means on Dropbox servers. It simplifies sharing your data with teams and friends. All the files you upload on Dropbox can be accessed from anywhere on the Dropbox website or any device which has the Dropbox client. What’s more, even if you have a massive computer meltdown or your data is set on fire, your files are still safe with Dropbox and can still be accessed come rain, hail or shine. F

Official Dropbox Logo

Revive Projects helps franchises attract, engage and retain their clients through marketing, communications support, training advice and social media policy development. Reach 1 0 / Maria 1 2 / at1mariaabadilla@reviveprojects.com.au 2 , 6 : 1 3 PM or phone 1300 836 863.

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Customer Loyalty | How to...

MOBILE MARKETING Image: Discgo

Food and beverage outlets need to engage with customers to keep them, suggests Sean Brandtman.

SEAN BRANDTMAN Managing director and founder of Discgo Charger

enues are getting people into their establishments using various forms of marketing, but are they doing a good job at retaining customers in a connected world? After seeing the opportunities presented by the boom of social media, many businesses have done a really good job of recruiting new customers. The powerful online channels such as Facebook and Twitter are a great way to be on the radar of customers who have not yet stepped foot into your area let alone venue. Attracting customers to your venue is the first step, but what are you offering to make them stay or even more importantly, return? Things such as competitions, members draws and discounted meals can all make a huge difference on who stays at your venue and who goes running off to competitor venues. But is that enough to keep the fickle, on-the-go mobile user? These days entertainment outlets are required to do so much more than just offer good food, drink and service, as the typical customer has become more and more demanding and the need for additional customer services is becoming a deciding factor in time spent at venues. Giving something for nothing has long been a good way to keep bums on seats, but the audience, particularly in the current economic environment, can select a venue based on what’s on offer as well as the experience they have. Just take a look at the rise of group buying sites that offer cheap food and booze. Once again this is a fantastic opportunity utilised by venues, but what about the typical young connected consumer that sits, eats, then leaves? How do you gain their loyalty? www.FRANCHISe.Net.AU

By giving them a great customer service experience, not only are patrons likely to return but also share the experience with their friends, giving you a share of voice that would not have been an option before. As mobile phones have become a large part of our daily lives, being connected is crucial to most Australians. Like social media or group buying, a mobile phone can be used as a marketing tool and can be very effective in keeping people at a venue. I know that if I can’t use my phone while I’m out, then I can’t communicate with friends or family or keep up-to-date with my business, putting me in a difficult situation. I can choose to stay at the venue, or head home to recharge and stay connected. The same goes for our very fickle Gen Ys, if not more. On an average night out, it has become more likely for them to move around from place to place seeking the best prices, music, and vibe. And without their phones they feel cut off from their friends and fellow party goers. Even with a phone, people are easily alienated and left wanting as their battery dies. Some bars are combating this with the installation of charging stations, but even then, being detached from the conversation on the other side of the room is seen as a hindrance. Giving customers the freedom to enjoy the service wherever they choose within the venue, takes customer service to another level. Once you take these things into consideration you can start to see a what makes you stand out from the crowd. A simple device such as a portable mobile charger can be the difference in customer loyalty in your franchise venue. F JUL/AUG 2013 FRANCHISING | 123

How to... | Social Media

WEB

WISDOM What are the essential traits of a great website? Catriona Pollard, director of CP Communications, looks at the issue

fter you visit a site and you browse through it for a while, what makes you stay? Great design helps. Amazing graphics are eye catching. But the fundamental trait that makes a website work is the content. The content or copy of your website is critical. This is where you hold the attention of your audience and your word choice and grammar are critical. Misspellings and poor grammar are a quick turn off. If your content isnâ&#x20AC;&#x2122;t easy to read people will go to other sites to get information and make purchases. Copy writing is often one of those jobs that people think they can do themselves but probably shouldnâ&#x20AC;&#x2122;t. We often help clients with their web copy to assist them in the creation of a professionally written website.

HOw tO wRIte GOOD COPY Keep it short While choosing the right words are important, keeping them to a minimum is equally important. The length of your copy online should be about half that of the print version. Re-work your original, including succinct sentences and short paragraphs. Dot points are often a great way to achieve this.

Image: Thinkstock 124| FRANCHISING JUL/AUG 2013

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Social Media | How to...

Chose your words carefully Try to avoid words that are too descriptive, colloquial or flowery. Descriptive words often don’t tell readers much and are a waste of words. Understand your audience and write for them. Just because you have a well versed vocabulary doesn’t mean your audience does. At the same time by choosing colloquial language you often dumb down your website and limit credibility. Organisation is the key Organise your content and information. Start simple and then get to the details. Your homepage is designed to welcome your readers and include your key words. It is designed to tell readers what’s in it for them. Your inner pages can go into more detail. Make sure each page is friendly, organised and uncluttered. Information is great, but make sure it is readable and easy on the eye.

Check and re check spelling and grammar Check and re check your content to make sure it is correct. If you are unsure whether there should be a comma, a colon or a semi colon it is a good

If your content isn’t easy to read people will go to other sites to get information and make purchases idea to consult a grammar guide. Good grammar and spelling ensures your professionalism and increases your credibility. Avoid exclamation marks! If you are one of those people that put an exclamation mark after every sentence – stop! They make people edgy and they are annoying! Exclamation marks don’t make your sales pitch any more effective! F

Use subheadings People often get lost or bored reading online so include subheadings to catch their attention and allow for scanning. Ensure paragraphs are short by cutting out any unnecessary Make sure A D _ F R copy. M R WJ AN _ 1the 3 .font p dis freader P afriendly g e 1 CP 1 0Communications / 1 2 / 1 2 , is a9Sydney-based : 4 2 A Mpr and social and put all headings and subheadings in a bold font. media agency; clients include Franchising magazine.

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Advice LEGit | LegaLiSe Made eaSy

EsthEr Gutnick Senior associate, Mason Sier Turnbull Laywers

rospective franchisees are often advised to engage franchising lawyers to review franchise agreements and disclosure documents. But if disclosure documents generally all look the same and are in a standard format prescribed by legislation, what is it that a franchise lawyer will focus on? The secrets are revealed below. 1. Is the document current? Disclosure documents must be updated annually, within four months of the end of the last financial year. The preparation date must appear on the first page and so it is immediately apparent whether the disclosure document is up to date. 2. Is the document complete? A compliant disclosure document must be signed by the franchisor and must attach copies of the Franchising Code of Conduct, the franchise agreement in the form in which it is to be executed by the franchisee, and certain financial reports or audit reports of the franchisor. 3. Although all headings and questions in a disclosure document are prescribed by law and should therefore be identical, substantial variation is found in the manner in which different franchisors respond to those questions. As a franchise lawyer, I pay attention to the overall feel of the document, its general compliance with the format set out in the Code and the quality of information provided. I find that full, frank and well-written responses are often indications that the franchise is a well-established system and/or governed by a conscientious franchisor. 4. Items 2 and 3 of the disclosure document provide highly relevant information regarding the people behind the franchisor, including its officers and associates and their qualifications and relevant business experience. 5. Details of whether the franchisor or its directors have been involved in any relevant litigation should appear at Item 4. Franchisees should familiarise themselves with such information and make further enquiries if applicable. 6. Item 6 provides details of current franchisee numbers in each state, territory or region and details of franchises that have ended in the past three financial years. The information disclosed here may prompt further enquiries as to the circumstances surrounding franchisee exits. Contact details of former franchisees should also be provided (unless those franchisees have requested for their details to remain private).

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7. Item 8 contains important details in relation to the extent (or perhaps limitation) of the territory in which the franchisee will be entitled to operate. I always cross-check these details with the corresponding contractual obligations in the franchise agreement to ensure they are consistent and the franchisee is aware of their rights. 8. Items 12, 13, 19 and 20 all contain certain financial information in relation to payments the franchisee can expect to incur, any projections or earnings information provided by the franchisor, and the franchisorâ&#x20AC;&#x2122;s financial reports or audit report. Franchisees should seek accounting advice for these figures but lawyers will check whether the information provided seems

Ensure the franchisee is aware of their main rights and obligations complete and compliant with the Code. 9. Particular consideration should be given to items 15, 16 and 17 which point to key obligations and conditions of the franchise agreement to ensure the franchisee is aware of their main rights and obligations. 10. Item 17C clarifies what franchisees can expect to occur at the end of the finite franchise agreement term so there are no surprises and franchisees can make timely plans. 11. Item 18 reveals whether franchisees will be required to sign any collateral agreements (such as occupancy or confidentiality agreements). This knowledge enables franchisees to request and review copies of any such related agreements and obtain a global picture of the entire transaction they will be entering into. This is just a summary of certain key issues franchising lawyers will pay particular attention to, but franchisees and their advisers should thoroughly review all documents provided by the franchisor.

Image: Thinkstock

The lawyer and the disclosure document

Franchising www.franchise.net.au

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Opinion thE skEtch | TReNdS aNd deveLoPMeNT

AndrEw tErry Professor of Business Regulation in the University of Sydney Business School

erhaps the most welcome of the 18 recommendations resulting from the 2013 Review of the Franchising Code of Conduct is Recommendation 17 – that there should not be another review of the Code for at least five years! The Report acknowledges that franchising has been reported on by government and parliamentary committees, at both federal and state levels, “many times since the concept of franchising regulation was first put forward in 1976”. On my counting we average a franchising review every two years. This may not be a bad thing of course: we may not have ended up with the world’s strongest regulatory regime for franchising if it were not for the reviews and reports which, originally, proposed the case for strong regulation and, more recently, have proposed amendments to strengthen the regulatory scheme and improve its efficiency. Franchise reform fatigue is nevertheless a real danger. The 17 substantive recommendations are aimed at improving an already robust model and are claimed to be neither “overly conservative” nor “unduly interventionist”. The two most significant recommendations are those to strengthen the obligations of the parties to act in good faith and to strengthen the enforcement regime by including financial penalties for Code breaches. No recommendations are made for minimum terms of franchise agreements or for

an obligation of good faith being included in the Code which will make it more difficult for the government to again reject this recommendation. Under the recommendation good faith is not defined and it is left to the judges to determine its meaning on a case by case approach. There are obvious similarities with the prohibition of unconscionable conduct under the Australian Consumer Law the definition of which is also elusive and which is also left in the hands of the judges to shape and develop. The recommendation that Code breaches attract financial penalties is sensible and overdue. More effective enforcement of the Code – a government and ACCC priority – is facilitated by the availability of financial penalties for Code contravention. Other recommendations include amending the Code to require franchisors to provide prospective franchisees with a short summary of the key risks and matters they should be aware of when going into franchising and to provide franchisees with the right to terminate the franchise agreement in the

The Code is a good franchise industry model that operates effectively automatic renewal of franchise agreements or for franchisees to receive an exit or goodwill payment at the end of the term of their franchise agreements. The recommendation that the Code be amended to include an express obligation of good faith which extends to the negotiation or performance of a franchise agreement, as well as to the performance of Code obligations and dispute resolution, is not as controversial today as it was five years ago when recommended by the Opportunity not Opportunism Report. On that occasion the Government rejected this recommendation on the basis that the inherent uncertainty of the concept would lead to disputation. The 2013 report expressly notes that there has been a shift in the attitude of some key industry stakeholders, including the Franchise Council of Australia, towards 130| FRaNCHiSiNg JUL/aUg 2013

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event that the administrator of an insolvent franchisor cannot turn the business around within a reasonable time. The Government’s response to the recommendations is, at the time of writing, uncertain. Few will argue with the judgement in the Report that the Code is a “good franchise industry model” that “operates effectively within a very dynamic and difficult economic environment”. And although there will be wide support for the wish that “the industry has a strong regulatory framework, that mandates best practice where required, to ensure outcomes that all reasonable parties would agree produce fairness and enhance confidence in commercial dealings” this sentiment is much more easily stated than achieved as future experience with a codified obligation of good faith will no doubt demonstrate.

Image: Thinkstock

Code of Conduct Review. Again

Are you on target for 2014?

Hit the Bullseye with OrderMate! Contact us now! 1300 667 067 sales@ordermate.com.au

Opinion PEoPLE | LeadeRSHiP

How to tell if franchising is right for you?

kArLi FurmAGE Ceo of The Franchise Relationships institute, a research and training organisation that has been helping franchisors and franchisees create profitable partnerships for 24 years

required to share information on your financial position and performance. Good franchisors use this information to provide benchmarks to help you improve your business performance. Some people are uncomfortable with that level of disclosure.

aSk yoURSeLF: • Will you be able to follow the direction set by the franchisor, even if you think there is a better way? • Can you embrace someone else’s vision or will you feel stifled by it? • Are you a marketing genius with ideas on better ways to market your business and the brand? • Will you expect the franchisor to change strategy to suit your market? • Do you prefer to work independently and not as part of a team? If you have answered yes to any of the questions above, you may want to investigate your decision more carefully.

TiPS Here are some tips to help you ensure franchising is right for you. • Talk to as many current and former franchisees as possible. What have they found most frustrating? And where have they had to put aside their own interests to support the wider needs of the group? Keep asking questions until you have an understanding of what it is to be part of the system. • Be clear on the boundaries. If possible have a look at the operations manual and see the specific policies and systems you will be expected to follow. • Find out the processes the franchisor has for taking feedback. What committees and groups does the franchisor have in place to support continual development of the system? • Shadow a franchisee. Invest a few days in really finding out what it means to be a franchisee in that system. • Be honest with yourself. Will you be able to accept decisions that are for the good of the overall system, but might not always be in your immediate best interest?

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Image: Thinkstock

s franchising right for you? It’s the million dollar question… or half million, or three hundred thousand, depending on what you plan to invest! While you have no doubt investigated if running a small business is right for you, there is a difference between running a franchise and running a small business. In a small business you can run things any way you want to but in a franchise system you don’t get to make all the decisions. Let me tell you about Bruce. Some years ago I was responsible for the induction program for new franchisees in a large retail food franchise system. From the first day of training, Bruce challenged everything he was taught – every process, recipe and marketing initiative. He was convinced he could do everything better. He came from a corporate environment, had also run his own small business and was set in what he wanted to achieve. He had simply not considered the implications of having to work within somebody else’s system and failed to see his role was to execute the system and leave the strategy to the franchisor. Unfortunately, things ended badly for Bruce because he did not take into account the need to operate his business within the guidelines of the franchise system. There are many benefits to buying a franchise: you are provided with a proven system, ongoing training and mentoring and access to a community of people you can tap into to share ideas. But if you have an entrepreneurial spirit like Bruce you will want to fiddle with the products, create your own customer offers, change the colour of the uniform... Your role as a franchisee is to stay within the bounds of the system and improve on it through better execution. As a franchisee you will be

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Opinion ViEwPoint | yoUR voiCe

Why a franchise model works in retail

BoB BEAumont Managing director of Beaumont Tiles, australia’s largest retailer of tile and bathroomware

arly adopters have the most to gain in the shift to specialist group retail franchising. There are fundamental shifts underway in Australia’s speciality retail markets that have nothing to do with the rise of digital commerce. Home improvement and hardware is a battleground with one established big box retailer being joined by a second in a struggle for market dominance, just as what’s occurring in the US. In the middle are more than 500 independent stores and small chains in the specialist tile and bathroomware category. The economic environment has been difficult for independents for several years now. They’re under enormous pressure as the hardware wars heat up and casualties are unavoidable. Of course there are big advantages to being an independent. Big box retailers trying to be “all things to all people” can’t possibly specialise to the same degree. Tile retail is, however, a relatively easy business to enter but a hard one to exit. Many showrooms are established by a tiler, whose back and knees have given out and who’s looking for another 15 years of income. They use wholesaler contacts to assemble enough stock to get going, learning the retail game as they go along but secure in the knowledge that purchasers still want to touch and feel what they’re buying. The trap for the unwary is that tiling is increasingly a fashion industry where consumer tastes change very fast. Many independents accrue stock that is obsolete or redundant after 12 months. Some would hold $500,000 in product that they’d be lucky to turn over twice in a year. There is an alternative for those independents and privately-held groups when they’re caught at the cross roads of selling or getting out.

wHy FRaNCHiSiNg woRkS The right franchising pathway can provide great capital growth directly related to the franchisees’ input and drive. My own company has grown to close to 100 stores nationally to become the biggest tiling and bathroom retailer in Australia and half our outlets are franchises. There are two reasons the model is working for us. 1. We have almost complete control of our supply chain. Its efficiencies include favourable terms of trade and tremendous buying power. 2. Our systems eliminate the need to carry large amounts of stock or physically handle and 134| FRaNCHiSiNg JUL/aUg 2013

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Image: Beaumont Tiles

arrange deliveries. Central distribution does that and our average franchise carries less than $50,000 of product. We move 60 semi-trailers of tiles through Australia retail channels every week. Dedicated group merchandisers and stylists keep our stores up with the latest market trends.

We respect franchisees’ ability to be their own person New franchisees can convert their stock to cash, significantly upgrade their store and own a business with a national brand that is saleable. They can establish an exit strategy, managing the business hands-on or having someone else do it for them. Of course systems for planning, accounting, IT and HR are part of a successful franchise network. We also respect franchisees’ ability to be their own person while using tools designed to help grow their business’ capital value. Brand name groups in speciality retail have the strength to compete and the marketing to compete and take it up to the competition. That momentum will grow.

Imagine working your own hours in your own successful business? That’s the life of a Swimart Franchisee “Swimming Pools have given me a lot in life… and they could give you a lot too!” Susie O’Neill – Mother and former Olympic and World Champion

If you’re tired of working long hours on the tools or in an office for someone else why not build your own successful retail & service business working on pools...with a Swimart Pool & Spa Services franchise. Swimart Pool & Spa Services are the premium operators in the pool & spa industry with more than 25 years industry experience & over 67 stores across Australia & New Zealand. We provide all the needs of pool & spa owners from spare parts & accessories to new filtration equipment & total pool & spa maintenance. As a Swimart franchisee you’ll benefit from our comprehensive training programs, exclusive range of quality products, high consumer brand awareness & successful marketing strategies as well as professional business & technical support from the best in the business. Our franchise system provides the tools for you to build a high turnover & highly profitable lifestyle business in which boredom doesn’t exist! So, if you love the outdoors & have a passion for customer service why not speak to Swimart now & find out how a Swimart Pool & Spa Services franchise could help secure your family’s future.

Call Chris Fitzmaurice on

02 9898 8608 swimartfranchise.com.au Phone

SWI2243

Glossary hELP GuidE | key TeRMS

Disclosure Document: this document provides information about a franchise system, the franchisor and the franchised business. It must be supplied to a prospective franchisee, in accordance with the Franchising Code of Conduct. Due diligence: a thorough examination of the franchise business before purchase. Franchise: 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. Franchise agreement: the business contract between the franchisor and franchisee. Franchisee: an individual who runs the franchised business using the intellectual property of the franchisor. Franchise fee: this is an up-front cost paid to the franchisor and covers the use of the brand name and operating system required to operate the business. Franchisor: grants permission to the franchisee to conduct business using its intellectual property; brand name, methods of operation and marketing. Franchise term: 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. Greenfield site: a brand new site.

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License: 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. Local area marketing: [LAM] this is marketing the franchisee is responsible for conducting in the franchise territory or designated marketing area. Marketing and advertising levy: a regular flat or percentage based fee paid into a centralised advertising or marketing fund. Master franchisee: a franchisee who is responsible for a large territory, appointing other franchisees within the territory with direct agreements, and ensuring that the franchisorâ&#x20AC;&#x2122;s systems and methods are applied. Multi-unit franchisee: a franchisee granted the rights to operate more than one franchise outlet. Not every franchise system allows for franchisees to be multiple operators. Operations manual: the franchiseeâ&#x20AC;&#x2122;s guide to operating the franchise business. The franchisor may produce several manuals for different areas of the business, and should regularly update the information. Regional franchisee: similar to master franchisees, regional franchisees operate a large territory and appoints franchisees within the area. 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 and there is no automatic right of renewal.

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Royalty: fee paid by the franchisee to the franchisor for the ongoing use of the brand and systems, management and technical support. It may be a flat fee or a percentage of sales or profit. Termination: the ending of the franchise contract between franchisee and franchisor, usually for breach of contract. Some franchise agreements allow the franchisor to terminate the agreement even if the franchisee has not breached the agreement. The Franchising Code of Conduct: a mandatory Code that governs franchising in Australia and 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). Total investment: the total amount of money a franchisee requires to set up in business. This includes the franchise fee, working capital and any equipment purchases required. Turnkey franchise: a franchise package that includes all the equipment, information and systems required for a franchisee to open up the business and start trading. Working capital: the funds required by any business to pay its costs before it starts making a profit, and as ongoing cash flow to counter any dips in business activity.

Checklist hELP GuidE | To do LiST

20 things to check before you invest Before you purchase your franchise you need to tick off all the must-do items. check the following: 1. Are you confident in the franchisor

11. What are the franchisee and franchisor obligations?

2. Have you seen a disclosure document?

12. What training is available and who pays for it?

3. Have you evaluated the ﬁnancial returns?

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

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

14. What marketing will the franchisor implement?

5. Have you worked out your operating costs?

15. Who pays for the marketing?

6. Do you know the term of the agreement?

16. What is the dispute resolution process?

7. Is the business operating from ﬁxed or mobile premises?

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

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

18. Can you assign the franchised business?

9. Are you restricted in your product purchase?

19. How can the franchisor or franchisee terminate the Franchise Agreement?

10. Are you required to reach a minimum performance level?

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

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SKIPS ON WHEELS PROVIDES A UNIQUE RUBBISH REMOVAL, NOT JUST ANOTHER SKIP COMPANY, PROFESSIONAL AND DILIGENT. ✓ ✓ ✓ ✓ ✓ ✓ ✓

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Run your own rewarding business Fastway Couriers has a number of exciting franchise opportunities available • Guaranteed income package*

• Exclusive territories

• Low start up costs

• No weekend work

• Perpetual Franchise Agreement

• Ongoing business support & training

• Recognised brand

• Easy to operate - no experience required

• Award winning system for over 30 years

• Enjoy the freedom of working for yourself

To ﬁnd out more contact us: p. w.

1300 FASTWAY fastway.com.au

*For a deﬁned period. Conditions apply. Fastway Couriers (Australia) ABN 38 057 389 769. Fastway Couriers is a franchised courier network and its businesses are independently owned.

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