Franchising Sept/Oct 2014 by Cirrus Media

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FRANCHISING

Franchising YOUR ESSENTIAL GUIDE TO BUYING A FRANCHISE | WWW.FRANCHISE.NET.AU | SEP/OCT 2014 VOL.27/NO.5

SEP/OCT 2014

GETTING THE TRAINING RIGHT, BUDGET FRANCHISES, LEGAL ADVICE

Salon

PR I N T P O S T A PPR OV E D 10 0 0 0 8121

WWW.FRANCHISE.NET.AU

AUS $6.95|NZ $7.95

SOLUTIONS FAST FOOD REPORT 6 SIGNS OF SUCCESS p.16

p.56

Tastes and trends in takeaway

What to look for in a business model

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CONTENTS COV E R STORY

12 TRENDS IN AUSTRALIA

What will we look like in 15 years time?

16 FAST FOOD GETS A HEALTH KICK Market report on the takeaway sector

24 MAKING SENSE OF FRANCHISOR FIGURES

Essential information to help you understand the financials

28 MORTGAGING THE HOUSE

60 MUNCHING ON SUCCESS

34 FRANCHISE FAILURE

68 HOME KITCHEN OFFICE

75 FRANCHISES FOR ALL BUDGETS

Can you afford this franchise?

If it happens, what do you do next?

HOW DO RESTRAINTS OF TRADE WORK? A legal look at the issues

42 DOES THIS FRANCHISE HAVE

POTENTIAL?

How to identify the promise in a business

SUCCESS IN BEAUTY

The healthy eating market reviewed

Retail: a focus on homewares

Investment options for less than $100,000

102 CAN FRIENDS FRANCHISE TOGETHER?

How two Hotondo Homes franchisees make their partnership work

106

PERSONAL TRAINING, NOT AS YOU KNOW IT A different approach to keeping fit

120 A PASSION FOR PETS

Dogue, the boutique and spa brand that has just started franchising

REGULARS

5 6 124 126 128 130 132 134 135 146

WELCOME INSIGHTS LEGALESE THE SKETCH LEADERSHIP RESOURCES GLOSSARY WHAT TO DO WHEN CHECKLIST ADVERTISERS INDEX

WHAT IS THE RIGHT LEVEL OF TRAINING FOR A NEW FRANCHISEE? Training is fundamental in a new business

50 ARE YOU FRANCHISE READY?

What to consider before you start the franchise purchase process

CHOOSING A FRANCHISE WITH THE RIGHT SUPPORT Match your needs to the right franchisor

56 SUCCESS IN FRANCHISING

Six things to look for in a franchise model

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( WELCOME )

here will you be next year? Will you be a franchisee? Perhaps you’ll be looking ahead to multi-unit ownership. If you decide that investing in a franchise is the right move for you to make at this stage of your life, it might be something you can build and develop for many years to come.

SARAH STOWE EDITOR

So where will we all be in 2020? How about 2030? While many of us may have retired there will be plenty of today’s fledgling franchisees who will have built mini empires and are still forging ahead. In this issue we take a look at what the Australian population will look like over the next decade and a half. It’s no secret that we’re an ageing population, and health will be a key concern. Today healthier food models are eating away at the fast food sector – read more about the market in our report on p16. There is more to learn about how another food and beverage trend is faring, the kiosk model. Check out our look at this retail option on p86. The benefits of a smaller footprint retail outlet haven’t been lost on chicken franchise Lenards; in this issue we investigate its new hub and spoke model, find out how Civic Video is sustaining franchise support, pick up on another new Asian cuisine franchise, and learn more about our front cover couple, the multi-unit winners Ann and Graham Thatcher.

PUBLISHER Raffael Fernandes P: 02 8484 0754 raffael.fernandes@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 GRAPHIC DESIGNER Nick Cox P: 02 8484 0622

Picking the right business for your skills, passion and investment level will give you the best start in a franchise. How do you work out if you can afford the franchise, make sense of the franchisor’s financials, spot the potential in the business? Do you know if you are franchise ready? What are the six signs of success? And what shouldn’t you do once you’re installed in your own business? We answer all these questions, and more, in this edition. And once you have consumed the information you need from this publication, turn to our other channels to stay up to date until the next magazine is on the shelves. Turn to our main channels www.franchise. net.au and www.franchisebusiness.com. au for even more information on franchising issues and specific business opportunities; take advantage of our social media presence to see how the franchise community engages (Franchising magazine on Facebook) and access advice and tips on video through You Tube.

NATIONAL SALES AND MARKETING MANAGER David Strong P: 02 8484 0905 david.strong@cirrusmedia.com.au ACCOUNT MANAGER Ben Smith P: 02 8484 0740 ben.smith@cirrusmedia.com.au ACCOUNT MANAGER Mitchell Greenway P: 02 8484 06 96 mitchell.greenway@cirrusmedia.com.au CLIENT SUCCESS MANAGER My Do P: 02 8484 0927 my.do@cirrusmedia.com.au

Turn to our other channels to stay up to date until the next magazine is on the shelves

PRODUCTION CO-ORDINATOR Tracy Engle P: 02 8484 0707 tracy.engle@cirrusmedia.com.au For subscription enquiries call customer service: 1300 360 126 ISSN: 1321-408X

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HAVE W BEFORE ABOUTS

Average Net Distribution Period ending Mar ‘14 - 7,142 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. OPINIONS EXPRESSED IN FRANCHISING ARE NOT NECESSARILY THOSE OF FRANCHISING OR CIRRUS MEDIA. © COPYRIGHT CIRRUS MEDIA, 2014

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INSIGHTS

DO YOU HAVE YOUR FINANCES SORTED? Our latest poll, which poses the question ‘Do you have the finance to invest in the franchise of your choosing?’ reveals the majority of people are not financially ready to purchase their franchise of choice.

37.16% I have the finance and am ready to sign

40.54% I need to sort my finance

20.3% I can't afford my ideal business, I have to revise my plan

YOUR TAKE ON WORKING CAPITAL A recent Franchising poll found that when it comes to working capital, people’s responses are mixed. ✱ 35.04% said they will follow the franchisor’s recommendation ✱ 34.19% stated they need to work from a formula to get it right ✱ 20.51% are confident $50,000 will see them through ✱ 10.51% plan to add it to their loan, so they will settle with whatever the bank will give them

Change at Eagle Boys Eagle Boys CEO Bruce Scott appointed Nick Vincent as the company’s general manager of retail in April, a move that signifies a period of change for the business. There is emphasis on product development, the brand’s online offering and expansion both within Australia and overseas.

years now, and it recently opened a sixth store in the country. “We are looking to open 250 stores in India in the next five years, and they will be predominantly franchised,” says Scott.

“New product development is a big focus, with a focus on new flavours,” says Vincent.

Eagle Boys has focused its attention online of late – there is online ordering, and its EDMs are now tailored to suit customer interests.

He adds Eagle Boys’ regional footprint is “very strong” and for the most part the company’s attention will remain there.

“We’ve had a nine percent increase year on year in online sales, and we send out 16 different EDMs per week now,” says Scott.

“We are looking at Perth, Adelaide, regional New South Wales and South Australia.”

The next stage of business technology will focus on store data, providing recording capabilities for international outlets as well as domestic stores to send information to the franchisor.

Eagle Boys has been operating in India with a wholly owned subsidiary for three

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EAGLE BOYS' NICK VINCENT

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INSIGHTS

AUSTRALIAN BRANDS ARE HEADING OVERSEAS

Only through adding genuine value to franchisees can we achieve our sustainable long term growth objectives. Leanne Pilkington, Laing + Simmons general manager

FRANCHISING 101: FINANCING YOUR FRANCHISE BUSINESS What are the important questions to ask before you invest. Franchise adviser and former franchisor Kate Groom suggests three key considerations in this video.

SCAN THIS QR CODE TO VIEW THE VIDEO ON YOUR MOBILE:

FIND A FRANCHISE WWW.FRANCHISEBUSINESS.COM.AU When you’re ready to source a franchise, why not check out the www.franchisebusiness.com.au site for the most comprehensive selection of franchise opportunities, searchable by price, location and type? You’ll find company news and videos there too.

BRAND BUY-OUTS

DID YOU KNOW FRANCHISING MAGAZINE HAS A YOUTUBE SITE? Visit www.youtube.com/franchiseau to view all our on-screen interviews and franchise buying advice.

Queensland based chain Burger Urge has bought the Urban Burger franchise and appointed Eagle Boys founder Tom Potter as chairman of the combined group. Brothers Sean and Colby Carthew head up the Burger Urge business.

Zambrero opened its first overseas outlet in Bangkok in July, and another five stores are scheduled to open in Bangkok within the next six months. New Zealand is set to receive six Zambrero outlets by February 2015.

ASK YOURSELF...

Laser Clinics Australia (LCA) has partnered with Archer Capital Growth Funds (Archer Growth) to drive its national expansion. LCA is set to open over 20 sites in 2015, bringing its total number of clinics to more than 50, and the company is soon to enter the West Australian market, opening its first store there at the end of the year.

Vegetarian fast food franchise, Lord of the Fries has signed an agreement that will see it open 50 stores in India within the next 10 years, if not earlier.

How can a franchise buyer judge the franchisor’s commitment levels? That’s a question we asked on the Franchise Council of Australia’s LinkedIn group. Here are some quick tips: ✱ positive feedback from franchisees ✱ unit profitability as a corporate metric ✱ franchisor investment into the business

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The Leather Doctor entered the New Zealand market in March, and it is looking to increase its footprint there. There are plans to divide the territories of Tauranga and Hamilton, enabling new franchisees to service the areas. The company’s focus is also around recruiting franchisees in the cities of Wellington and Christchurch, followed by Napier.

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INSIGHTS

TOP SECTOR COMPLAINS RELATE TO MISLEADING CLAIMS

PRDNATIONWIDE ALIGNS WITH US FRANCHISE GROUP

The Australian Competition and Consumer Commission's (ACCC) latest Small Business in Focus report highlights misleading claims remain the key complaint area for both the franchising and small business sectors.

Real estate business PRDnationwide is linking with fast growing North American franchise United Real Estate Group. The deal gives both organisations a global reach, with more than 5000 real estate professionals and 850 franchise offices in eight countries. The newly formed alliance will operate under the United PRD International sub brand.

The ACCC had 86 complaints about misleading conduct and false representations between 1 January and 30 June, 2014.

BING BOY EXPANDS IN MELBOURNE Urban Asian street food retailer Bing Boy opened four new Victorian stores in August to meet the increasing popularity of bings - or Chinese crepes - in Australia. New stores have opened in Chadstone Shopping Centre, Broadmeadows Shopping Centre, Watergardens at Taylors Lakes and Bayside Shopping Centre in Frankston. There are now 17 stores in Victoria.

You can’t allow yourself to get bogged down in every aspect of your business so having the ability to trust your team is incredibly important, former multi-unit McDonald’s licensee, Mike Bolton.

ACCOR ADDS SYDNEY CONVENTION CENTRE HOTEL PORTFOLIO Accor has signed a management agreement that will see the Sydney International Centre Convention (ICC) hotel operate under its Sofitel brand. Australian hotel owner Dr. Jerry Schwartz has signed a conditional agreement to purchase the hotel, which is to be developed by Lend Lease. Accor Pacific chief operating officer, Simon McGrath said the

company is extremely proud to be selected to manage the hotel, which is to begin construction at the end of the year. “We are thrilled that our longstanding relationship with Dr. Schwartz continues to prosper and we are honoured to manage his latest hotel project which will be one of the largest luxury hotels in Australia.” Schwartz said: “Our relationship with Accor is a long one and we believe that Sofitel branding of the hotel will help maximise the potential of the hotel asset. The luxury 35-storey hotel will include 600 rooms and what is said to be a unique and instantly recognisable architectural design. The hotel forms part of the NSW Government’s $2.5 billion transformation of Darling Harbour, and it is scheduled for completion in the second quarter of 2017. F

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hat will Australia look like in 10, 15 years time? It will be 2030 before the cohort of Australians aged 65 or older overtakes the birth rate, but our population is ageing. By 2030 this age group will have grown by 97.5 percent. The greatest section of the population between the years now and 2025 is expected to be aged between 30 and 40. ^

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Later lifers, as Euromonitor describes them in its May 2014 overview, The Global Later Lifers Market: How the over 60s are coming into their own, will represent 14 percent of the 2020 population worldwide, at 1.1 billion people. Much of the 26 percent growth predicted for this section of the global population between 2013 and 2020 will occur in China, which last year counted 231 million residents aged 60 or older. The Asia Pacific region will have the highest levels of older people – Japan now housing the most elderly with one third of its population over 60.

LET’S PREDICT Looking ahead two decades, what will Australia look like? According to the Australian Bureau of Statistics, if birth rates are low and net overseas migration is the major population driver for the next 20 years, Australia is expected to house 32 million residents in 2033. Two thirds of this population will be of working age, and there will be 55 dependents for every 100 workers. Euromonitor’s Passport Australia in 2030: the future demographic predicts the population of very elderly (80+) will have doubled from 2010 and

account for six percent of the country’s population.

new Australian in The New Australian Consumer, Citizen and Employee, part of The Future of Australian Business Trends series.

Metro areas will retain their dominance across the country though Perth is expected to outpace growth in the other cities at 58.6 percent from 2010 so that by 2030 it will have 2.7 million residents, that’s the equivalent of 9.6 percent of Australia’s urban population. Adelaide, Hobart and Newcastle will grow at the slowest rates. And the forecasts are that we will continue to be a mixed bunch, with ethnic diversity continuing. When it comes to foreign born residents, the dominance of the top six countries will be retained: UK, New Zealand, China, India, Philippines and South Africa. The greatest growth is predicted to come from China, India and the Philippines.

According to this report, three out of 10 employees currently work part-time, and the government is aiming to offer 12 percent of public servants the chance to work from home one day a week by 2020.

Australian retirees are the wealthiest in the world, with the average wealth almost doubling in one generation, due particularly to increased home ownership

HOW WILL WE GET THERE? There will be increasing mobility and fluidity in employment, despite a trend for a more educated workforce that is expected to engage in longer-term employment. Mobile, agile and digital – that’s how Accenture and The Financial Review sum up the

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The challenges of the workplace will continue to be flexible employment – late age parenting for instance means middle aged citizens will be caught with both young and old dependents – and teleworking technology will play a part in shaping the workplace. In Australia, healthy life expectancy is just over 74 years. At the younger end of the group, the under 70s have a tendency to be both healthy and active, and as part of the optimistic Baby Boomer generation Australians in this age group tend to be open-minded about innovation and new experiences. However, the authors of the Euromonitor report The Global Later Lifers Market: How the over 60s are coming into their own say, “Even in relatively wealthy markets, such as Australia and the US, the cost of healthcare for Later Lifers is becoming an impossible burden for many.

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NEXT YEAR So what are the growth sectors in business for 2015? Analysis firm IbisWorld has identified four key sectors expected to boom over the next year. Growth sectors

Revenue 2013-14 ($ million)

Revenue 2014-15 ($ million)

Growth (%)

Building societies

1,264.4

1,454.1

15.0

Superannuation funds management services

12,657.3

13,984.3

10.5

Online education

5,875.8

6,486.7

10.4

Mortgages

73,770.4

80,823.6

9.6

The demand for home ownership still exists, says Phil Ruthven at IbisWorld. "While most will be enjoying a smaller acreage, faith in owning a home remains strong across a broad range of Australian demographics, including new migrants and members of generation X trying to get into the property market."

IBISWorld has identified this increase as being driven by favourable lending conditions, declining interest rates and a suite of government assistance packages designed to help boost demand for residential property.

“In Australia, over one million Later Lifers are served by some form of professional care, either in assisted living, adult day care, long-term care, nursing homes, hospice care or home care. According to the Australian Institute of Health and Welfare, there were around 169,000 people living in nursing homes as of 30 June 2011, nearly all on a permanent basis. Seventy seven percent were aged 80 years old or older, and 57 percent were aged 85 years old or older.” When it comes to finances, the likelihood increases of over 60s working beyond their retirement age, simply to cope with the costs of living. Even in Australia 35.5 percent of the population aged 65 or more are living with less than 50 percent of the median income.

Despite this, Australian retirees are the wealthiest in the world, with the average wealth almost doubling in one generation, due particularly to increased home ownership.

MATURE SPENDERS So what will these later lifers be spending their money on? Holidays, technology, physical activity and wellbeing. ✱ Healthy living – health foods, sports equipment, healthcare are prime markets for the mature customer. ✱ Better communications – technology that allows older residents to keep in touch with family and friends will be a focus. ✱ Leisure products – items that fit in the traditional pastimes of senior citizens, SEPT/OCT 2014 | 15 | WWW.frAnchISe.net.Au

think gardening items and pet care – are joined by products like e-readers. For those less fortunate, the cash-strapped, unwell over 60s, bargain hunting is important; much of their limited funds focus on essentials such as food, health and fuel bills. In contrast fast food restaurants feature low down on the list for later lifers’ spending in the next 12 months – discount stores, savings, travel and entertainment such as cinemas and theatres will be taking their dollars. F

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Fast Food

GETS A

he healthy eater, the foodie, the working mother and the techsavvy consumer are all helping to change the shape of the fast food offer of the future as revealed in the latest report on the market. ^

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And the growing consumer awareness of the value of healthier eating looks set to continue.

the expansion of the food van model is expected to encroach on the consumer-base of existing retail outlets.

That’s according to the IbisWorld report Fast Food Services in Australia June 2014, which we reference here in this market overview.

The paucity of suitable locations in metro areas will help drive the food van option, which provides flexibility of venue, time and menu and lower rental costs. “Food vans have been a staple in other cities around the world, spreading to Melbourne and Sydney in the past few years,” the report states.

SOME KEY FINDINGS Healthy eating has driven change in the fast food sector and food offerings have been boosted with premium menu items that contain lower sugar, salt and fat levels than traditional fast food choices. Add to this an ageing population which is focused on better nutrition, and an increase in disposable incomes in the 2009-14 period, and revenue is on the rise: a decline in the share of revenue among traditional fast food operators has been matched by increased revenue in the healthier fast food categories. Younger consumers are retaining the taste for the pizza, burger, pies and fries menu, while older customers are seeking food with a perceived higher nutritional profile; the median age of the population is about 37.7 this year, rising to 38.2 by 2018. Competition is fierce in the sector, which now has new players: supermarkets and convenience stores offering a growing selection of readymeals. IbisWorld believes the greatest threat to fast-food outlets will come from the supermarkets over the next five years; filling the need for healthier, gourmet meals for time-poor customers. More women are returning to the workforce and this has driven demand for convenience meals. And within the next five years

38.5 38.0

10 5 0 −5

Year 06 Revenue

For the fast food retailers themselves, the installation of technically advanced point of sale systems has resulted in efficiency gains.

THE ECONOMIC LANDSCAPE

37.0

36.0

Year 04

Employment SOURCE: WWW.IBISWORLD.COM.AU

food industry has focused on alternative strategies to drive business, including introducing and promoting new product lines. And the trend for healthier eating has helped boost existing businesses and open up the market to new operators.

“This trend will be mainly focused on made-to-order meals, such as pizza, where ordering ahead or delivery options provide a tangible increase in convenience,” the report suggests. an impact too from that act as online portals – Menulog is example cited in the

37.5

36.5

Social media is predicted to be a major driver of customers to these mobile operators. Techsavvy younger consumers are the core demographic for the fast food sector, and the development of online and app-based ordering systems by franchise brands such as Domino’s and Pizza Hut, has made it easier and more convenient to order.

There is websites ordering a classic report.

Median age of the population

Revenue vs. employment growth

Years

% change

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Fast food is a mature industry, and there is modest growth expected in numbers of outlets opened in the 10 years to 2019

Consumers are more cautious with their spending than pre-GFC, and fluctuations in both economic growth and disposable income have had an impact on Australians’ purse strings. In response to moderate spending the fast

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Fast food is a mature industry, and there is modest growth expected in numbers of outlets opened in the 10 years to 2019. The report indicates there is a tough operating landscape due to the difficulties of site selection – population density, suitable locations and rental costs all challenges for fast food networks. Profit margins have been sacrificed for market share, according to the report which cites McDonald’s Loose Change Menu, aimed at attracting customers with small, cheap snacks, as typical of this strategy. In contrast the emphasis on products with

growing premium premium

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pricing has margins.

helped

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boost

“Industry operators have been relatively profitable over the past five years, with profit increasing modestly as a share of revenue. Industry profit is expected to continue its growth over the next five years,” the report reads. A shift towards gourmet items on a menu has been brought about by the growing ‘foodie’ culture and a focus on good quality products.

GETTING HEALTHIER Healthy eating alternatives include salad, sandwiches, sushi and juice and these have broadened the customers’ options. “Initially, industry heavyweights viewed these new fast food options as passing fads. However, over time, these new retailers have cemented their places in the fast-food market,” the report reads.

WHICH FOODS?

1.BURGERS While the burger has a strong share of industry revenue there has been a five year decline, and this is expected to continue. McDonald’s and Hungry Jacks dominate the market but the addition of premium products with grilled chicken burgers and chains such as Grill’d is widening the offer.

revenue. KFC is the main player here, but Red Rooster, Chicken Treat, Nandos and Oporto have made their mark. Growth has been slow for the specialists as other operators have added chicken to their menus.

6.DESSERTS AND CONFECTIONERY 3.PIZZAS This is the third-largest category in the fast food sector. It has proved to be a popular segment for new operators and these fresh faces in the sector have helped boost customer demand. This is a highly competitive segment with brands such as Pizza Hut, Domino’s and Eagle Boys.

4.SANDWICHES, SALADS AND JUICE BARS Consumer demand has been met with expansion of the product range in this high growth sector. Subway has forged a dominant role in the market, but other healthy option brands have carved a strong niche too: Boost Juice, Sumo Salad and Healthy Habits. [Read more about the salad and sandwich operators on p60 and juice bar trends in our special report on p86]

5.ETHNIC FAST FOOD

2.CHICKEN Chicken now accounts for almost one fifth of the sector’s

includes other non-Western menus, are a greater awareness of foreign foods and increased globablisation. It also benefits from the healthier eating focus.

Chinese, Indian, Japanese, Thai and Vietnamese cuisines are represented in this category which now accounts for 10 percent of revenue. The drivers for this segment, which

In this growing sector are ice-cream, yogurts, fruit and pastries, and the popularity of healthier options is helping boost revenue increases.

7.PIES, SAUSAGE ROLLS, PASTIES, FISH AND CHIPS Once again the consumer demand for food choices that fit with balanced lifestyles and healthier living are affecting the sales of traditional fast food. There has been a decline and “modest decreases” are expected to continue, according to the report.

The greatest threat to fast-food outlets will come from the supermarkets over the next five years; filling the need for healthier, gourmet meals for time-poor customers

HOW OFTEN DO AUSTRALIANS VISIT FAST FOOD RESTAURANTS? According to research fi rm Roy Morgan, in the three years to March 2014, 43 percent of Australian adults said they hadn’t visited a fast food restaurant within the last four weeks. Over the same period, 27 percent of people stated they had attended a fast food outlet between one and four times, which is classified as light visitation. Medium visitation of between five and nine times was recorded among 17 percent of respondents, meanwhile 13 percent went to fast food outlets 10 or more times in a four week period, which is classified as heavy visitation. SOURCE: ROY MORGAN RESEARCH; APRIL 2011 - MARCH 2014, SAMPLE N = 144,551 AUSTRALIANS 18+

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TRADITIONAL TAKEAWAY CHOICES

THE MAJOR PLAYERS MCDONALD’S AUSTRALIA = 15% MARKET SHARE YUM! RESTAURANTS = 9.2% MARKET SHARE SUBWAY = 8.8% MARKET SHARE COMPETITIVE FOODS = 6.7% MARKET SHARE

YUM! RESTAURANTS Operator of KFC and Pizza Hut 80% of stores franchised KFC started in 1968 in Australia Pizza Hut started in Australia in 1970 Revenue 2009 = $1.19bn, 3.5% change

MCDONALD’S Franchising in Australia since 1972

Revenue 2014 = $1.40bn, 2.9% change

70% of stores franchised

SUBWAY In Australia since 1988

Key initiatives include reducing sugar and salt content, nutritional labelling, new menu items

All outlets are franchised Now more outlets than McDonald’s globally

More than 90% of food and packaging is made in Australia Revenue 2009 = $1.94bn, 7.2% change Revenue 2014= $2.30bn, 3.1% change

The brand has beneﬁted from health-conscious trends Revenue 2008-9 = $901.2m, 9.5% change Revenue 2013-14 = $1351.5m, 6% change

COMPETITIVE FOODS Operator of Hungry Jack’s The company sold its WA and Northern Territory KFC stores in February this year to Collins Foods. Hungry Jack’s has focused on the quality of its burgers, with the tagline ‘the burgers are better at Hungry Jack’s.’ Vouchers and discounting have been part of the strategy Revenue 2008-9 = $828m, 29.4% change Revenue 2013-14 = $1020m, -0.2% change

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OTHER PLAYERS IN THE MARKETPLACE QUICK SERVICE RESTAURANT GROUP [est market share 3.2%]

Brands include Chicken Treat, Oporto, Red Rooster. DOMINO’S PIZZA [est market share 3%] EAGLE BOYS [est market share 1.7%] RETAIL ZOO [est market share 1.2%]

Brands include Boost Juice and Salsa’s Fresh Mex Grill. ALL INFORMATION IN THIS ARTICLE SOURCED FROM IBISWORLD FAST FOOD SERVICES IN AUSTRALIA JUNE 2014, UNLESS OTHERWISE STATED. IBISWORLD DRAWS ON INFORMATION FROM AN ARRAY OF SOURCES INCLUDING THE ABS, RBA, INDUSTRY ASSOCIATIONS, COMPANY REPORTS AND INDUSTRY CONTACTS AND ADDS ITS OWN EXPERT DATA AND ANALYSIS.

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MAKING

SENSE of the FRANCHISOR’S F I G U R E S

eople cite differing reasons for considering the purchase of a franchise. However, one thing all potential franchisees have in common is a desire to make a reasonable profit from the business. ^

TIM KILHAM Head of the franchising division and a director of Lanyon Partners Chartered Accountants

Due diligence is the process of evaluating a business to evaluate its potential. There are different types of due diligence – for example, financial, operational and legal. The purpose of gathering financial information for financial due diligence is to assist with the preparation by the potential franchisee of budgeted profit and loss and cash flow statements. It is these statements that the franchisee should use to determine whether the profit will be reasonable, whether to buy the franchise, and if so, how much to pay for the franchise.

In order for a potential franchisee to obtain the information that is required to prepare budgeted profit and loss and cash flow statements, there is much groundwork to be done. THIS INCLUDES: ✱ Speaking with existing franchisees (as many as possible) about their financial performance, and obtaining detailed financial information ✱ Looking at trends in the financial performance of the particular franchise, the franchise system as a whole, and the industry in which the franchise system operates. Will past performance be representative of future performance or are their local, national or international trends that are likely to affect performance? ✱ Assessing current and likely competition ✱ Analysis of financial information provided by the franchisor It is this last point – analysis of the financial information provided by the franchisor, and making sense of these franchisor figures, that the remainder of this article is concerned with.

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A franchisor does not have to provide you with financial information. There is a trend – probably an increasing trend – in Australia for franchisors not to provide financial information. If this is the case, the disclosure document at Section 19 will simply say that the franchisor does not give earnings information. It is the franchisor’s right to do this but, if you are unable to obtain sufficient information to enable you to carry out your financial due diligence, you can of course choose not to buy the franchise. I find it surprising how many franchisors state in the disclosure document that they do not provide any financial information, and then choose to provide “unofficial” information to prospective franchisees. This is a dangerous practice on the part of franchisors, to say the least. My advice to potential franchisees that face this situation is to discuss it with their solicitors and to consider making sure that all “unofficial” representations are recorded in writing, because otherwise there is the danger that the franchisor could later deny having made these representations.

SO WHAT INFORMATION MIGHT YOU RECEIVE FROM THE FRANCHISOR? Most franchisors are of course honest and reputable and wish to provide potential franchisees with useful information to help with financial due diligence. At the same time, franchisors are concerned that the information they provide is not used against them by disgruntled franchisees – and often by franchisees who do not have have good reason to be disgruntled with the franchisor but who use the franchisor as a scapegoat for their own shortcomings. The trend of suing franchisors is on the rise in our increasingly litigious society and franchisors have found the need to be wary about the information they disclose. I always recommend that the information that the franchisor does provide is cross-checked against other sources – information publicly available, information from other franchisors in a similar industry, and most importantly information provided by existing

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FR0914_0026

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only a guide to what you might achieve.

franchisees in the system the potential franchisee is looking to buy into.

This is why I said earlier in this article that the purpose of gathering financial information for financial due diligence is to gather information to assist with the preparation by the potential franchisee of budgeted profit and loss and cash flow statements – so the potential franchisee can determine what their results will be.

SO WHAT INFORMATION MIGHT THE FRANCHISOR PROVIDE? Information most commonly provided by franchisors in the disclosure document is actual historical results achieved by existing franchisees. The information will rarely be specific details for specific franchisees. The information will usually be an amalgam of the results of existing franchisees.

The financial information that is provided by the franchisor – be it historical results or projections – will differ from your actual results for many reasons.

Not uncommonly, the franchisor will provide information in three categories – the results for franchisees that are classified as having good financial results, average financial results and below average financial results. Alternatively, franchise performance might be classified by turnover – perhaps three categories, one for franchisees with high turnover, one with franchisees with average turnover and one with franchisees with below average turnover. In some cases franchisors will provide projections. That is, the financial information will not be based on actual historical results for existing franchisees but on projections made by the franchisor as to what franchisees can achieve. This is less common than providing historical information because the risk to a franchisor of being sued for misrepresentation is (and this is an accountant’s opinion, not a legal opinion) far greater when projections are being provided than when a summary of a historical performance is being provided. It is most important to understand that whatever information is provided, your results will be different. The financial information you are given in the disclosure document is

A franchisor does not have to provide you with financial information

One obvious reason is that the sales for your franchise will depend on factors such as the hours of operation, the area of the franchise where a physical location is involved, demographic factors, etc. Another reason is that your business structure and operating methods may be different to other franchisees. POINTS OF DIFFERENCE ✱ Financing costs – some franchisees need to borrow money, others don’t. Some franchisees might lease equipment, others might acquire it on hire purchase. So for different franchises in a particular system, the financing costs might be very different. ✱ Tax costs – if a franchise is being assessed on an after-tax basis, then the tax costs of different franchises are going to be very different. Franchisees might operate as companies, trusts, sole traders or partnerships. The tax outcomes of each of these business structures may be very different. ✱ Employment costs – some franchisees will pay themselves fair salaries and others won’t. Some franchisees will take income in the form of trust distributions. Some franchisees will have other

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family members working in the franchise, some or all of whom may be paid a non-commercial salary. All these factors mean the information you are provided by the franchisor is only a guide to what you might achieve. It is worth pointing out that a franchise disclosure document must, where the earnings information is a projection, state whether the projection includes depreciation, salary for the franchisee and the cost of servicing loans, and must also provide assumptions about interest and tax. This is not a requirement where the information provided is actual historical results of franchisees. Finally, a mention of cash flow. The information provided by franchisors is usually profit and loss based – it will be information about sales and costs, whether they are historical results or projections. What the franchisor does not usually provide is cashflow information – what a franchisee’s cash requirement likely to be. Profit and cash can be and very often are two very different numbers. To illustrate, when a franchise sells an item for $3 that cost $1, it makes a $2 profit. But if the item is sold on credit, there is no cash in the bank until the sold item has been paid for. So, the day that the item is sold for $3, there is a $2 profit, but there is also a $1 bank overdraft – the cost of the item that was purchased. When you apply this example to many businesses, which may involve purchasing stock, buying and selling items on credit, buying assets and then depreciating them etc, the outcome is often that cash in the bank at the end of any period will be very different to the profit. It follows that both profit and loss and cash flow must be considered when doing due diligence and making sense of the franchisor figures. F

FR0914_0028

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MORTGAGING THE HOUSE CAN YOU AFFORD THIS FRANCHISE

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FR0914_0029

When yo thorough investiga assessed of the bu you can negotiat with the

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NAOMI MITCHELL Partner of leading Western Sydney accountancy and business advisory practice YCG

ranchising is an exciting option for individuals looking to open their own business with the backing of an established brand, proven systems and a popular product offering. However, getting a franchise off the ground often requires a significant investment of capital on the franchisee’s part, something that needs to be taken into consideration when initially considering opening a franchise. ^

Ensuring you’re able to access adequate capital to open your business is one of the first steps that successful franchise owners take. However, this doesn’t mean you’ll need to have hundreds of thousands of dollars saved away to open your franchise. There are many other options available to secure sufficient capital to open your business, including, as an example, business or personal loans, which can often be obtained through a specialised broker. Before you consider how you’re going to finance your operations, it’s important to think about how much finance you’ll need. This should be a relatively simple process; however, there are some hidden hurdles which can catch the uninitiated.

HOW MUCH IS ENOUGH It’s important that the franchisor is transparent and gives you full access to other franchisees’ books. This will give you a strong idea of how capital-intensive your business is likely to be and the financial resources you’ll require to get going. If the franchisor isn’t able or willing to provide this information, it’s worthwhile investigating why not, as it may indicate damaged relation-

ships within the franchise network or a franchise proposition that simply isn’t likely to make money. If the franchisor isn’t able to clearly explain why this information isn’t available, it’s probably time to investigate other franchises.

You’ll need to separate the start up cost, the ongoing cost and the working capital required to continue operating the business

When going through this process, you’ll need to separate the start up cost, the ongoing cost and the working capital required to continue operating the business. This is a crucial distinction, as confusing these different business costs could lead to you under (or over) estimating the amount of capital required for the establishment and operation of the business. You’ll likely be looking at a range of figures in this process such as fixed asset costs (how much equipment is required to set up the business, what are the fit-out costs), what are the raw business costs (the costs of the business not including costs specific to individual circumstances), typical margins the business operates within and the cost of inventory. These are only a few examples and its worthwhile going over these figures with an accountant or experienced business adviser to spot any potential flaws or weaknesses in the franchise structure.

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HOW MUCH WILL IT COST Once you’ve figured out how much capital you’ll need to establish the business and how much working capital you’ll need on hand, it’s important to ensure that the business is still a viable proposition with the cost of this capital included. The ‘cost of capital’ refers to the cost of any debt (and equity) that is required to finance the establishment and operation of the business. While the cost of debt is very easy to calculate as it is likely based upon periodic repayments at a specified interest rate, the cost of equity can be more difficult to conceptualise. Simply put, the cost of equity is the return you’d expect on any equity put into the business, were you to invest it in a similar business with similar levels of risk and reward. This is a vital step that oddly enough, is often forgotten as an inclusion in the pre-opening budgeting exercise. It’s not as uncommon as it would seem for business owners to start making repayments on the loan they’ve taken to establish the business only to discover that once these have been paid, there’s not much left for them to take home. In these situations the owners have found that the cost of debt is too high, which likely means that if they’d taken the cost of capital into account (including the cost of equity) they wouldn’t have opened the business in the first place. Alternatively, it may be found that the cost of capital doesn’t have as much of an impact as initially budgeted for, meaning you can look at more floor space, a better location or more expensive equipment. I also recommend thoroughly stress-testing the cost of your financing with a qualified advisor, as reports indicate that

the Reserve Bank’s next move will likely be upwards. This will place an additional stress on the financial situation of the business, as the cost of capital increases along with your loan repayments. Extending this stress-testing to your personal finances is also a good idea, as the cost of servicing your business and personal loans will likely rise at the same time, a double-hit to your personal finances.

WHERE SHOULD YOU GO? There are many options for accessing finance for your business, from working with specialist lenders in the franchising sector, to approaching retail banks directly or accessing personal savings. I’m often in the position of cautioning people about putting their personal assets on the line in situations such as this, as I mentioned before. This is because in the event of an economic downturn, the business not performing as expected will find themselves out of not only a steady income, but losing the house to boot. Of course, there are situations where people have become successful off the back of money raised against personal assets such as their homes, but I’d caution people considering this strategy to stress-test their business plan and budget for a worst case scenario to make sure putting the house on their line is going to be worth it. If you’re in the position of seeking investment from friends and family, it’s worthwhile considering how much control they’ll seek over the venture. This can be a difficult conversation to have at the outset, but will likely save you a considerable amount of grief in the future if an investor suddenly decides they want to assist with the day-to-day management of the business

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and you haven’t clearly specified boundaries for their involvement.

IS IT WORTH IT? I’ve worked with a lot of franchises where owners haven’t spoken with their solicitors, accountants and financial planners before entering into an agreement. They often visit me once the business is losing money and they’re falling behind on loan repayments which are forcing them even further into the red. Additionally, these businesses are often set up incorrectly, resulting in tax and asset protection problems which are very difficult to undo once at that point. In saying this, I also know of, or have worked with, a number of franchise owners who have taken the time to review their situation with qualified advisers, assessed the holistic cost of operating the franchise and are now comfortably semi-retired. This is why I highly recommend taking as much time as you need and working closely with these professionals to ensure you’re completely comfortable with every aspect of your prospective franchise’s operations before you enter into an agreement. This doesn’t mean you need to be involved in intricate detail with the technical aspects of raising the capital to establish your franchise, however, it’s essential that you have a strong understanding of how much this will cost and how this will affect the day-to-day operations, and resulting profitability, of your business. By taking this time now, you will be giving your franchise every chance of success in the future and, ideally, will find yourself able to survive and prosper during the most prosperous and trying economic times. F

FR0914_0032

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WHAT TO AVOID IN YOUR

FRANCHISE

hat are the three areas hindering business growth for small to medium-sized enterprises? ^

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According to David Henderson, founder of online business CashMAXforecaster.com, the trio of behaviours that can prevent company growth are: emotional decision making, lack of attention to detail, and business as-a-hobby mentality.

1. EMOTIONAL DECISION MAKING Emotional pricing often sees owners base their prices and services structures on gut-feel with minimal evidence, fingers crossed, without considering where they sit in the marketplace. Objectivity rarely comes into the equation, suggests Henderson.

required to meet success criteria, such as calculating the benefit of what adding five trading-hours each week could mean to the business.

There’s no point in developing a business plan factoring in last year’s scenarios when the dynamics can change in a week

2. LACK OF ATTENTION TO DETAIL Yes, business owners really do need to sweat the small stuff: the minutiae of working 0 7hours 1 4 _ and 0 0 0variables _ DRB outF R the

A coffee shop has to understand how many coffees it will need to sell to be profitable, how the weather affects those sales and the influence factors of locality dynamics.

3. BUSINESS AS A HOBBY MENTALITY This attitude means a business-owner is not treating the business as that. Instead of standing back and seeing the business as an entity that must perform for profit, the shop, office or mobile unit is run on bravado or lifestyle. Friends and family are roped in, recruiting and training is poor and compliance can be negligible.

2 0 1 4 - 0 6 - 2 5 T1 4 : 4 0 : 2 0 + 1 0 : 0 0

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HOW DATA CAN HELP A business plan is your blueprint for the new franchise but it needs to be maintained and updated and having the right data to hand is essential. Before setting up, business owners must factor in to the budget their biggest cost the rent guarantee. Coupled with equipment and fit out, it’s easy to spend big upfront without factoring in removal and make-good clauses and the liability of the lease whether the business flies or fails, Henderson says. “Business success is predicated upon objective day-today analysis. There’s no point in developing a business plan factoring in last year’s scenarios when the dynamics can change in a week,” says Henderson. “It is often just small changes that are the difference between flying, flailing or failing.” F

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FRANCHISE FAILURE

FR0914_0034

WHAT TO DO NEXT

ou buy the franchise, you work hard, but for whatever reason, you end up facing a scenario where your franchise is only bringing in losses. What do you do? Can you get out of the agreement? ^

There are a number of options for getting out of the franchise agreement. However, each of these comes with its own set of risks and consequences and must be carefully assessed on the merits of personal circumstances.

1. ABANDONING YOUR BUSINESS Subject to the lease requirements, you may simply want to close the doors of your business and walk out. However, if you do that, you potentially face the following actions: ✱ The franchisor immediately terminating your franchise agreement, as the franchisor is entitled to do according to the Franchising Code of Conduct; ✱ The franchisor pursuing you for the fees it would otherwise receive during the remainder of the term of the franchise agreement; ✱ The landlord pursuing you for breaking the lease and for rent and outgoings until the end of the term of the lease; or ✱ If the franchisor is the tenant on the lease, you being pursued by the franchisor under the licence or sub-lease that you hold with them for unpaid rent and outgoings until such time as a new franchisee is secured.

2. AGREEING TO TERMINATE THE FRANCHISE AGREEMENT Franchisors may be open to negotiation to let a franchisee terminate the franchise relationship. This may mean that: ✱ The franchisor will require an exit payment; or ✱ The franchisor may, in some circumstances, offer you an exit payment to amicably part ways. In both of the above circumstances you will be asked to sign an agreement surrendering your franchise agreement from a particular date. That agreement will usually contain a release of the franchisee entity (whether corporate, trust or individual) and, if applicable, for the guarantors who have guaranteed the performance of the franchisee in the franchise agreement.

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Lawyers may be best placed to help negotiate a positive outcome in these circumstances, particularly if what is being managed is a serious dispute or potential dispute with the franchisor. In addition, if there is a threat of insolvent trading, it may be worthwhile to involve your accountant early on.

3. SELLING YOUR BUSINESS Remember that any sale of a franchised business must be approved by your franchisor. In many systems the franchisor has the right of first refusal to buy the franchisee’s business. And there are often transfer fees payable to the franchisor upon a sale of the franchisee’s business. In certain cases, the franchisee’s failure in business may be due to an action of the franchisor or misrepresentations made by the franchisor at the time of the franchisee entering into their franchise agreement. In such circumstances there may be legitimate grounds for the franchisee to terminate their franchise agreement and even recover (through legal proceedings) the funds invested from the franchisor. However, misrepresentation actions are typically difficult to prove in court and should only be pursued if there is adequate evidence.

CONCLUSION Regardless of how your franchise agreement is terminated, there will be consequences of termination, which will include, amongst others, ceasing to use and returning to the franchisor all materials containing the franchisor’s intellectual property. In many cases, there may be restraints, which may prohibit you from competing with the franchisor in a particular area for a particular period from the termination date. We recommend that you consult with a franchise lawyer prior to taking any step in exiting your franchise agreement to ensure your risks are managed and to optimise the outcome of a precarious business situation. F JANE GARBER AND ILYA FURMAN: WWW.FRANCHISELEGAL.COM.AU

FR0914_0036

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HO W TR AD

DO S

NTS O I A F TR

estraint of trade clauses are common not only in franchise agreements but also in sale of business agreements and employment contracts. In a franchise agreement, restraints are included with the intention of restricting the freedom of a franchisee (and guarantors, shareholders, principals and managers, if applicable) to engage in a particular type of business or commercial activity in an effort to protect the franchisorâ&#x20AC;&#x2122;s business from competition by franchisees both during the term of the franchise agreement and for a period after the franchise agreement comes to an end. ^

It is important to note that even though a franchise agreement may include a restraint of trade clause, the clause may not be enforceable; the terms may be reduced or the clause may be deemed void and unenforceable by a court.

HOW DOES A RESTRAINT OF TRADE CLAUSE WORK? Generally, a restraint of trade clause in a franchise agreement will prevent the franchisee (and the other parties mentioned above) from being involved, either directly or indirectly, as an owner, director, partner, shareholder, employee, consultant, representative or agent, or otherwise operating or having any interest in a

business or activity that competes with the business of the franchisor, within a certain geographical area or channel to market and for a certain amount of time.

WHAT IS RESTRAINED? Restraints will depend on the franchisorâ&#x20AC;&#x2122;s business and the nature of the franchise system; the restraint may apply: 1. To certain goods or services that compete with those supplied by the franchisor; 2. To any business that is a competitor of the franchisor; or

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FR0914_0038

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3. In relation to soliciting or selling to customers of the franchise. Whether goods or service or a business is a competitor of the franchisor will often be a matter for the franchisor to determine, in its discretion.

(e.g. five years, three years, two years, one year or six months). The reason for including alternative geographical areas and time periods is discussed below.

IS A RESTRAINT OF TRADE CLAUSE ENFORCEABLE?

WHERE IS THE RESTRAINT EFFECTIVE?

As a general rule, a restraint of trade clause is enforceable only to the extent reasonably necessary to protect the legitimate business interests of the franchisor.

The geographical area to which the restraint applies is either drafted as a particular fixed area or, more commonly, as a list of alternative areas, gradually getting narrower. For example: ✱ A certain radius (e.g. five km radius) of any other business of the franchisor (whether franchised or company owned); ✱ A certain radius (e.g. five km radius) of the territory or from the outer borders of the franchisee’s territory; ✱ The franchisee’s territory; ✱ The site or premises (if the franchise is operated from a fixed site/premises). Sometimes it will apply to a particular channel to market, such as selling through an internet site or to particular types of F R0 9 1 3 _ 0 3 9 _ CAF 2 2 businesses.

HOW LONG DOES THE RESTRAINT APPLY? Most restraint clauses apply both during the term of the franchise agreement and after the franchise agreement comes to an end. The period of time that the restraint applies after the franchise agreement comes to an end will either be:

Whether the clause is reasonable will depend on the interests of the parties and the facts of the particular case. If a restraint of trade clause is found by a court to extend beyond what is deemed necessary, the clause will be considered to be void and unenforceable or the court may reduce the application of the clause.

It is for this reason that alternative geographical areas and time periods are used by franchisors. If the restraint is ✱ A fixed period of time (e.g. five years); or argued before a court and the judge finds 0✱1A3list - of 0 8alternative - 1 5 T 1time 5 : periods 0 5 : 2 0 + 1 0 : that 0 0 the first area or period in the list

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FR0914_0039

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is unreasonable, the judge can select one of the alternatives listed and â&#x20AC;&#x2DC;read downâ&#x20AC;&#x2122; the restraint clause so that it only applies in respect of the alternative area or time period.

As a general rule, a restraint of trade clause is enforceable only to the extent reasonably necessary to protect the legitimate business interests of the franchisor

For example, if a judge held that a restraint for five years was unreasonable, the judge could select one of the alternate time frames, such as one year or six months. If the restraint has not been drafted to include alternatives, depending on the state or territory in which it is to be enforced, the court may simply hold the entire clause to be void. Once a clause is held to be void, the franchise agreement will be treated as if the restraint has been deleted.

WHAT TO LOOK OUT FOR Franchise buyers should consider, before signing the restraint, such things as: 4. Will the restraint have a potential impact on the current or prospective activities of the people asked to sign the restraint? For example, if a husband and wife are both to be signatories , but only the husband is involved in the fran-

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chised business, will the wife still be able to obtain employment without being in breach of the restraint? 5. If the parties being asked to sign the restraint already have an existing business, should there be an exclusion in the restraint for the existing business? 6. If the franchisee is signing a lease and the franchise agreement ends first, will there be problems using the site for the balance of the lease if the franchisee cannot conduct a similar business from the premises? It is important that franchise buyers carefully read any restraint clauses in their franchise agreement to ensure that they are aware of any restraint that applies to them (and their related parties) both during the term and for a period of time after the franchise agreement comes to an end. F

MELISSA HORE, ASSOCIATE, AND MATTHEW ROWE, PARTNER, HWL EBSWORTH LAWYERS.

FR0914_0042

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f you are considering purchasing a franchise, you need to address many issues but in particular carefully examine the business to assess its potential for growth. ^

Potential franchisees should be aware that usually the starting point in determining the value of a business will be in historical documents such as the financial statements. However, these documents only report on past performance and may not be a reliable indicator of future performance. Management analysis can be useful at this stage rather than solely relying on financial data in order to assess the future maintainable earnings of the business. The amount paid for the business should reflect the underlying consistency of the future maintainable earnings and an acceptable return on investment for the risks associated with the business. An analysis including strengths, weaknesses, opportunities and threats (SWOT), industry and lifecycle can all help you understand the business, the industry in which it operates and associated risks.

TEST THE DATA As part of the evaluation, test the financial data. 1. PREPARE A THREE-WAY BUDGET, WHICH INCLUDES: ✱ Profit and loss ✱ Cash flow ✱ Balance sheet Use the latest available data as a starting point and then test the assumptions to give a comprehensive outlook for the business. Adjust for seasonality and test for impacts on: ✱ Cash flow ✱ Profitability ✱ The ability to service any debts SEP/OCT 2014 | 42 | WWW.FRANCHISE.NET.AU

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DoES haVE

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2. RETURN ON INVESTMENT Once you have prepared the budget, it can then be used to determine your return on investment (ROI). Ensure you factor in paying yourself a commercial wage before calculating the ROI. It’s important to consider the taxation consequences of the purchase. Understand how to achieve a balance between plant and equipment, stock and goodwill from the point of view of taxation as each component is treated differently for tax purposes.

When you have thoroughly investigated and assessed the value of the business, you can begin to negotiate a price with the seller

Consider the structure you are using to purchase and operate the business including how it fits into the overall franchise structure, tax implications including the ability to access small business capital gains tax concessions when you sell the business in the future, and asset protection issues to mitigate risks and exposure to personal assets. Once you have reviewed the financial data, undertaken management analysis, prepared a budget and evaluated the taxation consequences and asset protection issues you need to assess the attractiveness of the business for future growth. There are several things that make an opportunity attractive and indicate that a business has potential including: 1. The total market size is large and/ or rapidly growing 2. The industry is structurally attractive with: ✱ High gross profit margins ✱ Customers paying up-front or quickly ✱ Recurring revenues/low cost of new business ✱ Barriers to others for entry ✱ The ability to sustain profitability and competitive advantage ✱ An impressive, experienced management team with a succession plan ✱ A quality customer list ✱ Reliable cash flow SEP/OCT 2014 | 44 | WWW.FRANCHISE.NET.AU

When evaluating growth opportunities look at both the current capacity and the capability of the business. Find out what stage of the business lifecycle the franchise is at and review customer demographics, products and services mix, access to capital, people and internal processes and systems to see if there is an opportunity to improve capacity. In terms of capability look at the existing skills, expertise, access to capital and adaptability to change to see if there is an opportunity to increase the capability of the business. In both cases, if there is an opportunity to increase the capacity and capability assess how much you will need to invest to make this possible and how you will transition the business in the best way possible without affecting profit. Purchasing a business is a huge financial and emotional commitment and the decision needs to be considered methodically and pragmatically. It is important not to become emotionally attached to a business you are yet to buy. If the numbers don’t stack up, be prepared to walk away. While it may be disappointing, you will learn from the experience. There will always be other businesses for sale and other opportunities that you can explore. F

ANDREW GRAHAM National head of business solutions for RSM Bird Cameron with more than 20 years’ experience.

FR0914_0046

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IS W What is the right level of training for a neW franchisee?

raining is a fundamental part of the franchise offer, setting the groundwork for a successful franchisee to achieve their goals. Essentially training needs to fulfil the skill demands of each franchise, and the complexity of the learning program reflects this. But how much training is enough for a franchisee? ^

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One advocate for a solid approach to franchisee training is Corina Vucic, director at FC Business Solutions, which provides professional and relevant training programs for franchisors, their teams and the franchise network. She is in no doubt that training, both in personal and professional development, is a contributor towards stronger business performance and productivity, and cites the statistic that 81 percent* of all Australian employers provide some training for their employees. “The key issue facing new franchisees is getting the right balance in training especially at this highly challenging period of a business lifecycle, where success and failure is at times most prevalent. Many new franchisees at this phase are time poor and most vulnerable to conflicting interests and demands,” says Vucic. Tony Larkin, group manager franchise services at the Barry Plant Group agrees. “A new franchisee should view training as ongoing and never enough. We understand that new franchisees are keen to take on the reins of the business quickly so at Barry Plant we have an ongoing 12-month rolling tailored calendar of training and interactive workshops to help ensure they are well supported in their business now and in the future.”

The key issue facing new franchisees is getting the right balance in training especially at this highly challenging period of a business lifecycle, where success and failure is at times most prevalent 1 - A KEY ISSUE IS THE RIGHT LEVEL OF TRAINING

TRAINING AND THE BUSINESS PLAN Larkin explains the training programs cover business systems and leadership through to staffing and team building. “These programs are ultimately tied back to the franchisee’s annual business plan,” he explains. These business blueprints are created prior to the new franchisee setting up their business and help to identify their knowledge gaps early on.

Potential franchisees need to always be on the front foot leading and developing their team, he advises. “It is important that the people w it h i n you r bu si ne ss do not outg row t he bu si ne ss a nd t he f ra nc h i s e. T h i s w i l l m a ke you v u l nerable to losi ng good people for g re ener pa st u re s a nd bu si ness e s t h at appea r to of fer more. “To earn your team’s respect you need to invest in yourself through training and show by example that training is vitally important,” he adds.

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Jennifer Martin, head of people and culture at Hairhouse Warehouse shares a similar philosophy. “I have found that with high performing stores, we generally see that the franchisee maximises the training on offer from the start. We ensure that new franchisees understand that link and encourage our new franchisee to view training, for themselves and their team, as a vital ingredient for business success. There is never ‘enough’ training for new franchisees – it is an ongoing process throughout the whole franchise journey.”

“Sometimes we see new franchisees want to jump in, they are driven to make the money and may have the perception that training may not be needed and therefore be placed lower down on the list of priorities for the business. We nip that in the bud early and ensure that they understand that planning, strategy and training are critical to meeting their business goals and visions.”

ACCELERATED LEARNING Registered applicants in the McDonald’s system undergo a nine month training schedule,

which franchise development manager Lilian Tartaglia explains is accelerated learning. “The training is quite intense and detailed, registered applicants take a lot from it. Quite often they are keen to finish sooner but they can’t fast track. This is at least five years’ worth of knowledge on board. It takes them from a crew person to a restaurant manager. “It’s not an option. It’s really important. We can extend their training if we think fit, if something needs fine tuning.”

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Why does such an intensive training approach work for McDonald’s? “It works because of the expectations of the brand that we have to maintain,” says Tartaglia. “Hands on training can make a difference; if you’re not in QSR it could be different. We can’t just let people walk in and work it out. “Any training is valuable. People development is important, you can have all the business acumen but you need to apply it in a new situation.” F *Australian Bureau of Statistics, Employer Training Expenditure and Practises, Australia

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ARE YOU FRANCHISE READY ?

uying a franchise has been a very rewarding experience for tens of thousands of Australians. ^

BILL LOCKETT Bill Lockett is a director of Franchise Systems Group

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But as you would with any major investment, you should be totally thorough in your planning and preparation before satisfying yourself that this is the right path for you to follow. Too many failed franchises are blamed on “franchising” and the franchisor, when better planning would have prevented failure. You need to assess yourself, your family, your resources, your advisers, the franchisor, the product or service, the franchise agreement and territory/location. You also need to assess the future - your own, your franchisor’s, the economy and trends in society generally to see where you might be in five years.

ASSESS YOUR PERSONAL SITUATION Why are you considering purchasing a franchise? ✱ You want to quit your job ✱ You want your own business with a support system ✱ It’s a way of beating unemployment ✱ You’ve been given a lump sum payment ✱ You believe in franchising Those who ultimately succeed acted on sensible business

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reasons, not primarily on personal or lifestyle reasons.

ARE YOU GETTING THE BEST ADVICE?

Consider whether this is how you’d like to spend at least the next five years, because there are alternatives:

What is your starting place in seeking a franchise? Start with broad information sources rather than specific franchise systems:

✱ Be an employee, maybe a retiree ✱ Look for a new career ✱ Start an independent business ✱ Check out government grants Buying a franchise is a serious commitment. Although less risky (statistically) than small business, it is still a major investment decision.

✱ Franchise publications provide advice, news and case studies ✱ Franchise expos - these are good places to start because each exhibitor is under the scrutinising eyes of peers. ✱ Brokers ✱ The banks’ publications ✱ Office of Small Business

FAMILY SUPPORT

WHAT IS YOUR BUSINESS EXPERIENCE?

The majority of franchise outlets are run - to some extent - as family businesses. So is your family supportive of your decision buy a franchise? Is there support for the particular franchise you have chosen? Is the family behind the decision to have your spouse as business partner? Will you be providing an employee base for family members? Also consider if this investment will result in an imbalance in family politics that you can’t withstand or reconcile if things don’t work out.

Will this investment result in an imbalance in family politics that you can’t withstand or reconcile if things don’t work out?

✱ You have no knowledge of running a business ✱ Your experience is limited ✱ Your business understanding comes from a TAFE or other course ✱ You have a relevant university degree ✱ You have already run your own business Experience is the most valuable source of knowledge, though not always advantageous when starting a franchise. Ideally the franchisor’s start-up and ongoing training teaches you all you need to know.

ARE YOU SEEKING PROFESSIONAL ADVICE? ✱ Legal advice ✱ Accounting ✱ Franchise specific ✱ Other Under the Franchising Code of Conduct a franchisee has to sign in the franchise agreement that they have been advised to seek independent advice, and have done so, or chosen not to do so. It’s always advisable to get advice from a franchise-experienced lawyer or accountant. 1. Has your lawyer approved the franchise contract? 2. Is your accountant or adviser satisfied with the figures? 3. Have you sought advice from specialist franchise consultants, who can generally advise on all these issues? F

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CHOOSING A FRANCHISE WITH THE RIGHT SUPPORT

ranchisors like franchisees go through cycles so when considering, purchasing a franchise it is good to be able to understand where the franchise is in that cycle. As franchisors expand their network, so the demands of franchisees change ^

A mature franchise will have an established structure of support that has evolved in response to franchisee needs. There should be investment in sophisticated tools to help franchisees do better business. Flexibility can be the main approach at a fledgling franchise, though, as Jane Lombard explains. Lombard is the NSW/ACT franchisee for The Franchise Shop, a broker business that develops franchise systems and helps recruit franchisees for them. “Investing in a young franchise system means that you will join a network in the early growth stages, offering you the opportunity to get in early and both contribute and benefit as the brand grows in the market place,” she says. “Often franchisors of young systems are enthusiastic and will go the extra mile to support you, as your early success if crucial to their success.” Lombard believes it is important to consider your individual needs too.

You will also want to weigh up the value proposition in regards to continual support; often as a new franchisee you will need a lot of initial backup from the franchisor

“When I have looked at purchasing a franchise, and I have owned three to date, I think it important to understand what the franchise offers in regards to support and skills and what you need to either have yourself or will need to outsource. There isn’t a right or wrong amount of support or skills on offer it is more about what you as a franchisee have and whether those things match or not,” she says. Lombard suggests a franchisor should be able to communicate their requirements. “A franchisor should be able to very clearly let you know what they are looking for in a franchisee and from that you should be able to weigh up whether or not you have the skills and personality traits that they need. If you don’t have all of them, don’t write off the opportunity,” she advises. It doesn’t mean it won’t be a good match, because you may be able to outsource the skills you lack and focus on your existing talents to build a successful business. Of course there’s always the alternative of re skilling in a specific area if necessary. SEP/OCT 2014 | 54 | WWW.FRANCHISE.NET.AU

“When it comes to support that franchisors offer, again I think it comes down to your skill strengths and weaknesses and whether they can support you and help develop your areas of weakness through training or mentoring. “You will also want to weigh up the value proposition in regards to continual support; often as a new franchisee you will need a lot of initial back-up from the franchisor until you can get your skills and knowledge to a certain level. “From there you will probably need differing levels of support, dependent on your background and your personal traits. A good franchisor will recognise that franchisees need differing levels of support at various stages of their franchisee life cycle and be able to provide those as appropriate,” adds Lombard.

WHAT SUPPORT CAN YOU GET? Before you start you will need to know: ✱ how to operate your business systems ✱ how to source customers ✱ how to conduct operations ✱ how to market your business ✱ how to communicate with other franchisees in the network and the franchisor ✱ how to comply with brand presentation ✱ how to follow health and safety procedures ✱ how to recruit and train staff ✱ how to manage staff rosters The franchisor can offer training in the franchise systems, an operations manual, help with administration, provide marketing tools and collateral, supply uniform and branding and have IT support. The real key to initial success is to find a franchisor in synergy with your needs, able to provide support that suits you, and to listen and learn as much as possible. F

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SUCCESS IN FRANCHISING Six things to look for in a franchise model

ustralian research company, IBISWorld has established 250 of what it calls â&#x20AC;&#x2DC;key success factorsâ&#x20AC;&#x2122; in business, and in its Franchising in Australia report (March 2014) it outlines the top six success factors most pertinent to the franchise industry.

1. HAVING A LOYAL CUSTOMER BASE A loyal customer base improves the likelihood that clients will become repeat buyers.

2. HAVING A CLEAR MARKET POSITION Franchisees need to follow the business structure as set out by their franchisor. With a defined market position, the business and its customers can aim for the same target market.

3. BUSINESS EXPERTISE OF OPERATORS Franchisees stand to benefit from the expertise of their franchisor, along with their guidance and leadership, in growing the business model into the future.

4. ABILITY TO CONTROL STOCK ON HAND Operators benefit from controlling stock on hand to meet client demand, reduce inventory costs and ensure adequate stock turn.

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5. ESTABLISHMENT OF BRAND NAMES Many franchises have established brand names, and people buying into a franchise license the particular product or service.

6. WORK FORCE Franchisees should ensure that employees have sufficient knowledge to provide sound advice and quality customer service.

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THE INDUSTRY’S TAKE Karim Messih, the general manager of Australian-based Mexican food chain Zambrero believes each of the aforementioned factors is important; however he adds business success will only be achieved when these elements operate as one. “Each cannot stand in isolation. It is the sum of all parts that creates the DNA of a franchise operation,” he says. Nigel Miller, the director of 24/7 gym Plus Fitness, says these factors are relevant for all businesses irrespective of whether they are a franchise or independent operation. “The added benefit of a franchise network is that the operator is not solely responsible for all of these [factors], moreover franchisees have the added advantage and sense of security that their franchisor is sharing the responsibility for many of these points,” he explains. Peter Fiasco, the franchise development manager at Hairhouse Warehouse agrees F R0 7 1 4 _ 0 0 0 _ I NX

with all six factors, and two in particular really resonate with him. “In regards to loyal customers, yes, it is a factor, and franchising is one of the reasons that customers connect to a brand. “In terms of having a clear market position, this is extremely important, and I believe that the main reason we sometimes see failure among brands in the market is that their offering is either based around a fad or they don’t have a unique selling proposition (USP). If a brand doesn't have a clear USP then the success of a business is more heavily weighted to the operator rather than there being a balance between the brand and the operator," he explains. Richard Thame, the CEO at Fastway Couriers agrees with IBISWorld’s take on what constitutes success in franchising, and believes it is important businesses change as the needs of the consumer change. “As a company, we’ve adapted dramatically over the past few years to meet the

needs of online retailers and consequently we’ve really seen this come to fruition over the last 12 months. “Brand awareness is now at an all-time high, we’ve announced new initiatives such as Parcel Connect, and we’re winning business across the country,” he says.

INCORPORATING THESE FACTORS INTO BUSINESS ZAMBRERO While he doesn’t touch on the factors specifically, to help ensure business success Messih advises franchisees: ✱ Focus on the end-customer during the entire customer life cycle ✱ Establish the right foundations, which includes systems, processes, training, communication, and strong franchise partner engagement ✱ Surround themselves with the right people – this includes staff, suppliers and the franchisor ✱ Maintain the business’ core

2 0 1 4 - 0 6 - 1 3 T1 3 : 4 0 : 0 3 + 1 0 : 0 0

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values and direction ✱ Be aware of competitors but be relentless in what they want to achieve PLUS FITNESS Miller believes the right training plays an important part in building franchisees’ customer base. “Having a loyal customer base is in large part a by-product of having a solid and reliable workforce, and having a solid workforce comes from ensuring the appropriate level of training is provided. “Failure by a franchisor to provide its franchisees and their staff with direct training as well as franchisees with the tools to deliver ongoing training, will lead to a substandard customer experience and in turn affect customer retention or repeat buying,” he explains. “This also will impact on the strength of the brand, so the lesson here is that if you are looking to buy a franchise you must ensure that the franchisor is going to provide you with appropriate training and training resources to deliver a five star customer experience.” He believes the day-to-day success of a franchise business is also dependent upon a franchisee’s ability to decipher their priorities, along with those of their staff. “This comes in part from the training and guidance provided but also from

effective, simple to use business tools and systems,” adds Miller. HAIRHOUSE WAREHOUSE Hairhouse Warehouse’s national loyalty program known as Style Club is specifically designed to build the brand’s loyal customer base. “We now have over 700,000 members, with a target of increasing this database to 1,000,000 within the next financial year. “Each store has their own database of loyal customers that they can offer promotions to. At a national level we tier the database depending on the customer’s spend and they receive different offers throughout the year according to their status,” Fiasco explains. He adds the company's loyal customers spend on average 25 percent more per transaction than the national average. Fiasco believes the business expertise of operators is also key, and approaches the point from a franchisee perspective. “When we look for business skills what we are really looking for is an understanding of business in a general sense. “We don’t expect new franchisees to know our business or to be experts in our business. We will happily teach that, but we do expect a general understanding, as we know that SEP/OCT 2014 | 59 | WWW.FRANCHISE.NET.AU

TOP LEFT: PETER FIASCO TOP RIGHT: PLUS FITNESS CO FOUNDERS JOHN FULLER AND NIGEL MILLER (RIGHT) BOTTOM LEFT: RICHARD THAME BOTTOM RIGHT: KARIM MESSIH

this will help the franchisee operate their business and pick up what it is that truly makes a business successful. FASTWAY COURIERS Thame says the establishment of brand names resonates most strongly with him as he has devoted much of his time to enhancing Fastway Couriers’ brand presence of late. “We rebranded Fastway Couriers a few years ago as I felt that there was a great opportunity to expand the company into the online retail space. At the time, Fastway had a great network, but I didn’t feel that the brand was as well recognised as it could be. “We set about rebranding the entire business. We updated the logo, the look and feel, our marketing material, our training material, our sales approach, all of those publicfacing facets of the business, and went out there and said, ‘We want to be the number one courier service provider to online retailers in Australia’,” he explains. F

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MUNCHING ON SUCCESS

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ast food franchises that specialise in nutritious, cost effective and flavoursome menu items including salads and sandwiches are snapping up their share of the market.

ABOVE AND LEFT: A LIV-EAT SANDWICH BAR

According to the Key Insights into Franchising in Australia 2012 report by Griffith University’s Asia-Pacific Centre for Franchising Excellence, retail food accounts for 18 percent of the sector, second behind retail (non-food), which has a 27 percent market share. Traditionally there has been a strong link between food franchising and fast food brands including McDonald’s, KFC and Hungry Jacks, however a number of healthier brand names are coming to the fore, fuelled by consumers’ desire to lead healthier lifestyles. IBISWorld’s Fast Food Services in Australia report reads: “Traditional fast food has declined as a share of revenue, while revenue from premium and healthy categories has exhibited solid growth.” The market research company’s specific sector report Sandwich

Shops in Australia, states industry revenue is forecast to expand by an annualised 4.9 percent in the five years through 2013-14, to total $1.6 billion. Furthermore, it is expected industry revenue will grow by an annualised 1.3 percent in the five years through 2018-19, to reach $1.7 billion. Increased demand for healthy, convenient fast food options is expected to drive the industry’s growth over the next five years, however the sector is also expected to become increasingly more competitive as new players eager to cash in on the booming health wave enter the market. This means existing salad and sandwich bar chains will need to develop ways to differentiate themselves from their competitors amid a more saturated market.

LIV-EAT SANDWICH BARS Chris Button, the co-founder of Tasmanian-based Liv-eat Sandwich Bars cites the media as contributing to peoples’ changing eating habits. “I think the main thing that is driving growth is the health industry, it seems to have its own force behind it at the moment. “There is a lot of media hype around getting fit, and I think the general awareness of eating healthily is only increasing every year,” he explains. At the same time, he has also noticed a trend where people deviate from their healthy lifestyles every now and then and indulge a little. “They splurge out knowing that they can eat something

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Traditional fast food has declined as a share of revenue, while revenue from premium and healthy categories has exhibited solid growth

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like a burger or drink some alcohol on the weekend and then revert back to a healthy lifestyle Monday to Friday,” Button says. He believes that essentially all salad and sandwich bar businesses offer the same product, so Liv-eat seeks to differentiate itself through product innovation, marketing and an inherent focus on customer experience. “If you stripped away every element of an individual store’s design, look and feel you would probably end up with similar products, so differentiation is really about presentation, packaging and marketing mixed with a more diverse offering,” Button explains. “Customers don’t just come to us to get a sandwich or salad, we offer smoothies, juices and snacks,” he adds. In saying that, salads and sandwiches comprise the bulk of Liv-eat’s business, and they are equally popular.

“The core business is still salads and sandwiches and in winter its soups as well.” Liv-eat has found a niche in catering, where Button explains business is booming. “I’d say we are the biggest corporate caterers down in Tasmania now, and that is really just through our product and business model.”

RIGHT: A SELECTION OF HEALTHY HABITS' FOOD OFFERINGS BOTTOM LEFT: A SUBWAY STORE BOTTOM RIGHT: LIV-EAT'S SIGNATURE BRIGHT BRANDING

Customers can place an order online via the Liv-eat website by simply selecting their preferred products, as well as a delivery time. “It is very convenient for office workers – they don’t have to ring around to place an order, which can be quite frustrating when they are trying to get their job done. “We have grown our catering arm 500 fold within the last two years – we started off doing $30,000 a year catering and I am hoping within the next year we will do $1 million or so. I think having a good, solid website has really helped us,” he says.

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SALADS REMAIN SUMO SALAD'S TOP SELLER

Button believes a brand such as Liv-eat offers a level of security that independent businesses cannot. “Obviously franchises are backed by research and the franchisor has put a lot of hours into getting the business’s functions to work properly. “An individual’s chances of being successful are largely increased by buying into a developed company/business,” he adds.

HEALTHY HABITS Businesses’ ability to cater to the needs of the customer is driving growth within the salad and sandwich bar market, explains Mark Buckland, managing director at Healthy Habits. “I don’t think that the factors driving the industry’s growth have changed much over the decades. When you reduce it down, quick service retail (QSR) has always existed to solve a problem for the customer.

“In a broad sense the customer’s problem has always been to access food that is convenient as well as innovative. All that has changed in recent years is the number of businesses that seek to solve the customer’s problem have grown,” Buckland adds. Buckland speaks of ‘scope creep,’ within the sector, where large QSR brands are diversifying their menus to include salads and sandwiches – areas in which they do not traditionally play, bringing with it increased competition. “Our key differentiation strategies have been around product and supply chain innovation. A relentless focus on our ‘real food, real fast’ mantra means that we are actually culling parts of our range to concentrate on core products.

Buckland says the brand’s sandwiches remain top sellers, however salads and juices are also taking off.

Our key differentiation strategies have been around product and supply chain innovation

“On the supply chain front we have made significant changes to the standard QSR supply models to bring the cost of goods down.”

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“Our key now is to develop complementarity between the offers so that we can provide customers with a true meal in the manner in which they have become accustomed through other outlets.” He says Healthy Habits’ customer base has changed within the last 12 months to include younger Australians. “A year ago I would have indicated that our product was most popular with the 24 – 44 year old age group, [however] in the past year we have discovered that age bracket has swelled to include people aged 17 to 24. “This has been an unexpected effect of our investment in product pricing as well as social media. Both have really made our offer much more accessible to customers,” he adds.

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LEFT: A SUBWAY STORE FROM ABOVE BOTTOM: SUMO SALAD SERVES HORMONE FREE CHICKEN

tious products, but also flavoursome ones that don't break the bank.

“They comprise about 80 percent of our total sales,” Baylis says.

“What we’re noticing is that people are shifting [to healthier alternatives] on the basis that they are value for money and taste good – if a product doesn’t tick those two boxes then it doesn’t work. A health related product has to meet those two basic elements of consumer demand,” he explains.

“We have been doing made-toorder or design-your-own salad options for years, however they are starting to get a bit of a resurgence – more people seem to be choosing them.”

Baylis believes SumoSalad is a unique player in the market by virtue of its proven track record as well as emphasis on product development – he and his team scour the world to uncover the latest and greatest in food.

Buckland believes it pays to invest in a Healthy Habits franchise because independent salad and sandwich bars are being squeezed out of the market – namely due to their inability to compete on price and cater to consumers’ more discerning tastes.

country,” Baylis.

“A chain like ours gives operators a real fighting chance of avoiding these two trends and enables them to take advantage of supply chain and menu innovation as well as investment in technology.

“Thirty-five percent of our total customers are male and we are seeing that figure increase, which is a very interesting trend because salads weren’t really considered a blokey type of meal previously,” he explains.

“In a franchise the franchisor can help the store owner engage with their customer through a variety of touch points that the sole operator simply does not have the time for.”

says

CEO

Luke

While females aged between 24 and 35 constitute the brand’s primary customer base, it's salads and other offerings are also gaining traction among the male population.

Baylis recognises that customers seek not only nutri-

“Our resources, geographical spread, constant focus on improving the quality and taste of our products and ability to remain at the forefront of global trends is where we feel SumoSalad’s competitive advantage lies. “We invest in research and innovation as a part of our core business ethos, and so whatever we are doing we are leading the market – we’ve been around for 11 years, so we are really entrenched in it,” he adds. While SumoSalad’s product range also includes wraps, pastas, soups, fruit and yoghurt and more, salads are the biggest seller.

He believes SumoSalad’s reputation as a trusted brand makes it a more viable option than an independent salad and sandwich bar business. “It is very difficult for a start-up to create that same degree of competitive differentiation within a short period of time,” Baylis says. He adds the brand is based around a tried and tested business model, meaning the chances of success are far greater. “We’ve made a lot of mistakes along the way and we’ve learned from those mistakes – we’ve built a very strong, robust business system. “People can learn from our mistakes as opposed to going out there and making costly mistakes themselves.”

SUBWAY According to Ben Miles, the regional communications and PR specialist at Subway Systems Australia, there has been a shift in people’s lifestyle and food choices over the last five to 10 years. “Australians have become more and more health conscious, especially when on the go. For Subway, that’s been great – customers love the huge choice and fresh veggies that we have on offer and we’re excited to see this trend continue to grow even more in the future,” he says.

SUMOSALAD Society’s emphasis on healthy eating has transformed SumoSalad’s customer base of late, opening it up to a broader range of people. “Previously we considered salad to work better in more white collar orientated demographics whereas now we are seeing it really has become accepted across the entire

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social media channels, as well as through our online catering,” he explains.

People are shifting [to healthier alternatives] on the basis that they are value for money and taste good – if a product doesn't tick those two boxes then it doesn't work

on its product offering, Miles explains. “Freshness and quality is at the heart of everything we do. One of the best things that we offer at Subway is the ability to see your sub being made right in front of you with freshly prepared ingredients, on bread that’s F Rfreshly 0 9 1 baked 3 _ 0 in-store. 8 5 _ RED been

“Subway will continue to stand out from the crowd by offering choice, freshly made subs and being a leader in better-foryou options.” The brand has also focused its efforts online in a bid to connect with customers. “We have a strong online 1 2 via 0 1our 3 - website 0 8 - 1and 3 T1 presence

In keeping in line with the belief that people are increasingly more health conscious, Subway’s more popular items are low in fat. “The subs in of fat or less some of the subs on the says.

our six grams range include most popular menu,” Miles

According to IBISWorld’s Sandwich Shops in Australia market report, Subway had exceeded more than 1300 stores by early 2014, so it’s safe to say most Australians are familiar with the brand. Apart from brand recognition, what does Subway offer people that an inde0 : 2 7 : business 0 7 + 1 0can’t? : 0 0 pendent

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“The Subway franchisee model … [includes] effective systems, fantastic marketing and a strong support network. “Subway has one of the lowest start-up costs in the industry, and the concept fits into many smaller locations that other brands can’t," Miles says. He adds the majority of franchisees adopt a hands-on approach to business. “They work in their stores most days, making subs and managing their costs. As a team, we’re focused on building sales and profits for franchisees and our rate of franchisee reinvestment is high," Miles explains. “With more than 90 percent of new stores opened by existing franchisees, the strength of our franchisees and our system speaks for itself." F

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HOUSE

KITCHEN

OFFICE

Retailers need to offer a seamless retailing experience across in-store, online, mobile telecommunications and over the telephone.” That’s the view at Euromonitor in its Home Furnishings of Australia 2013 report. Here we take a look at customer spend and trends.

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HOW TO MAKE RETAIL WORK ✱ Focus on brand strength ✱ Cater for all budgets ✱ Choose convenient, easy access locations ✱ Boost customer servicew

THE TREND TO SPEND The Australian Bureau of Statistics retail trade figures for June showed an estimated 0.6 percent seasonally adjusted increase in spending, following a 0.3 percent fall in May, and a relatively unchanged spend in April. The National Retailers Association chief executive officer Trevor Evans suggests the surprising results show consumer spending is beginning to bounce back after months of uncertainty surrounding the Federal Budget. “Retail performance had been building timidly since just before last year’s Federal Election but took a battering amid commentary on the possible impacts of the Abbott Government’s first Federal Budget,” Evans says. Australia's retail sector finished the 2013-14 financial year strongly, recovering in June from a post-federal budget downturn. Australian Retail Index (ARI) figures released by leading accounting and advisory firm BDO and pre-eminent cloudbased software provider Retail Express showed steady growth

of 4.1% in June. BDO's national retail lead partner Simon Scalzo says shoppers were quick to forget their budget concerns and return with confidence. And it's good news for the homemaker businesses. “According to the Australian Retail Index, furniture and homewares retailers experienced the greatest stability across the financial year, thanks to the activity in the housing market," says Scalzo.

SO WHAT ARE THE CHALLENGES OF RETAIL RIGHT NOW? One of the big challenges for retail has been the competition from the internet but in this sector e-retailing accounts for just 1.3 percent of customer spend. As Domini Panetta, Howards Storage World marketing manager, explains, retail challenges are not new but digital enhancements have accelerated consumer’s brand and product expectations. So retailers have had to quickly adapt to a changing digital environment, he says including having to fast-track website developments with better product information and images and ensuring Google search is optimised, allowing SEPT/OCT 2014 | 70 | WWW.FRANCHISE.NET.AU

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customers to find exactly what they search for. "Product pricing has become much more transparent, allowing both our customers and our retail competitors to easily compare pricing structures," says Panetta. Online-only competitors have become more prevalent, often stocking comparable products at lower prices. Customer access to global trends means retailers have to consider shorter product life-cycles to meet a growing hunger for new products, he says. "With greater digital developments, being able to reach and communicate with our customers has grown more fragmented. Traditional media needs to be supplemented with a wider scope of digital broadcast communications."

✱ High density living = smaller homes = compact multipurpose furniture with functions ie ipod docking stations + small and mobile barbecues for balconies

CHALLENGES ✱ Poor financial forecasting systems = slow to respond to changing conditions ✱ Poor inventory management = excess stock holding up cashflow ✱ Poor management of stakeholder expectations = reduces likelihood of ongoing support ✱ Undefined digital strategy = reduces competitiveness

✱ Economy drive = food storage items

SOURCE: DELOITTE GLOBAL POWERS OF RETAIL 2013

✱ Sustainability – organic materials

Using data to understand customer purchasing cycles will help tailor both product and communications more effectively.

CUSTOMER TRENDS Growth for Howards is centred on increasing the number of traditional bricks and mortar stores within Australia and in international locations. "Howards will also develop and grow our ecommerce service offering, our Howards at Home direct-selling retail channel and our B2B commercial offering," says Panetta. Own brands also give franchisees "a sustainable competitive advantage in the marketplace" he explains. "With high density living becoming more common, being organised and utilising the available space becomes essential. Put simply, smaller spaces need more effective storage solutions. This leads to the development of clever storage products or multipurpose storage solutions where Howards products can be used for several purposes across different rooms of the home. "Additionally, Howards research indicates that our core customers tend to be couples with children, of which, two-thirds tend to have both partners working in some capacity. This has led to our customers being more time-poor and more stressed in trying to meet their every-day demands. Hence, being organised and having the right products and organisational systems is paramount."

SOURCE: EUROMONITOR

REQUIREMENTS ✱ Access to capital = investment in technology ✱ A diligent team = well executed strategy ✱ Good management of the finances = strong supply chain, rental negotiations, logistics ✱ Good working capital management = cash flow ✱ Digital strategies, in-store experiences and value = customer engagement

LET’S LOOK AHEAD: SALES FORECAST FOR 2017 (all down from projected 2014, except outdoor living)

Indoor living $8408.2m

SOURCE: EUROMONITOR

[Kitchen = $531.7m, Dining = $676.1m] Outdoor living $741.8m Lighting $348.7m [includes lightbulbs]

TRENDS AND OPPORTUNITIES ✱ Demographics = baby boom + ageing population = customised furniture for children and elderly ✱ NBN rollout = more working from home = more office furniture

Home furnishings $9498.7m SOURCE: EUROMONITOR - HOMEWARES IN AUSTRALIA 2013; HOME FURNISHINGS IN AUSTRALIA 2013

MARKET SHARE: Home and garden specialist stores 17.6% Furniture and homewares 15% WHERE ARE THE COSTS? REVENUE

Wages account for 13.9% of revenue

Rent accounts for 4.3% of revenue SOURCE: IBISWORLD CONSUMER GOODS RETAIL IN AUSTRALIA MAY 2014

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FRANCHISES A FOR ALL BUDGETS THE PROS & CONS OF THE FITNESS INDUSTRY

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ccording to the results of a recent Franchising poll, more than half of people are looking to invest in a franchise that costs $100,000 or less.

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The findings revealed 34.55 percent of respondents have $50,000 or less to spare, meanwhile 22.15 percent would like to purchase a franchise that costs between $50,000 and $100,000.

who have a knack for customer service.

Luckily for them, there are a number of franchises out there that cost $100,000 or less; and they cover a broad range of categories, from construction and couriering right through to automotive and IT.

“The model targets 30 customer contacts a day and two new shipping customers per week. The franchisee is provided with full training including product knowledge specifically on express freight, sales skills, and business management,” she adds.

INXPRESS InXpress, the authorised sales partner for the global courier company DHL, launched in the UK in 2005 and it entered the Australian market in 2009.

“InXpress is all about selling, developing customer relationships, providing advice and on-going support.

The franchise term is five years plus five, the cost of a franchise is $49,000 + GST, and when it comes to ongoing fees, Birley says the InXpress model is win-win.

OLD IS NEW

“InXpress offers a franchise agreement averaging one per month following our country master plan on locations despite the model not being geographically specific,” says InXpress CEO – Asia Pacific, Lindsay Birley.

“This rate of growth allows us the right level of time to invest in training with new business partners while supporting existing franchisees with on-going business growth.”

Birley explains the business is great for people who want to be their own boss, as well as those

“Franchisee fees are paid on gross margin at 20 and 10 percent to support billing and collections. This means our franchisees spend 90 percent of their time building the business and less time on admin. There is no marketing levy at present as we are a sales driven system.”

The rise of retro TOP SNAP

Do you have a passion for photography and/or property? A Top Snap franchise could be a great fit. The business specialises in delivering a range of

TOP: A TOP SNAP BRANDED VEHICLE

professional photography services to customers.

LEFT: AN INXPRESS FRANCHISE COSTS LESS THAN $100,000

These include daytime, dusk, elevated and aerial photography for both residential and commercial buildings.

RIGHT: A CAR CARE VAN

So what’s an average day? “A Top Snap franchisee would primarily focus on property photography, and they will also be required to provide constant support to their clients and initiate regular local area marketing efforts from time to time,” says managing director Rob Watkin.

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Top Snap handles the production side of things, as well as national marketing initiatives, enabling franchisees (there are currently 23 operating across 29 territories) to focus on the needs of their business. “It gives them the freedom to run their photography business with flexible working hours while maintaining a suitable work-life balance. This also means that they can really focus on developing and maintaining relationships with their clients,” Watkin adds. He explains Top Snap is different from its competitors by virtue of its custom built web system, known as Photo Genie. “It helps them manage their business – key features include easy access to images, database management, centralised invoicing and online marketing tools.” The term of a Top Snap franchise agreement is 10 years plus a 10 year renewal, and the cost varies.

“Prices start at $39,950 plus an additional cost of between $10,000 and $25,000 depending on the equipment purchased,” says Watkin. “There is a seven percent franchise fee, three percent for marketing and relevant production management fees.”

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CAR CARE Mobile car detailing business, Car Care delivers car maintenance services ranging from a basic interior detail and outside wash through to a more comprehensive pre-sale detail, which is designed to prepare a customer's car for sale. A Car Care franchise is $45,000, plus the cost of a commercial van to be bought privately, says New South Wales master franchisor, Craig Peters. He says franchisees are responsible for: “All practical detailing tasks, client management and local area marketing initiatives. “We are Australia’s largest mobile car detailing business and average franchisee turnover is $1500+ per week.”

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STROUD HOMES Building business Stroud Homes entered the franchising realm in July last year, and the brand has grown to include three franchisees, as well as another two who are in the setup stage, say the company’s franchise development and support managers, Sam Hegarty and Amanda Bird. “We have had a phenomenal response from across Australia with franchise queries from Williams Landing in Victoria through to Orange in New South Wales and as far north as Townsville in Queensland.” It is a requirement that at least one of the franchise owners is licensed to build new homes, and they will work within a specific, and exclusive, franchise territory. QUICK COMPANY FACTS ACCORDING TO PETERS: ✱ Agreement term: 10 years ✱ Number of franchises: more than 100 ✱ Ongoing fees: $255.08 p/w

We have around 80 locations across Australia, plus 21 locations in New Zealand, as part of the around 450 locations worldwide

COMPUTER TROUBLESHOOTERS People with an interest in IT who have a budget of around $30,000 are well suited to the Computer Troubleshooters brand, which operates in 27 countries. “We have around 80 locations across Australia, plus 21 locations in New Zealand, as part of the around 450 locations worldwide,” Nick Roche, the company’s national director says. He explains franchisees enjoy the diversity and flexibility of owning their own business. “Most of our franchise owners are passionate about IT and enjoy the hands on involvement of running their own business and solving client IT issues.”

Franchisees will also spend their days marketing their business, networking with others in the IT industry and carrying out general business admin. “Computer Troubleshooters targets small business so our franchise owners need to be able to communicate with clients and be proactive in building their business." A franchise costs $27,000 plus GST, which includes a $4,000 local start-up marketing fund, and monthly fees commence only after franchisees have been in business for three months. “Franchise owners [then] pay $325 + GST a month in franchise fees plus a state marketing fund contribution of around $100 – each state franchise group sets the level of contribution,” says Roche. The initial franchise term is 10 years and there is an option to renew for an additional 10 years.

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“Essentially they will be able to operate the business as they please, using Stroud Homes’ house plans and buying power for better profitability, and to keep costs down for the clients building the homes,” the pair explains.

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No two days are ever the same, and franchisees typically work both on and in the business. “The franchisee is responsible for selling our homes and co-ordinating with their own team of sub-contractors to build them from start to finish, ensuring that the Stroud Homes reputation is upheld for each and every individual home owner,” Hegarty and Bird say. The pair explains the total cost of a Stroud Homes franchise varies. “At the moment the total cost is $44,900 + GST, even though it costs Stroud Homes in excess of $70,000 to set up each individual franchise.

The franchise term is five years, and the contract is renewable after that.

THE LEATHER DOCTOR The Leather Doctor was established in Brisbane in 1989 and franchising began in 1995. Its network has grown to include 56 franchisees and 61 technicians.

THE LEATHER DOCTOR DELIVERS FURNITURE REPAIR SERVICES TO CLIENTS

“The majority of work that comes to franchisees is from the commercial furniture industry. This work is secured by head office and requires no advertising on the part of the franchisee,” says CEO and director of marketing, Dean Reid.

“Franchisees pay a flat fee of four percent of their gross income on a “Each job is done onsite at the monthly basis – three percent is customer’s home or place of a service fee and one percent is a business. Franchisees are also marketing fee. The franchise fee is responsible for answering phone only payable upon the slab stage calls from customers, completing F Rconstruction,” 0 9 1 4 _ 0 0they 0 _ add. N O O Dthe L Erepair - reports 1 2on 0 1their 4 - iPad 0 8 - 2 8 T0 9 : 3 8 : 1 2 + 1 0 : 0 0 of the

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WHAT CAN WE OFFER YOU? Australia’s largest noodle based franchise chain Dedicated Franchise Support Centre team with focus on profitable development National & local area marketing campaign support Full training in-restaurant & in our purpose built training centre Innovative & exciting new restaurant design Australian owned Competitive capital entry level Successful business model for sustainable growth International expansion

Visit noodlebox.com.au/franchise & fill out enquiry form to receive an Information Kit. Or contact our Network Development Manager - Michael Standley on (03) 8851 4200 or 0416 256 338.

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ensuring enquiries are generated and converted during a technical sales process,” Edwards adds. He explains Totalspan is a proven franchise system, where everything is handled in-house and quality assured. “We design, engineer and manufacture all of our products, so franchisees have a unique advantage in the market by being connected across all aspects of the supply chain.” The initial franchise term is five years, and there is an option to renew for an additional five year period after that. The franchise fee can range from $30,000 through to $50,000. “Start-up costs vary as the requirements of individual territories can be quite different. In addition each business model is unique with much depending on existing operational structures and capabilities that may already exist.” after each job and filling in their invoices.” Reid says new franchise territories start at $55,000 including GST. “This includes all tools, materials, uniforms, training, van signage, stationary, an iPad and some initial advertising. “New franchisees must lease or purchase their own white van – depending on the model and age, this can range from $500 to $800 per month on a lease.” As with most franchises, there are ongoing fees to consider. "The franchise licence fee is $600 + GST per month. There is also a support services fee which is calculated at five percent of all commercial work that comes to franchisees via our online job system.” The term of the agreement is five years with the option to renew every five years after that.

TOTALSPAN Steel buildings are the focus at Totalspan, which is part of the wider Spanbild Group, a business that includes 100 franchisees.

TOP: TOTALSPAN IS PART OF THE SPANBILD GROUP RIGHT: A STUDENT TAKES PART IN A CLASS BY BRICKS 4 KIDZ

“For more than 20 years Totalspan has been designing and building steel sheds, garages and buildings,” says general manager Kerry Edwards. He explains the company’s focus around the Do It For Me Model (DIFM) requires franchisees exhibit particular skills and personality traits. “It demands strong financial, people and organisational leadership from franchisees in a diverse and dynamic environment. “The franchisee will need to lead the business to create presence and awareness SEP/OCT 2014 | 82 | WWW.FRANCHISE.NET.AU

What can franchisees expect in ongoing fees? Edwards says: “Our agreement provides for ongoing royalties however at this point these are not charged. "

BRICKS 4 KIDZ Educating children aged between three and 13 in a safe, relaxed learning environment is the focus at Bricks 4 Kidz. “We are passionate about children's education, the need for Australia to be a nation of builders, and delivering consistently excellent, fun experiences for kids and parents who enjoy our business,” says director Steve Bealing. Franchisees should expect to spend at least 30 hours on the business every week, he says."Their primary role is to lead the business by recruiting and retaining great instructors and staff, pursuing customers, executing marketing strategies and ensuring that all customers enjoy an excellent experience with Bricks 4 Kidz."

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He outlines a number of key characteristics the company looks for in potential franchisees: ✱ Entrepreneurial flair and a strong drive to succeed ✱ A capacity to learn, and unlearn ✱ Good people skills, especially with kids/children ✱ Resilience and a positive attitude ✱ A predisposition to the brand and its customers The franchise fee is $25,000 + GST, and Bealing says additional start-up costs typically vary between $17,300 and $52,300 + GST depending on a number of factors. “A royalty fee of eight percent of turnover is paid every month.

step of the way. “Jobs are allocated to franchisees daily via the franchisor. The franchisor receives these from customers directly and allocates them based on where they are located relative to the franchisees home location. They are also granted access to the business’s purpose designed wall chasing and cutting equipment. “It allows us to operate more safely compared to other operators, who use general purpose equipment not specifically designed for wall chasing.” The brand is seeking team players with a positive, customer-centric attitude and a reasonable level of fitness. “The franchisee is responsible for following customer plans

TOP: MOBILE SKIPS WORKS WITH BUNNINGS LEFT: AN ENVIRO CHASING BRANDED VEHICLE

"There is a contribution to a marketing fund of two percent of turnover,” Bealing adds.

and instructions and doing an accurate and quality job," he adds.

A Bricks 4 Kidz franchise agreement lasts eight years with an option to renew.

A franchise costs approximately $100,000 including a fully branded vehicle, and those that are interested in investing are invited to contact the team at head office to discuss ongoing fees in detail.

ENVIRO CHASING Franchisees that invest in an Enviro Chasing business can expect to spend their days delivering specialist wall chasing and concrete cutting services to clients at worksites of varying sizes. The business started franchising in 2008 and includes 10 franchisees. General manaer Craig Penty says the company provides support to franchisees every

The term of the agreement is five years plus another two five year renewal periods.

MOBILE SKIPS

chain, Bunnings Warehouse and director Cam Griffiths explains franchisees will be required to liaise with staff members there, as well as manage bookings. “They work with Bunnings team members to ensure they are trained in the offering,” he says. He says Mobile Skips is: ✱ A hands on business with flexibility ✱ A people’s person business ✱ A business where high service levels are critical The cost of a Mobile Skips franchise will vary according to the region in which the franchisee operates. “[Prices] range from $47,000 to $87,000,” Griffiths says.

Skip bin hire business, Mobile Skips was established in 2011, and it currently includes five franchisees.

There’s a 13 percent management fee, five percent marketing fee and franchisees will be required to pay $99 per month for trailer hire.

The company has established a relationship with hardware

The term of agreement is five years, with an option to renew. F

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ON-THE-GO FOOD BUSINESSES

ARE BOOMING

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treet stalls and kiosks have been heralded for their convenient, healthy and affordable menu items over recent years, and according to Euromonitor International’s Street Stalls/ Kiosks in Australia (November 2013) report, the sector, which includes chained and independent operators, was worth $1.3 billion in 2012. ^

According to this report Retail Food Group recorded a 22 percent share of the chained sub-sector in terms of values sales in 2012 – two of its brands, Donut King and Brumby’s GO! have a presence in the market. Fuelled by a 17 percent (from 97 to 113) outlet expansion, Boost Juice increased its brand value share within chained street stalls/kiosks by brand from 16 percent in 2011 to 18 percent in 2012, overtaking Donut King, which recorded a 17 percent brand value share. Chained street stalls and kiosks recorded a four percent value growth from two percent transaction growth in 2012; meanwhile their independent counterparts recorded a two percent value growth and two percent transaction growth.

BEVERAGES PROVE LUCRATIVE Kiosks with a beverageonly focus (hot and/or cold) accounted for 47 percent of chained outlets, up from 46 percent in 2011, the report indicates.

ILLUSTRATION: MICHAEL BEVAN

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Across the entire street stalls/ kiosks sector, in 2012 drink sales represented 42 percent of foodservice value, up from 32 percent in 2007.

WHY? ✱ Innovative menu items ✱ Affordable ✱ Higher margin items = more profitable for the operator ✱ Convenient offerings that can be enjoyed on the go

THE RISE OF RETAIL In 2012, 47 percent of chained kiosks were located in a retail environment, enabling them to leverage off the high level of

Beverage-only operators are expected to drive much of the growth within chained street stalls/kiosks over the forecast period

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2012 CHAINED STREET STALLS/KIOSKS: 947 OVERALL STREET STALLS/KIOSKS: 4,268 FORECAST SALES: NUMBER OF TRANSACTIONS (CHAINED): 61,580.4 FORECAST SALES: NUMBER OF TRANSACTIONS (OVERALL): 223,599,9 FORECAST SALES: FOODSERVICE VALUE (CHAINED): 396.2 MILLION FORECAST SALES: FOODSERVICE VALUE (OVERALL): 1,261.6 MILLION

foot traffic typical of shopping centres/malls. ✱ Higher visibility ✱ Leverage off people’s impulsive snack or beverage purchases ✱ People are swayed by familiar brands The category’s performance tends to mirror that of the retail sector – its growth slowed over the latter part of the report’s review period, which correlates with Australia’s less than favourable retail conditions.

CO-BRANDED SITES Co-branded retail kiosks are on the rise – examples include Pacific Retail Management, which operates a “Back-2-Back” store model for its Go Sushi and Kick Juice brands. BENEFITS: 1. One lease with potential revenue from two stores

2. Staff can work across both according to peak periods 3. Savings in overheads

AFFORDABLE Average unit price of A$5.64 per transaction in 2012 (a one percent decline from 2011) CHARACTERISED BY A LOW SPEND YET GENERALLY REMAINS PROFITABLE ✱ Low rent ✱ Low overheads ✱ Low staffi ng costs ✱ High traffic locations ✱ Limited range, high level of traffic

MOBILE COFFEE The combined outlet share of mobile coffee operators such as Cafe2U, Cappuccino Xpress and Xpresso Mobile Coffee within the chained stalls/kiosks market grew from 19 percent in 2007 to 27 percent in 2011.

KEY CHARACTERISTICS: ✱ Revenue per outlet remains low ✱ Acceptable considering the absence of rental costs ✱ Tend to attract franchisees looking to reduce working hours Drive-thru coffee operator, Muzz Buzz represented 5 percent of chained street stall/kiosk outlets at 49 locations in 2012

BUBBLE TEA Bubble tea chains Easy Way and Chatime, which specialise in Taiwanese-style chilled tea beverages are on the rise. The report reads: “The strength of these chains is not necessarily their high concentration in their inner city heartlands but their nationwide expansion to more regional retail locations,” the report reads. Chatime doubled its value share within chained street stalls/ kiosks to 2 percent in 2012. Easy Way represented 3 percent

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of chained street stalls/kiosks outlet numbers in 2012.

WHAT CAN WE EXPECT? Innovative menus, particularly those that offer healthy items at affordable prices will prove popular within the sector. Chained street stalls/kiosks are anticipated to record a stronger performance than independents over the forecast period ending the year 2017. Beverage-only operators such as Boost Juice, Easy Way and Chatime are expected to drive much of the growth within chained street stalls/kiosks over the forecast period. Food traffic in shopping centres/malls is expected to continue to decline due the rise of online shopping, which could impact on brands that play in these spaces. F SOURCE: EUROMONITOR INTERNATIONAL STREET STALLS/KIOSKS IN AUSTRALIA NOVEMBER 2013

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SUCC

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SUCCESS IN BEAUTY G

raham and Ann Thatcher opened their first Ella Baché salon in the Brisbane CBD in 2004, and 10 years on they’re still passionate about the business – it’s just grown a little.

The couple has expanded their empire to include five salons which collectively employ a total of 42 staff, and they were recently named Multi-Unit Franchisees of the Year at the QLD/NT FCA Excellence in Franchising Awards. Graham and Ann, who both hail from corporate backgrounds, began to explore the world of franchising after Ann in particular sought a career change. “Even though we wanted to go into business for ourselves, we didn’t want to invent a brand – we were looking for something that already existed,” Graham says. “We weren’t specifically looking for a beauty business; however we were looking for a business that Ann could move into – she specifically wanted to move into a new direction.” In the early stages this meant Ann would devote all of her time to the couple’s new business, meanwhile Graham retained his nine to five position, attending to the business at night and on weekends. “Around the time our fourth salon opened we decided the business was getting too big for

You are a slave to your business and you have to be, you have to be switched on 24/7

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TOP: GRAHAM AND ANN HEAD UP FIVE SALONS BOTTOM: ANN VALUES EACH AND EVERY ONE OF HER STAFF MEMBERS

the salons at least once a week, however sometimes I might be in one salon four days a week – it just depends on what’s happening.

Graham adds each salon has its own manager, enabling the pair to operate the business remotely.

“We have a managers meeting every week where we all sit down and look at the week that was and the week that is going to be,” she explains.

“Our business allows us to get away somewhat, but that’s because we’ve set it up that way.

A 24/7 COMMITMENT Ann admits switching off from the business is definitely a challenge, and says it’s important to be passionate about the brand in which you invest.

me not to be fully involved in it,” Graham recalls.

IDENTIFYING A NICHE Ann opted for a beauty business because she felt there was a shortage of salons that delivered quality services to clients in the Brisbane CBD. “As a CBD worker who was busy in their job I didn’t really feel there was an opportunity for me to visit a salon that was reputable and available at the times that I needed it – there were salons here and there but they didn’t really appeal to the corporate client. “I felt that there was an opportunity to offer corporate clientele great treatments in a time frame that works for them, which is why we are open from 8am until 7pm,” she says. The pair explains the Ella Baché brand was appealing for a number of reasons. “We felt there was a good structure there – they have a good reputation and have been around for a long time,” Ann says. “While they’ve been operating in the Australian market for 50 years Ella Baché is still owned and operated by the original family, it is a family business,” Graham adds.

“That very much appealed to us as opposed to getting involved with another corporate entity. Over the past 10 years we’ve built up a really strong personal relationship with the family and I think that’s been one of the positives for us as far as being a franchisee is concerned.”

COMPLEMENTARY ROLES Graham and Ann have clearly defined roles within the business – Graham handles back-of-house tasks, meanwhile Ann’s focus is very much front-of-house. “We are often asked ‘what’s it like to work with your husband or your wife?’ and for us it works really well,” Graham says.

“We are very busy, and while we try and switch off when we can it’s just not reality. "I think as a franchisee you have to be aware of that – a lot of people think ‘oh I will be my own boss and I can do what I please,’ but honestly you are a slave to your business and you have to be, you have to be switched on 24/7," she says. “We have a great lifestyle, we try and get away on an overseas holiday once a year, and that just gives us an opportunity to refresh, however we still work on the business while we are away. I don’t think you can make it work and not be 100 percent passionate about what you do, because if you’re not then it’s hard work."

“I am very much involved in the administrative side of the business; I manage the books, the marketing, the maintenance, the repairs and the targets and figures,” he adds. Ann is responsible for devising rosters and managing staff, interacting with clients, placing product orders and more. “Basically I am there to support our managers in any way that they need to be supported, which is a full time job. I visit each of SEP/OCT 2014 | 92 | WWW.FRANCHISE.NET.AU

"As long as we have internet access we can still do what we need to from a remote perspective.”

CHALLENGES: INITIAL AND ONGOING Given their prior experience Graham and Ann were confident they would be able to operate a small business. “We went in thinking we would be able to do it quite easily because of our backgrounds, and I guess from a business perspective we do come with a lot of experience, but the beauty industry itself comes with its own challenges, so in the early days we had to work out how to manage those challenges,” Graham explains. “We had to learn to surround ourselves with good staff, good people and so on.” Taking on a second salon within 12 months of opening their first was no doubt quite a test, however looking back the pair wouldn't change a thing.

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“Often people get really enthusiastic about starting their own business but I think it often falls down because they don’t have the experience or the skills to manage the admin side of things.” TAKE A STEP BACK While he recognises it’s a cliché, Graham believes it is vital franchisees work on the business rather than work in it day in, day out – it enables franchisees to focus on business growth.

It's about keeping the service levels up and being one step ahead of our competitors all the while trying to make the numbers work, where we put a great treatment together and the return on investment (ROI) is where it needs to be

“You’ve got to take these opportunities when they present themselves, but going into our second salon with less than a year under our belt was challenging and we had to work really hard to make it work,” Graham recalls. More recently, the couple’s biggest hurdles revolve around recruiting and retaining staff, as well as penalty rates. “The way the new modern Award works – it is very much in favour of the employee, especially around penalty rates,” Graham says. “We have to have the correct amount of girls on to service the clients that we are going to have in, which means we need to predict how busy we are going to be on a particular day to ensure we don’t have somebody getting paid double time on a Sunday where there are no clients booked,” adds Ann. The pair recognises a good, solid team of employees is key to their business’s success, and they strive to accommodate the needs of each and every one of their staff members. “Keeping the girls happy is our job; we really need to make sure that we are switched on with

our girls to see where they want to go with their careers and whether we can accommodate that within our business. From our perspective, with five salons and over 40 staff there is always going to be an opportunity for somebody that wants to achieve great things,” Ann says. “We really need to make sure that we are listening to what they need and we try to ensure that they are given consistent rosters.”

TIPS FOR ACHIEVING SUCCESS IN FRANCHISING YOU NEED TO HAVE PASSION Passion for the business is a must, Graham says. “It’s the first and most important thing.” ENSURE YOU’VE GOT THE RIGHT SKILL SET He says business experience is also desirable. “People really need to have some business background and training in how to manage the business’s accounts, books, profit and loss statements and that sort of thing.

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“You’ve got to be able to give yourself enough time to think about strategy and where your business is going – if you don’t have that opportunity then all you are doing is looking after one customer at a time. “Because Ann and I are both in our business it gives us the opportunity to do both – one of us can strategise while the other one is hands on,” he explains. CHOOSE THE RIGHT PARTNER While franchise partnerships aren’t for everyone, and not all husband and wife teams work when it comes to business, Graham and Ann attribute the business’s success to their partnership. “I think about the business from a customer point of view whereas Graham thinks about it from a numbers point of view, so we work together to ensure that what we are trying to achieve in our targets isn’t going to disadvantage our clients in any way. “It’s about keeping the service levels up and being one step ahead of our competitors all the while trying to make the numbers work, where we put a great treatment together and the return on investment (ROI) is where it needs to be,” Ann explains. “A lot of our success is based on the fact that we are working together,” adds Graham. F

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Fast food takes on a new meaning at

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new Vietnamese food franchise is taking over Melbourne one banh mi at a time – enter Ba’get. ^

As its name suggests, the casual dining concept specialises in banh mi, otherwise known as the Vietnamese baguette, as well as vermicelli bowls, a gluten free alternative for the health conscious.

“We’ve made sure that everything is authentic; we travelled really widely throughout the Mekong Delta to make sure our banh mi is similar to or almost exactly the same as what you would get there,” he says.

CEO Duy Huynh told Franchising he and his team initially planned to focus solely on banh mi; however feedback from friends prompted them to include a second product on the menu.

“My grandmother used to sell banh mi in the Mekong Delta and my father sold them as a 10 year old, so there is a long family history there as well.”

“There was demand for a gluten free option so we experimented with gluten free bread, however it failed to meet the standard that we wanted.

There are currently two company-owned Ba’get stores operating in the Melbourne CBD, and Huynh is keen to grow the business.

“The vermicelli bowls use the same ingredients as the banh mi and they are both really delicious and absolutely authentic,” he explains.

“We would like to see Ba’get stores throughout Australia, I think it is a pretty desirable product and I think it’s definitely got a place in the Australian food scene,” he says.

The decision to celebrate both products’ authenticity stems from Huynh’s heritage, as well as scepticism surrounding fusion food. “I think sometimes fusion food can go a bit crazy. If you are going to call something a banh mi it needs to be true to its origins.

GROWTH EXPECTATIONS

“We’ve got a target of 50 stores over the next five years, and we are going to focus primarily on Melbourne in the first 12 months and then travel up the eastern seaboard to Sydney, Brisbane, Adelaide and maybe Perth – there is a

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TOP: A BA'GET STORE BOTTOM: BA'GET SPECIALITY, BANH MI

We've got a target of 50 stores over the next five years, and we are going to focus primarily on Melbourne in the first 12 months

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good food scene there that is sometimes under-catered for.” Huynh is looking to grow the brand at a steady rate, and the company has employed a specialist franchise recruitment manager to ensure the most suitable people join the business. “Our plan is to grow quite organically and not try to push it [growth] too quickly in the beginning. “We’ve got a recruitment manager who is really good at profiling people and identifying the right candidates. "We are going to be very careful about who we take on and will ensure that their profile fits the business, because we want all of the stores to be a great success,” he explains.

Ba'get is designed to be a place where customers can grab their meal and either eat it in-store or take it away to their office

THE MODEL There are two key store concepts – the Elizabeth Street store is spacious and offers more of a restaurant feel, meanwhile the Russell Street stall is a little smaller and the atmosphere more casual. “We wanted to demonstrate that both models work really well,” he says.

“Ultimately we want people who love the product to begin with, that’s probably more important to us than any other aspect. We want to wait for the right people to come in rather than say ‘yes’ to everybody that wants to be involved.”

Despite their differences, both models operate predominantly around the takeaway model. “Ba’get is designed to be a place where customers can grab their meal

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and either eat it in-store or take it away to their office – it is a quick turnover model.”

WHY INVEST? Huynh believes the Ba’get business is a cut above the rest for a number of reasons, from its product offering to the business model and training program. “Vietnamese food is right on trend at the moment – people are more health conscious now and Vietnamese food in general is quite healthy and tasty, so we’ve 0 3edge 1 4 there. _ 0 0 0 _ VI P 1 2 gotFaRreal

“We are on the wave of this new trend in fast food, where people are looking for something a little bit more exciting and interesting – I think Ba’get caters to that need. “Our products are easy to make – they are made to order and really appealing as an item," he explains.

“Franchisees can be absolutely confident that we are not making things up as we go, there is a real formula behind the whole process.” Huynh’s background is in corporate training, and he has devoted much of his time to the business’s training program, which caters to franchisees and their staff.

Huynh’s family has more than 20 years of experience in the hospitality industry, and he says both the product and model are tried and tested.

“The training program works really well, it has been trialled over our first two stores so we know that it is effective – new staff are trained in the same way to ensure 0 1 4 - 0 2 - 2 1 T 0 9 : 2 1 : 3 7 + 1 1 : quality 0 0 and consistency,” he says. F

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otondo Homes franchisees Adrian Willingham and Brenton Simpson prove franchise partnerships can work.

CAN FRIENDS FRANCHISE TOGETHER?

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Adrian and Brenton are Ballarat locals, both have backgrounds in the construction industry and they are long term friends. The franchise is a family affair, too. Adrian and Brenton head up the business with their wives Amira and Lisa.

A PARTNERSHIP BASED ON RESPECT The pair immediately realised their business would perform at its best if they worked together to achieve a common goal. “We each have our own area of expertise and we respect each other’s skill set, so we don’t step on each other’s toes,” said Adrian. “We also forget quickly. If we have an argument, we just resolve it and move on. At the end of the day, we both want the same thing.”

We each have our own area of expertise and we respect each other's skill set, so we don't step on each other's toes A SIMILAR WORK ETHIC

can improve the business and how we can motivate our staff. We have a shared passion and that definitely keeps us on the front foot,” Adrian explained.

It also helps that Adrian and Brenton are equally passionate about the business. “We’re both really driven guys, so if it’s not right, it’s not right, and if it’s not good enough, it’s not good enough,” said Adrian.

“We don’t stop thinking about how to better the business,” added Brenton. “And if we come up with a more efficient way to do something, we implement it.”

The pair are constantly working on ways to improve the business, whether it be through the implementation of new workflows or strategies to boost employee morale.

Brenton added they trust one another. “It’s comforting to know that if I take a day off, that I can leave Adrian in charge and know that things are being taken care of “We strive to challenge ourselves all the F vice R0 9 1 4 _ 0 0 0 _ BEG 1 2 0time. 1 4 We - 0 8 - 2as5 aT team 1 5 : about 0 2 : ways 3 5 + we 1 0 talk and versa.”

THE SAME MOTIVATIONS Adrian and Brenton sought out the brand for the same reason – to support their families. : “We 0 0 joined Hotondo Homes to give our

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children the best possible life we can,” said Lisa. “In terms of juggling work and family life, it has been tough, but things have definitely improved.” “We work hard at managing the demands of the business and family life, but work isn’t a chore. “We definitely don’t wake up not wanting to go to work or dreading the thought. Brenton and I certainly spend a lot of time talking about building homes – so it’s definitely a passion. It has to be,” she added. “We had to put in hard work and it’s finally paying off,” said Adrian. “We no longer have to work weekends. We have hired a fantastic team that we feel confident about leaving in charge, so this has allowed us to spend some quality time with our kids.”

initial stages right through to the present. Adrian and Brenton were assigned a sales and operations manager when they joined the business two years ago, who along with the company’s national sales manager helped them with a recent move. “[They] gave us a lot of good advice when we were choosing the ideal location for both our display home and shop front. “Obviously they’ve had a lot of experience in knowing where the best sites are in order to get the most traffic, so it’s always good to get their input,” the pair said. Brenton praised the business model, a reflection of the brand’s set of tried and tested systems and procedures. “The Hotondo Homes business model makes it easy. “It’s all set out for you, so instead of winging it, which is what we had a habit of in the past, there is a process that we follow,” he added.

television advertising, enabling them to focus on running the business. “We continue to be impressed by what the marketing team present, and not having to worry about it is an added bonus,” they said.

FRIENDS FOR THE LONG RUN It seems friendship paired with business works well for Adrian and Brenton, who are pleased with how the business is tracking and are optimistic about the future. “Last year and this year have been awesome,” Adrian said. “Last financial year we reported 30 jobs, we have moved to a new shop front and opened a new display home. Two years ago if we were told that we would be running these kinds of numbers, we wouldn’t have believed it.”

They have established firm goals for the business over the next five years. The backing and support of the Hotondo “Now we have set the eventual goal to Homes brand has helped to ensure the Hotondo also takes care of national comfortably build 50-60 homes a year," F R 0 running 1 1 4 _ of 0 0the 0 business, _ U N I from 1the 2 0marketing, 1 3 - 1 1which - 1 5 includes T 1 2 : radio, 0 9 : press 5 6 +and 1 1 : added 0 0 smooth Adrian. F

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PERSONAL F TRAINING,

itness Enhancement CEO Scott Hunt is changing the perception of the personal trainer one client at a time. ^

In fact he believes people who fulfil the traditional personal trainer stereotype aren’t suitable for the business.

NOT AS YOU KNOW IT

“If they live at the gym and they’ve never had a beer in their life they are probably a terrible personal trainer for us because they can’t relate to the client,” he says. “The best trainers are not gym junkies; they are caring and have a passion for leading a healthy, happy lifestyle – existing franchisees have backgrounds in teaching, counselling, aged care and so on.” Hunt outlines the five key traits he looks for in a franchisee: ✱ A positive outlook ✱ Energetic ✱ Likes helping people ✱ Likes being active ✱ Healthy

A UNIQUE OFFERING Hunt established the business in 1999, and in that time he’s fine tuned the model to ensure it is suitable for franchising. “I think that’s a big selling point compared to a lot of franchises, where the day they open is the day they franchise. We’ve tried and proven the model, we ran our existing company just like a franchisee would so there are no double standards,” he says. The focus is around private personal training sessions, and Hunt reiterates the business is far removed from the traditional gym concept. “We are a 100 percent private, personal training business – no one can offer privacy like we do. We are an appointment only personal training studio." Hunt believes one-on-one sessions delivered in a private environment are more effective than gyms. “People get results from having a trainer that actually cares, not from having the latest piece of machinery at a gym. Our best success story lost over 100kg with us – that was a lady who had failed repeatedly at SEP/OCT 2014 | 106 | WWW.FRANCHISE.NET.AU

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CEO SCOTT HUNT DELIVERS A PERSONAL TRAINING SESSON

STUDIO Studio franchises, which resemble bricksand-mortar locations, cost between $130,000 and $190,000, which Hunt says is a third of the cost of a 24/7 gym. “They have three separate, 100 percent private training rooms, which means it’s just the client and their personal trainer, no-one else is allowed in – there won’t be a stranger sweating right next to them.” Hunt says the company’s emphasis on privacy encompasses a number of other qualities. “It’s about all the other things that come with that 100 percent private phrase, including personal attention, respecting the customer and being focused on their goals.”

gyms because no-one cared and she didn’t feel comfortable in that environment. “The vast majority of people don’t go to gyms and enjoy it, I think about 20 percent of the population have a gym membership and only about five percent actually use it,” he says.

TRAINING He believes that unlike personality traits, skills can be taught, and the company facilitates training for franchisees who do not hold the relevant personal training qualifications.

THE MODEL There are two franchise models on offer – mobile and studio. In both instances, franchisees can opt to deliver sessions on their own, hire staff to facilitate the sessions or a combination of both. MOBILE The mobile franchise costs between $20,000 and $30,000 and as its name suggests, enables franchisees to travel to different locations to deliver personal training sessions. “It is extremely cheap compared to any other fitness franchise out there,” he says.

“We teach franchisees the skills required to become a personal trainer, and they can also get qualified through us for an extra $3,000.”

There is a massive niche for people wanting personal trainers in their own home, and the advantage people get with us is security

“The package includes absolutely everything franchisees need to run a fully operational business, from equipment to marketing, and there are options for franchisees to grow their business bigger and bigger.”

He says prior experience working in the industry isn’t important whatsoever. “They do, however need to have a background in keeping fit and healthy – if someone has never stepped foot in a gym in their life or have never worked out, they probably aren’t for us.”

EXPANSION Fitness Enhancement spans Brisbane and the Gold Coast, and it recently signed an interstate franchisee in Melbourne, with more to come. “We want to be Australia wide within the next few years and we obviously want to recruit franchisees, but the big thing for us is having happy franchisees who deliver successful results to clients.”

Sessions can also be conducted at the client’s home, where Hunt says there is high demand.

He adds the business is tracking well financially. “Every year we grow, we’ve been doing that pretty much since we started.”

“There is a massive niche for people wanting personal trainers in their own home, and the advantage people get with us is security – when you invite someone to your own home you want to call a reputable company that has been around for a long time.”

Opportunities in other Australian states are currently available, and Hunt says there are great deals on offer for people who register their interest now. F SEP/OCT 2014 | 108 | WWW.FRANCHISE.NET.AU

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HOW CIVIC VIDEO IS SUSTAINING ITS FRANCHISEE SUPPORT

he business of home entertainment has changed dramatically. When Civic Video started its trajectory into retailing film, there were two formats available – VHS and Beta. The first major development was the dropping of the Beta option, followed by the introduction of DVDs in the early 2000s, then the high definition format Blu-ray. ^

“Technology has had a dramatic effect on the industry. The point of difference is equipment and releases, and staff who can give advice,” CEO Rod Laycock points out. Now the franchise chain, driven by customer demand, has moved more into snacks and accessories to go with video equipment. “They have become one-stopshops,”he says.

The advances of digital distribution are not the only challenges faced by a video store franchisee – there’s also the issue of piracy: 35 percent of film product is pirated, he says; if and how that is controlled by the internet service providers themselves is a bigger issue but it does affect rentals. While the video retail business has been written off by many, Laycock believes the sector still has some life in it. And he

cites the situation in the music industry: “Music is different, but we still buy CDs. There will always be a demand for physical product. The video store is still the easiest way to access and play movies. There will always be a demand, though it is diminishing.” Laycock says “The theme of our last conference in 2012 was ‘last man standing’. We recognise and can’t stop the demise but we can make sure the stores that are closing are not ours. “If you’re the last left,” he suggests, “you get a new lease of life.” What hasn’t diminished is the power of wet weather to drive consumers into the stores: a 50 percent increase in rentals is standard for rainy weekends, he says.

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The video store is still the easiest way to access and play movies

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On the other hand, competition for the outlets comes from how people use their spare time – sunny days, internet use and television choices all have an impact.

who don’t need full service support (think IT, branding, operations support and marketing) but can benefit from the united buying power of the group.

“The family has splintered its viewing habits so our role is to remind people how good it is to sit together and watch a movie. Then the source becomes a choice – store, vending machine or digital?”

“Brand is important in this sector but not as important as location,” says Laycock. Being in the centre of the community is vital; a video store needs to be convenient and situated where customers can easily stop or park the car.

A typical, well-stocked video outlet will have between 12,000 and 15,000 titles on its shelves; vending machines have about 200, Laycock says. But beyond choice and rental price, service is a key consideration. Some people just prefer to deal with staff who know the product and can offer advice and recommendations, rather than using the more impersonal vending option.

FRANCHISE CHOICE Civic also runs the MovieHQ network of independent video store operators, an investment F R 3 9 3option 1 _ T that u r suits n e r those F r epeople e ma

It is summed up in the acronym for delivering success at Civic – CAVE: convenience, availability, value, experience.

FRANCHISEES TO BENEFIT FROM FRANCHISOR FOCUS But with a declining sector, how can Civic maintain its services to existing and any incoming franchisees?

“We decided to keep the team intact and offer services to other franchisors. How do they grow their infrastructures? We can provide that for them at a fraction of the cost of them duplicating the resources we have. “Franchise support is sustained but serves our clients as well. At the moment we can absorb the demand but we will expand the team.” Laycock expects to increase staff numbers as the client base expands. Franchisees in the network will continue to run their businesses as long as they are profitable, he says. A handful of franchisees run combined convenience stores and Civic Video outlets but for most the focus will remain on the niche market.

Laycock says the decline will level out but he has addressed this issue by looking to “We are already quite diverse. We do another field entirely – the management what we do well and will continue to and support services the group can provide do that.” F -to other 1 franchisors 2 0 1 4 - 0in4 other - 1 7sectors. T1 1 : 5 7 : 3 6 + 1 0 : 0 0

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1800 683 928 | www.tfqlawyers.com.au SEP/OCT 2014 | 111 | WWW.FRANCHISE.NET.AU

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A new model at Lenard’s

hicken may be the favoured meat of Australia but there is still plenty of opportunity to get more poultry on to our plates believes the team at Lenard’s.

The capacity to make a profit out of poultry that comes in one door and exits another boned, cut and transformed into customer-friendly chicken meals for retail is at the heart of the Lenard’s empire. When the business introduced the simplified production process Easy Cuts, it enabled franchisees to shrink their store footprint from 75 sq m to 35 sq m – and with it the rental costs. Lenard’s has most recently introduced a Hub & Spoke format into its retail network, and company stores that have joined the model have seen increased turnover, CEO Bruce Myers reports. This new Hub & Spoke system has boosted manufacturing by a multiple of five and opened up a series of different opportunities for franchisees. Ideally, suggests Myers, the new options will attract franchisees who want to operate across urbanised areas. “Now we can go to the system and look for those people who are interested in developing the concept,” he says. The system works by taking production out of all but one retail site. The production capacity is sited in a hub store turning out the product for other stores commonly referred to as ‘spokes’ (which brings the

footprint back to 20 sq m). It has resulted in a new franchise agreement offer that enables franchisees to buy and operate a production hub and up to four spoke outlets under the one franchise license. The model also supports growth opportunities for existing franchisees, allowing them to add spokes to their existing business. The size of a Hub & Spoke operation will depend on the specific location says Myers: Northern Queensland towns like Cairns, Mackay and Townsville could easily occupy up to five stores. But the opportunities extend beyond the simple shopping centre outlet profile. As there is no production required on site, a modular kiosk option has also been introduced that can operate on limited trading hours, allowing staff to focus on sales and customer service. In addition to smaller rent it reduces the wage bill for a franchisee. And the introduction of 50 Lenard’s Express outlets at IGA supermarkets has been based on and facilitated by the Hub & Spoke supply methodology, Myers highlights. A company owned Brisbane

central product make up facility is an example of a larger hub operation the company is using to deliver Lenard’s products to more consumers under the Lenard’s Express brand. “We put the Lenard’s Express business into action, and we are starting to expose our franchisees to the model to help them build it up,” says Myers. Franchisees can use their own trucks or cold couriers to deliver the goods, he says. Who would the wholesale distribution be aimed at? Butchers can take on a branded Lenard’s Express section, or the chicken can be merchandised

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in chilled cabinets in other food retailers. The difficulty of maintaining control in a set up where distribution is outside the franchised network is unavoidable, Myers says. “The retail scene has changed, possibly for ever. We have to get turnover from different locations for franchisees to make a living.” There is also talk of a home delivery service – this opens up a lot of avenues, says Myers. “What it’s about is getting Lenard’s to more and more people. That’s the key.” F

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TA K I N G

T H E

R E G I O N A L F R A N C H I S E R O U T E

ndrew Castle knows the fast food industry inside out. At the age of 28, he has already clocked up 15 years of experience. ^

The young entrepreneur started working at a local McDonald’s at the age of 13, where he successfully worked his way up the management ladder. Andrew had always dreamed of owning his own business, and went on to invest in his first Oporto franchise at just 20. He purchased a second Oporto outlet in the regional city of Tamworth five years ago, and acknowledges the experience hasn’t been without its challenges.

LAUNCHING INTO A NEW MARKET Andrew explains he developed a number of strategies to raise locals' awareness of the new store. “Initially much of the town hadn’t even heard of Oporto. We have gradually overcome this by telling the Oporto story, promoting that it is an Australian business (which is important in regional Australia), and ensuring that when new customers come through the door they are met by great customer service and receive an outstanding product. “Word spreads very quickly in a regional city, so if you are serving a fresh, quality product at a good price and delivering great customer service people will return, and in turn word will get out and more people will come in for the experience," he says. Andrew continues to leverage local area marketing to build brand recognition and attract customers.

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I decided on a franchise so that I would have the support and guidance of a franchisor, as opposed to going out in the market solo

ANDREW CASTLE AT OPORTO TAMWORTH

“I am involved in the Chamber of Commerce, Junior Chamber of Commerce and Lions Clubs, and the store sponsors numerous sporting clubs and organisations – you certainly need to be involved in the city,” he says.

TRANSPORTATION ISSUES “Getting our stock to Tamworth has always been a hurdle as often transport breaks down, there is slow lead times from time of order to time of receiving and it can take a long time to get replacement stock if items are missed.

“This is particularly hard being that all of our products are delivered fresh, and are not frozen so we can’t carry much of a buffer. We have to manage the relationship with suppliers carefully and ensure that they understand our situation and the importance of our stock arriving on time,” he explains.

BUSINESS IS BOOMING The business has grown by over 110 percent since opening five years ago, and Andrew believes the outlet will leverage off new developments in the area. “A large Woolworths and Dan Murphy’s liquor outlet is

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scheduled to open next year right next door to my business, with construction to begin very shortly. “I see this as a very big positive for my business and the city as a whole. I would like to open further outlets in the region and continue to employ many local residents,” he says.

WHY OPORTO? Andrew says he opted for the Oporto brand for a number of reasons: ✱ It is an Australian company ✱ It has a unique brand concept – all of our products are delivered

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fresh and cooked fresh to order ✱ Oporto has provided a lot of opportunities for brand growth and store expansion ✱ The company’s operating procedures are similar to that of McDonalds, so I needed very little conversion training “I decided on a franchise so that I would have the support and guidance of a franchisor, as opposed to going out in the market solo,” he adds.

BUSY DAYS, LONG HOURS Andrew was surprised by the amount of work that goes on behind the scenes to ensure the smooth running of the store, and until recently spent seven days per week there. “The list is endless and includes managing the day-to day-operations, stock, staff management, suppliers and creditors. “On any given day I liaise with the Oporto support office in regards to any questions or issues that may arise, work on marketing F Rand 0 7 more,” 1 4 _ he 0 0adds. 0 _ XPRE 1 plans

Andrew’s day typically starts at around 4am, where he attends to administrative tasks associated with the business.

Andrew has recently taken a step back from the business, handing more of the every day responsibilities to his team.

“I always check the previous day’s data – everything from sales and labour costs to the speed of service reports.

“I have recently reduced the amount of time that I spend in the business.

“This has certainly enabled me to look at “I also review any emails that have come the bigger picture of operating a business through and action any outstanding issues instead of worrying about the little day to 2from 0 1 the 4 - previous 0 6 - 1 day,” 8 T 1he 0 says. : 3 1 : 4 7 + 1 0day : 0items,” 0 he explains.

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TRAINING AND DUE DILIGENCE THE KEY TO SUCCESS Andrew says prior experience in the fast food industry definitely makes the transition process much easier for new franchisees “Coming from within the fast food industry makes a very big difference as you don’t have to learn about the day-to-day operation of the business. “I attended six weeks of training as opposed to the standard 12, and the training mainly covered how to prepare the Oporto products,” he adds.

“I would recommend some external training such as bookkeeping/accounting or small business management.” “Spend time with existing franchisees to see what their entire day involves and ask questions,” he adds.

FRANCHISING: A LIFE CHANGER “Owning a franchise has been the single largest change in my life. At times it can be tough and very stressful, and other times there are a lot of positives and rewards from it.

“I take immense pride in my business and get a lot of satisfaction and enjoyment out of owning my own 2 0 1 4 - 0 4 - 1 7 T 1 6 : 0 6 : 4business,” 4 + 1 0 :Andrew 0 0 says. F

Having said that, he advises new franchisees seek out additional training wherever possible.

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sales@d isplaydesign.com.au

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PASSION FOR PE T S

ogue, a retail boutique and spa brand that caters to manâ&#x20AC;&#x2122;s best friend has recently started franchising.

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The company was established in 1998 and CEO Margaret Hennessy joined the business in 2005. She says franchising has been on the agenda since that time, and the expansion plan is to be steady and well timed. “As a small company, we understand the importance of continuing to grow steadily. “We are pretty conservative about the roll out plan because I think that’s where I see a lot of franchises having difficulties. You often hear experienced franchisors say if they had their time again they would roll their model out more slowly.”

THE OFFERING Each Dogue boutique includes a retail as well as day care and spa area, Hennessy explains. “We specialise in very intimate, high quality grooming and day care. We differentiate ourselves on the level of customer service we provide and our knowledge of our customers, and by customers I mean the dogs.” In addition, each store is designed so as ensure there is a connect between both arms of the business. “The concept is very much about being a boutique and spa, so people walk in and there’s the boutique where they can get collars, beds and so on, and then the dogs go through to the grooming and day care area – it flows very nicely between the retail and the spa area.”

THE FINANCIAL OPPORTUNITY Hennessy says a Dogue boutique and spa can demonstrate strong revenue in its very first year of operation. “Based on the historical performance of Bondi Junction and our other stores, we experience revenue growth of between 15 and 30 percent in the first few

ABOVE: DOGUE STAFF DEVELOP CLOSE BONDS WITH THEIR "CLIENTS" LEFT: OUTSIDE A TYPICAL DOGUE STORE

years of operation – variation relates to store location, size, blend of business and so on.” She adds the Bondi Junction store in particular has enabled the Dogue business to grow. “It has delivered steady growth and is a consistently profitable business. The store has largely funded Dogue’s growth and investment in brand expansion and the strategy and development of the franchise model.”

THE CUSTOMER EXPERIENCE Dogue has opted for franchising out of a desire to see store owners working in their business – there is a belief that the overall customer experience and trust formed is like no other. SEP/OCT 2014 | 121 | WWW.FRANCHISE.NET.AU

“We are dealing with people’s companions – they are very important to them so you really want someone trusted to be taking care of them. “I want to encourage that trust that an owner of the store has. Not to say staff can’t have that as well but if you are coming back and seeing the same person again and again I think that’s really important,” says Hennessy.

EXPANSION There are currently four Dogue stores in operation across Sydney – three are under license and the flagship store in Bondi Junction is company owned. Hennessy has established long and short term expansion goals for the business, and reiterates market saturation is not the plan.

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As a small company, we understand the importance of continuing to grow steadily “Our aim over the next 12 months would be to have between three and five franchisees on board. When we talk about how big we want to be in Australia we are probably looking at 40 to 50 stores.

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International markets could also eventually be on the cards. “We are very passionate about our brand and we see Dogue going all over the world,” Hennessy adds.

HAVE YOU GOT WHAT IT TAKES?

“The stores are very community based and we It is vital that Dogue franchisees don’t want one on every corner have a passion for the brand, as - any 1 means,” 2 0 1 3she - 1says. 1 - 2 7 T 1 well 6 : 4 3 1 + 1in1dogs. : 0 0 as1an: interest by

Thinking of becoming a Franchisor or Franchisee? Franchising is an exciting business opportunity but requires specialist legal advice. MST Lawyers is widely recognised as one of Australia’s leading franchising law firms. We advise franchisors, franchisees and suppliers to the franchising sector throughout Australia and internationally on all aspects of franchising. Our dedicated team practices exclusively in franchise law. We offer fixed fees for a variety of franchise work.

MST Lawyers 315 Ferntree Gully Road, Mount Waverley Victoria 3149 Australia Tel: 1300 MST LAW or +61 3 8540 0200 Email: mst@mst.com.au www.mst.com.au

Contact our franchising specialist team: John Sier, Philip Colman & Raynia Theodore

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“It is important they are passionate about the brand and what we do – they need to understand what Dogue is about and the quality of service and products that we offer. “A level of business acumen is important, and we like franchisees to be driven to connect with their local community,” she explains.

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We specialise in very intimate, high quality grooming and day care

DO YOUR RESEARCH Hennessy advises potential franchisees compare brands within the same market, and understand the franchising model before they invest. “Understanding the commitment that is involved is important.

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"We ask all potential franchisees to undertake an ACCC course, which outlines the roles 2 0 1 4 - 0 6 - 2 6 T 1 and 6 : 4responsibilities 6 : 1 5 + 1 0 :of0 0fran-

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chisors and franchisees, the Franchising Code of Conduct and so forth.” Hennessy adds potential franchisees should look into the head office team and support on offer at their brand of choice. “Get to know the different people involved with the franchise business, because you will be working very closely together, and familiarise yourself with the people that are going to support you.” F

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LEGALESE

ways to make the best use of your lawyer

lawyer who is experienced in franchising can help in a number of ways. By asking your lawyer some specific questions, you can ensure that you obtain targeted advice that will assist you as you negotiate each step towards becoming the owner of a franchised business. ^

1. ASK YOUR LAWYER TO REVIEW ALL THE RELEVANT DOCUMENTS

LOUISE WOLF Louise Wolf is senior associate in the corporate advisory and franchising team at MST Lawyers

Not every document you have received from the franchisor needs to be reviewed by your lawyer. As a minimum, your lawyer should advise you in relation to the terms of the franchise agreement and the contents of the disclosure document; whether these documents comply with the Franchising Code of Conduct (Code) and the risks associated with entering into the franchise agreement and associated documents. Where relevant, you should also seek advice in relation to the sale of business agreement, the lease of the premises and the occupancy licence agreement.

2. ASK YOUR LAWYER TO EXPLAIN THE MOST ONEROUS THINGS IN THE FRANCHISE AGREEMENT PAYMENTS UNDER THE FRANCHISE AGREEMENT Typically, fees are specified in a schedule at the end of a franchise agreement. However, sometimes some fees are located inconspicuously within the terms of the franchise agreement. Some agreements provide that certain fees may be changed at the franchisor’s discretion.

renewal fee, the upgrade of premises and entering into the franchisor’s “then current” franchise agreement, which may be different from the franchise agreement you signed. TERRITORY Some franchise agreements are limited to a particular site, some grant a territory, which may be exclusive or non-exclusive. Some franchise agreements purport to have exclusive territories, but may actually only give exclusive rights to market in an area. In certain circumstances, exclusive territories can become non-exclusive. MINIMUM PERFORMANCE CRITERIA Consequences of the failure to meet minimum performance criteria typically include requirements to attend further training. A further failure to meet the criteria may give the franchisor the right to appoint other franchisees in the franchisee’s exclusive territory, the right to force the franchisee to sell the business, or the right to terminate the franchise agreement. TERMINATION

TERM AND RENEWAL

It is imperative that you understand the grounds upon which a franchise agreement can be terminated by a franchisor and ensure they comply with the Code.

There may be an option to renew the franchise agreement for a further term, subject to you complying with certain preconditions, including the payment of a

Usually, the only way for a franchisee to exit prior to the end of the term is to sell the business or to obtain the agreement of the franchisor.

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LEGALESE

Not only is the franchisor not obliged to agree to end a franchise agreement early, if the franchise agreement is terminated early by you without the franchisor’s agreement, the franchisor may be entitled to claim damages from you for the revenue it would have otherwise made, such as via royalties, until the end of the term, or at least until the franchisor can find a replacement franchisee.

tees. Giving a personal guarantee potentially places all of your assets at risk.

RESTRAINTS

5. ADVICE ALONG THE WAY

Most franchise agreements provide for a period after the end of the franchise agreement during which the franchisee is restrained from being in any way involved in a competing business within a specified area from the territory or premises. Advice should be sought as to the reasonableness of such restraint.

Entering into a franchise agreement is not the only time you should consider consulting your lawyer. Lawyers can assist in relation to employment law, privacy law, trade practices compliance and in relation to alleged breaches of or queries about the franchise agreement.

3. NEGOTIATION OF AMENDMENTS TO THE FRANCHISE AGREEMENT An experienced franchising lawyer will highlight clauses that are contrary to the Code, clauses that are both extremely onerous and unusual within the industry and clauses that have relevance to your particular circumstances. Your lawyer can negotiate amendments to such clauses on your behalf or guide you to negotiate yourself.

4. HOW CAN I PROTECT MYSELF AND MY FAMILY IF THINGS DO NOT TURN OUT AS PLANNED? The shareholders and directors of franchisee companies will undoubtedly be required to give personal guaran-

Advice in relation to asset protection and structuring is critical. Structuring advice should also consider the tax implications of selling the business in the future. Your accountant and your lawyer should liaise with each other to get the best structure possible for you, from the outset.

Seeking advice early is the best way to ensure you make an informed decision. GET THE BEST OUT OF YOUR LAWYER To get the best out of your lawyer, ensure that they: ✱ are experienced in franchising; ✱ review all relevant documents; ✱ answer your questions; ✱ assist you in negotiating amendments; ✱ consider asset protection and end of term arrangements; and ✱ support you along the way. F

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It is imperative that you understand the grounds upon which a franchise agreement can be terminated by a franchisor and ensure they comply with the Code

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TRENDS

Are franchisors liable for franchisee’s conduct? ANDREW TERRY Professor of Business Regulation, The University of Sydney Business School

tandardisation and uniformity characterise and drive business format franchising. In the words of Stephen Kos the essence of franchising is to “convey the appearance of a single entity largely indistinguishable from a single owner chain comprising branches at separate locations”. ^

This formula – driven by system formats enshrined in operational documentation and supported by contractual provisions – is responsible for the success of franchising but it also gives rise to a potential source of liability for franchisors. The relationship between a franchisor and its franchisees is an independent contractor relationship: the parties are legally and financially independent enterprises responsible for the legal consequences of their own conduct. While a franchisor is liable for conduct in respect of its own managed outlets it is not liable for conduct in respect of its franchised outlets. The reality of course is that the public is usually not aware of the ownership arrangements and, even if this was known, the legal ramifications that flow therefrom would not be understood.

THE AUSTRALIAN CASE Australian law in this area has, fortunately, developed differently and cases of franchisor liability for franchises misconduct are rare. Liability may nevertheless arise but on a basis other than the control of the franchisor. A franchisor who is careless in selecting, training or supervising franchisees may be liable to a third party in a negligence action if the franchisor’s carelessness was the attributable cause of the injury. A franchisor may also be liable under specific statutory provisions – for unsafe or unsatisfactory goods supplied by it or in relation to workplace safety under the national work health and safety laws. There are also attempts from time to time by state and territory payroll tax authorities to seek to classify franchisor/

A SEISMIC EFFECT? The recent decision of the US National Labor Relations Board that McDonald’s could be held to be jointly liable with its franchisees for labour and wage violations by its franchisees has therefore attracted much interest and great concern – not only in the US but throughout the franchising world. The decision is not final and, given its significance, is likely to be appealed all the way to the Supreme Court. In the words of one US commentator, “If this ruling stands it will have seismic effects on the franchise model”.

Cases of franchisor liability for franchises misconduct are rare

Franchising could not operate successfully or economically if franchisors were routinely held liable for the acts and omissions of their franchisees. Under US law there is scope for franchisors to be held vicariously liable for the conduct of franchisees. Such liability has been based on the extent of the franchisor’s control over the premises and the practices of the franchisee: the greater the level of control the greater the likelihood of liability. This may be regarded as counter-intuitive given that the success of franchising is largely attributable to the franchisor cloning a proven and successful business format and system in its entirety. It would be unfortunate if franchisors provided less than optimal system prescription simply to reduce the possibility of being held vicariously liable. Fortunately more recent US cases seem to be modifying this position.

franchisee relationships as one of employer/employee rather than as one of independent contractors in order to levy payroll tax on the system payroll rather than on the franchisor’s payroll. Such attempts to date have been unsuccessful. In the case of the vast majority of franchise systems in which franchisees clearly operate their own businesses, albeit using the franchisor’s sophisticated systems, there is little likelihood of revenue of labour authorities seeking to establish an employment relationship that would give to franchisor liability whether sole of joint. However, unsophisticated systems which seek to disguise employment relationships by the cloak of franchising are vulnerable. F

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LEADERSHIP

Process and passion: a moving experience GREG NATHAN Psychologist, founder of Franchise Relationships Institute, and author of Profitable Partnerships

literally had a moving experience when we pulled up stumps in Brisbane and moved to Melbourne. As I write this sitting at my beautiful huon pine kitchen table I am thinking about the 26 or so suppliers of personal and professional services we used, a mixture of franchised and independent operators. Some were outstanding, most were mediocre and a few were, let’s say, hopeless. ^

In hindsight there are two reasons why only some of these people delivered an outstanding service I would unreservedly recommend. The first is they used a good process. The second is they delivered it with a high level of zeal and care. Several of the franchised systems we used obviously had a process but the person delivered it in a sloppy or half-hearted manner. For instance, one started off well but failed to follow through on his promises. Another had a mindless approach that left us feeling more like a number than a customer. On the other hand several of the independent business operators were highly enthusiastic and full of good intentions, but were all over the place because they weren’t following a process. This resulted in frustrating inefficiences for them and us.

delivered to my wife face to face in our home while I participated virtually on Skype from the Denver airport. I tried a number of times to speed him up or get him to

All the excellent performers combined a proven process with enthusiasm, care and attention to detail

All the excellent performers combined a proven process with enthusiasm, care and attention to detail. Take the young real estate agent who sold our Brisbane house. His initial sales presentation was SEP/OCT 2014 | 128 | WWW.FRANCHISE.NET.AU

jump ahead but he stuck to his process, explaining patiently and with good humour why it was in our interests that he take us through each step. He consistently combined this commitment to using the process developed by his franchise system with enthusiasm and dedication to keep us satisfied.

RIGIDITY WITH A PURPOSE We had a similar experience with our mortgage broker. At times she was almost rigid in how she took us through her process. However, she always explained why she insistetd on certain things and regularly took the initiative to ensure we felt supported. Again it was good process with a human touch. Not all the great performers were part of a franchise, like the independent buyers’ advocate we used to find our Melbourne home. We used her because she was highly recommended and I wasn’t disappointed. She got it right because she followed a process she had obviously developed through trial and error. After each house we inspected she would give me a detailed report on the house and the area. Whenever I asked to see this report prior to visiting a house, she insisted on sticking to her process, explaining that she has found it best that I first gather my own impressions of the house before being influenced by hers. Similar to the other excellent performers, she clearly enjoyed her work and was always cheerful and available when we needed her. Whether it is part of a franchise system or not, a good process implemented with passion and care is what creates a truly moving customer experience. F

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DIRECTORY

ASIA-PACIFIC CENTRE FOR FRANCHISING EXCELLENCE A pre-entry franchise education program is available for free and online through this centre. Funded by the ACCC this course aims to help franchisees understand the process of due diligence and have realistic expectations of what it means to be a franchisee. The Centre was launched by Griffith University in 2008 and undertakes research on franchising best practice. The research helps inform policy and team members regularly engage with government bodies and franchise associations across the Asia-Pacific. VISIT: WWW.FRANCHISE.EDU.AU

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION (ACCC) The ACCC is an independent Commonwealth statutory authority that is responsible for enforcing the Competition and Consumer Act 2010 as well as legislation, promoting competition, fair trading and regulating national infrastructure. Its role is to protect, strengthen and improve the way competition works in Australian markets and industries. The ACCC also regulates the Franchising Code of Conduct (Code) which is a mandatory industry code that applies to parties involved in a franchise agreement, namely the franchisor and franchisee. The purpose of the Code is to regulate the conduct of the parties involved and if allegedly breached prompts investigations by the ACCC. VISIT: WWW.ACCC.GOV.AU

BUSINESS.GOV.AU This website is an online government resource for the Australian business community which gives the public access to government information, forms and services for all things business. It is aimed at assisting individuals or a group of people to plan, start and grow their business. New business owners can access the advice finder, events calendar, grants and assistance finder, a directory of government and business associations, planning templates, business videos, and business checklists.

Business topics include emergency management and recovery, finance, recruitment, environmental management, fair trading, taxation, online business, franchising, importing and exporting, intellectual property and training. VISIT: WWW.BUSINESS.GOV.AU

FRANCHISE COUNCIL OF AUSTRALIA (FCA) The FCA is the main body for representing franchisees, franchisors and service providers in the $131 billion franchise sector in Australia. Becoming a member of the FCA is voluntary and is available for any organisation or anyone involved in the franchise industry including franchisees. VISIT: WWW.FRANCHISE.ORG.AU

FRANCHISE BUSINESS Franchise Business is a sister website to www.franchise. net.au. It is the official directory of the FCA and lists franchising opportunities available in Australia and New Zealand. Potential franchisees looking to move into the franchising sphere can explore opportunities by location that currently exist in the market and enquire about the franchisor or brand. The site is also updated with what’s happening in the franchising industry as well as announcements from franchisors in relation to their franchising advancements. Users also have access to franchise consultants and advisors who can assist prospective or existing franchisees or franchisors with any legal, financial, education and training, IT and other services. VISIT: WWW.FRANCHISEBUSINESS.COM.AU

FRANCHISE.NET.AU As the online arm of Franchising magazine, this website is focused on providing essential advice and information for anyone looking to invest in a franchise - short and snappy business tips and news, video interviews, industry commentary and market reports. Financial, legal and business guidance are key components of the independent, authorative editorial that helps potential franchisees make their purchasing decision. VISIT: WWW.FRANCHISE.NET.AU

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GLOSSARY

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 new site.

SITE: a brand

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 franchisor’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 franchisee’s guide to operating the franchise business. The franchisor may produce several manuals for different areas of the business, and should regularly update the information. REGIONAL FRANCHISEE: similar to master franchisees, regional franchisees operate a large territory and appoints franchisees within the area. RENEWAL: once a franchise term nears its end, franchisees may or may not be given a right to renew their agreement for a further

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term. This process is bound by the Franchising Code of Conduct and there is no automatic right of renewal. ROYALTY: fee paid by the franchisee to the franchisor for the ongoing use of the brand and systems, management and technical support. It may be a flat fee or a percentage of sales or profit. TERMINATION: the ending of the franchise contract between franchisee and franchisor, usually for breach of contract. Some franchise agreements allow the franchisor to terminate the agreement even if the franchisee has not breached the agreement. 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.

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CHECKLIST

THINGS TO CHECK BEFORE YOU INVEST BEFORE YOU PURCHASE YOUR FRANCHISE YOU NEED TO TICK OFF ALL THE MUST-DO ITEMS. CHECK THE FOLLOWING:

Are you confident in the franchisor?

What are the franchiseeÂ and franchisor obligations?

Have you seen a disclosure document?

What training is available and who pays for it?

Have you evaluated the financial returns?

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

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

What marketing will the franchisor implement?

Have you worked out your operating costs?

Who pays for the marketing?

Do you know the term of the agreement?

What is the dispute resolution process?

Is the business operating from fixed or mobile premises?

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

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

Can you assign the franchised business?

Are you restricted in your product purchase?

How can the franchisor or franchisee terminate the Franchise Agreement?

Are you required to reach a minimum performance level?

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

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CHECKLIST

STEPS TO OPENING YOUR FRANCHISE WHAT ARE THE PRACTICAL STEPS YOU NEED TO TAKE TO SET UP YOUR FRANCHISE? HERE IS A CALENDAR GUIDELINE TO OPEN DAY:

1-3 MONTHS AHEAD

Book franchisee training

Sign the lease or licence agreement

Research your market

Lease vehicle

Conduct due diligence on your franchisor

Organise fit-out for your store or office

3 3

Speak to franchisees

Read the disclosure document

Research the location

Clarify what support the franchisor will provide for opening and the first few days of trading

Do a business plan

Check what insurance policies you need to protect your business

Get legal and accounting advice

Organise finance and working capital

Check any relevant regulations or local by-laws

Decide on and set up your business structure

Understand your tax liabilities

Purchase a telecoms package and organise installation

3 3

Open a business bank account

Start planning your local area marketing strategy

1-4 WEEKS AHEAD

Sign the franchise agreement

Order and check the delivery of any stationery, uniform and vehicle wrap required

If you will be an employee, start the staff recruitment process

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A-Z LISTINGS

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

Phone: 0417 077 633 Contact: Michael Payne Email: michael@palmoasisventures.com Website: www.baskinrobbins.com.au Start up costs from: $190,000

Start up costs from: $47,000 + GST PROFILE: Looking for a franchise with on-going repeat business, large territories and access to an existing client base to get you started? ATS are Australia-wide specialists in Electrical Testing and Tagging in accordance with AS/NZS 3760:2010. Providing expert technical, admin, business and sales support, access to our National client base and comprehensive on and off-site training, ATS are committed to helping its 45 franchisees grow profitable and successful businesses. No prior electrical experience is required - just a passion for safety and a commitment to growing your business. With low entry fees and minimal franchisee administration, an ATS franchise may just be the opportunity for you.

PROFILE: At Baskin-Robbins, we love ice cream. Everything we do is for the fun, indulgence and enjoyment that ice cream provides to our beloved guests around the world in over 7,500 locations – with our 1,000 unique and much-loved ice cream flavours, frozen drinks and famous range of ice-cream cakes, there’s a delicious treat for everyone. Our world class training program will prepare you, our national marketing platforms and comprehensive Local Store Marketing programs will generate the brand awareness and our operations team are there to support and assist you. If you love to have fun & put a smile on people’s faces and are as passionate about ice cream and the Baskin-Robbins brand as we are, then we want to hear from you.

Phone: 07 3373 1760 Fax: 07 3373 1770 Contact: Delena Farmer Email: admin@batteryworld.com.au Website: www.batteryworld.com.au/franchising Start up costs from: $250,000 + GST PROFILE: Australia’s leading battery retailer Battery World is offering a unique retail opportunity with a great growth potential. Battery World stores carry batteries for everything from mobile phones and laptops to vehicles and boats. With 81 stores throughout Australia we are the largest and most comprehensive retail franchise network focused on the battery category.

School readiness and primary tutoring centre franchise

Phone: 0406 626 074 Contact Name: Mat Tower Email: franchise@beginbright.com.au Website: www.beginbright.com.au Start up costs: $60,000 - $70,000

PROFILE: Here at Begin Bright, we strive to give franchise owner’s financial freedom and success by making children happier, more confident and smarter. You will gain a new lease on life by working fewer hours so you can re-discover your passions in life.

If you want to invest your time and money in a powerful franchise, Battery World offers a unique opportunity to tap into an ever-growing market.

You receive a 4 day initial training followed by a weekly catch up while on your 12 week launch plan. There’s also monthly webinars, quarterly field visits in your first year and conference. We use software for timetables and accounting that you are also fully trained in.

Franchises are currently available throughout Australia for motivated individuals with strong communication skills and a love for retail.

Begin Bright has a very extensive and researched marketing plan. This is implemented in a combined effort between both franchisor and franchisee. Every centre has 4 pages on the Begin Brightwebsite which is heavily promoted by Head Office as well as receiving marketing materials and campaign support.

Phone: 1800 634 227 Contact: Andrew Email: info@briantracyglobal.com Website: www.briantracyglobal.com

Phone: 1300 99 55 12 Email: franchise@buyaustralianproperties.com.au Website: www.buyaustralianproperties.com.au Start up costs from: $110,000 INC GST

Start up costs from: $79,950 + GST Includes inventory for fast ROI.

PROFILE: Buy Australian Properties is the first professional franchised property investment company in Australia. We are leading the industry with safe, ethical and proven ways of investing in residential property with integrity. We supply quality approved direct property investments in brand new full turn key house and land packages, apartments, townhouses, units and row houses Australia wide. We have created a simple yet very effective 4 step client engagement process incorporating proven systems and procedures designed to produce outstanding results and highly satisfied clients every time we use them. Franchisees have the opportunity to operate a very unique, first of its kind property investment business in Australia. • great work-life balance • work from your home office • a team of highly motivated and dedicated professionals • excellent company culture

• comprehensive initial and ongoing training

PROFILE: The name Brian Tracy is synonymous with personal and professional success. Our excellent reputation and highly-regarded programs are unrivalled and will give you brand credibility, prestige and trust in your business community. We are searching for high-calibre individuals who are self-motivated thinkers, looking for a business opportunity beyond the generic franchise. If you are an innovative leader with a knack for business and you want to build a solid financial future, take the next step and find about more about the Brian Tracy International.

• unlimited growth and earnings potential

Are you a fit and are you ready to experience the difference?

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Phone: 1300 659 676 Fax: 1300 659 675 Contact: James Scurr Email: customerservice@cashflowit.com.au Website: www.cashflowit.com.au

Phone: 02 9206 8877 Fax: 02 9206 8811 Contact: Rod Laycock Email: rodl@civicms.com.au Website: www.civicmanagedservices.com.au

PROFILE: Cashflow It specialises in equipment financing solutions for the franchise sector. It’s the smart way to finance the equipment you need in your business. Cashflow It can get you pre-approved for finance so that you can find the best deal on the equipment you need from any supplier in Australia. You simply agree to a minimum 12 month term and we buy the equipment you need for your business. At the end of this term you have the option to Continue Renting, Purchase Equipment, Rent To Own or Return Equipment.

PROFILE: We are an Australian owned and operated company with a passion for entrepreneurial business building. We are dynamic, innovative, forward thinking and ooze an energetic and creative culture as well as maintaining the traditional values of honesty, transparency and accountability. We are franchise specialists, and we can help you achieve success by providing you with a tailored flexible package including: • Strategic Direction and Planning • Marketing and Digital Marketing • Accounting, Finance and Management Reporting • IT Support and Infrastructure • Franchise Support, Documentation and Compliance • Purchasing and Procurement • Warehousing and Distribution

Apply online today in less than 10 minutes.

Phone: 0401 805 096 Contact: Josh Lawson Email: franchise@cocolat.com.au Website: www.cocolat.com.au/ franchise-opportunities

Phone: 02 9332 2824 Contact: Holly Boal Email: holly@enviefitness.com.au Website: enviefitness.com.au Start up costs from: $100,000 + monthly leases

Start up costs from: $295,500-$455,000 + working capital PROFILE: The Cocolat concept was established in 1992 and during this time has attracted a growing and loyal following to become an icon in South Australia and winning many national and local food awards along the way. Cocolat franchises can exist either as a café with seating or shopping centre kiosk preferably also with seating. Cocolat’s unique offering consists of award winning desserts, Cocolat’s own gelato, handmade chocolates and a range of savoury ciabatta rolls and pastries. Our products are all made using only the finest quality ingredients and each product is as visually appealing as it is delicious.

PROFILE: Don’t buy a fitness franchise without exploring this exciting opportunity. EnVie is the innovative new approach to inspirational Women’s Health and Fitness. With sites ready for opening across the eastern seaboard we are seeking enthusiastic and passionate business owners NOW; with a determination to succeed and a passion for health and fitness. Incorporating the best elements from a range of franchise models an EnVie business is completely systemised. An innovative new franchise model means franchisee and franchisor have the mutual goal of your SUCCESS. The business is further supported by extensive training and ongoing coaching from a team of fitness, business, franchise operations, marketing and sales experts with a combined 127 years of experience in the franchise and fitness industries.

Phone: (03) 9923 3514 Contact: Ross Malcomson Email: franchise@dodo.com Website: www.dodo.com/franchise

Phone: 03 9417 5000 Fax: 03 9419 0937 Contact Name: Sarah Le Breton Email: sales@displaydesign.com.au Website: www.displaydesign.com.au

PROFILE: For over 25 years, Display Design has been helping businesses both large and small with their retail merchandising and display requirements. Specialising in the manufacture and supply of a vast range of products suitable for use in any retail, commercial or corporate environment, Display Design’s range includes: Wall display systems, freestanding merchandising units and racks, light boxes, showcases and counters, graphic display products, metal and acrylic accessories, suspended cable and rod display systems and sign connection components. In addition, the business also encompasses areas such as design, custom manufacture, project management, installation & fit out.

PROFILE: Dodo Connect is a fun, vibrant and energetic technology and home utilities driven business. Core to Dodo’s success has been the provision of extremely competitively priced products, along with superior customer service. A Dodo Connect franchise provides you with low-cost entry, a simple business format, a wide range of products and services (including: internet, home phone, mobile phone and mobile wireless broadband, electricity and gas, plus vehicle, home and contents insurance. Dodo is backed by an ASX listed powerhouse the M2 Group, in a dynamic and growing sector.

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Phone: 0408 444 734 Fax: 02 4321 0286 Contact: Jack Zervos Email: jack@execucon.com.au Website: www.drboom.com.au

Phone: 1300 131 888 Fax: 07 3633 3399 Contact: Franchise recruitment Website: www.dominos.com.au/franchising Start up costs from: $100,000 PROFILE: At Domino’s we see ourselves as the Pizza Experts, and focus all our energy and passion into making and delivering the hottest, freshest and tastiest pizzas. As a New Franchisee, you are about to embark on a journey to become a Pizza Professional. We are the market leaders in most neighbourhoods and we need to continue to rise to the occasion of exceeding our customers expectations. If you think you’ve got what it takes, contact us today for more details about becoming part our family.

Start up costs on application PROFILE: Dr Boom Communications pride themselves on being one of the longest established and most innovative mobile phone and tablet accessories and repairs specialists in Australia having commenced trading from a single kiosk site in 1987. With eight well established stores in premium locations across Sydney, a modern central distribution, training and service centre and a secure exclusive supply chain including premium global brands we invite entrepreneurial, hardworking and committed people to leverage our experience, share in our success and build our future.

Phone: 1800 373263 Contact: Cam Hadlow Email: cam@dreamdoors.com.au Website: www.dreamdoorskitchens.com Start up costs from: $65,000 + GST + operating capital PROFILE: Dream Doors is different from other kitchen, bathroom and bedroom renovation companies. By simply replacing the doors, drawer fronts and benchtops we save the customers $1000’s on their renovation and there in lies the secret to our universal success. We will give you 14 years worth of International experience and knowledge and help you run your local Dream Doors Franchise. Working together is crucial to any new undertaking in the business arena and working with the company co-founder and the Australian Master Franchisee to set up and develop your own Franchise Territory will be a major advantage to the growth of your business. Long term this relationship will flourish because it is absolutely in the interest of both parties to make this business work together. Our joint incomes depend on it.

Phone: 1300 FASTWAY Fax: 02 9264 4966 Website: fastway.com.au Start up costs from: $25,000 PROFILE: Run your own rewarding business and take control of your future as a Fastway Courier Franchisee. As a market leader in nationwide courier services, our multi-award winning franchisees enjoy: • Guaranteed income package* • Low start up costs • No weekend work • Ongoing business support & training • Exclusive territories • Perpetual franchise agreement with no ongoing fees No prior business experience is needed, just a great attitude and an ability to talk to people. So, if you’re ready for a positive change, we’d love to hear from you. *Conditions apply

Phone: 1300 954 812 Contact: Bob Johnston Email: info@fibrenew.com Website: www.fibrenew-franchising.com

Phone: 1800 PT for U (783 678) Contact: Scott Hunt Email: franchise@fitnessenhancement.com Website: www.fitnessenhancement.com

Start up costs from: $85,000 + GST

Start up costs: From $29,000 including all equipment, training and advertising

PROFILE: Fibrenew is the industry leader in the restoration of leather, plastic and vinyl. We are a mobile service that caters to the aviation, automobile, commercial, insurance, marine, medical and residential markets. With the diversity of all these opportunities across so many markets, our company and franchisees have grown and thrived through every rise and fall of the economy. That really speaks to the fact that there is always a need for our services. Right now, there are franchise territories available throughout Australia. This is your chance at an exceptional business opportunity with potential for great income. To find out more about joining our franchise team, visit: www.fibrenew-franchising.com.au

PROFILE: A low cost fitness franchise where the average customer spends over $5,000 and many have spent over $30,000! Established in 1999, Fitness Enhancement is Australia’s third largest Personal Training company. You don’t have to be a Gym junkie to be an amazing Personal Trainer, we can get you qualified with your franchise purchase and teach you our award winning skills that have seen our clients lose up to 100kg. All you need is a passion for a fit and healthy life and helping others change their lives. Our Mobile and Studio franchises offer unlimited growth and expansion opportunities with unparalleled head office support.

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Phone: 1300 FRANCHISE Fax: 03 8640 0688 Contact: Kevin Bugeja Email: kevin@franchiseselection.com.au Website: www.franchiseselection.com.au PROFILE: Franchise Selection is the leading franchisee recruitment company in Australia that assists potential franchisees through the interview and selection process. We offer potential franchisees a wide selection of franchises covering all industries including retail, food, automotive, telecommunications, construction and even service franchises. We pride ourselves in being leaders in our industry and our approach is not to sell franchises but to educate and assist buyers in finding the right business opportunity for them and to assist franchisors in selecting the very best franchisees.

Phone: 02 8845 0100 Fax: 02 8845 0199 Contact: Karen Pollard Email: franchise@gelatissimo.com.au Website: www.gelatissimo.com.au Start up costs from: $350,000 PROFILE: Australia’s leading gelato franchise is looking for outstanding franchisees. Prior food experience is not necessary however franchisees must have passion for the system and brand, leadership skills, and enthusiasm for delivering quality products through excellent customer service. Multi award winning Gelatissimo provides full training and on-going support from dedicated operational, marketing and development teams enabling them to produce artisan gelato fresh in store using a simple and proven system.

Phone: 07 5515 0119 Fax: 07 5500 3716 Contact: Geoff Biddle Email: mail@groutpro.com.au Website: www.groutpro.com.au

Phone: 0451 370 060 Contact: Peter Fiasco Email: franchising@hairhousewarehouse.com.au Website: www.hairhousewarehouse.com.au/franchanising

Start up costs from: $29,950 + GST & vehicle

Start up costs from: $200,000 - $400,000

PROFILE: Earn between $50 and $200 per hour and get a high return on investment in the booming Home Improvement Industry with LOW SETUP COSTS & little competition. GroutPro specialises in the after-market care of tiles and grout to homeowners and businesses. Offering a range of professional services from stain protection of new tile and grout installations to our flagship grout “colourseal” application which rejuvenates and re-colours old grout saving customers time and money without having to re-tile. Specialists use GroutPro’s own branded range of professional quality products including cleaners, sealers, tile Anti-Slip treatments and shower glass restoration and sealer coatings. This is a complete package to get you up and running in your own business fast. Call us today for more information.

PROFILE: Hairhouse Warehouse is Australia’s leader in the hair and beauty industry, with over 140 stores across Australia. A belief in your ability to change your life and courage to do it is all you need. Our culture and business has developed from over 21 years of success and mastery. Hairhouse Warehouse is built on passion and creativity. • Extensive and ongoing training programs • A proven turnkey operation • A focus on world class service • Multiple revenue streams, including retail, salon, piercing and beauty services • Exclusive stockists of world leading brands with the most lucrative merchandise trading terms worldwide

Phone: 0418 600 919 Contact: Meredith Ham Email: sales.au@inxpress.com Website: inxpress.com E-Tour: inxpress.com.au/franchising

Phone: 0427 208462 Contact: Steve Potter Email: franchising@indianbrothers.com.au Website: www.indianbrothers.com.au Start up costs from: $160,000

PROFILE: Indian Brothers restaurants began in 2002 with a simple philosophy – to bring the authentic taste of North India to Australia. Our first restaurant became a local institution in Queensland, offering tasty meals cooked to perfection. Using the freshest ingredients, traditional spices and only genuine Tandoor ovens enabled us to offer an Indian experience like few others. Today, Indian Brothers Restaurants provide opportunities for motivated individuals to own and operate their own Indian take away food business. Our unique system has been designed from the ground up to meet the increasing demand from time poor customers who are looking for instant, value for money, fresh and tasty food.

Start up costs from: $49,000 +GST PROFILE: InXpress provides a revolutionary concept delivering customers with express freight advantages to gain a competitive edge in the marketplace. InXpress is an authorised sales partner for the world class courier company, DHL. Domestically, InXpress partners with companies such as Toll and TNT to offer a complete suite of courier and freight solutions, providing increased value and service, saving valuable time and money. Operating in 15 countries with over 200 franchisees internationally, InXpress is now accepting applications to grow the Australian business. Benefits to franchisees include: • Low entry costs • Low risk • No inventory/warehousing

• Minimal employee base • High income potential • Ongoing training and support

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

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Phone: 1300 989 366 Contact: Drew Davies Email: info@kubarz.com.au Website: http://www.kubarz.com.au

Phone: 131 546 Email: franchise.sales@jimsfencing.net Website: www.jimsfencing.net Start up costs from: approx $64,000 - $66,000 inc equipment

PROFILE: Jim’s Fencing operates Australia wide with currently 160 plus franchise owners and sub-contractors building fences everyday. Jim’s Fencing has such a huge demand for work in fact; Jim’s Fencing is at a point in which they are actually reluctant to advertise the services as they have to many leads to fill as it is and not enough franchise owners on the ground to do the work. Can you imagine? A business that has too much work available?

Start up costs: $19,990 AUD

PROFILE: Kubarz is Australia’s premier and original beverage catering and mobile bar company established in 2003. Servicing clients and their guests Australia wide our professional and stylish beverage and mobile bar catering services are tailored to any function, party or corporate event, regardless of your budget and at any venue you like!

If you yearn to work outdoors and are handy with the tools, then Jim’s Fencing could be for you. Franchises available Australia wide.

Phone: (02) 48235980 / 0413610373 Contact: Karen Peterson

LAPTOP LIFESTYLE

Phone: 1300 453 284 Fax: 07 5564 9045 Contact Name: Dean Reid

Start up license fee from: $500.00

Email: marketing@mobileservices.net.au Website: www.myleatherdoctor.com.au

PROFILE: To successfully run this business all you need is a laptop and a phone to work from home, or from anywhere in the world. When you join the business you will receive life-time ownership and the resale licensing rights to a HUGE ONLINE STORE of dynamic videos, audios, seminars and training programs from some of the leading experts within the 200 billion dollar PERSONAL GROWTH, MARKETING AND BUSINESS EDUCATION INDUSTRY. But the main product is a simple system that allows you to start your own big money business with the structures, training, support and oneon-one mentoring necessary to ensure your success.

Start up costs: $55,000 (plus GST)

PROFILE: The Leather Doctor is the leading international brand in Australia for mobile leather repairs. With over 60 franchisees in Australia and teams in New Zealand and Dubai, this is truly a turn-key business with proven success. No previous experience required. All training included. For a unique business opportunity with little competition, great income and amazing support, call today for an information pack.

This business is structured like a franchise without the price tag. As this is an online franchise opportunity, as opposed to a traditional franchise there are NO START UP FEES, NO FRANCHISE FEES and NO ONGOING MONTHLY FEES of any kind. With this system you are an independent business owner from the start.

Phone: +61 3 8540 0200 Fax: +61 3 8540 0202 Contact: John Sier Email: john.sier@mst.com.au Website: www.mst.com.au

Phone: 02 9687 7700 Fax: 02 9687 7706 Contact: Miki Kanamaru (Franchise Development Manager) Email: miki@lewrap.com Website: www.lewrap.com Start up costs: $250,000 to $450,000

PROFILE: MST Lawyers is widely recognised as one of Australia’s leading franchising law firms advising participants in the franchising sector, Australia wide, on all aspects of franchising.

PROFILE: LeWrap® is a fresh and exciting franchise concept. What makes LeWrap® different from other fast food offerings is in the way we only use fresh chicken and beef, never frozen or thawed. This, combined with the healthy salads and the ‘theatre’ of seeing how the products are made, makes LeWrap® stand apart from the rest. LeWrap® is a food retail opportunity that has been refined over many years, and offers prospective Franchise Partners an opportunity to become part a proven retail business model. LeWrap® provides the Franchise Partners with a strong retail image and growing reputation together with established operating systems, training and ongoing support. Our aim is simple. We are very customer-driven and we believe in providing good value, healthy, high quality products backed by friendly and prompt service. If you share the same belief and would like to be part of the LeWrap family, we invite you to apply and see if you are a good fit. We’re all about bringing in the right people to join us in our journey to become an iconic Brand.

We assist both emerging and established franchisors with their franchise strategy and structures, including acting for franchisors acquiring, selling or restructuring franchise networks, drafting franchise documentation, managing franchise transactions, Franchising Code and consumer law compliance, leasing, employment law, intellectual property and dispute resolution. We also assist many overseas franchisors in entering the Australian market, including reviewing, adapting and drafting necessary franchise documents and advising in relation to Australian legal compliance. MST Lawyers also act for franchisees providing advice in respect of sales and purchases of franchise businesses, advising on franchise documents and leases and providing advice and services on the full range of commercial and other legal matters relevant to small business owners. Our international affiliations allow us to stay in touch with global franchising trends and assist our clients with their international expansion strategies.

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Phone: 03 8851 4200 Fax: 03 8851 427 Contact: Michael Standley Email: franchise@noodlebox.com.au Website: noodlebox.com.au/franchise

Phone: 1800 776 747 Fax: 1800 194 525 Contact Name: Brad Dixon Email: info@mynfib.com.au Website: Mynfib.com.au

Start up costs from: $250,000 - $280,000

PROFILE: NFIB meets the Australian demand for a dedicated 24/7 online provider of insurance cover for franchisors and their franchisees. Our service is fully automated, compliant and provides you with full documentation. Put simply, NFIB is the fastest, most affordable way to get the most appropriate level of cover you need to protect your business.

PROFILE: An Australian success story. Noodle Box’s goal is to be the first choice noodle-based restaurant concept in every market in which they operate. Franchise partner relationships are paramount and are built on integrity, respect and trust. The Noodle Box Franchise Support Centre is focused on ongoing Franchise Partner profitability and success. With a competitive entry level investment and new restaurant design concept, the Noodle Box brand represents excellent value for money. Noodle Box is healthy, fresh and fast and made right in front of guests by friendly, welltrained team members. With a relaxed atmosphere – it doesn’t get tastier than that!

Phone: 02 9822 5622 / 0423 052 456 Fax: 02 9822 5677 Contact: Kate Bird Email: franchise@packsend.com.au Website: www.packsend.com.au

Phone: 02 9930 3023 Contact: John Nero Email: au-pizzahut.franchising@yum.com Website: www.pizzahut.com.au/franchise Start up costs from: $270,000-$330,000

Start up costs from: $154,450 - $166,900 + working capital (ex GST) PROFILE: PACK & SEND is an award winning Retail Service Centre operation providing convenient freight and packaging services to businesses and consumers wanting to send anything, anywhere - plus, we offer online freight solutions for pre-packed parcels! Utilising our proprietary freight management technology (GlobalMaster™) to perform the delivery solution, together with our expertise in packaging services, means you can offer a solution for any person or business. Established for 20 years with a network of over 100 Australian stores – along with international stores in New Zealand and the United Kingdom – there is no other franchise system like PACK & SEND in the world and, best of all, our franchisees receive assistance and support along the way.

PROFILE: Pizza Hut is the leading global pizza franchise, with over 14,000 restaurants throughout the world and is part of the quick service restaurant, Yum! Restaurants International. Franchising with Pizza Hut gives you the financial control of owning your own business combined with the support of a historically successful global company. With exciting new store opportunities available throughout Melbourne/Regional Victoria, Perth/Western Australia, Regional New South Wales, Northern Territory, South Australia and South East/Regional Queensland there has never been a better time to join.

Phone: 02 4648 2099 Fax: 02 8572 8222 Contact: Nigel Miller Email: franchising@plusfitness.com.au Website: www.plusfitness.com.au

Phone: 07 3456 4255 Fax: 07 3456 4299 Contact: Phil Hill Email: phil.hill@tic.com.au Website: propertyclub.com.au

Start up costs from: $249,000

Start up costs from: $98,000

PROFILE: Plus Fitness 24/7 offers a true turnkey, 24 hour gym franchise. A Plus Fitness 24/7 franchise will cost you from as little as $249k including all gym equipment, aesthetic fit-out, signage, access control, marketing, training and franchisee support. The Plus Fitness 24/7 business franchise model offers low staffing, fast break evens and impressive returns in one of the fastest growing industries within the franchising sector. With over 100 gyms open across Australia and a further 50 territories sold, Plus Fitness has a clear goal of establishing over 200 gyms by end 2015.

PROFILE: The Property Club is a division of The Investors Club. Since its establishment in 1994, The Property Club has assisted in the sale of over 17,000 properties throughout Australia and New Zealand and are looking to expand further in these markets. Property Club prides itself on providing investment opportunities and deals and a one-stop-shop to access property related services for its members. The company currently has 18 Franchises and 300 Property Mentors, as well as a head office with 40 staff specialising in all areas of Property Investment.

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Phone: 1300 4 REDCAT (1300 4 733 228) Fax: 03 9696 1553 Email: info@redcat.com.au Website: www.redcat.com.au

Phone: 1300 4 RED ROCK (1300 473 376) Contact: Phil Colburn Email: admin@redrocknoodlebar.com.au Website: www.redrocknoodlebar.com.au Start up costs from: $180,000

PROFILE: Red Rock Noodle Bar is one of the healthiest food franchises around in this growing fast food industry. We deliver this by offering an exciting range of Asian 97% Fat Free tastes that appeal to all. Fresh Ingredients handpicked by our customers and “wokked” up right in front of your eyes. Currently 12 stores all over Brisbane as we expand this healthy option throughout Queensland and Northern NSW.

PROFILE: RedCat provides end-to-end, point of sale, accounting and business management solutions that gives users total control of their business. RedCat supplies integrated software and hardware solutions that can manage sales, staff, stock, payroll, through to accounts, GST, customer loyalty, and web based multi-site reporting to provide a complete business management system. Franchised groups can benefit from their flexible centralised management capability that permits multiple levels of control and reporting. RedCat are also able to provide online ordering systems. Customers order and pay through a uniquely branded app, the order is then automatically integrated into the point of sale system.

Phone: 07 5591 3242 Fax: 07 5591 9021 Contact: Michelle Connor Email: michelle.connor@rfg.com.au Website: www.rfg.com.au

PROFILE: RFG is Australia’s largest multi-food franchise operator with more than 105 million customer visits each year across the Donut King, bb’s Café, Brumby’s, Michel’s Patisserie, Esquire’s Coffee, Pizza Capers, Crust Gourmet Pizza and The Coffee Guy Franchise Systems. Today, RFG has more than 1,400 outlets across Australia, New Zealand, Papa New Guinea, China, Malaysia, the Middle East and the USA. Our premium product offering combined with our successful franchise systems and innovative brands are key strengths which have positioned RFG as a leader in the retail food franchise industry.

Phone: 1800 064 431 Fax: 1800 884 431 Email: franchising@silverchef.com.au Website: www.silverchef.com.au

PROFILE: Silver Chef has been helping businesses to fund their equipment needs for almost 30 years. Silver Chef’s Rent.Try.Buy.® Solution offers a simple 12 month term so that you have the flexibility to: • Keep renting and we will continue to • Purchase the equipment during the reduce the purchase price 12 month period and enjoy a 75% • Upgrade if you decide your franchise net rental rebate has outgrown the original equipment • Return equipment at the end of the 12 months if you don’t need it anymore And if you are part of an accredited franchise, you will enjoy even greater benefits such as reduced rental bonds, rental discounts and pre-approval for all franchisees.

Phone: 0427 401 169 Fax: 03 9888 6327 Contact: Alistair Browne Email: alistairb@snooze.com.au Website: www.snooze.com.au

Phone: 1300 810 233 Contact: Franchising development team Email: snapfranchising@snap.com.au Website: www.snap.com.au Start up costs from: $150,000

PROFILE: Snap is the most successful print, design and website franchise network for medium-sized enterprises (SMEs) in the Southern Hemisphere. Founded in 1899 and still 100% Australian owned, we now have over 145 Centres in Australia and a further 30 in New Zealand, Ireland and China. First to Australia in digital print, our ability to evolve is key to snap-proofing the future of our Franchise Owners. Today, clients can not only rely on Snap for top quality print, but the full range of design, websites and all other online marketing tools as well – all developed by a company with a 100 year long history of achievement. So, are you ready to Snap-Proof your future?

Start up costs from: $450,000 PROFILE: As one of Australia’s longest-running, most successful and innovative franchised business, Snooze’s experience in the bedding industry is second to none. With over 70 stores nationwide and a commitment to continued growth and development, Snooze offers great return on investment Snoozes offers a personable, flexible business solution with expertise and support every step of the way, including: • Vendor finance assistance • NAB & ANZ accreditation • Sales and product training

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• Business management support • A national marketing program • IT services

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Phone: 08 8353 5888 Contact: George Karamalis Email: info@st-louis.com.au Website: www.st-louis.com.au

Phone: NSW/ACT - 02 9250 5000 VIC/TAS - 03 9287 9555 WA/SA - 08 9430 2877 QLD/NT - 07 3877 7333 Email: franchdev@caltex.com.au Website: www.caltex.com.au

CMY

Start up costs from: $350,000

PROFILE: St. Louis franchisees will find comfort in the support and guidance they receive once they become part of the St. Louis family and take the first steps into owning their own business.

PROFILE: • Caltex Star Mart is Australia’s number 1 convenience retailer with locations in every State and Territory across the country. • The Star Mart convenience network consists of over 630 stores nationally. • Franchisees operate approximately 85% of Caltex’s retail network.

With full training and on-going assistance franchisees will learn the art to producing the highest quality, premium ice cream and dessert creations, and much more in store, using a simple, user-friendly model.

Our world class business model, merchandising and field support has set the benchmark for convenience retailing, making Caltex the number one convenience retailer throughout Australia.

We are looking for franchisees who are passionate about dessert, have a love for all things sweet and decadent, and who believe in never compromising on quality.

A select amount of Caltex Star Mart opportunities now exist for high calibre franchisees with a passion for retail and a burning desire to be successful.

Change your lifestyle. Invest in something that warms you from the inside out.

To discover more about Caltex’s exciting franchise opportunity, please visit www.caltex.com.au and click on ‘Franchising at Caltex’.

Phone: Toll Free Australia - 1800 630 355 New Zealand - 0800 444 618 Fax: 07 3852 4081 Contact: Franchise Administrator Email: ssa@subway.com Website: www.subway.com

Phone: 02 9898 8608 Contact: Chris Fitzmaurice Email: enquiries@swimart.com.au Website: www.swimartfranchise.com.au Start up costs from: Retail - $175,000-$250,000 Mobile - $85,000-$90,000

Start up costs from: Varies by site PROFILE: Subway® is the world’s largest restaurant chain with more locations than any other chain. We offer business owners simple operations, ongoing field support and a defined marketing structure, along with providing customers with a variety of freshly made menu options.

PROFILE: Swimart operates in the pool and spa industry providing owners with all their pool and spa needs from filtration equipment and chemicals to pool cleaners, accessories, spare parts and leisure products. We also provide extensive, in home services, such as pool cleaning and maintenance.

For over 47 years, the SUBWAY® brand has been helping individuals build their own independently operated business – run by people just like you! From step one, throughout the entire franchise process, the Subway® system provides training and guidance that aids in the operation of each restaurant.

Established in 1983, Swimart has over 70 retail stores and more than 250 service vehicles across both Australia & New Zealand and is a fully owned subsidiary of Waterco Ltd, a publicly listed Australian company with operations in over eight countries around the globe. We offer both retail and mobile franchises with set up costs starting from as little as $85,000. If you’re looking for either a retail or service business that delivers solid revenues with high margins and low fees, just ask Swimart!

Join the winning team with the #1 Franchise! Register your interest today.

Phone: 02 9723 1011 Fax: 02 9727 6771 Contact: Nick Avgerinos Email: franchise@cheesecake.com.au Website: www.cheesecake.com.au

Phone: +61 439 222 422 (AUS) +64 21 917 148 (NZ) Contact: Glenn Dobson Email: glenn.dobson@tdda.com Website: www.tdda.com PROFILE: The Drug Detection Agency (TDDA) is rapidly establishing itself as the largest and most dominant provider of workplace drug detection services in Australia & New Zealand, with a fast growing list of major corporate clients. With workplace drug screening becoming a necessity for most businesses for safety, legal and productivity reasons, the opportunities are endless to win contracts with Local, State and National businesses. You will also benefit from State Office support and large-scale clients that need services in your area.

Start up costs from: $200,000 - $800,000 PROFILE: The Cheesecake Shop opened in 1991 and has developed into an Australian favourite with a massive network of almost 200 stores across Australasia. Our award winning system makes for one of the simplest businesses to operate. Our systems guide you on how many cakes you need to produce each week and how much of each ingredient to order.

TDDA wants highly motivated and business oriented individuals to join the team to share in the success of this proven business model.

Our cakes are baked from easy to follow recipes. You don’t need to be a chef or a baker, its so easy!

If you are seeking a next generation business opportunity with huge potential then contact us now to find out more.

If you love to bake cakes for the kids then here is your chance to turn your passion into profit.

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A-Z LISTINGS

Phone: 0414 217 019 Contact: Rob Watkin Email: sales@topsnap.com Website: www.topsnap.com

Phone: 03 9008 5945 Fax: 03 9876 6612 Contact: Grant Email: grant@thefranchiseshop.com.au Website: thefranchiseshop.com.au

PROFILE: The Franchise Shop is the leading franchise consultancy offering both franchise development & recruitment services to the franchising industry throughout Australia and New Zealand. With more than 30 years experience in developing businesses into franchises, conducting feasibility studies, recruiting franchise owners, territory planning and site finding. At The Franchise Shop our aim is to grow your business. Are you thinking of developing your business? A free initial consultation will provide you with an honest, comprehensive and accurate assessment. Looking to buy a franchise? We offer an advice service and range of documents which are designed to help you make an informed decision.

Start up costs from: $39,950 + GST PROFILE: Interested in real estate? Passionate or keen to learn about photography? Then a Top Snap property photography franchise could be for you! We are currently looking for positive, enthusiastic, customer-focused individuals to build their own professional photography business, with the support of an established franchise system behind them. As a leading and fast-growing property photography franchise, we have photographers located across the country servicing the real estate industry’s growing demands for professional property photography and marketing tools. In recognition of this outstanding growth, Top Snap was recognised as one of Australia’s top 50 fastest growing SMEs in both the 2012 and 2011 SmartCompany awards.

Phone: 07 3827 8010 Fax: 07 3803 2320 Contact: Kerry Edwards Email: kerry.edwards@spanbild.com.au Website: www.totalspan.com.au

Phone: 0438 011 020 Fax: 03 5243 1476 Contact: Joe Rossi Email: franchise@townandcountrypizza.com.au Website: www.townandcountrypizza.com.au

Start up costs from: $20,000 + GST

Start up costs from: $200,000-$350,000

PROFILE: Totalspan is part of the Spanbild Group, with over 40 years’ experience in the building industry in Australia and New Zealand. Our franchising structure and systems are tried, tested and proven – just ask any of our 100 franchisees, or 1,000 employees! Totalspan not only offers you a proven franchise system, but we’re also the designer, engineer and manufacturer of all our products, so you’ll have a unique advantage in the market, by being connected across all aspects of the supply chain. What’s more, our quality, affordable steel buildings are designed and built for life – we stand behind every one with a 25 year structural guarantee. Successful people are changing their life with Totalspan - you can too! Be part of our success story!

PROFILE: Town & Country Pizza & Pasta want to share and help franchisees build a successful business with the development of their effective and profitable business model. They help you manage your team, cultivate your clientele and grow your business to ensure your full potential is reached and maintained. By using the right business systems, ingredients and recipes, Town & Country Pizza & Pasta’s proven franchise model can help franchisees take-off sooner without the usual headaches when starting up. Being a Town & Country Pizza & Pasta franchisee is a rewarding opportunity for people who want to thrive in a challenging environment and make a difference in their workplace and communities.

Phone: 03 9413 1400 / 0429 811 811 Fax: 03 9413 1401 Contact: Adrian Gallace Email: adrian.gallace@unitedpetroleum.com.au Website: www.unitedpetroleum.com.au/ franchising/welcome

Phone: 1313 2626 1313 Phone: Fax: 0808 8220 4588 Fax: 8220 4588 Email: info@viphomeservices.com Email: info@viphomeservices.com Website: www.vipfranchisesales.com.au Website: www.vipfranchisesales.com.au Start upup costs from: $25,000 Start costs from: $25,000

Start up costs from: $400,000 upwards PROFILE: Australian-owned company that has become one of the largest independent fuel retailers with over 320 convenience stores throughout Australia. United Petroleum continues to invest heavily in its stores and systems which has earned the trust of consumers and respect of major competitors. United franchisees enjoy ongoing support, generous Fuel Commissions, merchandising support, a national promotional program, five week induction program and on-going training. United is a proud member of the Franchise Council of Australia (FCA) and was awarded Canstar winner for 3 years in a row – Most Satisfied Customers (Service Stations).

PROFILE: PROFILE: V.I.P.was wasthe the first first company company to to start start franchising V.I.P. franchising inin home homeservices servicesinin1979. 1979.Today V.I.P. has over 1100 franchisees across Australia and New Zealand. V.I.P. has over 1100 franchisees across Australia and New Zealand. V.I.P. has franchise opportunities available in: V.I.P. has franchise opportunities available in: • Garden Maintenance and Lawn Mowing • Garden Maintenance and Lawn Mowing • Home Cleaning • Commercial Cleaning • Home Cleaning • Commercial Cleaning Over the last 35 years, V.I.P. has helped over 4,000 people just like you become V.I.P. offer franchisees comprehensive training, a solid support system, exclusive successful business owners by providing: territories and an established customer base along with the chance to be their own •boss Initial and ongoing • An established client base and choose thetraining, hours they want to work. coaching and mentoring • Access to a network of franchisees In 2009 & 2010 V.I.P. was declared the Best Franchise System in Australia under • Affordable franchise options • An initial start-up kit so that you are $50,000 by the Financial Review Smart Investor magazine. • National and local marketing ready to go

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A-Z LISTINGS

Phone: 02 6737 684 Fax: 02 9475 4974 Contact: Janelle Barraclough Email: enquire@westerntradingcompany.com.au Website: www.westerntradingcompany.com.au Start up costs: $50K PROFILE: For quality home décor solutions, Western Trading Company is the leading name that can be trusted by homeowners in Australia and New Zealand. Founded in July 2012, Western Trading Company is the exclusive distributor and leading provider for the biggest Mexican and South Western Home Décor and Furniture Supplier in the United States. We specialise in importing exclusive and unique high quality products that perfectly highlight all of Mexico and the South West USA’s vibrant colours to bring their exceptional touch right into your homes. As a family owned and run business based in Australia, our main focus is to outsource exceptional products for all Australian consumers who are searching for home décor and accents that have a Mexican, South Western and Western touch. Our extensive collection includes a diverse range of one-of-a-kind items that include gift lines and home décor, which include furniture, home wares, pottery, textiles, saddle blankets, skins, rugs, antlers, hides, mounted longhorns, accessories and so much more.

Wisewould Mahony Lawyers Lawyers in love...... with Franchising

Phone: 03 9612 7297 Fax: 03 9629 4035 Contact: Robert Toth Email: robert.toth@wisemah.com.au Website: www.wisewouldmahony.com.au

PROFILE: 30 Years of Specialised Franchise Industry Knowledge Member Franchise Council of Australia (FCA), International Lawyers Association (IFLA), Franchise Association of New Zealand & US Commercial Services. FIXED COST FEES to Franchisors and Franchisees based on scope of works. No hourly rate surprises! Services provided: • Legal and consulting advice to Franchisors & Franchisees. • Code compliance requirements. • Dispute resolution – mediation – strategies and solutions

• Sale/Purchase of Franchise Systems • Master Franchising • International Franchising • Business Law Specialists

Call or email for a complementary brochure for Franchisors and Franchisees.

Phone: 0414 745 155 Contact: Paul Crabtree Email: paul@xpressodelight.com.au Website: www.xpressodelight.com.au

Phone: 1300 655 559 Contact: Jonathan Payne Email: jonathan@xpresso.com.au Website: www.xpresso.com.au Facebook: https://www.facebook.com XpressoMobileCafe

Start up costs from: $64,900 + GST

Start up costs: $119 500 + GST including our FAST TRACK Program which guarantees your income! PROFILE: Xpresso Mobile Cafés operate in areas nationally where there are little to no fixed location café options for the workforce in commercial and light industrial precincts. We supply premium Di Bella Coffee products – both hot and cold. Frappés, energy drinks, bottles of water and food options such as gourmet cookies that are designed to compliment the enjoyment of an awesome espresso coffee. An Xpresso Mobile Café is also able to custom grind beans from a dedicated bean display cabinet and then weigh, custom grind, heat seal and retail with Eftpos.

A-Z

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

We also stock Di Bella Coffee specialty capsules that fit the ‘Nespresso’ pod machine. Both of these services are unique to Australia!

L I S T I NGS

FOR A-Z LISTINGS ENQUIRIES CONTACT:

NATIONAL SALES & MARKETING MANAGER DAVID STRONG ON 02 8484 0905 DAVID.STRONG@CIRRUSMEDIA.COM.AU

Phone: 1800 664 653 Contact: Scott Leydon Email: sleydon@1800onhold.com.au Website: www.zbm.com.au

PROFILE: Zoo Business Media is a full service provider of music, video and voice marketing solutions to the Hospitality, Retail and Fitness industries. We help you create the perfect ambience for your shops, gyms, restaurants and bars with internet delivered, license fee free music. We also enable you to make a great first impression with creative on hold messages for your telephone lines. A cost effective service absolutely essential to your marketing plan.

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ADVERTISING INDEX

1800 OnHol

INCORPORATING FCA NEWS

5 Dogs

Appliance T

* INDICATES FCA MEMBER

Aussie Outd Autobarn

1800 OnHold

115*

MST Lawyers

122*

Baskin-Rob

Appliance Tagging Services

113*

National Franchise Insurance Brokers

89*

Battery Wor

Baskin-Robbins

11*

Noodle Box

81*

Baybridge L

Battery World

Pack & Send

104*

Brian Tracy

Begin Bright

Pizza Hut

Brian Tracy

37*

Red Rock Noodle Bar

67*

Buy Australian Property

Redcat

127*

Cafe2U

38,39*

Retail Food Group

78,79

Cashflow It

Caltex

Silver Chef

31*

Cirrus Med

Cashflow It

55*

Snap

83*

Civic Mana

Civic Managed Services

19*

Snooze

119*

118

Coffee Hit

Display Design

133*

Dodo

Specialised Events

Dominos

St Louis

45*

Dr Boom

Subway

53*

Dr Boom

Dream Doors

73*

Swimart

107*

Dream Doo

23*

The Cheesecake Shop

Envie Fitness

148

Envie Fitne

Fastway Couriers

147*

The Drug Detection Agency

109

The Franchise Consultants

40,41*

Fibrenew

Fastway Co

133*

The Leather Doctor

Franchise Council of Australia Franchise Selection

100,101*

The Property Club

Gelatissimo

21*

Top Snap

27*

GJ Gardner Homes

129*

Town & Country Pizza & Pasta

123*

GroutPro

65*

Turner Freeman Solicitors

111

Hairhouse Warehouse

47*

United Petroleum

105*

Indian Brothers Restaurant

98*

VIP Home Services

99*

InXpress

57*

Western Trading Company

103

Jim’s Fencing

93*

Wisewould Mahony Lawyers

77*

Laptop Lifestyle

Xpresso Coffee

117

Le Wrap

85*

Xpresso Delight

69*

SEP/OCT 2014 | 146 | WWW.FRANCHISE.NET.AU

Cafe2U Caltex

Display Des Domino’s