Franchising Sept Oct 2015

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FRANCHISING

Franchising YOUR ESSENTIAL GUIDE TO BUYING A FRANCHISE | WWW.FRANCHISEBUSINESS.COM.AU SEP/OCT 2015 VOL.28/NO.5

WHAT'S

BREWING? Stirring up the coffee market

SEP/OCT 2015 AUS $6.95|NZ $7.95

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

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FIND OUT ABOUT LEGALS, LEASING, TERRITORY AND ROYALTIES

DUE DILIGENCE

A BARGAIN BUY?

SIGNS OF SUCCESS

P.16

P.24

P.12

Why you need to research before you buy

How to spot an undervalued business

9 ways to spot a winning franchise

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CONTENTS

COV E R STORY

56

12 SPOTTING A FRANCHISE

74 ACCOMMODATING THE

9 signs that a franchise company is serious about its franchising commitments

More and more hotels are turning to franchising as a way forward

THAT HAS GOT IT TOGETHER

FRANCHISE MODEL

14 FIELD AGENT

What does a field manager do?

16 RESEARCH BEFORE YOU BUY

A recent study reveals franchise buyers need to do more research

20 CULTURE CLUB

How to assess a franchise culture

24 HOW TO SPOT AN

UNDERVALUED FRANCHISE

Is the business you are investigating really a bargain buy?

30 HOW TO AVOID A LET-DOWN

Be prepared, and there’s less chance of being unpleasantly surprised once you become a franchisee

A CAFFEINE FIX

32 TOP TIPS FROM FRANCHISEES

What really works once you are running your own business

36 WHY YOU NEED A TERRITORY There is a skill to mapping a business area

REGULARS

40 10 TOP POINTS

What to look for in a lease agreement

5 6 105 108 110 114 116 118 121 130

WELCOME INSIGHTS LEGALESE THE SKETCH LEADERSHIP DIRECTORY GLOSSARY CHECKLIST LISTINGS ADVERTISERS INDEX

81 5 THINGS I WISH I KNEW

Award-winning OPSM franchisee Rowan Prendergast shares his thoughts

84 A SWEET SIGNATURE

The Belgian chocolate business Guylian is expanding in Australia

88 TIPS FOR FRANCHISEES

Lenard’s chicken founder, Lenard Poulter, offers some franchisee advice

90 TWO MUMS, TWO CLINICS, 25 STAFF

Why Australian Skin Clinics has been a success for two Victorian women

42 LEASING IN TODAY’S WORLD 94 MRS FIELDS’ SWEETENS RETAIL What goes into choosing the right site

49 LEASING AND DISPUTES

What you need to know about getting into a leasing dispute

52 CAN’T AFFORD TO PAY ROYALTIES?

What happens when you have insufficient funds to pay your franchisor fees?

68 CAN NEWSAGENCIES

CONNECT WITH A RETAIL FUTURE?

How can newsagents build a viable business in today's digital world?

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Take a look at the brand refresh for the cookie franchise chain

98 THE MAN WITH THE VANS

Why theCafe2U model suits this franchisee

101 THE INSIDER

Quick Q&A with Ferguson Plarre Bakehouses’s Steven Plarre

102 HOW ONLINE RETAIL IS BOOSTING BUSINESS

These Pack & Send franchisees are harnessing the internet to grow their business while they sleep

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( WELCOME )

H

ow do you find a franchise business that is viable? It’s a question that is very pertinent as we go to press with headlines about 7-Eleven and the suggestion that franchisees who are underpaying staff are doing so simply to stay afloat. Whatever the outcome of the independent panel review of the situation, the convenience store crisis has highlighted the need to ensure a business model is profitable for its franchisees.

You can read what our regular columnist Professor Andrew Terry has to say in his Trends piece on page 108.

system is important to a franchisee, and is worth evaluating before signing up to a franchise.

What is clear is that conducting sufficient research to be confident in the brand, the operating model, and the business strategy, is essential for any franchise buyer to give themselves the best chance of success.

It is essential to remember that speaking to existing franchisees and former franchisees can be the best insight into the real workings of a franchise system.

There are no guarantees in franchising, but when a buyer is investing considerable savings or mortgaging their home to purchase a franchise, it makes sense to spend both time and money in researching the opportunity and seeking expert advice from lawyers and accountants.

According to a report by Griffith University, however, a great number of franchisees don’t undertake sufficient research.

You can find out more about this study on page 16, and pick up some tips on key areas to investigate.

As Greg Nathan, the founder of Franchise Relationships Institute, points out in our feature on page 20, the culture of a franchise

There are some inspiring success stories across the franchising sector and you can read some of the stories in this issue: franchisees from Australian Skin Clinics, Cafe2U and Pack & Send. You can read about the Guylian chocolate business, how Mrs Fields has undergone a brand refresh, and get some tips from the Lenard’s founder.

Take as much time as you need to research franchising, and any particular brand you are interested in. Check out our website www.franchisebusiness.com.au to stay up-to-date with developments in the sector – you can sign up for our free newsletter and have the latest news and advice articles delivered to your email inbox.

SARAH STOWE EDITOR

Take as much time as you need to research franchising, and any particular brand you are interested in

Good luck with your research

EDITOR Sarah Stowe P: 02 8484 0900 sarah.stowe@cirrusmedia.com.au

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INSIGHTS

7-Eleven in crisis mode over employee allegations The company faces accusations of a systematic cover-up after claims of underpayment of wages hit the mainstream media.

INDUSTRY SNAPSHOT NUMBER OF FRANCHISORS IN: Retail

304

Accommodation & food

204

Admin & support services 165 Services

118

Education & training

78

Rental & real estate

72

Arts & recreation

38

Financial & insurance

37

Professional, scientific, technical

33

Construction

23

Transport and logistics

13

IT and telecom

11

A 7-Eleven franchisee in Melbourne has admitted to deliberately shortchanging employees by tens of thousands of dollars and doctoring employment records to cut costs.

The franchisee has also revealed, according to Fair Work, that he learned how to manipulate the payroll system from another franchisee at a 7-Eleven conference.

Fair Work Ombudsman Natalie James said that she is well aware of the systematic wage abuse across 7-Eleven stores and that franchisors need to pay more attention to what their franchisees are doing, how they’re doing it and whether it is inline with workplace laws.

ience store franchise 7-Eleven, Russ Wither, issued a statement.

One particular 7-Eleven operator, Kumar Sandarakumar, who runs a store in Melbourne’s CBD, confirmed that he deliberately breached federal workplace laws in the face of increasing financial pressures.

“Allegations against the 7-Eleven franchise model have challenged our business from individual store level to the top of our organisation.

As the founder and chairman of 7-Eleven Stores Pty Ltd, this stops with me.”

Sandarakumar underpaid his employees by a few hours less than they worked: one employee was paid for seven hours of work, even though they worked 20 hours.

Former consumer watchdog Allan Fels, who will head up an investigation panel, previously spoke out against the 7-Eleven franchise model suggesting the only way franchisees can make a living is by ripping off their workers.

Healthcare/social assistance 11 Wholesale

7

Manufacturing

5

Utilities

5

[Source: Franchising in Australia 2014, Asia Pacific Centre for Franchising Excellence, Griffith University]

INDUSTRY REVENUE In 2005-6 = $184,429m In 2014-15 = $168,668m Predicted 2019-20 = $191,571.4m [Source: Franchising in Australia Industry Report 2014, IbisWorld]

Nine 7-eleven franchisees have received a letter of caution, one has been issued a compliance notice and seven others have received on-the-spot fines.

According to a new Fairfax Media report, 7-Eleven employees have allegedly been receiving the correct award wage in their nominated bank accounts for the hours they worked.

However, the money they are paid is expected to be paid back in part to the franchisee in cash.

One Sydney-based 7-Eleven employee says a franchisee’s representative either collects cash away from surveillance cameras on-site or outside the store.

The employee said the payslip reflects a payment of about $25 an hour, which is within the award rate, but the agreed figure between employee and franchisee is a lesser amount.

On 10 September the chairman of the conven-

Fels’s assessment comes amid allegations of widespread underpayment of wages and adjusting payroll records within the country’s biggest convenience store franchise.

“My impression, my strong impression, is that the only way a franchisee can make a go of it in most cases is by underpaying workers, by illegal behaviour,” Professor Fels, the former chairman of the Australian Competition and Consumer Commission (ACCC) told the ABC. Withers agreed in his statement that secondary to the underpayment issues is the question of the franchise model itself.

“I have provided my commitment to fund the development of an Enterprise Bargaining Agreement for interested franchisees, following a specific request to do so from the franchisees themselves,” he said.

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INSIGHTS

ANNUAL PERFORMANCE PACK & SEND Record sales and profit growth for four consecutive quarters at Pack & Send are a result of a significant increase in parcel volumes distributed by the courier and logistics franchise.

Domestic shipping volumes increased by 10.03 percent, while international shipments (including import and export) jumped 35.51 percent. This resulted in the combined operating profit for the franchise network increasing in FY2015 by seven percent on the previous year.

QUEST APARTMENTS IN $10M REBRAND Quest has relaunched its franchise business as Quest Apartment Hotels in a $10m rebrand. This will be supported by a multichannel consumer advertising campaign targeting the frequent business traveller.

The rebrand will roll out across the 157 Quest (formerly Quest Serviced Apartments) properties in Australasia with a goal of completion by June 30, 2016. Franchisees will get a modernised logo, updated signage and stylish contemporary uniforms.

Quest worked with its franchisee body, the Franchise Advisory Council, on agreeing co-contributions to the branding project - the signage elements take almost $5m; uniforms and refurbishment added in take the total above the $10m.

With a brand new product comes the opportunity to charge higher room rates.

As an example, the Doncaster property went from charging $130 per room to $170.

Franchisee Kevin Murphy, who runs the William Street property, was approving of the changes. “The new logo is good, people like to be associated with nice brands.

There’s a bit more pride. And the name change is a no-brainer. It’s about getting better results all round.”

The franchisor has committed to continually raise the bar in apartment hotel design and fit out standards.

Quest CEO Zed Sanjana said “We are committed to an ongoing refurbishment program to align this premium standard of

accommodation across the Quest network, with six refurbishments completed in the past 12 months and another six scheduled for the coming year.

And there’s no sign of a slowdown: the franchise business had its biggest month for sales revenue in July 2015.

HARVEY NORMAN

“We know how to extract the best value for refurbishments because we are doing new builds.”

The rebranding though is the “icing on the cake” said Sanjana.

Maintaining high standards across the network (some franchised venues have been de-branded to ensure high brand consistency) and ensuring consistency of service delivery are vital. So is encouraging franchisees to get to know their guests - the average stay is four to five nights.

A personalised service will be increasingly important to the business and it’s the theme of the consumer advertising campaign which emphasises how travellers can “live like the locals”. It focuses on the personal elements of a stay at a Quest property, whether it is a working mother wanting to connect with family or a young single man keen to cook for himself while working away from home.

Harvey Norman has achieved net profit of $268.1m, thanks in part to a change in franchise operations.

Franchise sales revenue rose by 3.7 percent, up to $4.95bn; as a result franchisees paid increased fees to the franchisor, and at the same time the retail chain lessened the level of support it provided at the franchise front line.

Revenue from the franchise operations rose by $56.78m (seven percent) up to $870.80m.

There are now 194 franchised complexes in Australia, and 678 franchisees.

TOP SNAP INTERNATIONAL Real estate photography franchise Top Snap International has seen boosts in monthly turnover of up to 40 percent.

MORTGAGE CHOICE

“Market leadership is about continuous evolution; it is vital we lead the industry in meeting the needs of tomorrow’s business travellers. We are modernising and futureproofing the brand,” said Sanjana.

“Our franchising model is our competitive advantage, providing a unified front which ensures consistent delivery of a world-class guest experience.” ✱ Read more about the hotels market on page 74.

SEP/OCT 2015 | 8 | WWW.FRANCHISEBUSINESS.COM.AU

Mortgage Choice has revealed some financial achievements in the year to 30 June 2015, but still has more to do to grow its core broking business.

The franchise brand achieved record settlement volumes and a $49.5bn loan book (up 4.6 percent from the previous year).

Brokers in the network got approvals for housing loans worth $13.4bn, a rise from the 2014 figure of $12.2bn.

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A global leader in tools and franchising

A proven and established business model

No fixed office or workshop

Mobile showroom

Give customers personal service, premium products and finance solutions

Extensive training and support A market leader for mechanics

BE IN BUSINESS WITH THE BEST SNAP-ON TOOLS IS ONE OF THE LARGEST AND MOST SUCCESSFUL FRANCHISES IN THE WORLD AND HAS BEEN OPERATING IN AUSTRALIA SINCE 1988.

Snap-on Tools invites you to take our online Discovery Tour to find out if we’re the right business for you.

Visit www.snapontools.com.au/franchise

To learn more phone LES COPPIN - 0419 609 794 Franchise Recruitment Manager

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INSIGHTS

NEW DIVISION FOR V.I.P. HOME SERVICES

EAGLE BOYS NEW LOOK Pizza franchise chain Eagle Boys has a new look concept store featuring exposed brink and recycled timber.

The home services franchise V.I.P. is set to expand with a new division, fencing and home maintenance.

The new image has been developed after research to understand customer preferences and behaviour and was unveiled at the long-standing Bundaberg store, first opened in 1991.

Warren Smith and Vea Johnston have been appointed as national franchisors. The pair joined V.I.P. as lawns and gardens franchisees where they grounded themselves as part of the team.

V.I.P. Home Services founder Bill Vis said that the expansion fits the brand well and allows a further reach into new markets.

Franchisee Shaun Butcher said “The new concept is trendy and modern and provides our local customers with a different experience to what they are used to.”

The fast food franchise’s general manager of retail, Nick Vincent, said “Despite increasingly intense competition in the pizza industry, Eagle Boys has

MAKING WAVES IN CAR DETAILING SECTOR Waves Detail Pro, a mobile car detailing franchise business from Queensland was an exhibitor in the Melbourne Franchising & Business Opportunities Expo.

Managing director of Waves Detail Pro Daniel Fuchs said “Our passion started in the mobile detailing industry, for us now it’s all about franchising as a business model to take a market share in an industry that we believe is not being done professionally currently. So our focus is offering super high degree of quality training to ensure that our franchisees are satisfying all the needs of the user: right from the person who wants the car wash right through to the person who wants the new car protection package.

“We call those ‘multiple profit centres’, which means we have happy franchisees because they have a super high earning

remained steadily focused on innovation, research and development for our strong and loyal customer base.

“The stores of the future concept is an exciting expansion for us with a modern customer experience across Australia.”

potential using their multiple skillset and it’s also great for the end user because they’ve got a one-stop mobile shop – and that’s really important for credibility and authority,” Fuchs said.

MORE FRANCHISE UNITS FOR LEATHER DR

“We’ve just developed an online strategy for recruitment, working with a couple of different companies to bring that online and especially through Facebook marketing and social media. Social media is huge for us, no one in our space is really utilising it in a big way.

“We look for motivation in our potential franchisees but we most importantly want people who love people. We’re services based – it has to be first and foremost about satisfying the needs of the individual and developing a relationship.

There needs to be a certain degree of people skills and reliability,” Fuchs said.

The car wash and detailing industry is worth over $525 million.

The Leather Doctor continues to grow as it brings it franchising portfolio to 57 in Australia.

The franchise has expanded with six franchise sales in the last 12 months, with five being attributed to existing franchisees expanding on their reach.

Franchise business manager Casey Reid said that the growth is a sound indication of potential franchisee confidence in the business model. Once a franchisee is on board, however, there is a stringent process that determines whether existing franchisees are up to standard to expand further.

“Franchisees making additional purchases is a strong indication that our business is a really good investment opportunity.

Existing franchisees clearly see the value and these are the people who know the system intimately,” Reid said.

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“We are delighted to be announcing the expansion of V.I.P. home services. The new fencing and home maintenance division is a perfect fit for V.I.P. as it now means we can expand what we offer to our customers.

We are really becoming the complete provider of services for the home owner which is exciting,” said Vis. The new division launched on Monday 14, September 2015.

There will be three franchise systems on offer: a fencing franchise, a home maintenance franchise and a fencing franchise with an add-on package.

FRANCHISING FIRSTS Gloria Jean’s Coffees opens its first drive-through operation on the Gold Coast. The Robina drive through is the first for the Gold Coast, and the second drive-through for the brand in Queensland. Earlier this year the first drive-through opened in New South Wales.

Xpresso Delight sets up first Melbourne franchisee.

Queensland based Xpresso Mobile Café has launched its first Melbourne franchise and has plans for another five by the end of 2016.

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Baskin-Robbins™ is looking for people with drive, creativity and passion. We believe that people are the most important ingredient in a successful business. Ideal key qualities for prospective Franchisees include: • The ability to make people smile • Excited to be a part of a team and the Baskin-Robbins™ system • Ambition to succeed and grow your business • Outstanding guest service focus • Passion for the Baskin-Robbins™ brand We’re confident that once you get to know our product you’ll be in love with Baskin-Robbins™, just like we are.

For further information, please contact Michael Payne on 0417 077 633 or michael@palmoasisventures.com or visit www.baskinrobbins.com.au

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HOW TO SPOT A FRANCHISE THAT HAS GOT IT

TOGETHER I f you are serious about buying a franchise you are in demand, writes FranData’s Darryn McAuliffe.

With reportedly more than 1,110 franchise brands operating in Australia, nothing is more important to the ongoing success of a franchise business model than finding and keeping good franchisees.

If the old franchise adage “in business for yourself but not by yourself” rings true then your first step is to make sure you partner with a top quality brand.

IS IT A GOOD FRANCHISE CITIZEN? Franchise Council of Australia membership and registration with the Australian Franchise Registry are two excellent indicators that brands are serious about their reputation and that of the franchise sector; recognising the importance of a unified, representative voice and the role improved information plays in supporting that representation.

IS IT LENDER FRIENDLY? Smart brands recognise the importance of good relationships with lenders to help prospective franchisees buy a franchise. Accredited status is generally granted to brands that meet certain minimum requirements and have been through a comprehensive review process. These brands are allocated dedicated bank contacts and their franchisees generally enjoy more consistent and predictable treatment. Only a minority of brands enjoy formal bank accreditations, but a growing number have taken additional steps to make

themselves more lender friendly by creating tools that help their franchisees obtain finance.

DOES IT HAVE CODE COMPLIANT DOCUMENTATION? The Australian franchise sector operates under a Franchising Code of Conduct which is overseen by the Australian Competition and Consumer Commission (ACCC). This code has recently been updated and good franchise brands will be able to demonstrate they have updated both their disclosure document and franchise agreement.

IS THERE COMPREHENSIVE INFORMATION AVAILABLE? Top quality franchises have nothing to hide and are generally willing to share detailed information to help prospective franchisees quickly determine if they are the right fit for the brand.

DOES IT HAVE STRONG TRAINING AND SUPPORT PROGRAMS? Strong initial training and ongoing support are important to the success of franchisees. Ask the franchisor to outline exactly what

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they do and then validate that with some existing franchisees.

Some of the most worthwhile initial training can come through “on the job” practical experience and training days.

and poor support to accelerate their demise. A much better percentage play is generally achieved through finding brands that are growing in a steady and sustainable manner.

DOES IT HAVE GOOD PUBLIC HYGIENE?

HOW DOES IT HELP UNDERPERFORMING FRANCHISEES?

We live in a world of abundant public information through social media and sophisticated internet search engines. Franchising certainly gets its share of exposure and some is adverse. It is worth checking brands you have an interest in to see if there are any issues you require the franchisor to provide satisfaction with. Google, Safari and other search engines are a good start but it is also worthwhile digging deeper on the ACCC’s website to identify any franchising investigations the brand may have been involved with.

IS IT GROWING IN A DISCIPLINED MANNER? Growth is the aspiration of nearly every franchise brand, and a good pointer to market acceptance of a concept, but nothing sets a franchise brand up for failure like undisciplined growth. Sadly innocent franchisees can also be the subject of heavy collateral damage when the day of reckoning arrives for those brands that have grown too quickly and allowed items like excessive rents, weak franchisee recruitment

Even the best systems have franchisees performing below expectations. The good ones have a plan to help and can often call out specific examples of what they have done. Look for a strong support program with an ability to name early warning signs.

WHAT KEY RELATIONSHIPS CAN BENEFIT YOU? Multiple units make franchise brands prime targets for many equipment and service providers. More importantly many reliable franchise brands leverage their buying power to provide cost effective solutions for franchisees with items they most need to protect and grow their business. A good example is customised insurance policies to cover the key risks of their particular business.

If you, and your advisors, like the answers to these questions you may have found a brand that can claim that it has got it together.

SEP/OCT 2015 | 13 | WWW.FRANCHISEBUSINESS.COM.AU

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field agent W

hen you buy a franchise, one of the benefits will be access to a field manager. But what exactly is a field manager paid to do?

you may want help analysing your figures, and developing strategies to take the business to the next level.

First of all, relationship management is key for any field manager - who might also be called a business development manager (BDM).

Of course you want them to be transparent and honest too. And someone who you believe has your best interests at heart.

Secondly, a field manager needs to ensure there is brand alignment across the network. The third task for a field manager is to help boost a franchisee’s sales and profit levels.

According to a study produced by the Franchise Relationship Institute, existing franchisees surveyed revealed that although the improvement of sales and profits is hugely important, emotional engagement from a field manager is vital.

It is important that a field manager is business minded, because as a franchisee

But you will also want someone who is engaging, positive and friendly. You will want to know that you will get constructive advice from a field manager who is happy to engage in discussions with you.

So how can you ensure that you are joining a network with field managers who are effective and add value?

Your best source of information on this is to turn to existing franchisees within the network. When you conduct your due diligence, ensure you have a list of questions to pose to franchisees about the field managers or BDMs. You might be spending quite a bit of time with your field manager, depending on the particular franchise business you buy into and your particular needs, so make sure you have confidence in the team.

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10 QUESTIONS TO ASK A FRANCHISEE 1. Is there a great culture in the network?

2. Does the field manager share best practice?

3. How often does the field manager visit?

4. What sort of approach does the field manager adopt in dealing with challenging situations?

5. How much confidence is there in the business skills of the field manager?

6. What sort of business experience do field managers have across the network?

7. What difference has the field manager made to your business?

8. How dependable is the field manager?

9. How much interest does the field manager show in the success and well-being of franchisees?

10. What sort of relationship do you have with your field manager

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spice u*p

yOur career become an OPORTO franchisee!

Serving delicious mouth-watering grilled Portuguese chicken and burgers since 1986, Oporto is a 100% Aussie-owned network with over 140 great locations within Australia and New Zealand.

With an average of 15 new stores opening every year, Oporto are looking for people who are passionate about serving amazing food, providing exceptional service and are hungry for success!

Does this sound like you? Yes? Then we want to hear from you, apply now to be a part of the amazing, progressive and dynamic Oporto team.

oporto.com.au/franchising

Bangers & Tash Pty Ltd.

Contact:

Jo Dickison

VERSION

Specials

Trim Size:

205mm (w) X 275mm (h)

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RESEARCH

BEFORE

YOU BUY:

STUDY P

otential small business owners, including franchisees, need improved education and support when deciding to purchase a business, according to recent research conducted by Griffith University’s Asia-Pacific Centre for Franchising Excellence.

The research was completed by researchers from the University of New South Wales and supported by CPA Australia and it found that the level of due diligence undertaken by prospective small business owners and franchisees in Australia is largely “unsophisticated” and most business owners have a naive appreciation of business.

Across the 60 independent business owners and franchisees interviewed for the research many were not familiar with the term “due

diligence” or how to accurately conduct due diligence effectively.

In a recent SmartCompany article professor Lorelle Frazer said that the centre decided to undertake the research off the back of an earlier study of the conflict in franchising, which found there was often an “expectations gap” when individuals chose to purchase a franchise.

“Everyone says to make sure you do your due diligence but do we really know if it makes a difference?” Frazer says.

“We wanted to explore that more.”

Franchisees were more likely to seek advice from a lawyer – 64 percent – compared to independents – 28 percent – but independents were more likely to conduct research about their chosen market – 41 percent.

Additionally, just 14 percent of franchisees said they researched their respective market before making a decision.

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DUE DILIGENCE "An investigation or audit of a potential investment. Generally, due diligence refers to the care a reasonable person should take before entering into an agreement or a transaction with another party."

[Investopedia] Make sure you do your due diligence. It is a small expense and effort compared to what could happen if you just take the risk, suggests lawyer Elizabeth Gore-Jones.

LEGALS What research to do: A company or bankruptcy search Personal Properties Securities Register search: check if the assets are encumbered Accountant's review: to ensure the finan-

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cials check out; any financial obligations under the franchise agreement; and the lease - this will give you advice about your financial obligations, in most cases this is required under the Retail Shop Leases Act.

Make sure you do your due diligence.

It is a small expense and effort compared to what could happen if you just take the risk

Solicitor's review: have your solicitor review your contract, the lease and franchise agreement so you know what you are getting into and to help to ensure you are getting exactly what you bargained for.

Property search: does the landlord actually own the property? Is there anything to prevent registration of your lease?

language, she suggests.

FINANCIAL DATA How do you determine sales for a franchise? Accountant Tim Kilham has some suggestions: “As a buyer of an existing franchise, you will find the historical data for that franchise is a great starting point. If you are buying the first franchise in a new system in an industry in which no franchises operate, the data you get may bear little relation to how your franchise will perform.

FRANCHISEES Ask franchisees about their business, says trainer and coach Karli Furmage.

“One of the best sources of information is existing franchisees. They can tell you the intimate details of what it means to own a franchise, what they are making, the hours they are working, what’s lived up to their expectations and their disappointments, the things they wished they had of known before signing on the dotted line.

“The ideal is to get as many facts as possible. Maybe in some instances they can back up what they are saying and will share profit and loss statements, supplier invoices, cash flow, detailed sales figures and rosters. More likely they won’t. That info is the heart beat of their business, so hand it over to a stranger is difficult.

“Most often the kinds of conversations you have will be peppered with the emotions surrounding their personal experiences.”

So be open minded, be clear on what you want to get out of the conversation. Ask for evidence and be suspicious of anything that sounds like opinion. Watch their body SEP/OCT 2015 | 18 | WWW.FRANCHISEBUSINESS.COM.AU

“The reliability and accuracy of the data you obtain affects the risk, and accordingly the reliability and accuracy of the data should be taken into account when deciding whether to purchase a green field franchise, and if so, how much to pay.”

If you are buying a brand new business (so there is no trading history) but the franchise system has existing franchisees then you should find out which other franchises in the system are most similar to yours and try to obtain financial information – and particularly sales figures.

Take care to identify a similar franchise: factors such as demographics, population density or location can mean that two franchises that appear very similar are in fact very different.

You could also look at other franchise systems that operate in the same industry or business benchmarks for the industry .

Go online to www.franchisebusiness.com.au to see more advice articles including this guide: Profit, not turonver – how to evaluate the franchise opportunity [http://bit. ly/1UoeEzS]

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f you are looking to buy a franchise, pay attention to the culture, suggests Greg Nathan. Here he explains why and what to look for.

A colleague once confided that one of the most surprising moments in her life, was when she stayed for a few days at a school friend’s house and discovered that not all families constantly hit and scream at each other. She said until she experienced a household where people were pleasant and considerate, she thought her violent family situation was normal.

HOW CULTURE INFLUENCES OUR FEELINGS AND BEHAVIOUR

at the family Christmas dinner.

While you may be the same person, you are also a different person!

The way a group of people habitually behave together - whether they are a family, a sports team, a religious group or work colleagues - is often referred to as their culture. This is why culture is often defined as “how we do things around here.”

Not only does culture influence our behavior, it impacts on how we feel. Some cultures are stern and oppressive while others are fun and liberating. We’ve all had the experience of walking into a shop and immediately feeling uplifted or oppressed, depending on the way things are being done. That’s the power of culture.

You may be surprised to know that, next to your personality, group culture has the biggest influence on your thinking, feelings and behavior. Think of how you change when you are at a football match, in a church, in a work meeting or

My colleague said her life changed when she realised there were family cultures different to hers. It gave her hope that she could create something better.

SEP/OCT 2015 | 20 | WWW.FRANCHISEBUSINESS.COM.AU

WHERE CULTURE COMES FROM The culture of a group comes from two sources - the leader and the group’s history. The leader sets the values and norms that others buy into, while the history sets up patterns of behavior that can be difficult for a group to shake, even when these serve no useful purpose.

Most people will have joined a group or started a new job and noticed people doing things that seemed a bit strange. If you had the guts to ask about it at the time, you may have been laughed at or had your opinion dismissed.

Yet a few months later you were probably doing these very same

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GREG NATHAN Greg Nathan CFE is founder of the Franchise Relationships Institute, global leaders in the psychology of franchising. He is author of several bestselling franchising books, including Profitable Partnerships, and a popular keynote speaker at franchise conferences all over the world.

things without thinking about it.

That’s the power of culture.

For this reason it pays to be a little fussy when choosing the groups to which you are going to spend a lot of your time. If you are looking to buy a franchise I’d suggest you pay close attention to the culture.

THE FIVE INDICATORS OF A HEALTHY CULTURE I’ve had an amazing opportunity over the past 30 years to work with more than 500 different franchise networks. I have visited their head offices, sat in meetings with their executives, worked with their franchisees, trained their franchise

support teams, and watched franchisees and franchisor executives interact together at their conferences.

There are five things I pay attention to when assessing the health of a franchise culture. I suggest you do the same.

1. FRANCHISEES AND FRANCHISOR STAFF ARE GLAD THEY JOINED Ask franchisor staff what it’s like to work here. Listen carefully to their responses and watch their body language. Do their eyes light up as they give a simple and unreserved response? Or do they look a bit perplexed as they think of what to say, qual-

ifying their comments with words like “it depends…” or “generally speaking…”

If the company does regular franchisee satisfaction surveys, (and most franchise networks with healthy cultures do), ask to see franchisee responses to two important questions.

“Based on your experience, would you recommend this franchise?”

“If you had your time over, would you buy this franchise again?”

You are looking for a positive response by more than 70 percent of franchisees.

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Also ask whether any franchisor staff have left their job to buy a franchise. This is an indication of their confidence in the business model and the culture.

2. THERE IS OPEN SHARING OF INFORMATION AND DATA Ask franchisor staff if you can see information on the performance of existing franchisees. In a healthy franchise culture the franchisor will have access to accurate and up to date performance data on all franchisees, including detailed sales information, operating expenses and profits. And they will be happy to discuss this with you.

Also ask existing franchisees

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what sort of information they share between each other and how open people are collaborating and sharing operational tips.

Finally, consider how open people have been in dealing with you.

3. PEOPLE GIVE EACH OTHER THE BENEFIT OF THE DOUBT Ask franchisor staff to tell you about how a recent initiative has been implemented. Listen to how this was done, paying attention to the level of transparency in the decision making process, and the extent to which franchisees were involved.

Ask existing franchisees whether they think the franchisor team has their back and makes decisions with their legitimate interests in mind.

In a healthy franchise culture people trust each other’s motives and assume they are acting honestly and reasonably.

Also consider how open and straightforward franchisor executives have been with you.

Do you feel clear or confused after your meetings? Have they backed claims with facts, or are these based on hearsay? Have they delivered on their promises,

or do they always have excuses?

4. THERE IS DEEP ENGAGEMENT AND UNDERSTANDING OF THE BRAND While our culture reflects “how we do things around here”, our brand is our reputation. In other words, brand is what we want people to think about us and culture is what we are really like.

In a healthy franchise culture there is alignment between the brand and the culture. What you see is what you get. There is also a shared understanding throughout the organisation of what the brand stands for. This includes the staff of franchisees who are most likely to actually deliver the customer experience.

Ask people to tell you about the brand. Consider how clear and consistent they are in their responses. How enthusiastic are they when they talk about their products or services and how these are delivered? How proud are they of the brand?

5. EVERYONE IS FOCUSED ON THE MAIN GAME – CREATING HAPPY CUSTOMERS Many franchisor executives get

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so carried away with their brand, systems and achievements they forget the most important person in the world is the customer.

Some even confuse their franchisees with their customers.

There is only one customer and that is the person who chooses to shop with you.

In a healthy franchise culture, everyone – the CEO, the franchise sales manager, cleaners, franchisees and front line staff – is regularly reminded that the organisation exists to create and maintain happy customers.

Every decision is made through the filter, “Is this something our customers will appreciate?”

So ask them to tell you about their customers and listen to how closely they understand why their customers will continue to shop with this brand and not buy somewhere else.

In summary, when you join a franchise network you are joining a culture which is likely to have a big impact on your thinking, behaviour and life satisfaction.

While we may not be able to choose our family, we can choose the groups to which we belong, so choose wisely.

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How to spot an

UNDERVALUED

FRANCHISE

BY JASON GEHRKE Jason Gehrke is the director of the Franchise Advisory Centre and has been involved in franchising for more than 20 years at franchisee, franchisor and advisor level. He advises both potential and existing franchisors and franchisees, and conducts franchise education programs throughout Australia.

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t’s not often that buying a franchise is described as getting a bargain and typically, buying a franchise costs more at first than setting-up an independent business. But this is usually offset by improved cashflow, faster achievement of breakeven, more effective marketing, rapid operational deployment and reduced risks to the operator due to the training and support provided by the franchisor.

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Franchise buyers will generally have a choice of two types of franchise: an existing business that is being sold as a going concern, or a greenfield (ie. start-up) which has not yet begun trading.

Depending on a potential franchisee’s willingness to accept a higher level of risk in their business investment, it is possible to occasionally find an undervalued franchise, be it a going concern or a greenfield.

1. GOING CONCERN A going concern outlet in an established network may be sold for a lower price than a greenfield franchise for a variety of reasons, including: ✱ outlet underperformance ✱ the outlet lease or franchise agreement is approaching the end of its term without an option for renewal ✱ the outlet has ageing

equipment, fittings or stock ✱ the owner is under pressure to sell, particularly within a compressed timeframe

where they are already trading.

An outlet might underperform for a variety of reasons. For instance it could be in a poor location, the owner may not be managing the business particularly well, the outlet could be presented poorly, it may not offer a complete range of product or services.

A franchise sold toward the end of its lease or franchise term (where no renewal is offered or available) will be worth much less because a buyer will only have the business for the balance of the term available, and consequently will have much less time to earn back the price paid to buy the business.

If you are able to identify the root cause of the underperformance in the business, and are confident that you can overcome those issues, then an underperforming franchise could be an excellent bargain for the savvy franchise buyer.

Existing franchisees are often excellent candidates to buy underperforming outlets as they have the operational expertise to address the performance issues, and are often capable of taking on an extra outlet close to

SEP/OCT 2015 | 26 | WWW.FRANCHISEBUSINESS.COM.AU

END OF LEASE OR FRANCHISE TERM

If a business has only one year left on its five-year franchise agreement and retail lease, it is conceivably worth only 20 percent of the price of a business with a full five-year term available.

If you are new to franchising, then buying a business in these circumstances is not recommended unless are prepared to accept the risk that your lease or franchise term will run out

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The best chance of finding an undervalued franchise is to look for a going concern that is underperforming

before you have made enough money to get a return on your investment.

AGEING EQUIPMENT OR FITTINGS A business which has visibly ageing equipment, fixtures, fittings, or aged or depleted stock could potentially be bought under full market value because it needs a level of reinvestment that the current operator cannot afford or is otherwise unwilling to make.

An example might be a retail store which is looking old and tired, but which still has a considerable term left on its lease (or which requires a refurbishment as a condition of granting a renewal on its lease).

If the existing owner has not set money aside to reinvest in their business their sale price will be reduced accordingly.

While a new owner might pick up the business at a lower price, the additional investment required to refurbish the store, upgrade the equipment and fittings, or buy new stock, might bring the total cost of acquiring the business to the same level as buying another at full price.

THE OWNER IS UNDER PRESSURE TO SELL A colleague once told me that that to get the best deal when buying a business, you should look for three things: debt, death or divorce.

These three things can all put pressure on an owner to sell a business. Too much business or personal debt can force a sale, a death in the family (or of the owner themselves) can force a sale, and the division of assets that usually accompanies a divorce can also trigger a sale.

In each of these cases, a sale is likely to be conducted quickly, and in a shorter timeframe than would be undertaken for a business operating under normal circumstances.

The need to appease one or more third parties (eg. secured creditors, ex-spouses, the beneficiaries of an estate) from the proceeds of a sale can provide a strong incentive to sell quickly, even if it is not always for the best price. This might be bad news for a seller, but good news for the buyer.

2. GREENFIELD LOCATIONS Undervalued greenfield franchises are harder to find and come without an existing income stream, compared to going concerns.

Established franchisors will rarely, if ever, discount new franchises. However every few years they might review their franchise to reduce some of the costs in setting-up a new store.

For a retail business with a set-up cost of say, $400,000, a review might be able to reduce the set-up cost by five or 10 percent

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if a different fitout, fixtures or fittings are used, or a lower up-front franchise fee is applied.

While this might not be a large enough reduction to qualify as undervalued, it is still a valuable saving for a franchise buyer.

Generally speaking, undervalued greenfield franchises are most likely to be offered by start-up franchisors who are keen to attract enough early adopters to get their network to achieve a critical mass of outlets as quickly as possible.

However this occurs quite rarely as most new franchisors tend to need the capital inject-ion from granting franchises more so than a critical mass of outlets. When it does occur, outlets may only be offered to those who already have a relationship with the new franchisor, and therefore the vast majority of potential franchise buyers will be unaware of the

undervalued offer.

Regardless of the circumstances of a franchise offer, a potential buyer must always undertake extensive due diligence before commiting to a purchase.

So with this in mind, the best chance of finding an undervalued franchise is to look for a going concern that is underperforming, in need of reinvestment, or where the owner is in financial strife or has other serious distractions in their life.

Strangely enough, few of these circumstances commonly feature in For Sale headlines, so a closer look at the advertisements for existing businesses for sale will reveal whether or not they represent an opportunity to buy a bargain.

Happy hunting, and always remember that if a deal looks too good to be true, it probably is.

SEP/OCT 2015 | 29 | WWW.FRANCHISEBUSINESS.COM.AU

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AVOID A LET-DOWN when you buy a franchise

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

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fter a franchise buyer’s initial euphoria, the reality of the day to day business sets in. So it’s important for new franchisees to start off confident in their brand choice to avoid slipping down the slope to disappointment.

There are many successful franchise systems that act responsibly and support their franchisees. Franchisors have a vested interest in their business, staff training, research and development and look at ways to improve their system for the benefit of the brand, their consumers and their franchisees.

However, for a variety of reasons, franchisees may have entered into a franchise system and become disillusioned. They may:

There are some fundamental questions a franchisee should ask themselves, before committing to a franchise.

✱ have bought the wrong franchise ✱ have believed the hype ✱ have discovered the business is not for them, they actually don’t like the work and it’s not what they expected ✱ have failed to objectively assess whether there is a financial return on their effort and investment ✱ not be prepared to be held accountable and follow the system ✱ have changes to personal or financial circumstances since becoming a franchisee due to health, family or other reasons.

✱ is there a financial return on my effort?

Can I take out a reasonable salary for my effort? If not – walk away. ✱ is the business sustainable or a passing fad? ✱ am I likely to have something of value to sell in the future? ✱ can I see the brand and business building goodwill?

Franchise buyers need to ask the right questions.

If it is too good to be true – guess what?

It is!

SEP/OCT 2015 | 30 | WWW.FRANCHISEBUSINESS.COM.AU

There is no franchise or business where returns are made without effort, dedication and commitment.

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TOP TIPS FROM

FRANCHISEES W

hat does it take to run a successful franchise? Franchisees pinpoint two key elements to getting it right in business. Any franchise buyer will need to take the right steps to choosing a franchise that matches their requirements; that’s the most significant pre-purchase activity, and those steps include understanding the lifestyle goals, budget available, demands of the franchise and thorough research on the brand, the business and the sector.

Once a franchisee is installed in their brand new business however, there are simple ways to stay on top of running the franchise that will only serve to boost performance.

TIME MANAGEMENT Franchisees on an FCA Franchisee Success Panel at the SEP/OCT 2015 | 32 | WWW.FRANCHISEBUSINESS.COM.AU

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A franchise with a strong team in place is able to step away from the day-to-day business operations and take a more strategic role

Brisbane Franchising & Business Opportunities Expo all agreed that time management is absolutely crucial to getting off to a good start.

But it doesn’t happen automatically. For long term franchisee Shannon Hickey, the lesson in time management was only learned once he married and had a young family. With a family background in retail newsagencies driven by a strong work ethic it is easy for Hickey to spend all his time developing his business; learning to cut back his hours to find time for his family, and to take holidays, has been a big step.

Gavin Tandon, a newbie franchisee with Smartline, is particularly aware of the challenges of time management and has been getting advice from his franchisor on how best to organise each working day.

And that’s a tick in favour of investing in a franchise, said Victoria Wilkinson, a First Class Accounts franchisee for 11 years.

“That’s why it’s good to buy a franchise rather than go into business by yourself. You can get that kind of help and advice from the franchisor and other franchisees,” she said.

Some franchise systems have a segmented day that makes time management easier, as Duane Collins pointed out.

Collins is a franchisee with Jim’s Test & Tag, and his day starts early servicing tradies before addressing the corporate clients. Built into each day are blocks of time to manage the admin.

“You have to be disciplined.

If you think, I’ll leave it till tomorrow, then it mounts up and you have a whole day to do at the weekend.”

High flying Natalie Kington is just 12 months into her first Laser Clinics Australia franchise and has already added a second clinic to her business, with her eyes on a third outlet.

STAFFING Kington pinpointed the need to effectively manage her time so she could work on the business, not in it. A second crucial part of her franchise success is due to good staff, she says.

Other franchisee panellists who have employees echoed her conviction that the biggest challenge can be managing staff but that this aspect of business is fundamental to running an effective franchise.

A franchisee with a strong team in place is able to step away from the day-to-day business operations and take a more strategic role that encourages growth, particularly through multi-unit expansion.

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SWEET REWARDS of becoming a Gelatissimo franchisee To change your lifestyle through investing in a business that is fun, flexible and rewarding contact Karen at Gelatissimo on (02) 8845 0100 or email franchise@gelatissimo.com.au.

gelatissimo.com.au

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Why you need a

TERRITORY

BY PETER BUCKINGHAM Peter is managing director of demographic and location analysis fi rm Spectrum Analysis. He has wide experience in management, market research and projects as an experienced consultant to the retail and franchise industry.

SEP/OCT 2015 | 37 | WWW.FRANCHISEBUSINESS.COM.AU

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hen you are looking at buying a franchise, the options open to you are very varied: from a service business to a bricks and mortar shop, from cleaning pools to selling furniture and beds, from mobile coffee to aged care.

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Many franchises come with a territory, or a preferred marketing area (PMA) or an exclusion zone (EZ) – these all serve a different purpose but are basically a map with a right to use that area in some way within your business.

However many large, established businesses and retail chains will not provide a territory, PMA or EZ as they are powerful enough as a brand to say you can market where you wish, and this is where you are starting from – the store. McDonalds, Caltex, Flight Centre and many others can and do operate this way.

If on the other hand you are buying a service business, it is almost essential there is a properly defined territory identified in the franchise agreement. This defines the area leads are generated within, and that the leads generated from online, telephone calls and other approaches to the call centre are sent to you for action. This is what you are paying for, and this needs to happen in a seamless process.

Franchise systems like Mortgage Choice, ANZ Mobile Lending, Appliance Tagging Services, Bridgestone, KwikKopy and

What you need to know is how that territory was established and was there a systemised process Aussie Homeloans all operate with clearly established territories.

Smaller businesses and newer businesses need to give a territory to attract you, and give you a sense of security in your new investment. What you need to know is how that territory was established, was there a systemised process, and can it be easily defined so that the leads from within the territory go directly to you for action?

EQUALITY Any franchisor operating territory-based franchises should be able to stand up and

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say (hand on heart), “Our territories were created to offer similar opportunity to our franchisees based on the following assumptions.”

Now those assumptions may be explained as, for example: “Each territory was based on 10,000 households, and because what we market /service is more suitable to higher socio economic areas, the high socio economic areas require only 8,000 to 9,000 households, where lower socio economic areas require 11,000 to 12,000 households.”

There needs to be basic logic and some assumptions about the future business,

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So a territory is often seen as the best option for a franchisee, as it clearly also covers any issues about acting as an exclusion zone, and sets that area as the preferred marketing area in terms of leaflet drops, cold canvassing and other local area marketing.

Many franchisors are reluctant to give a territory as they can see it as limiting in the future, especially if they feel their brand is going to go gangbuster. In reality this rarely happens quite to the extent that they dream of, and in most cases giving territories for a 10 or 20 year agreement assists in securing the franchisees to the brand.

and then these need to be used honestly to create territories of similar opportunity.

We normally recommend that as there are around 2,600 postcodes in Australia, as long as the franchisor has a vision of fewer than 300 territories Australia wide, then using Australia Post postcodes is the way to go.

Almost everybody knows the postcode they live in, and it makes it very simple to allocate the jobs to the relevant franchisee.

THE OPTIONS Most new franchisees want a territory rather than an EZ or PMA, as it gives security. A territory is a bit like having a Torrens title on a block of land; something that once issued cannot be easily revoked, has value and can be sold in the future.

This is no different to owning a block of land rather than leasing the land, as far as long term security is concerned.

SEP/OCT 2015 | 39 | WWW.FRANCHISEBUSINESS.COM.AU

In many cases even if there is a territory, there is nothing stopping the franchisee opening second and third stores in the future, or running multiple vans if the demand is there.

If you are a potential franchisee, ask how the territories have been formed and why, and if you see a ‘beer and pizza’ map on the wall suggest a data driven territory planning process is necessary before committing your hard earned money.

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TOP POINTS TO LOOK OUT FOR IN A LEASE AGREEMENT

1. A LONG ENOUGH TERM It is ideal if your franchise agreement and lease coincide. If the lease finishes first, is there an option to find alternative premises?

If you are buying an existing business ensure there is enough lease term left.

2. RIGHT FOR A FRANCHISEE TO OCCUPY It is a fundamental requirement for leases of franchised businesses to allow a franchisee to occupy the premises if the franchisor holds the lease.

3. LEASE DISCLOSURE STATEMENT A lease disclosure statement includes important information such as outgoings obligations and about the shopping centre (if the shop is located in one). Ensure you get a copy of the disclosure statement prepared by either the landlord or the franchisor.

4. RIGHT TO TRANSFER Whether a lease is held by franchisor or franchisee, the tenant should be able to transfer the lease to any approved franchisee or potential franchisee within the same franchise system, without the landlord refusing consent.

5. REFURBISHMENT Both franchisors and landlords may have

separate refurbishment requirements.

Refurbishments are typically done at the end of term or every five years and it is common for the franchisee to foot the bill.

Holman Webb lawyer Corinne Attard says “Be aware that the refurbishment timing of landlord and franchisor may not coincide particularly if the lease term and franchise term do not match.”

6. FIT-OUT CONTRIBUTIONS Landlords frequently provide fit-out contributions or lease incentives to their tenants – sometimes these are passed on to franchisees.

“Most landlords require that the contribution be refunded (usually on a pro rata basis) in certain situations such as termination of the lease for breach or if there is a transfer of the lease so even if it is passed on to the franchisee you may need to pay it back,” says Attard.

7. USAGE AND MENUS Shopping centre landlords often try to restrict food court retailers to serving a set menu as it avoids conflict between retailers and possible exclusive rights.

However, as a general rule a broader usage benefits the franchisee.

8. SIGNAGE AND MARKETING Leases often have strict requirements for landlord consent for displays and signs, SEP/OCT 2015 | 40 | WWW.FRANCHISEBUSINESS.COM.AU

says Attard. Franchisees may be required by the franchisor to display promotional or temporary signage so landlord approval needs to be granted to allow promotional signage that conforms with the franchisor’s image or marketing campaigns.

9. BANK GUARANTEE A franchisee usually has to provide a bank guarantee for several months gross rent as a security for the lease. Let the bank know of this requirement early to ensure there is no delay in accessing the premises.

10. INSURANCE A lease usually requires the tenant to take out insurances and franchisors are likely to insist the insurance is taken out by a franchisee (noting the interest of both landlord and franchisor).

LEGAL ADVICE Attard recommends you must also look at the usual tenant obligations such as the payment of rent and outgoings, trading hours and so on.

“Just like the franchise agreement the lease is a binding long term commitment and needs to be treated with as much care and due diligence.”

It is imperative to have a lawyer familiar with the retail leasing laws review the lease and/or your licence and the disclosure statements.

FR0715_000_RED

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RULE THE ROOST. Red Rooster Franchise Opportunity.

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QSR0001 RedRooster_FranchisePress_FA01.indd 1

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LE A SI NG in today’s world

W

ith an increased cost of living has come a property boom in Australia, particularly in Sydney where the average price of a home pretty much exceeds a million dollars, writes Nathan Stanogias. This makes it increasingly difficult for anyone to own their own property: be it a shop, a unit or a house. But despite all of the growth in costs franchise businesses still need to find a location, and there are many things that go into choosing the right spot.

Kristin Simondson from the LeaseWise Group says that it’s important to remember that each individual brand has its own requirements, and that a standardised approach will likely harm a niche business.

“Every member of our team has unique retail and/or commercial real estate experience, meaning that we understand not only the importance of good site selection from a legal and financial standpoint, but also from the franchisee’s point of view in two or three years’ time.

SEP/OCT 2015 | 42 | WWW.FRANCHISEBUSINESS.COM.AU

“Each site needs to be a viable business in the long term, whether it is a company store or franchised,” Simondson says.

Key shopping strips have taken beatings over the past five years – like Melbourne’s Bridge Road or Sydney’s Oxford Street – and it seems as if For Lease signs are regular additions to the streetscape.

Is this a sign of a greater leasing demon or just an example of how important it is to choose the right location? Simondson believes it’s crucial to contact

FR0915_000_GRO

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the right people to help you pinpoint the right location.

different and requires unique research into location selection.

“Having the right contacts in leasing can really assist with forward planning on expiry profiles of shopping centres or retail strips, but even with the right contacts and a strong brand, most of the time the right site is all about timing.

“Stockland owns and operates 41 shopping centres throughout Australia, providing retail space to more than 3,200 retail tenants who, in turn, generate turnover exceeding $6.3 billion per annum. Every one of our shopping centres is different – and vary from small neighbourhood centres to sub-regional and super-regional centres.

“In the last 12 months I’ve found our ideal shopping centre sites have been easily acquired, with retail strips proving difficult to acquire a viable site (there’s a lot on the market, not much of it is very good).

“Because we are in the market on behalf of multiple clients nationally, we find that we are uniquely equipped with the knowledge and contacts needed to ensure quick provision of a short list of ideal sites,” Simondson says.

RESEARCHING SHOPPING CENTRES For the shopping centre giants there’s a part to play in helping retailers secure the right locations for their business, which help contribute billions of dollars per year in turnover. General manager of retail leasing at Stockland Tony Tsekouras says that it’s important to remember that each shopping centre is

“Our development and retail leasing teams work very closely with retailers to ensure the retail mix in each centre caters to our local customers’ needs and aspirations, thereby doing everything possible to ensure our retailers will thrive and grow within the trade area,” Tsekouras says.

Factors such as customer demographics, traffic data and customer surveys help to shape and define the right locations for franchises. Tsekouras says it isn’t necessarily difficult, though, and if all the right steps are taken all parties are happy: vendor and occupant.

FINDING A FRANCHISE LOCATION “Finding the right retail location is not difficult; the secret behind the success of franchisors and major retail brands is leaving no stone unturned,

SEP/OCT 2015 | 44 | WWW.FRANCHISEBUSINESS.COM.AU

and leaving nothing to chance.

Stockland owns and operates a very stable portfolio of shopping centres across Australia and, in many instances, we’ve either developed these centres from the group up, or acquired and owned the centres for 20, 30 or 40 or more years.

“Our depth of experience, coupled with very granular data analytics, detailed information on local customer demographics and regular customer surveys gives us a very good understanding about the type of retail businesses that are likely to succeed in any given Stockland shopping centre,” Tsekouras says.

Despite standardised rising rent costs Tsekouras explains that there is a requirement to ensure there is a sustainable environment for small business and franchisees within the community. Essentially, it’s key to attract the right people and keep them around.

“We [Stockland] are very aware of the role we play in supporting small business entrepreneurs within our communities. We pride ourselves on our financial performance and ability to create sustainable, lasting business relationships with our retail tenants, and this is reflected in the average tenure of our tenants across Australia,” Tsekouras says.

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FR0915_000_REF1

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FR0915_000_REF2

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“I’ve seen a 100% growth per year” Jim Gleeson – Franchise Owner

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1

FR0715_000_FCC

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HAVE YOU CONSIDERED A

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This ensures that you have all the tools you need to build your own successful business.

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What you need to know about

LEASING AND

DISPUTES

BY GEOFF BROWNE, VICTORIAN SMALL BUSINESS COMMISSIONER Geoff Browne was appointed as Small Business Commissioner in October 2011. Prior to the appointment, Geoff was deputy director at Consumer Affairs Victoria, for six years. He has had senior management experience in both the public and private sectors, working in telecommunications, finance, and e-commerce. He has also run his own small business.

R

unning a franchise can lead to great success but it may also require some challenging problemsolving. Here we look at the issues surrounding leasing and disputes.

In the first article in this series I looked at two fundamental questions you need to answer before you enter into a lease agreement. I also pointed out some areas where things can go wrong based on the 1,077 applications my Office received for retail leasing disputes alone in the 2014-2015 financial year.

In light of these figures, I am providing a checklist to work through if you find yourself in a dispute, or in a situation SEP/OCT 2015 | 49 | WWW.FRANCHISEBUSINESS.COM.AU

where a dispute may arise.

Please note, contact details for State Small Business Commissioners are provided at the end of this article.

1. CAN YOU IDENTIFY WHAT THE PROBLEM IS AND WHO THE PARTIES ARE? In the earliest stages of a leasing dispute, it

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Can you provide evidence showing a breach and any damage you have suffered is a good idea to prepare a short statement of the problems at hand so that you can present a clear summary to the other party.

This also enables any third party to identify what’s going on if the dispute escalates.

In preparation, you should consider: ✱ has there been a breach of your lease and/or franchise agreement? ✱ can you provide evidence showing a breach and any damage you have suffered? ✱ aside from your contract / agreement with the landlord are you aware of the relevant laws in the area? Your State Small Business Commissioner should be able to point you in the right direction.

The earlier article clarifies who your landlord is in a franchising dispute.

2. WHAT DO YOU REALLY WANT? Consider if an agreement cannot be reached between you and the other party, what are your best and worst alternatives?

Are there any other ways that you could settle this dispute? Also consider what is your bottom line.

In resolving disputes, it is important to consider where the other side may be coming from – however difficult that might be to do. Recognising that the other party will have their own side of the story is a key step in resolving disputes.

3. HAVE YOU CONTACTED THE OTHER PARTY YOURSELF TO DISCUSS THIS ISSUE? Try to contact the party to discuss your issues. This will give them an understanding of the problem. At this stage, it is useful for the communication to: ✱ be in writing ✱ be calm and professional ✱ deal with facts, not people or emotions ✱ include options for the two parties to resolve their issues.

4. WILL YOU BE USING A SUPPORT PERSON OR PROFESSIONAL REPRESENTATION? You may want to consider using a support person. This may be a professional such as a lawyer or accountant, but it may also be a friend or colleague who you trust. If using a professional, make sure you are aware of: ✱ what their costs are, and what they expect the total costs to be in representing you if a dispute takes longer to resolve than expected; ✱ whether they have experience in this area. Do they specialise in commercial leasing issues, and do they understand the process of alternative dispute resolution? ✱ if they have a good understanding of how you would be prepared to resolve this dispute and what you would settle for.

5 STEP SUMMARY 1. Prepare a short statement summarising the facts of the dispute 2. Clarify what you really want and how you would be prepared to resolve the dispute 3. Write to the other party to discuss, clearly and calmly, your issue and possible options for resolution 4. Consider arranging for a support person

5.CONSIDER WHETHER YOU NEED DISPUTE RESOLUTION/MEDIATION If you have worked through these steps and your dispute remains unresolved, contact your State Small Business Commissioner: ✱ Victorian Small Business Commissioner: www.vsbc.vic.gov.au or phone 13 8722 ✱ NSW Small Business Commissioner: www.smallbusiness.nsw.gov.au or phone 1300 795 534 ✱ WA Small Business Commissioner: www.smallbusiness.wa.gov.au or phone 13 12 49 ✱ SA Small Business Commissioner: www.sasbc.sa.gov.au or phone 1800 072 7222

SEP/OCT 2015 | 50 | WWW.FRANCHISEBUSINESS.COM.AU

FR0915_000_SNO_r

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WHAT HAPPENS IF I CANNOT PAY MY

FRANCHISE ROYALTIES?

BY JANE GARBER-ROSENZWEIG Jane’s practice focuses on commercial law, franchising, distribution and licensing on a domestic and international basis, leasing, and the protection of intellectual property.

Jane is also adjunct lecturer at the College of Law and a board member of Awards Victoria.

SEP/OCT 2015 | 52 | WWW.FRANCHISEBUSINESS.COM.AU

W

hen buying a franchise, all potential franchisees have the vision of running a successful business and complying with the franchise agreement. However, the reality of business and the tough economic conditions may result in inability to pay the bills when they fall due including the royalties due to the franchisor.

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So if you find yourself in a predicament of not being able to pay the franchise royalties, the best thing to do is to speak with the franchisor without delay.

sale. In some cases, the franchisor may even buy your business back. However, in many cases this may not be a viable option or your business may not attract an acceptable offer from any purchasers.

Discussing your financial troubles with the franchisor may seem daunting.

However, it is much more productive if all parties in the franchise relationship are on the same page. The open conversation with the franchisor may also make the situation much less stressful for you. Your financial struggle may only be of a temporary nature, for example you may fall ill or something unexpected may happen in your personal life. Even if your issues are ongoing and are of more permanent nature, the franchisor may be better equipped to make suggestions as to how you can trade out of the financial struggles. The franchisor may offer you a royalty free period and even negotiate a rent relief with the landlord.

If you find yourself in a predicament of not being able to pay the franchise royalties, the best thing to do is to speak with the franchisor without delay

You may also wish to ask for the chisor’s consent to try and sell business and cut your losses. Many chisors will agree and assist with

When deciding whether to have a discussion with the franchisor regarding your financial trouble, you must remember that the franchisor has the right to issue you with a notice of breach in relation to the royalty non-payment. This right is afforded to the franchisor in accordance with the franchise agreement and the Franchising Code of Conduct. If a notice of breach is issued, it must describe the breach, in this case the non-payment of royalties, and give you reasonable notice to cure the breach by making the payment within a reasonable time, which does not need to exceed 30 days.

If you pay the amount listed in the notice of breach, there is no further issue. If you cannot make such payment, the franchisor has an option to terminate your franchise agreement and you will no longer be able to operate your business.

In this case, you may not just lose your

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SEP/OCT 2015 | 54 | WWW.FRANCHISEBUSINESS.COM.AU

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business, but depending on the provisions of your franchise agreement, you may also be prevented from opening and operating a similar or competing business within a certain radius and for a period of time post termination.

Please note that if you become bankrupt (for individuals) or insolvent (for companies), where a trustee in bankruptcy or an administrator/receiver/liquidator is appointed, the franchisor will have the right to terminate the franchise agreement immediately and without providing you with any prior notice.

If you find yourself in financial trouble, you should also consult with a lawyer and an accountant concurrently with holding discussions with the franchisor.

An accountant may be able to consolidate your finances and enable you to reallocate funds to pay the outstanding royalties. A lawyer will be able to assist in any negotiations with the franchisor.

The main thing to remember is not to ignore the problem but to deal with it as soon as possible.

SEP/OCT 2015 | 55 | WWW.FRANCHISEBUSINESS.COM.AU

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A caffeine fi x

SEP/OCT 2015 | 56 | WWW.FRANCHISEBUSINESS.COM.AU

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I

f owning a cafe is a dream of yours, read on, and find out what’s happening in the coffee arena right now.

Mmm, the smell of freshly roasted coffee.

There’s nothing quite like it, and it is the olfactory boost that most of us need to kickstart our day. The humble cup of coffee that once graced the family breakfast table is now a takeaway espresso, cappuccino or latte with skimmed milk picked up on the way to work.

Coffee is an integral part of Australian life today, whether customers are enjoying their caffeine hit on the run, or savouring their favourite roasted beans at a leisurely get-together with friends.

The café coffee market is a dynamic, highly competitive arena, with high profile franchise chains and quirky independents jostling for position.

The development of the coffee market is apparent not just through the number of brands but the different business models operated across the sector. If we disregard the influx of mobile coffee vans and focus just on site-based retail, there are traditional in-line high street outlets, cafes and smaller footprint kiosks in shopping centres, drive-through stores, even coffee outlets housed in shipping containers at airports.

We know from visitor searches on our online site www.franchisebusiness.com.au that potential franchisees see the value in the coffee business So how can a franchise buyer make a considered choice between the franchise systems in the coffee space?

We’ve made it easy for you to get started on the search for the perfect coffee franchise; eight well-known franchised brands have answered our questions about their business, and the challenges faced by today’s coffee chains.

So what is the biggest challenge for coffee chains?

“Customer expectation is moving rapidly and the need to remain relevant is greater today than ever before,” says Gemma SEP/OCT 2015 | 57 | WWW.FRANCHISEBUSINESS.COM.AU

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demand for better quality products and has triggered the fragmentation of the coffee market into smaller specialised segments which are catered by a growing breed of independent coffee houses, says Federico Pimentel, global marketing manager at The Coffee Emporium.

LEWINA STUART FROM JAMAICA BLUE

“These coffee houses operate on the higher end of the market and compete indirectly with the mainstream coffee chain houses.

Although The Coffee Emporium operates through a franchise system, the quality of our coffee remains paramount.”

And that's a point Alicia Atkinson, Michel's Patisserie managing director, highlights.

She believes the biggest hurdle to overcome is "Changing the perception that chains can't make great coffee."

The flavour of the roasted beans is fundamental to all the coffee chains featured here; all either roast their own, have a subsidiary roaster or employ a supplier to source exclusive blends.

At Degani the role of the local coffee roaster even extends to barista training to ensure the beans are treated correctly to maximise flavour.

DEGANI The Degani difference is offering a franchise with individuality, allowing the franchisee to tailor the store to suit the local clientele.

Fitzsimons, national franchise manager for Muffin Break.

To stay relevant requires ongoing product, design and technology innovation and regular skills training, she says.

“This is a costly exercise and with rising business costs (rents, cost of goods, construction and labour) and increasing competition, the ability to return an acceptable return on investment is challenging. However, the risk of not doing this is far greater.”

ent cafés that offer a unique dining experience. It is dangerous for coffee chains to ignore this.”

Drew Eide, the brand manager for Jamaica Blue, agrees.

“The current café industry is extremely fragmented and witnessing an explosion of strong new independent cafés. This means that we must continually evolve and innovate to remain relevant.

Degani’s national franchise development manager, Tanya Kanaris, says the challenge is the continual pressure to innovate menu offerings and serve an exceptional cup of coffee.

“Today’s café customers are more sophisticated than ever before and they have very high expectations. They also have plenty of choice. If we are not the best in our niche in every trade area in which we operate, then customers will simply choose to go elsewhere.”

“This is the result of a surge in independ-

A more refined coffee drinker has generated SEP/OCT 2015 | 58 | WWW.FRANCHISEBUSINESS.COM.AU

The brand established its outlets predominantly in Victoria, with 92 percent of stores within a 45km radius of Melbourne CBD. This includes high street locations and a shopping centre portfolio.

There is an emphasis on supporting franchisees with whatever marketing material they feel they need to grow their business locally.

Tanya Kanaris, national franchise development manager, says “We make sure that their marketing levy is reinvested into their local marketing plan so they benefit 100 percent.”

Kanaris explains that the flexible franchise business model, low royalties and personalised support structure are big drawcards for franchisees. And that has an effect on customers.

“Consumers appreciate a high quality dining experience as a result of a happy franchisee.”

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Innovations are in the pipeline too.

“We are working on a cutting edge loyalty program that will enable a tangible customer and brand interaction that will provide powerful information to franchisees, and the franchisor,” says Kanaris.

and practical training, with a number of barista shifts in the EQ retail stores to apply their skills.

The franchisor has a speciality coffee subsidiary company Jahnus which is responsible for all coffee roasted and distributed to Muffin Break and Jamaica Blue.

FOODCO The FoodCo business operates Jamaica Blue and Muffin Break.

MUFFIN BREAK

both

The new head office at the Entertainment Quarter in Sydney includes a training facility called the FOODCO Centre of Retail Excellence (C.O.R.E). This includes a coffee training room, training kitchen, conference room and a fully operational store that new franchisees are able to utilise during the intensive three week training program.

FoodCo works closely with a registered training organisation, Key Skills, so brand specific online and face-to-face training is nationally recognised.

When it comes to the coffee itself, new franchisees receive a total of 16 hours of theory

Muffin Break’s signature coffee blend is award winning and hand selected from five growing regions.

Within the network there are four systems: a kiosk in a foodcourt, inline in a foodcourt, a kiosk with seating and inline with seating.

Every franchisee has a strategic marketing plan specific to their store opening needs and the marketing kit to support this.

They also receive an annual marketing allowance to spend on stock items they can order online and specific local marketing for their store.

In addition to the national campaigns there

is a dedicated marketing representative for each state and territory within Australia.

Gemma Fitzsimons, marketing manager ANZ, Muffin Break, explains what brings franchisees and customers to the brand.

“I believe it’s about credibility. With more than 25 years of experience and a network of more than 300 locations, we are a recognised and trusted brand which continues to evolve to meet market needs.

“We have invested heavily to ensure the longevity of the brand via: franchisee system developments, establishing a best of breed training academy, refinement of business systems, accredited training programs, real time sales reporting, initial and ongoing franchisee support in key business areas, with brand innovations that include design refinements and customer engagement programs.”

Muffin Break is also approved by all four major banks – CBA, Westpac, NAB, ANZ – in Australia with 50 percent secured and 50 percent unsecured lending available to franchise buyers.

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And it is the flexibility that is highly valued by both customers and franchisees, suggests Drew Eide, Jamaica Blue’s brand manager.

JAMAICA BLUE Jamaica Blue is a flexible and creative concept with different café formats spanning fully licensed café-restaurants and in-line cafés, to kiosks and hole-in-thewall espresso bars. Jamaica Blue outlets currently trade within shopping centres, residential areas, CBDs, airports, hospitals, universities and high streets.

“The Jamaica Blue concept is extremely flexible in that we adapt the format of outlets based on location. Jamaica Blue was built on two simple beliefs that have guided us in everything that we have

done during the past 23 years. The first is a belief in sourcing, roasting and preparing the very best coffee; and the second is a belief in using only fresh, locallysourced ingredients.

“The vast majority of our menu items are made fresh in-house daily, and no two Jamaica Blue cafés will have exactly the same menu. This is what sets us apart.”

COFFEE SNAP SHOT DEGANI

DONUT KING

JAMAICA BLUE

MICHEL'S PATISSERIE

MUFFIN BREAK

THE COFFEE CLUB

THE COFFEE EMPORIUM

ZARRAFFA'S COFFEE

Australian outlets

77

300+

111

260

202

294

30

73

Franchisees in Australia

17

210

107

240+

175

206

30

42

Is the franchise term aligned to the lease?

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Not disclosed

How many different business models are there in your system?

4

3

4

3

4

3

4

4

Who finds the location?

Franchisor/ franchisee

Franchisor

Franchisor

Franchisor

Franchisor

Franchisor

Franchisor

Franchisor

Total cost of a franchise?

$250,000 - $750,000

$280,000 - $360,000

Not disclosed

$320,000 - $400,000

$250,000 - $400,000

$450,000 $700,000 + working capital ($30,000$50,000) and bank guarantee (2 months rent)

$150,000 - $450,000

$800,000 + GST

What deposit is required?

$11,000

$3,000

$10,000

$3,000

$10,000

$22,000

$50,000 + GST

N/A

Is there financial assistance available to fund the franchisee’s purchase?

No

Yes

Bank accreditation

Yes

Bank accreditation

Bank accreditation

Bank accreditation

No

What royalties and marketing fees are there?

5% royalties, 2% marketing fee

7% royalties, 3% marketing

Not disclosed

7% royalties, 3% marketing

7% royalties, 3% marketing

6% royalties, 3% marketing

5% royalties, 2% marketing

7% royalties, 3% marketing

How long is initial training?

4 weeks

4-5 weeks

4 weeks, 3 days

4-5 weeks

155 hours

240 hours

4 weeks

6 weeks

Where is training conducted?

Mostly in Brisbane

Head office training academy, Gold Coast

Head office training facility, Sydney

Head office training academy, Gold Coast

Head office training facility, Sydney

Brisbane corporate stores

Training facilities at Parramatta

Training academy and corporate drive-thru stores

What ongoing training is available?

Online training

Quarterly state-based workshops

State and network based training 2-3 times p.a. plus online and in-field training

Quarterly statebased workshops

After 3 months, 2 day training then online and in-field

Additional training available

Quarterly workshops

Workshops, conference, in-field

Is the franchisor a registered training organisation?

No

No

No

No

No

No

No

No

Does the franchisor source coffee beans from an internal coffee-roaster?

Yes

Yes

Yes

Yes

Yes

No, our beans are sourced by Douwe Egberts

Yes

Yes

What are the standard opening hours?

6am - 10pm depending on store

Shopping centre or high street hours

Typically 7am-5pm

Shopping centre or high street hours

Shopping centre or high street hours

Typically 8am - 5pm

Shopping centre hours

Typically 5am - 10pm

Is there a customer loyalty program?

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

How many cups of coffee are served in your network each year?

13.25 million

9.45 million

9.6 million

16 million

19 million

29 million

2.3 million

Not disclosed

SEP/OCT 2015 | 60 | WWW.FRANCHISEBUSINESS.COM.AU

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café model across its network. Typically these range in size from a 100m2 kiosk to a 200m2 for the CafeBarRestaurant model.

FRANCHISEE CINDY CHEN WITH BARISTA TRAINER DANIEL LOMBARDI

The Coffee Club is accredited with four financial institutions (Westpac, ANZ, NAB and BOQ) who will lend up to 60 percent against the business and further with asset backing.

Training is mapped to the Australian Qualification Framework, and verified by a Registered Training Organisation, to provide employees with the opportunity to gain certificates or diplomas in hospitality. A suite of barista training includes basic training to advanced assessment in troubleshooting and latte art.

The Coffee Club’s new Learning & Development Program (L&DP) which was established as part of a system overhaul in late 2014, was named the ‘Training Initiative of the Year’ in recent QSR awards.

The winning training initiative has had a substantial impact on The Coffee Club operations and bottom-line results. The top 10 stores to complete the new training program recorded a 6.7 percent increase in transactions and six percent increase in same store sales growth.

PASSION AND SKILLS MAKE A GREAT CUP OF COFFEE Award winning barista Cindy Chen has been the franchisee at Donut King Chullora for the past seven years.

Cindy has been a high performer at a number of barista competitions, taking out fi rst place in regional and third in national championships.

Cindy will participate in the finals of the Gourmet Australian Coffee Chain Championships this September.

“I am really passionate about making coffee and really enjoyed competing

in the championships and having the opportunity to highlight my barista skills,” she says.

“There’s definitely an art to making the perfect cup of coffee, the secrets are in quality of beans used, precision with your coffee shot and the silky texture of the milk,” she adds.

“I have always served my customers a winning cup of coffee, but now my store has proof it really is one of the best around.”

The current innovation is a tribute to its Caribbean namesake, Eide explains. There will be a Jamaican Street Food menu at all Jamaica Blue cafés across Australia and New Zealand, from 1 September – 31 October 2015.

marketing materials that are accessible to each franchise. Additionally, each franchise partner has the support of a dedicated marketing representative who acts as a consultant for developing local area marketing strategies.

Franchisees have access to national campaigns and programs as well as an e-shop with an extensive range of

THE COFFEE CLUB The Coffee Club operates kiosk, club and SEP/OCT 2015 | 62 | WWW.FRANCHISEBUSINESS.COM.AU

The new L&DP program comprises more than 300 different online training modules, eight in-person classes, more than 10 hosted webinars, and a number of guides and resources - all of which are updated on a regular basis by the academy leads.

The Coffee Club Group people manager Tammy Ryder says “With such a significant geographical footprint, our people are intrinsic to the fabric of our franchise.

It’s only by equipping our team members, from the crews on the ground to the senior leadership team in HQ, that we can foster a culture of excellence.”

ZARRAFFA’S COFFEE Zarraffa's Coffee was founded in Queensland and has a strong presence in the Sunshine State and in Western Australia.

The business has its own roasting company so roasting is done at head office and the beans are shipped directly to the stores.

So what is the brand's drawcard for customers and franchisees?, Founder Kenton Campbell says “It has always been great coffee, that and our

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Want to be in the drivers seat? …err easy chair?

Do you want to really take control? The Leather Doctor franchise is Australia’s largest mobile leather care company and part of a larger group that specialise in mobile furniture repair.

Leather Doctors have been the respected name in mobile leather repair for around 20 years. Established throughout Australia and now overseas we have a proven system mostly servicing the furniture market which is a huge, $7Billion p.a. (IBISWorld’s Furniture

• 50 Franchisees in Australia, 5 in Dubai • 20 year history • Contracts with Australia’s leading furniture retailers • Proven system ensure success Give us a call and we can help you take the drivers seat in your future… or in our case the easy chair.

Retailing market research 2012)

The Leather Doctor offers a proven system that ensures success. We have a national customer base of major furniture retailers and manufacturers as well as a well recognised brand within the private market.

This is backed up by the fact that our growth has continued each year despite economic conditions.

1300 453 284 Email: info@theleatherdoctor.net.au

www.myleatherdoctor.com.au

FP Franchising Mag.indd 1

National Marketing Manager: Dean Reid - 0438 844 238

27/07/12 5:21 PM

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tions including ecommerce platforms.

MICHEL'S PATISSERIE FRANCHISEE HANNAH CAMPBELL

Nic Brill, managing director says "It’s the product range that really sets us apart in the market. Seen as the bright pink beacon for fun loving shoppers looking for a treat, Donut King is now becoming a destination in its own right due to its high quality food and beverage offering.

"The biggest challenge is maintaining relevance and bringing customers a truly engaging in-store experience.

"This means chains must focus on innovation, customer service and store design, three elements that are core to Donut King’s current growth strategy."

MICHEL’S PATISSERIE Alicia Atkinson, managing director at Michel's Patisserie, identifies what attracts customers and franchisees to the chain.

"Michel’s is all about the experience.

Customers come in to store to enjoy a cup of coffee, lunch with friends and family, or to buy the perfect cake for their special event. ability to create the perfect cup of coffee for each individual. No matter what store our customers go to they can get their favourite cup of coffee, just the way they like it.”

He believes coffee chains need “to be more convenient, without sacrificing on product or service."

Innovation is important too, he says.

Fernando Pimentel, the new global marketing manager, has designed and implemented a marketing strategy supported by four key pillars of branding, social media, public relations and local store marketing.

"We have a vibrant coffee culture that, coupled with the new enhanced menu offering, will see the brand continue to perform in the competitive Australian café market.

Support for franchisees includes barista training and quarterly workshops.

"Michel's Patisserie has been raising awareness of the quality of our coffee by highlighting our awards (Roy Morgan's Coffee Shop of the Year for the last four years in a row) and educating our consumers about the skills of our highly trained baristas through campaigns and by entering competitions."

"We’re never complacent and will look to continually improve on convenience and our customer experience.”

“The Coffee Emporium is a premium brand that has built a solid reputation in the market based on its multi-award winning coffee, world-class food menu and outstanding guest experience."

While the franchise does not offer financial assistance for its franchise buyers, it does have affiliations with a number of banks.

Pimentel highlights the upcoming year as a significant milestone: in 2016 the brand will be celebrating its 25th anniversary.

THE COFFEE EMPORIUM

DONUT KING

The Coffee Emporium has undergone major transformation under the leadership and strategic direction of its group general manager, Daniel Isaac. For 2016 the company has budgeted for 12 more coffee houses to join the 30-strong network which includes espresso bars, kiosks, in-line and café/restaurants.

Donut King is part of the Retail Food Group. The doughnut retailer has just been crowned coffee king by consumer satisfaction research and ratings business Canstar Blue, and its coffee card loyalty program also rated as five star.

The Coffee Emporium has a strong relationship with ANZ Bank which may lend 50 percent of the total turnkey amount to a potential franchisee.

The brand's newest concept, Michel’s Patisserie & Café, was established in 2014 to extend the standard menu offer to include breakfast and light meal options.

"Whilst still maintaining a take-away offering, this concept offers an extended dine in experience, so customers are invited to stay a little longer," says Atkinson.

Marketing material is comprehensive, from posters and counter cards to menus and merchandising.

"Michel’s Patisserie & Cafés are equipped with an easy to run short order kitchen, an easy to execute menu that doesn’t rely on a fully qualified chef, together with a larger seating area to ensure all customers can be catered to."

Customers cannot yet order online but Donut King is looking at digital innova-

Michel's Patisserie chain is part of the Retail Food Group.

SEP/OCT 2015 | 64 | WWW.FRANCHISEBUSINESS.COM.AU

FR0915_000_MAR

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SPECIALIST FRANCHISE ADVICE FRANCHISE, LICENSING AND RETAIL GROUP ROBERT TOTH & MARIANNE MARCHESI The new Franchising Code of Conduct commenced 1st January 2015 and the ACCC has indicated they are actively monitoring compliance in the industry!

Minimise your risk and ensure your compliance to avoid fines and penalties.

Are your financials up to date? Do you need an audit certificate?

The deadline of 31 October 2015 is approaching to be compliant.

We are assisting local and international Franchisors to update their franchise documents for a fixed fee.

We provide advice in relation to: 1. International Franchisors and assist overseas companies to establish business in Australia 2. Master Franchising Rights 3. Dispute Resolution - Solution and Strategies 4. Franchisee Advice - Fixed Fee Reports 5. Sale or Purchase of Franchise Systems 6. IP/ Trademark Advice 7. Company Structure & Tax Advice 8. Employment Law We have a network of franchise consultants to assist our clients to establish their franchise system.

Member: IFLA (International Franchise Lawyers Association) and US Commercial Service and FCA (Franchise Council of Australia) We offer fixed fees based on the scope of work, so our clients can budget with certainty for their legal costs.

Contact: Robert Toth p: 03 9604 9410 e: rxt@marshmaher.com.au

Marianne Marchesi p: 03 9604 9413 e: mim@marshmaher.com.au

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PARTNER WITH THE EXPERTS IN FRANCHISING RETAIL FOOD GROUP (RFG)

is one of Australia’s largest multi-brand retail food franchise operators. With over 2,000 retail stores and 25 years’ experience in franchising, we offer the support system you’re searching for. Finance assistance is available for suitable applicants* towards the cost of a new store. A limited number of new stores are currently available nationwide for all franchise systems, as well as opportunities to join our mobile coffee franchise models.

* information contained within is subject to change at the sole discretion of the franchisor. For Franchise assistance terms and conditions visit www.rfg.com.au

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TO INQUIRE ON HOW YOU TOO CAN

OWN YOUR OWN FUTURE

CALL 1800 067 619 OR VISIT RFG.COM.AU

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CAN NEWSAGENCIES CO N N E C T WI T H A RE TA I L FUTU RE?

SEP/OCT 2015 | 68 | WWW.FRANCHISEBUSINESS.COM.AU

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T

he digital onslaught has had a significant impact on the world of print, and nowhere is that more obvious than in the newsagencies across Australia. So is there still life and business potential in the sector?

Remember when buying a newspaper on the way to work was standard practice, if it wasn’t delivered to your house in time for breakfast? When going to the newsagency to buy the latest comic was a pocket-money treat? We might still pop in at lunchtime to purchase a birthday card for a friend or to catch up with the celebrity gossip in one of the myriad weeklies, but Australians’ spending patterns in the newsagencies have changed considerably.

Today the trend for gambling is providing a lifeline for newsagents who take a significant part of their revenue from lottery ticket sales.

Despite this – and in spite of all the magazines, newspapers, cards, stationery items, gift merchandise, lollies and Lotto tickets – newsagencies have seen a decline in turnover, according to analysis firm IbisWorld.

For the five years to 2014-15 the drop has been 2.7 percent to $2.1bn – that’s slowing to a predicted decline of 1.5 percent to reach an industry revenue of $2bn in 2019-20.

In its report, IbisWorld indicates the following are external drivers to the market: ✱ Real household discretionary income ✱ Gambling expenditure per capita ✱ Consumer sentiment index ✱ Internet connections ✱ IT and telecommunications adoption Australians consume their news and information much more readily online, even though some publications are forging a place for themselves in the media landscape.

There has been significant consolidation within the industry as operators are classified either as growing or contracting newsagencies.

IbisWorld report author Claudia BirgioFicca says “Growing businesses have achieved this status by expanding and diversifying their product range and effectively generating avenues to attract new

traffic. Conversely, contracting businesses are those that have refused to evolve from their original operating model, and have therefore continued to lose sales across traditional product segments including newspapers and magazines.”

The traditional mix of merchandise is now seen in just over half the newsagencies across Australia.

Today newspaper sales by these businesses may account for as little as five percent to 20 percent of revenue. IbisWorld indicates that differences in the product segmentation could also be attributed to location and whether the operator is a franchise or an independent.

IT has had an enormous impact on this sector, and there is no alternative for business owners in this arena but to alter the model.

The report reads: ”Newsagencies are expected to reinvent themselves in a bid to address the structural changes shaping the industry.

“The industry needs to prepare itself for a future without newspapers.”

One solution to the problem of declining sales is Connect, an on-counter screen that offers consumers to access a range of expanded products and services that they would normally purchase from other retailers.

“The uptake of the Connect system by newsagencies is expected to provide a much-needed boost to revenue and profitability and slow the rate of decline across the industry,” the report reads.

The Connect system was introduced last year and allows customers to undertake tasks they would previously have completed at alternative venues like the post office: paying bills, shipping parcels and printing photos.

Consumers can also access online deals with Groupon coupons and pay for them in cash in-store.

SEP/OCT 2015 | 69 | WWW.FRANCHISEBUSINESS.COM.AU

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account for less than three percent of the market; Lucky Charm has 50 stores, Supanews, now owned by UK brand WH Smith, 28 outlets.

The other key players in the arena are buying groups: Newspower with 650 outlets equating to a 21.8 percent of the market; and NewsXpress with 182 stores and 5.2 percent market share.

THE FUTURE NEXTRA “The on-counter screens offer newsagencies the potential to increase their foot traffic, margins and the size of purchase baskets.

Newsagencies are also expected to benefit from an increase in revenue that would generally have flowed to retailers outside of the industry.”

consolidated newsagencies able to support a niche magazine presence on their shelves.

The likely end of free online news content may also have an impact on newspaper sales as publishers turn to paywalls to access digital information.

So supermarkets, Australia Post, stationery retailers and online retailers have become the industry’s major external competitors.

BEHIND THE SCENES

What is going to drive turnover is the forecast growth in incomes, and the consequent discretionary spend for new product categories such as parcel delivery, Groupon online deals and travel insurance.

While the consumer is the dominant customer (66.5 percent of the market), business accounts are increasingly important to newsagencies (17 percent), thanks to services such as parcel shipping and ink supplies. The growth is expected to continue to 2018-19.

Diversification, new services and a better collaboration with suppliers will help newsagencies to survive.

There needs to be a greater focus on presentation in-store, grouping similar items together, implementing colour blocking with displays and placing key selling items at eye level to encourage impulse purchasing, Birgio-Ficca suggests.

Key categories that will provide average gross profit margins of at least 50 percent include stationery, greetings cards, confectionery and beverages.

Predictions indicate that the greetings cards segment in 2014-15 will account for 25 percent of the market, with lottery tickets and magazines each bringing in 20 percent of the business. Newspapers will provide just 10 percent of turnover, with other goods making up the remaining 15 percent.

But we aren’t just spiraling down to disappearing outlets.

As the industry changes in response to consumer habits, so the profile of the sector will alter. Sure, smaller businesses are likely to drop away but that leaves us with larger,

WHO IS BUYING?

Subagents on-selling publications account for the remaining 16.5 percent.

THE COSTS? The margins on some products (newspapers, magazines and lottery products) are fixed by suppliers and monitored externally, and this has hampered the industry’s profit levels.

All newsagencies rely on staff, but the contraction in store numbers and a softer retail trading economy have reduced demand for employees over the past five years, reports IbisWorld.

Greg Campbell, CEO and director, predicts a change in the merchandise on the shelves in the short to medium term. More floor space will be given over to gift and fashion stationery and this will deflect the leakage and shrink of the magazine category.

It isn't good news for independents. The high street is most likely to suffer from store closures he says, and there is concern about regional locations.

“Larger centres tend to reinvest to innovate and refresh. We are strategically located in these precincts for this reason,” he says.

“Occupancy costs are a concern for a lot of retailers, no doubt this will continue.”

Fellow director, and owner of the Chermside Nextra outlet, Denis Hickey, agrees.

“The Nextra Group is well placed with a significant number of members in regional shopping centres which may be considered “fortress centres” i.e. ‘last man standing’.

“Wages (and penalties) together with occupancy costs usually result in “treading water” in the periods outside of seasonal occasions which are very profitable.

Hickey sees that the magazine category may benefit from higher priced niche titles.

Innovation is required from suppliers as well in the greetings card market he says.

Add to this slowing demand the changes in award wages, loadings and penalty rates.

The result is a reduction in the industry’s wage bill, with wage costs falling by an annualised 4.2 percent to $179 m in 2014-15.

“The card and wrap offer needs to be an important part of our offer and also requires card companies to develop new themes and products.”

WHO’S WHO?

So what of the services option that is being touted as a boost for newsagencies?

Of the franchise chains in this sector, according to IbisWorld, Nextra is the biggest, with 11.4 percent market share and 327 outlets.

Lucky Charm and Supanews together SEP/OCT 2015 | 70 | WWW.FRANCHISEBUSINESS.COM.AU

“It is hard to determine at this stage if Connect type operations would be profitable for us. To forecast five years ahead in retail is a big call. In three years things can change significantly.”

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SIX KEYS TO SUCCESS 1. Being part of a franchise group 2. Being part of a buying group 3. Ability to control stock 4. Experienced staff 5. Attracting local customers 6. Good presentation Store location is crucial, as is customer service and the ability to turn shoppers into loyal customers.

Source: IbisWorld

THE LUCKY CHARM Mike Kentros, managing director of The Lucky Charm says “Our model is vastly different to the traditional newsagency.

“If you were to only include the commission of Lottery products as gross sales, magazines and newspapers would contribute only eight percent of total sales. This is a far cry from the 30 percent of total business.

“Our TLC business model does not include sub agents and home delivery. Only three of our 52 stores have home delivery and those businesses are treated separately. We are a retail model.

“We no longer see ourselves as newsagents or newsagencies. Whilst we sell traditional lines sold in a newsagency we no longer carry the name newsagent, news or the like. Whilst magazines still play an important part in our stores, newspapers are no longer a strategic part of our future.”

Over time the business has initiated programs to boost sales of products like stationery and printer cartridges, to attract 30 to 45 year old women back into stores with gifts and stationery merchandise, and introduced the industry’s first loyalty card.

TLC Rewards now has more than 300,000 members, and the program has more than doubled customer spend: an average preRewards basket was $12.48; in 2015 the average is more than $26.

Two years ago TLC launched a contemporary shop fit that realigned magazines, stationery and gifts, and dropped the newsagency name.

In 2015 the business has moved online and introduced a Back to School list for

retailers. Consumers choose a store and product can be delivered within 24 hours.

you get left behind,” says McDonough. “We are always looking for new ways.”

“According to our key suppliers in Bauer Media, Hallmark Cards, Lotteries and GNS we are the best performing group and have been for years,” says Kentros.

One introduction is the WH Smith branded

SUPANEWS

The IbisWorld report mentions the Connect model which includes other services typically found at a post office. WH Smith has featured post offices in some newsagency outlets and that’s something that Supanews could consider down the track.

Daniel McDonough, franchise business manager for Supanews, predicts the newsagency model in five years will be very different from today’s profile. “Magazines will be reduced a fair bit but there will always be a space for them,” he says.

The full format model is more likely to mirror the WH Smith stores in the UK, which have for years included books in their merchandise line-up. Gifts, cards and books will form the basis of bigger stores.

Kiosks, relying on convenience and impulse buys, will have a different product profile.

gifts and stationery items that will help stack the Supanews shelves.

At a time when retail models are broadening their focus so that there is crossover in merchandise and services, differentiation has never been more important. Also in the WH Smith portfolio in Australia is the Wild Cards & Gifts Retail franchise chain – so how do the two businesses segment themselves?

“Supanews has Lotto and services; Wild is a specialist, and within a Wild store are cards, gifts and wrappings.

Full format stores will likely be 150sqm, occasionally 200sqm. “The days of the typical 400sqm or 500sqm are long gone there are just a few around.

“We will look at the model to take it forward to differentiate it and do it better.”

“In some shopping centres there may be room for one store and a couple of satellite outlets,” he suggests.

There are 1800 stores worldwide, and the experience and understanding of what works and what doesn’t is a huge benefit to the franchisees under the WH Smith umbrella, McDonough says.

Lottery tickets prove to be a traffic driver.

“We see a spike in our sales, so it helps our business,” says McDonough.

In the UK the Lottery sales line snakes through the store, rather than outside, promoting further purchasing from waiting customers. This is something that Supanews is considering adopting.

“Innovation is important. If you don’t change SEP/OCT 2015 | 72 | WWW.FRANCHISEBUSINESS.COM.AU

Extensive expansion is on the cards over the next 12 to 18 months. New stores could be brand new businesses or acquisitions of existing independent newsagencies, and the model dependent on what is required to fulfill the local services.

Source for industry statistics: IbisWorld Industry Report OD5495, Newsagencies in Australia, January 2015; author Claudia Burgio-Ficca.

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Is this your Dream Job?

“It’s a proven model ... the returns have exceeded my expectations and I’m really enjoying the work” Brady Morris - Dream Doors Franchisee Sydney Northern Beaches

✓Be your own boss ✓Earn great money ✓Provide a great service Join one of Australia’s fastest growing franchises, with a proven model and comprehensive support every step of the way. Since launching in Sydney in March 2014, Dream Doors has already achieved spectacular success, with local franchises popping up all over the country.

Proven results. Delighted customers.

The unique Dream Doors ‘facelift’ concept makes it possible for Aussies to achieve a ‘new’ kitchen for a fraction of the usual cost - by replacing doors, drawer fronts and benchtops. The market response has already been extremely positive, with some Dream Doors operators exceeding $400k gross profit in their first year.

Join a supportive network.

From just $75,000 + GST + operating costs, you can join a highly successful business with over 73 franchises worldwide. With more than 14 years of international experience, we make everything easy – so you don’t need any previous experience to get up and running.

Contact details: Australian Master Franchisor Cam Hadlow (General Manager) Dream Doors Australia Pty Ltd cam@dreamdoors.com.au Phone: 1800 373263 or 04 57575727

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ACCOMMODATING

T

he hotels and accommodation sector isn’t traditionally a go-to franchising option. But of late the sector is enticing more potential franchisees to pursue their options as hoteliers.

With revenue of about $6bn and profit of $840m, the year 2014-15 proved promising for the sector.

More and more hotel groups are increasing their number of franchised units focusing on a talent pool rich with franchisees who have accumulated hotel, motel or hospitality experience.

According to IBISWorld data, the serviced apartments industry has been the steadiest performer in the accommodation subdivision over the past decade.

Other accommodation providers, including hotels and motels, have struggled in the wake of declining domestic tourism, a high Australian dollar and global economic uncertainty. These have been some industry-wide hiccups that franchised hotels have had to endure.

SEP/OCT 2015 | 74 | WWW.FRANCHISEBUSINESS.COM.AU

In the five years through 2014-15, IBISWorld expects industry revenue to increase by an annualised 2.3 percent to $3bn for the serviced apartments market.

A BRIGHT FUTURE Head of operations for the Intercontinental Hotel Group (IHG) Steven Skarott says that a franchise business’s success – particularly in the hotel sector – is heavily reliant on the capacity of its franchisees. He says that at IHG there’s a laser focus on recruiting the right people for the job.

“In having a successful franchise business you have got to have good franchisees: for us whether it be institutions or family companies people who operate hospitality operations are on our radar.

“Franchisees today exist from family run

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small businesses who started with a hotel or a motel, and over the years they’ve accumulated wealth from their success. These people are indeed a prime target. Essentially, what makes a great franchisee is someone who has a proven history of success in hospitality,” says Skarott.

and certainly franchising in America has gotten larger and larger, so I guess like Australia retail food has been the majority of types of businesses that have franchised and hotels are starting to gain popularity – I’m confident Australia will follow suit.

Discussing franchising growth in the hotel sector, Skarott draws operational parallels between the Australian and US market. If Australia follows suit, he says, Australia’s hotel franchising market has a bright future.

“We have the same level of business sophistication so in terms of some of the fundamental, environmental requirements to have franchising be successful are around having a good legal system, good intellectual property protection laws within the country, having a robust industry and having a deep pool of talent and industry professionals who are willing to be successful in that trade. Australia has all of that: the foundation to grow in hotel franchising as a sector,” Skarott says.

But the process of increasing franchised units isn’t a simple task: comprehending the franchising laws, intellectual property details and finding the right breadth of talent encompasses successful growth.

“If you ask me I‘d generally say that Australia follows the mould of America,

Senior director of communications at IHG SEP/OCT 2015 | 75 | WWW.FRANCHISEBUSINESS.COM.AU

Emma Corcoran outlines the importance of franchising as a business model, which is integral to expansion plans in Australia and global operations.

Emerging markets, such as the Asian market, require a different approach to expansion whereby more units are company run. This move is strategic, according to Corcoran, who says that while franchising is the predominant focus, there needs to be a tailored approach to certain markets.

“That [expansion] is a push for us because globally we are a franchise business, we have 4,900 hotels, 85 percent of those run under a franchise model already, so for us franchising is the predominant business model,” Corcoran says.

The global hotel management and franchising trend will increase both the size

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NEW UNIFORMS AT QUEST APARTMENT HOTELS

and globalisation level of operators in the local industry, giving them both increased national and international coverage, according to a recent IBISWorld report.

Companies are pushing further into franchising hotels and management agreements under their varying brand names, much like IHG’s model. This is in line with a general, global and corporate vision to expand franchising footprints and contest with more sought after industries such retail or fast food.

However, global accommodation businesses have set their sights on continuing to operate under a number of differ-ent structures including full ownership, leased operations, hotel management and franchised hotel operation (in the right market).

AccorHotels predicts there could be as many as 20 new franchise hotels in its portfolio by the end of 2016. The group is on track to double its current franchise network in the Pacific region in just three years.

While there has been city growth, particularly at airports, hotels in regional areas in particular have chosen to join the AccorHotels network in response to tough economic conditions - for instance, Victorian towns such as Ballarat and Warragul; Launceston; and Byron Bay, Goulburn and Maitland in New South Wales.

The Sebel, Mercure, Novotel, ibis, Pullman and the MGallery Collection chains have all embraced new franchisees. The Sebel brand is increasingly popular with owners of apartment-style hotel properties.

“It has been an incredibly successful year for franchising, says AccorHotels vice president development Pacific and vice president operations franchise, Lindsay Leeser.

“AccorHotels has built up its franchise network for over a decade, being the first hotel group in Australia and New Zealand to establish a dedicated franchise division, and the momentum has built to top pace with 2015 and 2016 set to be the fastest growing era for franchising in the region’s history.”

Independent hotels are signing up as franchisees with international chains in a bid to beat the competition from new hotels, and increases in commissions by online travel agencies (OTAs).

Hotel owners who are reliant on OTAs for the majority of their bookings could be

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QUEST APARTMENT HOTELS

Quest has relaunched its franchise business as Quest Apartment Hotels in a $10m rebrand (see the news story on page 8). The franchisor has committed to continually raise the bar in apartment hotel design and fit out standards.

“Market leadership is about continuous evolution; it is vital we lead the industry in meeting the needs of tomorrow’s business travellers. We are modernising and future-proofing the brand,” says Quest CEO Zed Sanjana.

The franchise network has recognised the value of an injection of new blood – not just for the performance of under-par venues which need a new lease of life, but for the franchisor too.

“We can get comfortable as a franchisor,” says Sanjana. It’s most exciting to get applicants from ouside the industry because it challenges us.”

QUEST ALBURY ON TOWNSEND

At a franchisee level it’s about new talent that can deliver leadership skills.

“The skill set is monitoring, managing and inspiring. It’s not about the beds.”

Potential franchisees will go through a seven stage process to ensure there is a match between them and the brand.

“Our franchising model is our competitive advantage, providing a unified front which ensures consistent delivery of a world-class guest experience.”

Of course there are challenges to the industry and these come predominantly from the digital world.

Sanjana says “There is potential

for margin erosion by disrupters – Expedia, Airbnb, bookings.com. They will always do it better and we need to recognise that.”

sensitive. Location is what matters to business clients, and the services and facilities which allow them to do their jobs away from home.

“Every hotel group will find loyalty erosion will equate to margin erosion,” he adds.

At Quest, 70 percent of bookings come direct.

The performance of the leisure market inevitably has a knock-on effect for providers of business accommodation. So the macro factors affecting the sector include the low dollar, oil prices which have an impact on cheap air fares, the Asian market and GDP growth across the US, UK and New Zealand.

The company focus is on national and local corporates and SMEs which Sanjana indicates are not price

“It’s a buoyant accommodation market in Australia. There’s a gap in demand and supply,” says Sanjana.

“But we’re pretty good at operations and getting repeat business.”

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paying 20 percent commission on each booking next year, suggests Leeser.

“This is a vast increase from the 10 percent levels that Wotif used to charge just a few years ago. And overseas trends suggest that commission levels could rise even further in years to come,” he says.

“Franchising offers hotel owners who want to manage their own hotels a toolkit to maximise the potential of their investment. With record levels of new hotel supply coming on the market over the next five years, AccorHotels’ branding and distribution strengths can ensure the hotel has the potential to perform at above-market levels irrespective of the overall market condition.”

With IHG – a hotel franchise that has many different brands under its umbrella – every respective franchise requires a tailored approach to site selection. Like any site selection diligence, there’s the requirement of feasibility testing, demographic research and a careful eye for making the right long term choice.

“For example, Holiday Inn Express is the family of Holiday Inn hotel brand and the site selection process for this particular brand is all about ensuring all the business drivers in the area exist together with food and beverage offerings. Holiday Inn Express is a limited service hotel, so it focuses on providing high quality, up market accommodation with a very lightweight touch on food and beverage.

“So this kind of brand relies on the hotel’s location and the restaurants and bars in the neighbouring areas – this helps the express model be a cheaper build and therefore helps the returns be at a higher level than, perhaps, a full service hotel,” Skarott says.

“We want to recruit the right franchisees.

There are a lot of things at risk, so if we were to select a franchisee who was not experienced enough to be able to deliver all the brand’s standards and leverage all the systems that we provide, you know, the business would ultimately fail and it would affect our brand reputation.

“For me, and I guess my role as head of operations, is centred on finding that right person.

I need to make sure that I work closely with the rest of my colleagues, particularly the development colleagues, in selecting the right franchisees and ensuring they have the capability. So from my perspective the most important thing is making sure franchisees are ready and capable,” Skarott says.

A business’s franchising model can be the dealmaker or dealbreaker, from a franchisee perspective. If prospective franchisees see that they can grow with a franchise business but after they research the model find that it isn’t in line with their professional goals, there’s a good chance they will seek another franchise business.

“At IHG we offer a franchise program that is not a one size fits all. We have what we call a ‘basic franchise offering’ – which is our starting point. Then we scale it up for, say, people who are currently operating a motel or a hotel who now want to look at partnership with IHG. And for franchisees like that, we can add on additional services because we are not one size fits all,” Skarott says.

IHG’s broad model, according to Corcoran, takes into consideration that a potential franchisee might have an impressive skill set that can be harnessed by the business.

So for franchisees like this the model can offer them a ready-to-go set of systems that fits the mould of their expertise.

“If, for example, revenue management is your thing but sales is your strength the model can be tailored to your skill set – you can plug and play along with the bigger IHG systems depending on what your background is and the needs of your individual hotel because every hotel is unique,” Corcoran says.

We live in an extremely brand-conscious society, and this is where the attraction of franchising comes in.

A small business like an independent hotel simply does not have the money to sustain brand awareness on its own, so it begs the following question: is franchising the way of the future for the hotels sector?

SEP/OCT 2015 | 79 | WWW.FRANCHISEBUSINESS.COM.AU

Franchising offers hotel owners who want to manage their own hotels a toolkit to maximise the potential of their investment

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5

THINGS I WISH I KNEW WHEN

I BOUGHT A FRANCHISE

ROWAN PRENDERGAST Rowan was awarded the 2014 FCA award for franchisee of the year, less than two staff.

He runs the optometry business at OPSM Waurn Ponds and tutors at Deakin University.

T

ake some tips from an award-winning franchisee.

Rowan Prendergast, OPSM Waurn Ponds franchisee, shares his reflections on what he would like to have known when he started out on his franchise journey.

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As a potential franchisee, imagine yourself standing at the head of a rushing river, her whitewater sections, frothy eddies and solid rocks beckoning. A whitewater raft lies by your side and your goal is to reach the calm waters waiting eventually at the river-mouth. Now visualise

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that often turbulent but ever-flowing river as your franchisor business, and your small but buoyant whitewater raft as your own franchise.

Ultimately, you are somewhat reliant on the inexorable rush of flowing water to carry you, but you are the one who determines how you get there. The job is yours to steer your business to take advantage of opportunities that present themselves, and simultaneously avoid the rocks and traps which can halt or slow your progress.

The following are five things I wish Iâ&#x20AC;&#x2122;d known prior to jumping into my own little whitewater raft back in 2012.

1. YOUR RAFT IS EXPENSIVE OVERESTIMATE THE COSTS The cost of product, training, marketing, royalties and services is dictated at the sole discretion of your franchisor. Many of these costs can be greater than expected.

The sometimes-small margins beyond these costs are where your profits lie. Plan by adding 10 percent to any projected costs.

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SEP/OCT 2015 | 82 | WWW.FRANCHISEBUSINESS.COM.AU

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2. REMEMBER THE RIVER ENDS ACTIVELY PLAN YOUR WORK/LIFE BALANCE

The sustainability and growth of your business is inextricably linked to the culture you create amongst your people

Define and regularly revisit your personal objectives in running a franchise business.

Ensure you are staying on your chosen course down the river. If you aim to build an eventual passive income, then maintain your focus on this goal.

Do not eventually reach the river-mouth to find that family, friends and lifestyle have suffered and melted away in the meantime.

3. CHOOSE YOUR CREW CAREFULLY

4. CONSTANTLY MONITOR YOUR RAFT DEVELOP YOUR OWN SYSTEMS FOR SUCCESS You are not buying a successful business, you are buying a river - a brand-name, customer awareness and some support systems. The rest is you and your crew.

Donâ&#x20AC;&#x2122;t rely on the franchisor to grow your business: plan early to identify holes in franchise systems and develop internal team procedures which complement or exceed those provided by the franchisor.

Constantly evolve and innovate.

PEOPLE MAKE THE BUSINESS

5. CASH-FLOW FLOATS THE BOAT

The sustainability and growth of your business is inextricably linked to the culture you create amongst your people.

Plan constantly to value, grow, train and reward your team. Treat your team the way you want them to treat your customers.

Lead by example, but work to build a team culture that thrives without relying on your constant presence.

The sometimes cold shock of your businessâ&#x20AC;&#x2122; numbers is inescapable. Pay your debts on time but grip your cash like a paddle, particularly in the white-knuckled early days. The costs will keep hitting you, often in successive waves. Protect your cash flow by keeping a tight grasp on costs and quickly gaining an understanding of how your cash-flow rises and falls.

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A sweet

signature

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J

ust what is it about Belgian chocolate?

Guylian is spreading the smooth, luscious taste across Australia.

1 - A TOUCH OF EUROPEAN STYLE IN A GUYLIAN STORE 2- A LIGHT MEAL OPTION

“If you hear ‘bang bang’ that means business is good.”

That “bang bang” is the sound of the press shaping and stamping out Guylian’s signature seahorse chocolates.

That’s the message Patrick Freriks, Guylian business development manager, delivers that message to his colleagues, as if to motivate and spread passion.

In 2008 the first Guylian franchise was opened in Sydney's Circular Quay then The Rocks opened shortly after. Freriks explained to me that their approach to growth is aggressive, planned and well thought-out.

“The last two to three years we did a lot of research. We worked with DC Strategy as a partner when we realised we wanted to do the franchising model,” he explains. “So what we did the last two years was working on the back of the house system; of course the front was ready.

But the back system meaning logistics, frameworks, admin, and that’s what we worked on.”

It’s one thing to pursue aggressive growth but it’s another to be truly motivated to do so.

In other words, there needs to be a vision for success in order to accurately strategise growth moving forward.

and the quality of the products made in New Zealand is more up to standards than here,” Freriks says.

Australia and New Zealand are an integral part of the brand’s expansion, as is the United Arab Emirates. These three parts of the world are Guylian’s primary targets.

“We opened in one of the biggest malls in Abu Dhabi – it was a very successful opening.

For us Australia, New Zealand and the UAE are our key markets,” Freriks explains.

It hasn’t be all smooth sailing, though. Like every success story, Guylian has experienced plenty of hiccups along the way.

One of the challenges Guylian faced in launching here was finding the right manufacturers for its product – and it couldn’t find the right business in Australia.

A high turnover of staff, a lack of product consistency and an overall lack of quality control loomed over the brand for a while. But it’s found its way back on track now, and for Freriks, the brand’s integrity is as strong as it’s ever been.

“We’ve gotten in touch with manufacturers to make our cakes to our guidelines. We found someone in New Zealand,

But, still hovering around the hospitality industry as a mild burden, is the high turnover of chefs.

“There is a fast rotation of chefs and there was no consistency in our product. So we have to be sure that we’re delivering the right things.

An important part of securing and settling the brand’s future is underpinned by the clarity in which the brand’s vision is explained to franchisees.

“Our mission is to take our growth step by step.”

So basically, if you’re a potential Guylian franchisee, you

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CHOCOLATE IS AT THE HEART OF THE MENU

Now the heritage brand is a global success and the seashells are still the signature chocolate

need to buy into the company philosophy.

It took time to compile franchisee documents that detail Guylian’s vision, its license arrangement and all the relevant information needed to be a successful franchisee.

“Documents, licensing and information is given to all franchisees and it took us at least three years to go from A-Z in getting our documents to potential franchisees.

“There’s a five week training program in place for pastry chefs, baristas, etc. We created an occupational health and safety manual too: the whole package.”

As Guylian expands into other Australian cities, Melbourne is quickly becoming a hotspot that Freriks believes will be just as successful for the chocolate retailer – if not more successful – than Sydney.

Largely inspired by the city’s

latte-sipping culture, Guylian’s Melbourne stores will be modelled around that very sentiment.

“We’re looking for the best locations, especially corner locations.”

So what kind of person needs to fit the potential franchisee bill?

“It’s all about the drive or entrepreneurship of the potential franchisee. That’s what we’re looking for. There needs to be a balance between business minds.”

Importantly potential franchisees “should have a passion for chocolate – if you know where it comes from it will give you the drive to step in”.

The Guylian story started in 1960 when passionate Belgian chocolatier Guy Foubert and his wife Liliane started a chocolate business; the combination of their names created the Guylian brand. The choco-

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lates themselves were a result of both Guy and Liliane: Guy developed the recipes, Liliane designed the marbled look and delicate shapes of the seashell shaped chocolates that gave the business a point of difference .

Now the heritage brand is a global success - and the seashells are still the signature chocolate.

Premium ingredients are essential to the products: West African cocoa beans form the basis for the high quality Belgian chocolate made with 100 percent cocoa butter; hazelnuts sourced from the Mediterranean are roasted to create a unique praline that gives a smooth, velvety taste.

While chocolate remains the heart and soul of the business, it has expanded to include drinks and light meals in a cafe environment, encouraging customers to enjoy the rich flavours for breakfast, lunch, high tea, after work or as a celebration.

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ADVICE FOR

FRANCHISEES W

hat does it take to have a good relationship with your franchisor?

Good communication is at the heart of a healthy franchise relationship. That’s according to Lenard Poulter, the founder of the Lenard’s chicken retail franchise chain. The relationship between franchisor and franchisee is like a marriage, he said. “It’s hard work.”

Poulter had some words of advice for prospective franchisees when he attended the Brisbane Franchising & Business Opportunities Expo on 19 July. He pointed out that franchisees need to be realistic about the level of support they will receive from the franchisor, who, to continue the marriage analogy, has to handle a host of partners, not just the one.

A franchisee in contrast, has a one-on-one relationship with the franchisor.

progresses and the honeymoon period wears off.

“Any good franchisor who says he is passionately going to look after you, it’s all going to be a success, well, stop there.”

Typically the franchisee’s journey will pick up, but getting through the tough times is important.

Franchise buyers need to think carefully about what a franchisor can reasonably support, he suggests. Remember that as a franchisee, the responsibility for the business lies with you.

Everyone makes mistakes, he reminded the audience, but transparency with the franchisor is important.

“When you are buying into a franchise, collectively it’s no different from being an independent business. What you get though is knowledge, expertise and lines of communication when you need them.”

Poulter talked about the journey of a franchisee, which starts with a period of euphoria about the business opportunity before plummeting as the franchise term SEP/OCT 2015 | 88 | WWW.FRANCHISEBUSINESS.COM.AU

“When you get to the point that you’re unhappy and don’t want to go back into your business, then go back to your franchisor. Open up to them about what your issues are.”

The franchisor, he points out, should be aiming “with their heart and soul”, to help every franchisee make money.

In return, franchisees need to trust their franchisors.

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TWO MUMS, TWO CLINICS, 25 STAFF

I

t’s smiles all round for Victorian mums Nichola Kempenaar and Amalia Georgoulos; buying a franchise has given them a niche in the beauty sector and the opportunity to achieve business success.

Nichola, a brand manager in the beauty industry for 16 years, and Amalia, a pharmacist by trade, met for the first time when taking their children to school.

This was a catalyst for them both, knowing the stay-at-home life was not for them.

“Other school mums were chatting about muffins, recipes, and what they were doing with their time, and that’s when Amalia and I turned to each other and

decided that particular lifestyle wasn’t for us,” Nichola says.

Nichola has a marketing background and a degree in business management, while Amalia has a pharmacy degree, which they felt equipped them well to become business partners in an Australian Skin Clinics franchise.

THE CLINIC CONCEPT “We started looking for a business together, but we were

looking for a company with a five to 10 year plan, not simply the near future, and only Australian Skin Clinics had this plan in place,” Nichola explains.

“The beauty industry is rapidly changing and Australian Skin Clinics has adapted to cater to the growing needs of consumers, with a strong focus on forward momentum and company progression.

“Australian Skin Clinics was a step in the right direction for us as they carefully consider the treatments they are offering and ensure they are of the highest technical quality whilst still being affordable and accessible.”

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Nichola and Amalia joined Australian Skin Clinics in 2013 when they opened their first clinic in Chadstone, with the Highpoint clinic opening not long after.

As the industry and concept of a shopping centre skin clinic was fairly new to Melbourne, funding was initially a challenge.

“Our business banking manager from the National Australia Bank was able to see our potential and provided assistance in the facilitation of some additional business finance. We managed to use a combination of self-funding and business finance to buy our clinics,” explains Nichola.

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NICHOLA (THIRD FROM LEFT, BACK) AND AMALIA (FRONT RIGHT) AND THE CHADSTONE TEAM

The two wannabe franchisees insisted that both clinic sites be in preferred shopping centre locations.

cation within our team and upholding a level of organisation, while trying to keep our heads above water.”

“For our Chadstone clinic we used the services of a leasing agent and then used our experience from this for the second clinic site. We had to wait for several months for the right locations to become available,” reveals Nichola.

Due to the commitment from their staff members as well as the strong and well-organised business model of Australian Skin Clinics, Nichola and Amalia have been able to overcome these challenges.

“Amalia and I spent many hours in the shopping centres looking at traffic flow, how people moved around the area and the types of people shopping within the proposed location. While it was tempting to take any site (they don’t come up often in Chadstone), we needed to think seriously about the investment we were about to undertake.”

Recently, the Chadstone clinic was awarded Clinic of the Year at the Australian Skin Clinics National Conference.

“We became Clinic of the Year due to the work our team puts in. Our staff members are so loyal and show so much passion for our industry,” Nichola says.

STRATEGIC PLAN “Being a part of a fast-paced industry posed a number of challenges early on such as maintaining great communi-

“By employing committed and service driven staff members, we have been able to bring more clients through the door and expand immensely with the introduction of a third laser machine, and the employment of a receptionist and a business manager,” Nichola says.

“Australian Skin clinics were amazing and helped us through the entire recruitment process. This provided us with the specialised staff we needed and the entire training required to start-up.”

The franchisor provided key trainers to work in the clinic to fine tune clinic performance and staff skill set.

“Being the number one store, in terms of sales, for eight months running is another element that has led to us winning clinic of the year.

“Being mums with aspirations to run clinics in the beauty

industry, we have successfully juggled parenting while managing two extremely successful operations with 25 staff between the clinics, which is a massive achievement.”

“While managing a hectic life and two clinics we like to think of our job as 'plate spinning’!

We have passionate managers and 2ICs that support us. We always endeavour to up skill every time we employ a new team member.

“We work in our business every day and don’t take our eye off our strategic objectives. Things don’t always go according to plan, however you always need to remain focused on your values and what is driving you to reach your goals. Amalia and I have very different strengths and we both know our limitations and respect each other’s views. I guess that’s why it works.”

The pair hope to open a third location in Chadstone shopping centre in 2016, which is undergoing a major redevelopment.

“It has been a challenge though growing at such a fast rate considering that we started out with six staff and now have just over 25 team members across the two clinics. As we look to set up a third clinic next year we will look to employ a business manager who will be as passionate as us about this brand.”

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We work in our business every day and don't take our eye off our strategic objectives.

Things don't always go according to plan, however you always need to remain focused on your values and what is driving you to reach your goals

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IN - H O ME , SO CI AL & LI FES TYLE S UPPORT

Are you ready to own a dynamic business providing services in a high growth industry that revolves around rewarding work?

Just Better Care is one of Australiaâ&#x20AC;&#x2122;s largest franchised in-home, social and lifestyle support providers with 31 franchise territories located around the country and now recognised as a provider of choice with the Federal Government after our successful application for Aged Care Package funding. We are now looking to build on this success and expand our franchise network with opportunities currently available in NSW, QLD, TAS, VIC and SA. We are seeking dedicated people with a passion for business and a desire to provide the very best in-home, social and lifestyle support services to our aged, disability, hospital to home, respite, basic and complex care customers and to the community at large.

Visit Visit our our website website to to learn learn more more about about franchising franchisingwith with JustBetter BetterCare Careand and view viewaa list list of of sites sites currently current available at:at: Just available www.justbettercare.com/franchise-me www.justbettercare.com/franchise-me or contact Paul Stearn, our Franchise Manager, on: (02) 9934 9929 or contact our Franchise Manager on (02) 9934 9950

Untitled-49 1

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ver the last three years Mrs Fields has worked to incorporate its tagline ‘Moments made better’ into the business, with a total makeover of the stores, redesigned packaging, new equipment and enhanced menus.

So how has it shaped up for the cookie retailer?

Andrew Benefield, managing director, says “We’ve done extensive market research into what our customers want, what works, what doesn’t work and we’ve compiled all the feedback, the results speak for themselves.”

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When it came to the question, what does Mrs Fields mean to Australian consumers, what the food franchise discovered was that customers saw a mismatch between stores and the brand story: so although the brand promoted a home-baked

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the test of time”.

THE NEW LOOK CHATSWOOD STORE

“A lot of cafes are on trend but it’s not long before they become off trend,” he adds.

From the early days of roll-out the new look has delivered sales growth and attracted new customers in-store.

The aim was always to develop a franchise model that would be sustainable, and that meant keeping costs reasonable.

“We couldn’t lose sight of what the end investment would be for the franchisee,” says Benefield.

CUSTOMER TASTES

concept, and customers loved the influences of comfort and quality, the stores’ red and white colourway and boxy layout with

glass and granite was viewed as too clinical. How did the company take the feedback? “We ate humble pie” says Benefield.

But the team also addressed the issue and now the store décor is developed around brick and timber and finishes “that stand

SEP/OCT 2015 | 96 | WWW.FRANCHISEBUSINESS.COM.AU

A new menu has been designed to address the changing snacking trends of the Australian consumer with stores opening at 8am remaining open later to match longer shopping centre hours.

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with a goal of 90 outlets by 2025.

The aim was always to develop a franchise model that would be sustainable The product line-up includes the re-emergence of popular flavours and some new tastes.

Benefield says “We have over 50 potential new products in development, and while many may not make it to market the most successful are often the old favourites, with a twist that meets a current trend.”

What the business isn’t doing is heading down the route to a full service food offering.

“We’re still about the cookie but giving franchises some-

thing to sell right through the day, and giving diversity. We do recognise that not everyone in a group will want a cookie.

“We still pitch ourselves as a spot to stop for 15 minutes, have a coffee and a snack, and continue on shopping. Full service cafes offer light meals and a 30 minute sit. More and more brands are chasing this space and I think they may live to regret it. The more complexity in the offer, the more labour is generally required,” says Benefield.

“It may be a while off yet but

interest rates will go up and disposable income will tighten.”

OPPORTUNITIES TO BUY A FRANCHISE The conversion of Cookie Man stores bought by Mrs Fields has been running alongside the new look rollout.

This year the remaining 12 Cookie Man stores scheduled to convert will be rebadged to the Mrs Fields brand. There will also be another four brand new locations in the network, bringing the store count to 50,

your

with

SIGNAGE

This slow-burn expansion is realistic, Benfield believes.

Ninety stores is enough of a challenge when retail costs and locations are so competitive, he says.

“The downside of being a snack business is that locations do require huge traffic counts.”

Alternative locations such as Sydney airport and a few transport locations can work well for the cookie chain, he says.

“What we won’t do is just open a location for the sake of it. It’s about getting the financials right.”

P LAS T IC FAB R ICA T IO N

ILLUMINATE

BRAND

The brand is under-represented in South Australia, poised to sign its first Canberra franchise, and in-filling other areas around the country.

LAR G E FOR M A T PRIN T IN G

S U P P LY INSTAL L & A TI O N

3D

P R OJ E C T MANAG E

SI GN A GE CUSTOM MANUFACTURE

07 3352 6972 | www.bengadesigns.com.au SEP/OCT 2015 | 97 | WWW.FRANCHISEBUSINESS.COM.AU

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THE MAN

WITH THE VANS S

outh Australia’s John Prasad has just purchased his third Cafe2U Van, and looks to expand further.

ing and read a feature story about the café industry. Cafe2U was one of the opportunities features, and after considerable research I came to the conclusion that Cafe2U provided the best fit for my situation and skill set.

Six years ago an opportunity arose for South Australian John Prasad to start his own business. John did his due diligence and researched his big decision to ensure he was entering the right field at the right time.

“I researched all the mobile options available, which involved face-to-face meetings with franchisors. For me, Cafe2U succeeded in all capacities: start-up, product, quality, range, support, training, profitability, and resale value,” Prasad said.

He said he weighed up the benefits between running an independent coffee van and opting to go with a mobile-type business, he found the latter worked more in favour.

Prasad owns three vans in total, and said the Cafe2U model suits his expansion plans to perfection.

“I received a magazine about franchis-

“Cafe2U has provided me with a great lifestyle chance, and has allowed me to grow to three vans in the last six years. The SEP/OCT 2015 | 98 | WWW.FRANCHISEBUSINESS.COM.AU

businesses have grown to such a level that most weekends we are busy with supplementary even work,” Prasad said.

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• Enjoy Helping Others Succeed • Client Focused Business • Committed to Outstanding Service • Personal Development & Growth • Passion For Property Investing

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FOR SALE!

s r e h t o r B n a i Ind Restaurant Franchises available NOW

LATEST NEWS!

Indian Brothers are excited to announce the appointment of our new Master Franchisor for Western Australia. Please contact Tony on 0419941988 for all WA Franchise enquiries. We are also proud to be recognised as a finalist for the India Australia Business & Community Awards – Small Business of the Year 2015. We look forward to the winners announcement at the Gala Awards Ceremony on Friday 30 October.

New opportunities …

Want to open your own Indian Brothers Restaurant? Call now, we have existing sites in SE Queensland and new sites interstate. If you have relatives down south who are looking to start their own business, let them know about this great opportunity.

Not all food franchises are the same.

The Indian Brothers system has been built from the ground up to comply with the Franchising Code of Conduct in Australia. Complying with the code is mandatory and provides protection for both the franchisor and franchisee. There’s safety in a system!

Is your food franchise compliant?

If you are thinking about buying a franchise, speak to the team at Indian Brothers. As members of the Franchising Council of Australia we have a reliable system you can trust.

Email: franchising@ indianbrothers.com.au or call now for details

Mike on 0488 777 277

BIT_Ad_2Sept15.indd 1

Enquire now for the best locations in Western Australia.

Contact Tony (tonyv@indianbrothers.com.au) or 0419941988

3/09/2015 9:19 am

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THE

Q&A with Steve Plarre

INSIDER

THE INSIDER

Plenty of funny moments. Steve’s movie score: 4/5.

STEVE PLARRE, CEO, FERGUSON PLARRE BAKEHOUSES Q. WHAT’S THE FIRST THING YOU CHECK ONLINE IN THE MORNING? A. The weather! The biggest influencing factor on our sales (other than our own quality and service) is the weather. If it’s cold, sales will be up. If it’s hot, sales will be down. We’ve studied this and for every one degree colder than the forecast, we can expect (on average) a one percent growth in sales. So I like to see the forecast.

Q. WHY DO YOU GET OUT OF BED IN THE MORNING? A. Firstly, to give my daughters a cuddle. Secondly, it sounds corny but I seriously LOVE what I do. I get to work with my family and we sell products that make people genuinely happy - it’s a great feeling.

Q. WHAT’S BEEN YOUR BEST IDEA THIS YEAR? A. Nutella Donuts. Yes...we started them well before they became famous.

Q. WHAT WAS THE LAST MOVIE YOU WATCHED?

Q. WHAT DOES YOUR LINKEDIN PROFILE SAY ABOUT YOU?

A. Avengers, The Age of Ultron with Robert Downey Junior, Scarlett Johansson and others (I rarely get to watch a movie with a three year old and five month old at home, so I was lucky enough to get this on a recent flight). Good, solid, fun action movie.

A. That I don’t update it enough ;-) Unlike most people on LinkedIn, my employment history has been entirely with one company. In all honesty it should really start in 1980 when I started as an 8 year old cleaner...

SEP/OCT 2015 | 101 | WWW.FRANCHISEBUSINESS.COM.AU

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HOW ONLINE RETAIL

IS BOOSTING BUSINESS FOR THIS FRANCHISEE COUPLE

M

ichele and Stephen Lawler have changed their business model to embrace online retail – and it’s paying off. The capacity for customers to choose to send parcels from home means the couple are now earning while they sleep.

“Stephen’s not one for change,” admits Michele “but last year we really got into online. Our daughter’s in digital marketing and keeps us up-to-date.”

The Lawlors operate two franchised Pack & Send outlets and have seen the bottom line increasing since turning to online retail.

“This is work we would never have got.

It’s more economical if customers don’t

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MICHELE AND STEPHEN LAWLER

want to pay for the service extras you get in-store. They can do it all from home, they don’t even have to bring the parcel in.”

Using the Pack & Send online system, customers can choose to send packages they have packed themselves with couriers appropriate to their needs – swift delivery for time-sensitive items, slower paced and more economical delivery for nonurgent packages.

Although this is essentially a hands-off process, the franchisees get in touch with new clients to gauge what items are being sent; prohibited items, like glass, for instance can’t be handled online.

ONLINE INCREASES SALES The sales through the online channel increased by 298 percent in 2014/15; it is Stephen’s dream to have most of the revenue generated online.

system to help improved user efficiency provide valuable feedback for the franchisor.

Pack and Send do a lot of the legwork in setting things up and there is always someone to ring. This is the franchisor’s forte; it’s our forte to sell and keep the customers happy,” says Michele.

“Logistics is changing. Everyone is buying individually now and shopping online and that suits us. It brings us to the future,” says Michele.

And while the couple have been embracing the digital world, they have also been looking to the future with their staffing arrangements. Over the 10 years of their business, university students – and soon to be high school students on VET courses – have been employed on a casual basis at the two stores.

WORKING WITH CASUALS

“We’ve worked so hard for 10 years,” says Michele.

It’s a situation says Michele.

that

suits

everyone,

Customer comments about additions to the

“Because we understand how they need to SEP/OCT 2015 | 103 | WWW.FRANCHISEBUSINESS.COM.AU

work and it’s not always thunderingly busy.”

The Lawlers sit down with the students’ exam schedules and work out rosters. But it isn’t an easy job, with an erratic pattern of customer orders there’s no day the same as another.

When the store is busy it might not all be packing either – there could be quotes and admin to process.

And it can get busy: adding the additional channel has given the couple much greater customer reach across the business, resulting in increased sales through the service centre too: 34 percent in 2014/15.

The Lawlers have adopted the student employment model after working through a number of staffing options, starting pre GFC with two full timers in addition to themselves, plus casuals.

“We’ve learned what works. The costs can work with casuals, and we like the students,” says Michele. “We are looking for people who can think laterally. We love engineers!”

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LEGALESE

Will the

FRANCHISING CODE RAYNIA THEODORE Principal, MST Lawyers

protect me as a franchisee?

O

ne of the main attractions of buying a franchise is that there is usually less risk associated with buying a franchise in an established franchise network that has achieved substantial brand recognition in the marketplace.

Furthermore, the franchising sector is highly regulated with many protections afforded to franchisees.

A new Franchising Code of Conduct came into effect on 1 January 2015 and is primarily for the benefit of franchisees.

HOW THE CODE HELPS FRANCHISEES The key changes made by the new Code that benefit franchisees are as follows: 1. The Federal Court can impose monetary penalties of up to $51,000 for a single offence for non-compliance with various provisions of the Code. Additionally, the Australian Competition and Consumer Commission (ACCC) can issue infringement notices of up to $8,500 for a company and $1,700 for individuals.

2. The introduction of an obligation for all parties to a franchise agreement to act in good faith towards each other.

3. The new Code requires franchisors to give an information statement to prospective franchisees at an early stage of negotiations. The information statement outlines the risks and rewards of franchising and reminds all franchise buyers to obtain legal, accounting and business advice, to read all the documents and to know their rights.

4. The new Code requires disclosure about sales of goods and services online by the franchisor, associates of the franchisor and franchisees. This is great news for franchisees who might otherwise have been unaware they could be in competition with their franchisor or other franchisees as a result of online trading and despite having been granted rights to a particular territory.

5. Franchisors are no longer be permitted to require franchisees to undertake significant capital expenditure during the term of their franchise agreement, except in certain limited circumstances; for instancewhere the expenditure is disclosed before the start of the franchise agreement or the expenditure is incurred by all or a majority of franchisees and approved by a majority of franchisees. This change benefits franchisees by making franchisors much more accountable when requiring franchisees to undertake capital expenditure.

Franchise agreements are complex, lengthy documents and buying a franchised business is a serious undertaking

SEP/OCT 2015 | 105 | WWW.FRANCHISEBUSINESS.COM.AU

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LEGALESE

6. Franchisors must maintain a separate bank account for marketing and advertising fees contributed by franchisees and pay the same marketing and advertising fees as franchisees for each business operated by the franchisor. Marketing or advertising fees will also only be able to be used to meet certain expenses, such as those disclosed in the franchisor’s disclosure document or legitimate marketing or advertising expenses. The new level of transparency around the use of marketing funds will give franchisees greater comfort in relation to what marketing fund contributions are used for.

7. Restraint clauses in franchise agreements will be ineffective if a franchisee seeks to renew its franchise agreement on substantially the same terms and is not in breach of its franchise agreement or any of the franchisor’s intellectual property rights and the franchisor does not renew the franchise agreement and does not offer compensation or only offers nominal compensation to the franchisee. This means that where a franchisee’s franchise agreement is not renewed the restraint of trade clause will not apply to them if they are not provided with adequate compensation.

8. If a franchisee leases premises from the franchisor or occupies premises under licence from the franchisor, the franchisor must provide to the franchisee details of any incentive or financial

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LEGALESE

benefit that the franchisor or an associate of the franchisor is entitled to receive as a result of the lease or agreement to lease.

WHERE THE CODE CANNOT HELP FRANCHISEES Despite the above protections the new Code will not afford a franchisee protection from the following: 1. If the franchisee fails to conduct appropriate due diligence. The new Code does not remove the need for a franchisee to undertake the task of reading all relevant agreements and conducting their own research about the franchise network. It is also still imperative that franchisees seek advice from lawyers, accountants and business advisors who are experienced in franchising to understand the legal documents and the franchise relationship.

2. Where a territory is offered, the franchisee failing to investigate and understand the scope of the territory â&#x20AC;&#x201C; whether it is exclusive or non-exclusive and whether the franchise business can be operated successfully or profitably within its bounds.

The new Code does not dictate to franchisors whether the franchises they grant are for exclusive territories or otherwise.

3. The duration of the franchise agreement. A franchise does

not continue for ever, the rights granted are usually for a fixed term. The new Code does not require franchisors to offer a minimum term or renew or extend a franchise agreement. It is therefore important that a franchisee seeks advice about whether it can recoup its investment and make a profit during the term offered. Whilst the Code imposes some restrictions on a franchisorâ&#x20AC;&#x2122;s ability to terminate a franchise agreement, it is also important to understand the circumstances which may lead to the franchisor terminating the franchise agreement early.

4. The new Code does not dictate the fees that may be charged by the franchisor under a franchise agreement.

5. Ending the franchise if the franchise business is not working.

Other than giving a franchisee a cooling off right when the franchisee first enters into a franchise agreement the new Code does not give franchisees the right to end the franchise agreement early.

Franchise agreements are complex lengthy documents and buying a franchised business is a serious undertaking. Despite the laws that apply to protect franchisees it is essential that franchisees obtain advice both professional financial and legal advice from experts in franchising.

SEP/OCT 2015 | 107 | WWW.FRANCHISEBUSINESS.COM.AU

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TRENDS

What makes a viable business?

ANDREW TERRY Professor of Business Regulation, The University of Sydney Business School

M

y favourite Alan Bennett quote came to mind recently as I was reading an item critical of franchising - “I saw someone peeing in Jermyn Street the other day.

I thought, is this the end of civilisation as we know it or is it simply someone peeing in Jermyn Street?”

It was, predictably, the well publicised problems of 7-Eleven flowing from the Four Corners/Fairfax Media revelations of widespread exploitation by franchisees of mostly foreign student workers through underpaying them that prompted this item.

7-Eleven of course has some real issues to deal with and the company’s response - including the appointment of one of its strongest critics, former ACCC chair Alan Fels, to inquire into ethical and legal failures, and the company’s commitment to compensate underpaid staff - is appropriate and encouraging. But it is important to keep this case, as unfortunate as it is, in perspective. It is, or it should be, 7-Eleven under investigation not the entire franchise sector. It is not meant to trivialise or discount the implications of the poor behaviour disclosed in this case to suggest that the revelations do not challenge the underlying viability of the franchise business model or the underlying strength of the Australian franchise sector.

Although it is of course the underpayment of employees by franchisees that has led to the current “7-Eleven wages scandal” headlines it would be naïve to assume that underpaying employees is a brand specific issue.

It is nevertheless the pre-eminence of the convenience chain which has led to the massive publicity and offers the opportunity for appropriate responses which transcend that particular system.

However, from a franchising perspective the issue of particular interest which the “underpayments scandal” has exposed is the particular nature of the 7-Eleven business basic model. Given the massive diversity in the manner in which the underlying franchise business model is implemented by Australia’s 1200 franchisors, caution must be exercised with generalisations. The 7-Eleven business model is nevertheless quite different from the vast majority of franchise systems operating in Australia. The most

common model for franchisor remuneration is a franchisee paying royalties to the franchisor - usually based on a percentage of turnover. The 7-Eleven model is based on a profit share with, in most cases, the 43 percent of gross profits allocated to the franchisee and 57 percent of gross profits to the franchisor (ie the Australian master franchisee).

It has been reported that, in the wake of the wages abuse scandal, 7-Eleven will review its profit share business model and collaborate with franchisees in developing a franchisee charter incorporating mandatory commitments beyond the scope of the franchise agreement.

Any prospective franchisee considering a franchising opportunity needs some comfort that the business will be viable. But franchises do not come with such guarantees. In the words that must appear on the first page of the prior disclosure document, “franchising is a business and, like any business…could fail”.

A prospective franchisee’s best protection is the appreciation that a viable franchising business is built on a multi-dimensional foundation and his or her informed due diligence in respect of the business concept, the business model, the financial equation and the franchisor. A prospective franchisee must be satisfied not only that the basic business concept is sound and viable and proven but also that the business model and system through which the concept is rolled out in the franchise network is sound and viable and proven. It is the latter consideration, the underlying business model. which is the current focus of both management and franchisees at 7-Eleven.

The wider franchising sector watches with interest.

At the very least the current saga is a compelling reminder that a viable franchise model must accommodate and balance the interests of both parties.

SEP/OCT 2015 | 108 | WWW.FRANCHISEBUSINESS.COM.AU

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Grow your business through property investment with Property Club Franchises offered for the first time • nearly 5,000 Property Millionaires Club members and counting “Property Club is wholly dedicated to providing Australians with the opportunity of a better life through property investment. To celebrate 21 years in property, we are offering a limited number of Property Club franchises. This is a unique offer to be part of an organisation that has over 80,000 members and we’ve helped more people create million dollar property portfolios than any other property investment organisation with almost 5000 members now in our Property Millionaires Club. Take advantage of this exclusive opportunity by contacting us today.”

TRY E BEFOR YOU BUY

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property-club-business-opportunities/ Call 1300 663 282 FRANCHISE FULL - New file.indd 1

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LEADERSHIP

How to avoid being a KARLI FURMAGE is a trainer, coach and writer. Contact karli@goglobal. consulting

FRANCHISE FLOP

B

usiness failure is rarely sudden. So how can you avoid franchise failure? Here are some tips on what to do before you buy a franchise.

“We’re in trouble.”

“What do you mean?”

“We have no cash, I’ve used up all our credit, I can’t pay wages tomorrow, rent is three months overdue, I’m on stop with all our suppliers… we’re in trouble.”

This conversation happened just seven months after Brian opened his franchise. The business started with textbook perfection. Great sales, raving fans, fantastic team, KPIs trending the right way and Brian was enjoying the business.

chisor, flawed systems, incompetence of the franchisee, killer rent, too low sales, insufficient working capital… It’s a long list and failure can result from one thing or many things.

From what I’ve seen of business failure, it is rarely sudden.

Mostly it’s a slow moving car crash, the result of a hundred little decisions that can often be traced right back to where you are today – investigating a business and thinking about becoming a franchisee.

How do you avoid a fate like Brian’s and the thousand other businesses that fail each year?

Happy days… until they weren’t.

FOUR WAYS TO AVOID FAILURE Here is a checklist of some of the things to investigate and watch out for.

1. WHAT DO YOU KNOW ABOUT THE FRANCHISOR? Sometimes the dream of owning your own business gets in the way of reality. It is critical to park those shiny, glittery dreams and go into the investigation with your eyes wide-open; park preconceived ideas or hopes and deal with the reality.

Have you thoroughly investigated the franchisor? Do you understand the support it offers, the training, the coaching, product, and marketing? Have you asked existing franchisees their experiences with the franchisor?

The industry you’re entering may be new to you. Have you investigated it? How ‘future proof’ is it? Industry bodies and organisations are a great source of information, have you spoken to them?

How does the product or service sit in the market? Can you see how the offering will evolve over time to meet changes in society?

Does the franchisor have a plan and commitment to R&D? Can you commit to working with that product or delivering that service day in and day out for the length of your agreement?

The answer is you prepare.

In Brian’s case his initial success was built on shaky foundations, and reality slugged him a savage upper cut. The business that took off like a rocket crashed just as quickly, leaving Brian with nothing.

There are many stories like Brian’s. The causes differ.

Sometimes it’s location, or product, support of the fran-

Some would say you can never fully prepare for owning your own business – I kind of agree! There are a lot of things that are out of your control, but there are many more things you can investigate, explore, analyse and research to increase your chances of avoiding a franchise flop.

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Do you fully understand the location or site where you will operate your business? How well positioned is it? How long is the lease? What is the traffic flow? Are there any plans to change surrounding buildings or infrastructure?

Have you talked to other business owners in your area [franchised and non-franchised]?

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TAKE YOUR PICK! 2 business opportunities from Swimart.

Work for yourself and be part of the Swimart success story.

Tired of working on the tools or in an office for someone else?

If you love the outdoors and have a passion for customer service, you could be running your own successful franchise business with Swimart.

1 Own

2 Own a Swimart

YOUR OWN Swimart Store

Mobile Pool Services business

With over 30 years experience in the industry and a huge network of independently owned stores, we’re Australia’s leading pool and spa specialist.

A Swimart franchise offers: - Strong gross profits and low operational costs - Low fixed fees - Comprehensive training - Professional support including marketing, TV advertising and business training.

A brand new business opportunity from Swimart.

- In specially selected regional and rural areas - At last, the chance to open a business in the area you love to live in!

Get with the strength When you become a Swimart franchisee, you’ll benefit from: - Strong brand awareness and a powerful marketing program including TV advertising hosted by Susie O’Neill - Comprehensive initial and ongoing training through the Swimart Training Academy - Exclusive Territory - The backing of a franchisor with 30 years in the business.

- Customer database of pools in your area.

ng “Nothing beats achievi success in the pool” Susie O’Neill

To find out more, call Chris Fitzmaurice on 02 9898 8608

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LEADERSHIP

Have you read and analysed the disclosure document and the franchise agreement until you understand them? Get input from an experienced franchise lawyer who can help you make sense of the legalese and skill you up on what to look for.

It’s useful to use the agreement to test scenarios; for example, if I don’t pay on time what happens? If I’m not getting the support I need, what do I do?

Are there other agreements you need to enter into as part of operating your business? If so do you fully understand your commitments?

4. WHO WILL BE YOUR SUPPORT TEAM?

2. WHAT DO YOU KNOW ABOUT BEING YOUR OWN BOSS? The security of a franchise group won’t stop you waking up in a cold sweat in the middle of the night because you don’t have the cash to pay wages. A franchisor [most likely] won’t be doing your BAS or hiring your staff. Beyond the product or service there is the reality of operating a business.

What do you know about running a business? Are you realistic about your expertise? Do you know what you don’t know?

The industry or the product you may love, but can you run a business? Finances, making the product or delivering the service, managing cash flow, managing a team, driving sales… How skilled are you? What areas do you need to develop?

Most new franchisees grossly underestimate the time, attention and energy a business sucks out of them. It is all consuming and it is hard. Do you have the time and attention to devote to getting a business off the ground? Working

weekends and at night, needing to devote time to training? Are you fit and healthy, physically and emotionally able to take on the business? Are your family and loved ones prepared for your focus being on the business? Do they support you?

Most franchisees underestimate the amount of money needed to get a business up and running. Do you have solid projections? What if the business kicks off with a slower start than projected? Do you have enough fat in your budget for unforeseen expenses? Do you have a line of credit if you need it?

3. CHECK THE FRANCHISE AGREEMENT Ignorance is not bliss. It’s dangerous. It continues to surprise me how many franchisees don’t read or understand their disclosure document and their franchise agreement. The disclosure document gives you valuable insight into the company you are about to partner with and the franchise agreement sets out the terms you will operate under.

Important!

None of us can do everything ourselves and you will need a team of people with their relevant skills and expertise. Do you have an experienced and skilled accountant, lawyer and bookkeeper? Will they anticipate issues and offer guidance?

Consider what other support roles you will need. How will you find them and ensure they have the skills you need?

Initially, you will be reliant on the franchisor’s support: ✱ Can you work confidently with them? ✱ Do you understand the support on offer? ✱ Is there additional help available to you if you need it? ✱ Do you understand exactly what the franchisor expects of you? ✱ Are you aligned to the direction of the franchisor?

Even a rigorous investigation process doesn’t guarantee success.

A lot can go wrong. Owning a business can bring you the highest of highs and lowest of lows.

Your job in these early stages of exploring a franchise is to do what Brian unfortunately didn’t, make sure a low won’t wipe you out.

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None of us can do everything ourselves and you will need a team of people with their relevant skills and expertise

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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.

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

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.

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.

VISIT: WWW.ACCC.GOV.AU

Franchise Business is also the official directory of the FCA and lists franchising opportunities available in Australia and New Zealand. Potential franchisees looking to move into the franchising sphere can explore by location opportunities that currently exist in the market and enquire about the franchisor or brand.

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

Financial, legal and business guidance are key components of the independent, authorative editorial that helps potential franchisees make their purchasing decision.

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

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NFC15 promises to build your knowledge on all things franchising to help ensure your business flourishes in any conditions.

A must-attend event for all franchise professionals in Australia, highlights will include inspirational keynote speakers, concurrent panel sessions, in-depth workshops examining the core issues and challenges facing franchisors today, a bustling trade show and abundant networking opportunities.

Join hundreds of Australian franchisors for the franchising information and networking event of the year!

For more information and to register, call 1300 669 030 or visit franchise.org.au

Keynote Speakers include

NATIONAL FRANCHISE CONVENTION 2015 11-13 OCTOBER GOLD COAST

Holly Kramer Holly Kramer is an inspirational business leader, who has worked at some of the best known companies in Australia, and who is responsible for the remarkable turnaround of retailer Best & Less.

Todd Sampson The Chairman of Leo Burnett, Australia, Todd is the co-creator of the Earth Hour initiative, the largest environmental movement in history. He is also the breakout star of the hit ABC show, Gruen Planet and a co-host on Channel Tenâ&#x20AC;&#x2122;s The Project.

Andrew Demetriou Andrew Demetriou is the recently retired CEO of the Australian Football League. In his 11 years at the helm of the AFL, he oversaw unprecedented growth in Australian football and expanded the game nationally and internationally.

The FCA gratefully acknowledges the contribution of the following sponsors for NFC15

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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

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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Visit the home of Franchising magazine online at FranchiseBusiness.com.au

nload Plus dow guide: E E R F r u yo the Choosing chise right fran • Access information and resources in our Knowledge Centre • Research franchise opportunities • Filter opportunities by location, category and investment level • Get mobile! Our mobile compatible site makes it easy to enquire wherever you are

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CHECKLIST

20

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

Are you confident in the franchisor?

What are the franchisee 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 and 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

24

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:

✓

Book franchisee training

✓

Sign the lease or licence agreement

Research your market

✓

Lease vehicle

Conduct due diligence on your franchisor

✓ ✓

1-3 MONTHS AHEAD

✓ ✓ ✓

Speak to franchisees

✓

Read the disclosure document

✓

Research the location

✓

Do a business plan

✓

✓

Get legal and accounting advice

✓

✓

Organise finance and working capital

✓

Decide on and set up your business structure

1-4 WEEKS AHEAD

✓ ✓

Sign the franchise agreement Register your business (Business Name, ABN, GST etc )

✓

✓ ✓ ✓ ✓ ✓

Organise fit-out for your store or office Order and check the delivery of any stationery, uniform and vehicle wrap required Clarify what support the franchisor will provide for opening and the first few days of trading Check what insurance policies you need to protect your business Check any relevant regulations or local by-laws Understand your tax liabilities Purchase a telecoms package and organise installation Open a business bank account If you will be an employee, start the staff recruitment process Start planning your local area marketing strategy

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A-Z LISTINGS

Phone: 02 8913 6400 Fax: 02 8088 6637 Contact: Esha Oberoi esha@afea.com.au www.afea.com.au

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

Establishment costs: $90,000

Start up costs from: $47,000 + GST

PROFILE: Afea is a leading provider of staffing solutions for residential healthcare and in-home care services. We at Afea, care about those in need and provide a high quality service that is delivered by skilled personnel with compassion and responsiveness.

We at Afea want to take our unique care experience to the doorsteps of all Australians. Our vision is to continuously search for ways to deliver quality healthcare services to our community, to build our people, to be socially responsible and to achieve all of this whilst being profitable.

If you are interested in an Afea franchise opportunity, please call us on 8913 6400 and request an information pack.

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.

Phone: 0428 082 474 Fax: 07 3373 1770 Contact: Alex Forbes alex.forbes@batteryworld.com.au www.batteryworld.com.au/franchising

Phone: 0417 077 633 Contact: Michael Payne michael@palmoasisventures.com www.baskinrobbins.com.au

Start up costs from: $150,000 + GST Start up costs from: $190,000

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.

PROFILE: Join the leading battery retailer in Australia! Battery World is embarking on a new era of rapid expansion and provides franchisees the chance to be your own boss but have the security of a national market leader with 18 years of stable growth behind it.

Count the number of batteries you rely on every day. Now, multiply it by 9,117,033* households. Whatever figure you come up with it’s a very compelling reason to join Battery World, the nationally established franchise that a growing number of Australians rely on for their everyday battery needs.

Battery World stores carry a product range of over 8,000 batteries for everything from mobile phones and laptops to vehicles and boats. With 85 stores throughout Australia we are the largest and most comprehensive retail franchise network focused on the battery category.

Franchises are currently available in NSW, VIC, WA, QLD, SA and TAS for motivated individuals with strong communication skills and a passion for retail. (*Source: Australian Bureau of Statistics, number of private dwellings in Australia 2011)

Phone: 07 3352 6972 Fax: 07 3352 7962 Contact: Danny Sinclair danny@bengadesigns.com.au www.bengadesigns.com.au

Phone: +61 41 220 5380 Fax: +61 2 6291 6710 Contact: John Longmire john@blackdotsolutions.com.au http://www.blackdotsolutions.com.au/ PROFILE: Black Dot Solutions is here to help you manage your world!

Introducing the Communicate. Interact. Motivate. (C.I.M) App based platform.

PROFILE: Benga Designs specialise in the design, manufacture and installation of custom made signage for retail shopfitting and national franchises, including but not limited to 3D illuminated signage, plastic fabrication, large format printed graphics and vehicle wraps.

We also produce a large range of “point of sale” products such as banners, flags, A-frames and corporate stationery.

Our success has been directly attributed to Benga’s refined project management skills. We pride ourselves on the attention given to upfront planning, communication and liaising with our clients and shopfitters.

Benga Designs is a proud member of ASOFIA, ASGA, BAA, DIA and FCA.

Key features include: • • • • • • • • •

Instant communication with front line staff Interactive eLearning experiences and induction processes Auditable compliance tools Documents and video library including remote form submission Gamification of key performance indicators Innovative customer engagement and marketing Fully customisable to your brand No lock in contracts Readable on all devices

Join our growing number of franchise partners already using the C.I.M platform.

For an obligation free consultation contact Black Dot Solutions today and don’t forget to ask us about our marketing App which turns every customer into a mystery shopper!

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A-Z LISTINGS

Phone: 1300 99 55 12 Contact: Gavin Trewin gavin@buyaustralianproperties.com.au www.buyaustralianproperties.com.au /welcome/ Start up costs from: $50,000 plus GST

Phone: 1300 Cafe2U (1300 223 328) Fax: 02 9451 2105 Contact: Os Castaneda, Sales & Franchising Manager franchises@cafe2u.com.au www.cafe2u.com Start up costs: $130,000

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 Unique 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 • be part of a team of highly motivated and dedicated professionals • excellent company culture

• no “hard sell” high pressure sales tactics ever • comprehensive initial and ongoing training • unlimited growth and earnings potential • vendor finance available • no real estate licence required • change your life in 12 weeks

PROFILE: Cafe2U is Australia’s first and most successful mobile Café system.

With over 250 franchises worldwide the business is rapidly growing due to a simple and proven business model. Cafe2U franchisees now have access to the unique “Acceleration Package” which fast-tracks success.

This includes an experienced Franchise Development Manager to launch the business alongside the new franchisee in their own exclusive territory.

Cafe2U builds a customer run that delivers a minimum of $500.00 a day before the Franchisee operates solo.

The business is HACCP certified and has a ‘no compromise’ attitude when it comes to quality. This includes the Mercedes vehicle, commercial equipment and fitout, branding and marketing strategies and dedicated events co-ordinator.

If you are ready to take control and enjoy working with people, a Cafe2U franchise provides you the perfect system to create your own destiny.

Phone: 1300 659 676 Fax: 1300 659 675 Contact: Dan Toms customerservice@cashflowit.com.au www.cashflowit.com.au

PROFILE: Cashflow It specialises in equipment financing solutions for the franchise sector.

Cashflow It can get you pre – approved so that you can find the best deal on the equipment you need from any supplier in Australia. Whether you are looking for just one piece of equipment, fitting out a brand new store or buying an existing business with established equipment, we have a funding solution that can help.

Phone: +61 02 9207 8877 Contact: Rod Laycock rodl@civicms.com.au www.civicmanagedservices.com.au PROFILE: Civic Managed Services (CMS) is a professional service provider and experienced franchisor offering tailored solutions for small to medium sized businesses on a short or long term basis.

CMS offers a full suite of business services, including Operations, IT Support, Online and Offline Marketing, Purchasing, Warehousing and Distribution, Finance and Management Reporting, Franchising and Strategic Management and Planning.

Choose terms from just 12 months up to 5 years. At the end of the term you can Continue Renting, Purchase Equipment, Rent To Own or Return Equipment.

CMS is ideally suited to provide infrastructure to businesses wishing to launch or expand their business, without the need to invest in costly staff recruitment. We have expertise and experience in a range of industries including retail, franchising, food, technology and education.

If you belong to a Cashflow It Accredited Franchise then you will enjoy additional products, benefits, and cost savings.

CMS could be the cost effective solution to provide you with an experienced team to grow your business.

Apply online today in less than 10 minutes.

Call us for an obligation free discussion.

Phone: 0407 059 603 Contact: Duncan Powell duncan@cocolat.com.au www.cocolat.com.au

Phone: 1300 720 622 Contact: Rian Bell supply@constructionsupplyservice.com.au

Start up costs: $200,000 +

PROFILE: “Now Franchising” At Cocolat we pride ourselves in our handmade artisan Products – Deserts, Chocolate Truffles, Gelato and Coffee. Our Team of Chocolatiers and Bakers use only the finest of ingredients in our full production kitchen based in the beautiful Adelaide Hills.

Cocolat is a popular South Australia Icon which has just opened up their first store in St. Ives, Sydney.

PROFILE: Construction Supply & Service (CSS) was established in 2003 with a view to providing a one stop solution for businesses in the QSR & restaurant industry.

We can locate, design, build, equip and maintain your business. With 24 hour a day on call service techs we can make sure you are always operational. With over 500 builds completed we have the expertise to ensure that it is done right the first time. From custom one of a kind build and equipment supply through to franchisee stores we have the team and contacts to take care of all your needs.

Now Franchising throughout NSW, VIC, SA, QLD, WA, NT and TAS.

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A-Z LISTINGS

Phone: 1300 131 888 Contact: Ashleigh Williams Franchise.recruitment@dominos.com.au www.dominosfranchise.com.au

Phone: 03 9923 3514 Contact: Ross Malcomson franchise@dodo.com www.dodo.com/franchise

Start up costs: $250,000 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.

PROFILE: Looking for a new career path and want to be your own boss?

Join the success of the Number One Pizza Company in Australia- Domino’s!

Our objective is to ensure every franchisee in the network is successful by offering; • Proven Systems and procedures for single unit and multi-unit operators • Clear growth & development strategies • Un-Paralleled Support from a dedicated team • Comprehensive training programs • Constant innovation • Leading Marketing Strategies • Support through all stages of the store building process • Local franchise consultant to help with ongoing store operations Our stores generally cost between $300,000-$600,000 + GST we require you to have approximately 40% of the total investment in cash and/or available equity.

Live your Dream and apply now.

Phone: 1800 373 263 04 57575727 Contact: Cam Hadlow cam@dreamdoors.com.au www.dreamdoors.com.au Start up costs from: $75,000 + GST + operating capital PROFILE: A DREAM OPPORTUNITY Do you dream of working for yourself and earning a stable income? Make it a reality with Dream Doors – one of Australia’s fastest growing franchises. You don’t need any previous experience. It’s easy and affordable to set up your own franchise, backed by comprehensive support and a proven business model with over 14 years of international success.

BE YOUR OWN BOSS The unique Dream Doors ‘facelift’ concept makes it possible for Aussies to achieve a ‘new’ kitchen for a fraction of the usual cost, by replacing doors, drawer fronts and benchtops. The market response has been extremely positive, with some Dream Doors operators exceeding $400k gross profit in their first year.

Call today and make your dream a reality.

Phone: 1300 FASTWAY Fax: 02 9264 4966 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: t Guaranteed income package* t Low start up costs t No weekend work t Ongoing business support & training t Exclusive territories t 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: 1800 307 903 Fax: (02) 8079 6174 Contact: Alan Biddle alan.biddle@firstclasscapital.com.au www.firstclasscapital.com.au

Phone: 02 8845 0100 Fax: 02 8845 0199 Contact: Karen Pollard franchise@gelatissimo.com.au www.gelatissimo.com.au

Start up costs: $40,000 + GST

PROFILE: First Class Capital is one of Australia’s most innovative lenders, specialising in the delivery of trade finance and working capital solutions to small business.

First Class Capital is now offering franchise opportunities nationally for savvy business professionals wanting to build their own successful franchise in the lucrative trade finance sector.

A background in finance is not necessary, as franchise partners receive comprehensive training, state of the art online systems, regular regional and national advertising campaigns, as well as on-going mentoring and support.

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.

This ensures that our franchise partners you have all the tools they need to build their own successful business.

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A-Z LISTINGS

Phone: 07 5515 0118 Fax: 07 5500 3716 Contact: Geoff Biddle mail@groutpro.com.au www.groutpro.com.au

Phone: 1800 689 550 Fax: 07 5591 9021 Contact: Maria Taylor Maria.taylor@rfg.com.au www.gloriajeanscoffees.com.au Start up costs: $320,000 - $450,000

PROFILE: Gloria Jean’s Coffees is tireless in the pursuit to serve the highest quality coffee, while making each and every guest feel like they are returning home when they step into any of the brand’s coffee houses.

After opening the first coffee house in Australia, the business model was perfected for international growth. Gloria Jean’s Coffees footprint has grown to over 800 coffee houses in 40 markets worldwide. Gloria Jean’s Coffees vision is to be the most loved and respected coffee company worldwide, and with the biggest international footprint of any of RFG’s Brand Systems the brand is well on its way to making this vision a reality.

Phone: 0419 290 800 Contact: Jonathan Frearson Fbs71@outlook.com www.harbourwatertaxis.com Start up costs: $68,000 + GST

PROFILE: A water taxi business operating on the busy waterways of Sydney Harbour.

This is a unique opportunity to own equity in a proven purpose built vessel.

There are no staffing costs, no franchise fees and no leases for premises or equipment. Harbour Water Taxis Pty Ltd offers you a positive cash flow business with additional opportunities to develop your managerial, business development and operational performance skills in the future as the business grows. On water experience (Coxwains ticket) an advantage. You must be customer focused and have excellent communication skills and be prepared to work evenings and weekends.

Start up costs from: $39,950 + GST & vehicle

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.

Phone: 0429 903 780 Contact: Craig Lennard franchising@healthyhabits.com.au www.healthyhabits.com.au Start up costs from: $200,000 - $300,000

PROFILE: Healthy Habits is a fast food retailer with a difference.

You see we’re all about feeling good – about the food we eat, our lives and our bodies. Everything we do is centred around this approach, maximising the opportunity to bring healthier, feel good food choices to the communities we live in.

Franchising with Healthy Habits provides you with the financial control of owning your own business, whilst being supported by proven systems and market leading innovation.

So, if you’re energetic, ambitious and ready to learn, contact Healthy Habits today and let’s start a conversation.

Phone: 0418 600 919 Contact: Meredith Ham sales.au@inxpress.com inxpress.com inxpress.com.au/franchising

Phone: 0427 208 462 Contact: Steve Potter franchising@indianbrothers.com.au 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 250 franchisees globally, InXpress is now accepting applications to grow the Australian business. Benefits to franchisees include: t Low entry costs t Low risk t No inventory/warehousing

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

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

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IN -HOM E , SO C IAL & LI FESTY LE SU PPO RT

Phone: 02 9934 9950 Fax: 02 9934 9900 Contact: Franchise Manager franchise@justbettercare.com www.justbettercare.com

Phone: 02 9527 5444 0439 130 499 Contact: Luke Manning Luke@justcuts.com Justcuts.com

Start up costs: $130,000 + GST

Start up costs: $85,000 - $120,000 (Kiosk) $160,000 - $240,000 (Salon)

PROFILE: A reputation for service excellence!

Just Better Care is Australia’s largest in home healthcare franchise group.

As an established market participant we have built a leading industry brand and are well positioned across both the Aged Care and Disability sector.

In protecting the strength of the Just Better Care brand we are very selective in franchise recruitment.

Ensuring our franchise owners share a strong determination to develop successful businesses and are genuinely passionate about providing exceptional services is what has set us apart.

With compelling demographic market and political changes this industry is well set for exciting growth into the future.

Phone: 1300 453 284 Fax: 07 5564 9045 Contact: Dean Reid marketing@mobileservices.net.au www.myleatherdoctor.com.au 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.

PROFILE: Join the largest hairdressing network in the Southern Hemisphere! Just Cuts™ offers a fixed franchising fee, with flexible finance options and ongoing business coaching and support.

Did you know that most Just Cuts™ Franchise Owners are not hairdressers and on average own 2.3 salons each! Why? Because proven systems, support and training means your Stylists become the technicians and easily run the business for you.

Just Cuts™ are also excited to announce our NEW kiosk option! With only 49 sites available Australia wide, buy yourself a new lifestyle from $85,000!

Just Cuts™ Franchisees have exclusive access to our professional retail range made in Europe; JUSTICE Professional™!

Phone: 02 9638 8000 Contact: Mark Futeran mark.futeran@hunterdouglas.com.au www.luxaflex.com.au Start up costs: $30K (Luxaflex Showcase) $150K (Luxaflex Gallery) PROFILE: The LUXAFLEX® Window Fashions brand is one of the most widely known and respected window furnishing brands in Australia. Luxaflex was established as a brand of the worldwide market leading Hunter Douglas Group operating in Australia since 1953.

Luxaflex Window Fashions are sold primarily through quality window furnishings stores nationwide.

We offer an unrivalled partnership to meet specific business needs, through the LUXAFLEX® Window Fashions Gallery and LUXAFLEX® Window Fashions Showcase Alliance programs. The Alliance programs provide marketing support, business management support, product supply, training and support, as well as on the ground local sales support.

Phone: 1300 544 755 Contact: Jacqueline Fearnley info@legalvision.com.au https://legalvision.com.au/

PROFILE: LegalVision is Australia’s largest and fastest growing online law firm. Our specialist franchise lawyers are experts in drafting and reviewing all franchise documents, including franchise agreements, disclosure documents and commercial leases.

We also regularly assist both franchisors and franchisees in relation to commercial disputes, employment law and intellectual property. Through our unique online model, we are able to offer fixed fees and a fast turnaround on high quality work to all our clients. Get in touch today for an obligation-free consultation and a fixed-fee quote!

Phone: 03 9604 9400 Fax: 03 9600 3313 Contact: Robert Toth rxt@marshmaher.com.au www.marshmaher.com.au

PROFILE: Robert Toth and Marianne Marchesi Well recognised and published franchise specialists with over 30 years industry knowledge and experience now head of franchise group at Marsh & Maher.

Providing advice to: 1. International Franchisors 2. Master Franchising 3. Dispute Resolutions – solutions and strategies 4. Franchisee Advice 5. Sale / Purchase Franchise systems 6. IP / Trademark Advice 7. Company Structure & Tax Advice Fixed fee to upgrade Franchise documents for 2015 Code Compliance.

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Phone: 02 8905 8401 Contact: Gary Glen Gary.glen@qsrh.com.au www.oporto.com.au

Phone: 1300 961 588 Contact: Luxottica Franchising Team franchising@luxottica.com.au luxottica.com.au/franchising

From approx.: $500K

Start up costs from: $250,000

PROFILE: Created in 1986, Oporto was Australia’s first Portuguese-style chicken restaurant that was renowned for its unique and delicious chilli sauce. From tantalising the taste buds of local Bondi residents, Oporto now satisfies over 13 million people per year across 140 stores, and that number is forever growing.

Oporto® has come a long way since 1986 however has maintained the heritage of high quality, great tasting, authentic fresh-grilled chicken and burgers. In a crowded fast food sector, Oporto® is fast becoming one of the major players in a new generation of fresh and casual dining offers.

For enquiries on Franchising opportunities please visit our franchise enquiries page here.

Phone: 02 9822 5622 / 0437 575 200 Contact: Jenna Backhouse franchise@packsend.com.au www.packsend.com.au Start up costs from: $160,000 - $170,000 + working capital (ex GST)

PROFILE: OPSM is a highly respected and market-leading franchise brand with nationwide opportunities available to both business professionals and optometrists.

From a single store in Sydney to over 400 OPSM stores across Australia and New Zealand, our passion has remained constant. We love eyes. When you partner with OPSM you’ll benefit from award winning systems, support, training and business development programs; and be part of an innovative, professional network.

An OPSM franchise makes great business sense. You can benefit from scalable and multi-site scenarios, backed by proven business systems and the reassurance that you’re working with world-leading technology and products.

Phone: 02 9930 3023 Contact: John Nero au-pizzahut.franchising@yum.com www.pizzahut.com.au/franchise Start up costs from: $300,000 - $340,000

PROFILE: Servicing one of the world’s fastest growing markets, PACK & SEND is an award winning, full service logistics operation servicing corporate and small business clients, as well as householders.

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.

Established for 20 years with over 100 Australian stores – along with international networks in New Zealand and the United Kingdom – there is no other franchise system like PACK & SEND!

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 cutting-edge technology and a thriving e-Commerce network, customers can simply send anything, anywhere through an array of sales channels. With the exponential growth of online purchasing, the parcel and freight industry is among the top to benefit.

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.

Our innovative approach and developed infrastructure creates a future-forward franchise platform with ‘no limits’ to success.

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

Phone: 02 8905 8401 Contact: Gary Glen Gary.Glen@qsrh.com.au www.redrooster.com.au From approx.: $600K

Start up costs from: $49,000

PROFILE: Property Club was estalished in 1994 as The Investors Club, and has grown to become one of Australia’s most successful property investing organisations.

By educating and assisting members to purchase carefully selected investment properties in Australia, Property Club has worked together with investors and property vendors with over 19,000 properties purchased to date. Success of the Club is evident through the 4,700+ members of our Property Millionaires Club.

Property Club now offers an opportunity to join our existing 21 Franchisees.

Full training, supported by a dedicated team of head office staff and property researchers will be provided to successful applicants.

PROFILE: An Australian iconic brand, Red Rooster® provides Australians with fresh not frozen… roasted not fried… quality roast chicken every day of the year.

Over the past 43 years Red Rooster has grown to become the largest Roast Chicken QSR operator in Australia with 360 stores nationally. Growth has been a result of the right people, dynamic product range, buying power, comprehensive marketing, strategic support and world class training.

With one of Australia’s most recognised brand identities and a well-established franchise support network, Red Rooster offers exciting business opportunities.

For enquiries on Franchising opportunities please visit our franchise enquiries page here.

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Phone: 1300 4 REDCAT (1300 473 322) Fax: 03 9696 1553 info@redcat.com.au www.redcat.com.au

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: 1300 139 557 Contact: Jon Bridge jonb@traffic.net.nz www.refreshfranchiseopportunities.com

PROFILE: Professional design and build renovation service. Refresh provides one point of contact and a clear process for consumers to receive an outstanding renovation experience.

Refresh delivers cost effective, low stress renovations to homeowners. Refresh undertakes all types of renovations, from kitchens and bathrooms, to loft conversions and extensive house renovations. You will leverage the existing trade skills in the market but provide an overarching process which maximises efficiencies and facilitates quality. You don’t need to be a builder to join Refresh.

Our head office infrastructure and support will help you extract maximum value from your operations.

Phone: 02 8417 2668 Contact: Josh Franklin apsales@revelsystems.com

Phone: 07 5591 3242 Fax: 07 5591 9021 Contact: Michael Marr Michael.marr@rfg.com.au www.rfg.com.au

http://revelsystems.com.au Start up costs from: $1000

PROFILE: Get Amazing Control, Stop Money Leakage, Save Time and Increase Your Turnover.

Upgrade Your Business With Revel iPad POS. Revel is a true business solution, developed from the ground up to be the world’s leading fully featured iPad POS. Available for single terminals to Enterprise and Global Franchises, Revel runs from an iPad connecting to the cloud with local back up, delivering incredible reliability that empowers you to access every single feature from anywhere with internet.

Our features are designed to protect & increase your profit margins, automatically reduce mistakes, increase sales and improve efficiency.

PROFILE: Founded in 1989 as the owner and manager of around 50 Donut King and bb’s Café stores, and Listed on the Australian Securities Exchange (ASX) since 2006, Retail Food Group (RFG) now has a strong portfolio of world class franchise systems with an extensive global footprint.

RFG is the owner, developer and manager of Donut King, Brumby’s Bakery, Michel’s Patisserie, Gloria Jean’s Coffees, It’s A Grind, The Coffee Guy, Café2U, Pizza Capers Gourmet Kitchen and Crust Gourmet Pizza Bar franchise systems.

Phone: 1800 762 766 Fax: 02 9837 9199 Contact: Les Coppin les.coppin@snapon.com www.snapontools.com.au

Phone: 03 9830 4166 Fax: 03 9888 6327 franchising@snooze.com.au www.snooze.com.au/franchising Start up costs from: $450,000

Start up costs from: $50,000

PROFILE: Snap-on Tools Australia & NZ is a mobile franchise operation putting high quality tools and equipment into the hands of mechanics, engineers and technicians across the country. Snap-on Tools is a wholly owned subsidiary of Snap-on Inc., a developer and manufacturer of innovative and technologically advanced tools with an established network of solid franchise operations across the globe.

After more than 25 years in the Australian market, Snap-on continues to solidly perform, providing robust financial results for its network of over 170 franchisees.

Extensive training and ongoing support is provided - no previous mechanical experience required. Snap-on offers an exclusive finance package to assist new franchisees.

PROFILE: As one of Australia’s longest-running, successful and innovative franchised business, Snooze’s experience in the bedding industry is second to none.

With 76 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: Toll Free Australia - 1800 630 355 New Zealand - 0800 444 618 Fax: 07 3852 4081 Contact: Franchise Administrator ssa@subway.com www.subway.com

Phone: 08 8376 3016 Contact: George Karamalis info@st-louis.com.au www.st-louis.com.au 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.

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.

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.

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

Start up costs from: Varies by site PROFILE: SubwayÂŽ is the worldâ&#x20AC;&#x2122;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.

For over 47 years, the SUBWAYÂŽ brand has been helping individuals build their own independently operated business â&#x20AC;&#x201C; run by people just like you! From step one, throughout the entire franchise process, the SubwayÂŽ system provides training and guidance that aids in the operation of each restaurant.

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

Phone: 02 9898 8608 Contact: Chris Fitzmaurice enquiries@swimart.com.au www.swimartfranchise.com.au

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

Start up costs from: Retail - $175,000 - $250,000 Mobile - $85,000 - $90,000 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.

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 youâ&#x20AC;&#x2122;re looking for either a retail or service business that delivers solid revenues with high margins and low fees, just ask Swimart!

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.

Our cakes are baked from easy to follow recipes. You donâ&#x20AC;&#x2122;t need to be a chef or a baker, its so easy!

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

Phone: +61 439 222 422 (AUS) +64 21 917 148 (NZ) Contact: Blair Larsen blair.larsen@tdda.com 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 a comprehensive 100 day training program; Australasia wide business networks; State Office support and large-scale clients that need services in your area.

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

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

Phone: 13 26 13 Fax: 08 8220 4588 info@viphomeservices.com www.viphomeservices.com Start up costs from: $25,000

PROFILE: V.I.P. was the first company to start franchising in home services in 1979.

V.I.P. has over 1100 franchisees across Australia and New Zealand.

V.I.P. has franchise opportunities available in: t ( BSEFO . BJOUFOBODF BOE -BXO . PXJOH t )PNF $ MFBOJOH t $ PNNFSDJBM $ MFBOJOH Over the last 35 years, V.I.P. has helped over 4,000 people just like you become successful business owners by providing: t *OJUJBM BOE POHPJOH USBJOJOH coaching and mentoring t " GGPSEBCMF GSBODIJTF PQUJPOT t / BUJPOBM BOE MPDBM NBSLFUJOH

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t " O FTUBCMJTIFE DMJFOU CBTF t " DDFTT UP B OFUXPSL PG GSBODIJTFFT t " O JOJUJBM TUBSU VQ LJU TP UIBU ZPV BSF ready to go

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Phone: 02 8338 0930 Contact: Daniel McDonough franchising@WHSmith.com.au www.wildcardsandgifts.com/franchising Start up costs: $42,000 + GST plus $200,000 to $300,000 capital investment w/ recommended working capital of $80,000 PROFILE: With 40+ stores across the nation, Wild Cards & Gifts is Australia’s largest group of franchised card and gift retailers.

The philosophy of Wild Cards & Gifts is simple - to make our stores #1 for profitability!

We believe that the formula to having outstanding success comes from providing great support and having great relationship with our franchisees. We deliver high quality, high demand cards & gifts in a contemporary, well designed store whilst offering value for money to our customers in a fun and energetic environment.

The card and gift market is highly competitive, worth in excess of $2b annually, and with the backing of UK giant WHSmith we have access to exclusive product not available in Australia through international suppliers creating our point of difference.

Phone: 1300 655 559 Contact: Jonathan Payne joinus@xpresso.com.au www.xpresso.com.au www.facebook.com XpressoMobileCafe Start up costs: $125,000 + 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, cold brew coffee products, 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 perfect for corporate and school/community events.

Ask us about our unique school fundraising programs!

A-Z

Phone: 03 9612 7297 Fax: 03 9629 4035 Contact: Melissa Strain melissa.strain@wisemah.com.au www.wisewouldmahony.com.au

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

PROFILE: Experienced Franchise Lawyers.

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: • Drafting & review of Franchise documents • Legal and consulting advice to Franchisors & Franchisees • Dispute resolution – mediation – strategies and solutions

• Code compliance requirements • Sale/Purchase of Franchise Systems & Business • Master Franchising • International Franchising

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

Phone: 0414 669 101 Contact: Stephen Spitz stephen.spitz@xpressodelight.com.au www.xpressodelight.com.au Start up costs from: $59,990 + GST

PROFILE: Invest in an Xpresso Delight franchise and seize the opportunity to profit from one of the fastest growing markets on the planet. As the number of savvy, educated coffee drinkers has boomed, the market has exploded!

This pent up demand for gourmet coffee in the workplace is very poorly met.

Each day, thousands of workers trek to the nearest café to pay as much as $4.00 for their morning and afternoon coffees.

This is the premise of Xpresso Delight - transplanting the cafe into the heart of the workplace at a fraction of the price that people pay normally.

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 N GS

FOR A-Z LISTINGS ENQUIRIES CONTACT:

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

Phone: 1300 139 913 Fax: 07 5587 7223 info@zbm.com.au www.zbm.com.au

PROFILE: Zoo Business Media is a full service supplier of innovative music, video and voice messaging solutions to hundreds of franchised businesses around Australia. We provide the latest in digital, customisable in-house radio and branded, music video technology.

We help you create the perfect ambience for your retail stores, gyms, restaurants or bars with the latest internet-delivered music and messaging services - inclusive of public performance fees.

Contact us on 1300 139 313 and find out how we can make your franchised business sound great!

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ADVERTISING INDEX

INCORPORATING FCA NEWS

* INDICATES FCA MEMBER

AFEA Home Nurseries

96

Legal Vision

95*

Appliance Tagging Services

80*

Marsh & Maher

65*

Baskin-Robbins

11*

Oporto

15*

Battery World

83*

Pack & Send

2*

Benga Designs

97*

Pizza Hut

7*

Black Dot

29

Property Club

109

Buy Australian Properties

99*

Redcat

104*

Cafe2U

38-39*

Red Rooster

41*

Cashflow It

23* 117, 120*

Refresh Renovations

46-47*

Cirrus Media

19*

Retail Food Group

66-67*

Civic Managed Services

54*

Revel

55

Cocolat

106

Specialised Events

113*

Construction, supply & service

77*

Snap–on

9*

Dodo Services Dominos

31

Snooze

51*

Dream Doors

73*

St Louis

17

Fastway Couriers

131*

Subway

33*

First Class Capital

48*

SumoSalad

45*

Ferguson Plarre Bakehouses

91*

Swimart

111*

Franchise Council of Australia

115

The Cheesecake Shop

61*

Gelatissimo

35*

The Drug Detection Agency

132

Gloria Jean’s Coffees

89

The Leather Doctor

63*

GroutPro

43*

VIP

59*

Healthy Habits

82

Wild Retail

4

Indian Brothers Restaurant

100*

Xpresso Delight

27*

InXpress

71*

Xpresso Mobile Café

107*

Just Better Care

93

Zoo Business Media

87

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There’s a lot of money in drugs.

We’ll help you get it!

Workplace and pre-employment drug testing is exploding as a business in every state in Australia.

Be quick to secure one of our exclusive franchise territories. With the right motivation, a bit of hard work and our comprehensive 100-day training program, the financial rewards will follow.

If you’re ready to jump on board as a Franchisee in our proven business model, we want to talk to you. Sooner rather than later.

For enquires please email Blair.Larsen@tdda.com

Take a video tour on our website

www.tdda.com