The Franchising Council of Australia (the FCA) hosted the annual State franchising conference in Melbourne on Tuesday 8 May 2007. The theme “Setting Solid Foundations” attracted over 30 speakers, covering a range of key issues affecting the franchising sector today.
Quick Facts
- There are 1,000 franchise systems in Australia with a $130 billion turnover annually.
- Australia is one of the most heavily franchised countries in the world.
- WorkChoices has had a significant impact on franchised businesses including providing greater flexibility.
- Australia appears to be behind in our IT systems, use of websites and online communication.
The FCA continues to grow and evolve, providing a range of services which involve franchisors, franchisees, suppliers, educators and support professionals.
Keynote Speaker - "The Clark Rubber Story" - Chris Malcolm
Chris Malcolm, as the owner of Clark Rubber, spoke about his role in taking on what was an Australian icon brand and turning it around completely. He identified the following as being key to the success of the system:
- establishing solid and sound documentation that reflects the model of franchise you are actually operating;
- implementing excellent IT and support systems and clear and precise procedures;
- the importance of planning from the outset including preparing a business plan; and
- reinvesting in the business, especially in the early years.
Focus on Franchisors
- Roger Wilson (Forty Winks)
- Peter Irvine (Gloria Jean’s Coffees)
John O'Brien (Chair - FCA)
- Warren Wilmot (7 Eleven)
A panel discussion lead by the above franchisors recognised the need to have a clean plan and vision of your mission and values from the outset and to share this with your business colleagues. The group also offered the following advice for franchisors:
- know your target market - establish a niche in that area and then target your marketing to get the best value for your dollar;
- work at business development in stages;
- ensure your message is consistent between markets and amongst franchisees;
- importance of training programs at all levels: new franchisees, their managers and staff.
- employ the right people for the job;
- look to the future - consider the medium and long term
and importance of leadership by franchisors.
Succession Planning
A roundtable discussion headed by Sergio Alderuccio (Franchise Developments) summarised the following key considerations for succession planning:
- documentation to facilitate handover and exit strategies;
- tax - obtain appropriate advice (financial, tax, legal) well before the proposed exit date;
- and emotional and family issues/factors are often involved - handing the business down to the next generation and the impact of generational change - what if they aren’t interested/equipped/available.
Site Visits
Tanya Robertson (Gloria Jean’s Coffees) headed a discussion on site visits and the importance of the visits adding value to the overall system. The visits should be systemised and information recorded for future reference and action.
Site visits can be a useful tool for communication and feedback as well as for identifying problems early and ensuring compliance with the relevant system.
Keeping out of court
To avoid the court process, a roundtable discussion noted the importance of the mediation process and maintaining quality documentation. An awareness of laws relevant to the industry is also of value, e.g. WorkChoices, various legislation dealing with discrimination, trade practices, the Franchising Code of Conduct.
Who should hold the lease?
Bruce McFarlane (Hall & Wilcox) and Greg Thomas (TressCox) facilitated a discussion on the benefits and risks of leasing decisions to be made by franchisors. Whilst it is often the decision of the landlord rather than the franchisor, the franchisor needs to consider the risks of holding a lease compared with the benefits of allowing the franchisee to run their own business.
What are the key challenges facing emerging franchisors?
- Simon Crowe (Grill’d)
- Leon Cupit (Independent Property Inspections)
- Joe Sirianni (Smart Line Home Loans)
- Scott Farrar (Brazilian Butterfly)
The above panel together with the established system operators summarised the following key challenges for franchisors:
- finding the right people - quality franchisees and advisors;
- when to expand - locally, interstate or internationally;
- marketing on a shoe string;
- learning on the job - listening to advice and knowing when to discount that advice;
- mentoring - where do we go - FCA, informal and formal CEO networks; and
- documentation - “buy back” clauses in franchise agreements - having the ability to buy back from a franchisee that is failing.
For further information, please contact: