Changes to Australian franchise regulations were announced yesterday by Australian Federal Minister for Small Business Dr Craig Emerson. The reforms to the Franchising Code of Conduct aim to create greater transparency and disclosure, while not restricting the operation of business, and are the most significant changes to the legislation since its introduction in 1998. Based on recommendations of the expert panel, Dr Emerson will not ban unilateral contract variations or unforseen capital expenditure. The panel’s report outlines there may be legitimate commercial reasons for such...

Although it’s often said franchising is a less risky option than independent small business there is a lack of solid data to support this statement. The difficulty in proving franchises are less risky than independent small business is it varies from franchise to franchise, and really depends on the sustainability of the individual business model. Despite joining a franchise network with a well-known and established brand you still may not be protected from everyday business risks. There have been a number of cases where franchise networks, despite their size or age, have ceased...

When you become a franchisee you become an owner of a business, however you don’t receive the same freedom as you would if you started your own independent business. One of the reasons you may have been attracted to franchising is the established procedures, policies and brand. However, along with these also comes the need to operate within the franchise network policies, procedures and brand guidelines. It’s through these elements the franchise establishes and maintains a strong brand which adds value to your investment. Franchisee Mindset and Conflict Again, as discussed in...

One motivation of people entering franchising is to effectively ‘buy themselves a job’. However becoming a franchisee is actually far more complex than ‘buying a job’, it’s actually a business you’re buying. Franchisee and Employee Differences Unlike being an employee, it’s your finances that are tied up with the business, so if your franchise unit struggles you may struggle, which may also impact your family.

Also you don’t get the same leave entitlements as if you were an employee. If you get sick or want to take recreation...

Go Sushi has announced a profit guarantee for new franchisees who sign up in 2010, and although it seems like a great offer (and it very well may be) it got my attention. The franchise is guaranteeing $100,000 net profit* in the first year or they will make up the difference, provided franchisees comply with the franchise system operations, reporting requirements, and similar conditions. When I initially read about the guarantee it brought to mind failed franchise Kleins. That’s not to say Go Sushi won’t be successful, I’ve just never seen a profit guarantee rather than...

I was down in Sydney earlier this week, to visit relatives. As the family was all together we went out to lunch, (as you do). While I was engrossed in conversation with my niece others at the table starting singing ‘Happy Birthday’. It took me a moment to realise the cake the waitress was bringing over was actually for me! (My birthday isn’t until this coming weekend). As the cake got closer to the table more and more people in the restaurant, people I didn’t even know, starting joining in the singing. I was so embarrassed. It was all very lovely, but it did make me...

The New Year in Australia brings new industrial relations laws. The Federal Government’s Fair Work changes – the new National Employment Standards and the Modern Awards System – are now in effect since January 1, 2010. The National Employment Standards, (part of the Fair Work Act 2009), aims to provide a safety net of minimum terms and conditions of employment, and brings with it changes franchisors and franchisees need to be aware of. If you’re a franchisor, you may find value in pointing these changes out to your franchisees (if you haven’t already done so),...

What a year 2009 has been: From the uncertain days of the beginning of the Global Financial Crisis (GFC) when no one knew just how big the crisis would become, to the shimmer of positive economic growth on the horizon for 2010. Franchise failure As the GFC was first coming to light, shockwaves were sent through the franchise community with the collapse of the Kleenmaid franchise in early April. With debt of more than $100 million, it’s the most expensive franchise collapse in Australian franchise history, and despite initial claims Kleenmaid was a victim of the GFC, closer...

I was speaking with a Gen Y colleague today about how she (and her other Gen Y flatmates) are really lost at the moment because their internet connection was destroyed in recent storms. Not only did it make me laugh at how dependent a generation can be on the internet, but it made me think about what contingencies the Centre has if our internet went down, and what impact this would have on business. For many franchise businesses the internet, and their website in particular is more crucial than they realise with nearly eight out of ten customers researching their purchases online, even...

Recruiting suitable franchisees is the biggest concern for the sector (based on our latest website poll), despite the downturn, so migrant franchisees may provide a solution. Franchise business opportunities provide migrant franchisees the opportunity to buy themselves Australian residency. Migrant franchisee growth increasing According to demographic and social change advisor, Bernard Salt, at the National Franchise Convention in Perth, Australia, earlier this year, the growth in migrant franchisees is likely to increase significantly. Bernard says the Federal Government recently...

The Australian federal government announced changes to the country’s national franchise regulations last week, and this week vocal South Australian State Labor MP Tony Piccolo says he will launch his own state-based bill. How could this change Australian franchise regulations? Currently the franchise business sector operates under one unified body of legislation, namely the Franchising Code of Conduct and parts of the Trade Practices Act. Having consistent national laws makes it easier for franchise businesses to move from state to state, creating a consistent playing field. The...

Gloria Jean’s Coffees is in 38 countries and counting, so it’s easy to understand why they won this year’s Franchise Council of Australia International Franchising Award. Gloria Jean’s Coffees Global Capability Manager Karli Furmage, shared with me some success secrets which have led the brand to become one of Australia’s, and indeed the world’s, most successful international franchise businesses. Karli is speaking at our Franchise Forum this month (November 18) in Brisbane, but said I could let you in early on a few of her secrets (as long as I save...

Hong Kong works as a good stepping stone into China, according to Hong Kong Trade Development Council Australia and New Zealand Director Bonnie Shek. She says the reason Hong Kong makes a good stepping stone into China is because Hong Kong has a resilient and service-oriented economy, free flow of capital, and western-friendly business conditions with low tax rates. Like mainland China, Hong Kong also has a rising middle class. The Hong Kong Pearl River Delta region alone has a middle class of 47 million people with high levels of disposable income. The region also accounts for 24 per...

Interest in China as a franchise opportunity destination is on the rise in line with its rising middle class, currently at around 200 million people. For an Australian that kind of scale of size is hard to comprehend – China’s middle class is close to ten times our entire population. No wonder its generating interest as a franchise opportunity market. One franchise business set to gain from China’s growing middle class is Gloria Jean’s Coffees.

Gloria Jean’s opened their first of 600 planned stores in China earlier this year, but franchising...

I’m reading Eagle Boys Pizza franchise founder Tom Potter’s book, The Eagle Boys Story, at the moment - it’s a great read! Knowing Tom I can hear him speaking as I read and have a little chuckle. He’s very frank and that’s one of the things that makes him so great.He tells it like it is which is why I’m so pleased he’ll be speaking at our Franchise Forum 2009. It’s clear from the book his mother played a really big role in his life and in his success. She always believed in him and it’s nice to see Tom pay tribute to her throughout...

Half of the winners of the Queensland Business Review Women in Business Awards are involved in franchising. Aussie Pooch Mobile franchisor Christine Taylor took out the Personal Services category. Smartline Personal Mortgage Advisors franchisee Karen Le Comte won the Business and Financial Services category and Remax Wynnum/Manly franchisee Narelle Gill was winner of the Property and Construction category. Franchising success stories These women demonstrate some of the success stories which franchising achieves and provide examples of franchisee profitability as well as the success...

A Franchising Inquiry was held this week, at Griffith University’s South Bank campus in Brisbane. The mock Inquiry was well attended and held as part of our Franchising course – we even had students who usually study entirely online travel to Brisbane to attend in person. Online students could also participate via videoconference with people from Brisbane, Melbourne and as far as New Zealand logging-in. The event ran like a real franchising inquiry, including the formalities and seating arrangement, and we had a combination of franchising students and industry professionals...

Results from our first website poll are in and although only antedotal, may indicate a growing trend towards born franchisors (that is, businesses that plan to franchise from inception). The majority of franchisors (34%) which responded to the website poll granted between two and five franchises in their first year of operation, followed by a quarter granting one unit. Fifteen percent granted between six and ten units, and a further 15 percent granted more than ten units in the first year. In our past academic research we’ve found most systems operate for three or four years...

If you’ve been involved in a dispute, whether in franchising, the workplace, or another area of your life you may have a particular opinion on how effective mediation is, or under what circumstances a mediator should become involved. And your response is likely to be highly dependent on the outcome of your individual experience. The Office of Mediation Advisor, who coordinates mediation in the franchise sector finds between around 73-76 per cent of mediations it handles end in an agreed outcome. That’s close to three out of every four, which isn’t bad. The Office of...

I was having a conversation with a franchise colleague the other day about the rising interest from franchises in social networking. Most franchises realise the importance of having an online presence but are unsure how to.

She mentioned at the National Franchise Convention last year and more recently at the Queensland Franchise Conference it seemed many franchises weren’t acting for fear of making a mistake. Franchises not acting for fear of making a mistake - why is this bad? Whether you’re actively involved in the online sphere or not, social networking...

Yes the franchising course is still open for enrolments, yes there’s lots of industry involvement, yes you’ll learn a lot of stuff you’ll be able to apply at work straight away, yes the content is in tune with the latest best practice – I was finalising it yesterday (that’s how up-to-date). I’ve received so many phone calls the last few days asking if enrolments are still open for Semester Two for the Franchising Specialist Course and the Graduate Certificate in Franchising. As everyone asks the same questions I thought it would help to answer them...

I have just returned from the Franchise Association of New Zealand Franchise Conference in Queenstown, where there was an obvious relief from the franchising sector that no legislation will be introduced following the recent government inquiry. The New Zealand Minister of Commerce, the Honourable Simon Power, released a paper last month, announcing no franchise specific legislation would be introduced, and so the sector continues to operate under a voluntary code of conduct. Although there were some concerns raised around this decision at a law symposium hosted at the University of...

The world’s leading franchise researcher, Professor Rajiv Dant from the University of Oklahoma is spending two weeks with our Asia-Pacific Centre for Franchising Excellence. While in Australia, he’s sharing his research and also helping coach early career researchers on how to get published. Centre members, including myself, have also been working with Rajiv on a new research project exploring consumer acceptance of western fast food in emerging markets of India and China. It’s a great opportunity for some of our members to build on their skills. As Rajiv lives in...

 Our Asia-Pacific Centre for Franchising Excellence received a visit from the senior staff of the Australian Competition and Consumer Commission (ACCC) this week. It wasn’t related to anti-competitive behaviour or breaches of legislation –it was highly positive – they came on-campus to learn more about the Centre and meet Centre members. We had the opportunity to hear first hand from three of the ACCC’s most senior people responsible for franchising — Deputy Chairperson Dr Michael Schaper, Compliance Strategies Branch General Manager Nigel Ridgway and...

Members of the franchise community have been asking lots of questions about our new Asia-Pacific Centre for Franchising Excellence — it’s great to see so much interest and excitement. A few people have been asking how our research funding works and if the Centre is independent, and to shed some light on how these things work… Research Independence All our research is independent. Even when we receive funding from external organisations they have no influence over the data or its analysis. All research projects need to be approved by the University’s Human...

Building a strong franchise group is clearly what all franchisors want to achieve. So what makes a good franchisee? Surely that is the holy grail of every franchisor, to find the perfect franchisee and replicate them a hundred times over. Equally, the perfect franchisor is what every franchisee hopes to work with. So how do they find each other? Franchising is a commercial relationship between the two parties; the relationship will be more successful if franchisors and franchisees are compatible. But what makes them compatible? Let's look at research recently undertaken by Stephen Bennett...

Research conducted by PhD candidate Owen Wright has been exploring the new phenomena of the use of co-branding in franchising to stimulate and rejuvenate growth in a mature franchising sector. The case study Owen's been looking at is the McDonald’s/McCafe co-branded arrangement, which evolved in Australia. Why co-brand? Development trends such as multiple unit franchising, mobile franchising and co-branding, occur because of the sector’s need to find new means of expansion beyond the standard model of franchising. Franchising in Australia is reaching a...

“There are no new ideas. There are only new ways of making them felt”, according to American poet Audre Lorde. This is obviously the premise upon which some franchisees build their businesses after leaving the franchise structure. Brand piracy is relatively common in the business world. Our research explores how and why it happens among ex-franchisees when they choose to operate independently after leaving a franchise network. People get into franchising because it provides an opportunity for people without prior business experience or who have low levels of technical skills...

Australia has been coined the ‘franchise capital of the world’ because it has over three times the number of franchise systems per capita than the United States.  The Australian franchising sector is described by BRW as ‘booming’ and in 2006 franchising was found to contribute $128 billion dollars to the Australian economy.  Australia naturally has some strength within the Asia-Pacific region and within Australia Griffith University has considerable academic expertise with a core team of experts in franchising. So it makes sense that it’s Griffith...

Australia is said to be the ‘franchise capital of the world’ because it has over three times the number of systems per capita than the United States. However, fewer women enter franchising than small business generally. Only 11 percent of all franchises are independently owned by women, which is significantly less than the reported 33 percent of female owned independent small businesses. So is it the case that women are rejecting franchising? Or are there are unique industry characteristics preventing women entering franchised businesses? Why we need women in...

Bill Merrilees, Greg Nathan and I conducted research recently on the building of relationships between franchisees and franchisors, and how those relationships change depending not only on the individuals but also on the stage they are at in the franchising cycle. To a large extent, the relationship is dependent on the dynamics of individual personalities and as the franchisor usually has numerous franchisees at various stages of development at any point in time, it is a great challenge for them to remain connected with each person. The franchising experience is unique for each...

There are many issues in franchising that, if not directly causing conflict in the first place, often do no good in reducing that conflict down the line. Issues include change (whether good or bad), external advisers such as lawyers and accountants getting involved, lack of innovation or development within the franchise and divergent expectations of the parties involved. Researchers at the Griffith Business School and the Griffith Law School undertook research into a greater understanding of franchising conflict as part of an Australian Research Council (ARC)-supported study in...

by Professor Lorelle Frazer Following on from the earlier blog “Who wears the pants”, a team of researchers at Griffith University have been awarded an Australian Research Council (ARC) linkage grant with the Australia Competition and Consumer Commission (ACCC) to research conflict in franchising.
Although the level of disputes in franchising is relatively low, the impact of a dispute can be very disruptive. Fewer than 4 percent of franchisees were reported to have a substantial dispute with a franchisor in 2006, however the effects of a dispute can be far reaching...

At a recent seminar on power relationships in franchising, presented by myself and Franchise Advisory Centre Director Jason Gehrke, we discussed that franchisors and franchisees wield significant power, but that the parties often misunderstand its extent and use. Franchisor versus Franchisee The seminar ‘Franchisor versus Franchisee – Who really wears the pants’ was jointly presented by myself, and Franchise Advisory Centre Director Jason Gehrke. The seminar discussed preliminary findings of research into power relationships, and proposed a model for movement of power...