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ISSUE 58 EDITION 2 2019
Conversion growth strategy
Poolwerx leads the way
Emerging stronger from a crisis
7-Eleven’s remediation and reform journey
Getting your lease right
The shifting retail landscape
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OFFICIAL JOURNAL OF THE FRANCHISE COUNCIL OF AUSTRALIA thefranchisereview | i
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FRANCHISES
RESTAURANTS
CAFÉS
Contents
2 A message from the CEO
4 Using a conversion growth strategy to realise potential
9 Confronting the challenge and emerging stronger
13 Tough time for small business means big challenges
for the economy
16 Franchisees provide input through new Advisory
Committee
4 18 Returning to the fold in franchising
20 Redcat’s IT platform is helping food retail franchises
adapt for success
22 Why the world’s biggest franchise brand gets ideas
from Down Under
24 Getting your retail lease right
26 A human approach to the evolving landscape
28 Turn the page: How millennials are influencing your
marketing
9 31 What’s next for franchising?
34 Good franchising is simply good business for all
38 Inspiring customer loyalty
40 Winning in 2020: A business planning method for
generating success
45 Upcoming FCA Events
46 WA shines at State Conference
48 Getting the right culture back
50 Evolution of a franchise
24 52 NFC19: Evolving in a new landscape
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indicate endorsement by the FCA. The responsibility
T 1300 669 030
ADVERTISING ENQUIRIES for accuracy of information is that of the individual
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contributors, and neither the publisher or editors can
E info@franchise.org.au Peter White, Franchise Council of Australia
accept responsibility for the accuracy of information
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thefranchisereview | 1
A MESSAGE FROM THE CEO
Regions
respond
enthusiastically
to franchise
opportunity
By Mary Aldred,
CEO, Franchise Council of Australia
Fostering a strong To help address this, the FCA began Franchises offer the brand
a campaign in 2019 to support regional recognition, efficiency and economies
and diverse small revitalisation by highlighting franchises of scale advantages of a chain store
business sector is a as an efficient, innovative tool to while retaining the local economy
address service and small business and entrepreneurial benefits that
significant component ownership gaps. are hallmarks of independent small
of a sustainable local The FCA sent letters of invitation businesses which help local economies
to nearly 80 regional economic strengthen and expand their base.
economic development development officers across Australia The franchise business model provides
strategy. For many and is now in discussion with a number an organisational system and corporate
of councils interested in attracting new support that lowers barriers to entry.
regional centres, slowing franchised businesses. Reducing these traditional obstacles may
commercial investment At the same time, the FCA sent an greatly enhance opportunities for many
email to members to ask if they were first-time entrepreneurs who traditionally
has resulted in a shortfall interested in setting up in specific lack adequate resources, access to capital,
in the range of retail and regions and looking to identify potential and extensive industry experience.
small business services franchisees and business operators. As CEO, I’m leading a small but
The result was outstanding and the focused FCA delegation in July meeting
and entrepreneurial FCA is now organising introductions with regional economic development
opportunities. between franchise members and local officers, councillors, local chambers of
governments in several regions, on the commerce and key regional landlords
path to become Australia’s foremost between the WA coast and northern
small business and franchise system NSW to discuss and introduce franchises
matchmaker. which could breathe life back into their
The regional councils have economies and communities through
approached the FCA mindful that matching local business people with
selective franchises which address some of the nation’s most successful
identified service and small business franchise systems.
gaps in their area will help create In doing so, we clearly acknowledge
a more diverse business mix, new the model for the program developed
employment opportunities and core with Greater Hamilton Council in south-
activity in the community. western Victoria.
2 | thefranchisereview
“The benefit of introducing
franchised businesses is not just
economic, but also has a positive
social and community impact.”
The Greater Hamilton region promoted Through my own regional background,
its business opportunities to franchisors I know how much franchised businesses
and franchisees at the Franchise Council contribute to rural and regional Australia
of Australia’s National Convention and the FCA has been delighted to assist
in Melbourne in October 2018 and Greater Hamilton, as well as discuss the
produced a detailed information kit to opportunity with several more councils
assist franchise systems to evaluate the across Australia.
opportunities in the region. The benefit of introducing franchised
The Greater Hamilton regional businesses is not just economic, but also
presence at NFC2018 was a fantastic has a positive social and community
introduction to the industry and a impact. Often you will find franchisees
surprise to many attendees, with passing on the knowledge they have
Hamilton receiving positive feedback for gained through their training and support
their proactive approach to generating to other local businesses. Healthy
business growth for the region. businesses create healthy communities.
The central geographical location for By helping to meet the needs and
a franchise territory, projected population maximise the opportunities for interested
growth of the region and the stable franchisors and franchisees, as well as
regional spend that is demonstrating providing a crucial link between local
an upward trend, were significant government and business, the FCA can
considerations for franchisors. further enhance the success of the local
Since then, the Council team and a economy, maintain population growth
number of franchise systems have been in and diversify the service offering for the
discussions aligning potential franchisees community.
with franchisors. Other franchisors are We would be pleased to discuss
redesigning their geographical territories further how the FCA can assist both our
or examining their business model to members and local regions in utilising
adjust to a smaller catchment. this program to participate in the nation-
Franchisors noted that when you see wide strategy to leverage the benefits
a local council investing in infrastructure of franchising to rebuild and strengthen
for its CBD, then this is a sure sign of Australia’s local economies and
growth throughout the region. communities. n
thefranchisereview | 3
As Poolwerx continues its expansion in the United States of America, the pool and spa care franchise has turned its attention to finding ‘ma and pa’ pool businesses and converting them to franchised operations. Using a conversion growth strategy to realise potential 4 | thefranchisereview
It’s a recruitment strategy that is pool businesses, with 500 ‘ma and pa’ not ready to retire yet but want a solid
paying dividends for franchisor and operators. As we strive for the goal of exit strategy. This makes them willing
franchisees alike. 300 stores new stores domestically as to convert to the brand because of the
For franchisees, it’s a welcome move well, we expect over 50 per cent of our higher future sales price it will drive.
from being an unsupported independent new Australian franchise partners will 4. COO – Convert, own, operate.
business in a tough market to gaining originate from a conversion.” These independents are usually around
the resources that come from joining 45 years of age, with about a decade
a franchise framework to secure their Identifying a of experience in the industry. They are
livelihood. conversion prospect ready to take their business to the next
As franchisor, Poolwerx gains a ready- “Our approach is based on a fair bit level but unsure how to achieve it solely.
made customer base and the expertise of science to ensure we are targeting the They realise the benefits of joining a
of franchisees who have already been right businesses,” O’Brien says. franchise to make this goal come to
operating their own business in the “We map all independent stores fruition.
market. in Australia, United States, and New
“Conversion as a franchise Zealand and crosscheck those against
Promoting the
development strategy is an opportunity our current franchise territories and advantages of franchising
we have embraced over the past few pool ownership to see what options are to potential converts
years after realising the immense available for expansion. We then rank the According to O’Brien, in the United
potential it held for our business,” says stores according to the opportunity level States currently about 30 per cent of
CEO and Founder of Poolwerx, John and utilise data from our suppliers to conversion prospects contact Poolwerx,
O’Brien (left). combine all this intelligence to populate with the remaining 70 per cent targeted
“Since adopting the strategy (in the our recruitment database and formulate through a direct approach.
USA), we have learnt so much about a plan of approach to introduce the Experience has taught O’Brien and
the process and honed our approach Poolwerx brand.” his team that there are several influential
to great success, leading to a record 40 According to O’Brien, prospects factors that a potential conversion
retail store conversions in 40 months,” usually fall into four categories. business considers before joining the
he says. 1. Immediate acquisition. Usually network.
Now, 70 percent of Poolwerx’s there is a serious personal issue or illness “The number one question people
USA network has been derived from that is driving the need for an immediate want to know is: how do I increase my
conversion franchising and O’Brien sale and they are grateful of the revenue? Marketing is the answer, but
says the strategy will also form a major approach. If the business and location the reality is it can be hard for a sole
element of the franchise’s recruitment is right, Poolwerx will find a franchise operator to turn their minds to investing
program in Australia, where he believes partner to buy it as soon as possible or in in marketing and sales,” O’Brien says.
it will eventually account for half of the some cases buy it corporately and find a “The fact we can go to them and say
network’s new franchise partners. franchisee buyer later. we utilise the combined resources of a
“There are so many benefits to 2. Matchmaker. Some owners are still national marketing fund to promote the
conversion for both the convert and keen to sell but do not want to convert brand regularly is an attractive benefit
the franchisor and it is an underutilised and are happy to wait for the right price. for a new prospect.”
strategy in my opinion. The opportunity They realise it would be easier to sell as Drilling down further into the finances,
is vast. In the US, research shows that part of a franchise, so they become part potential conversion franchisees are also
85 per cent of independent pools are of Poolwerx’s match maker program interested to know how being part of the
‘ma and pa’ operators. With our current to find a buyer. The buyer is aware the network can increase gross profits and
trajectory of 300 new Poolwerx stores business will be converted to a Poolwerx reduce costs. This is where group buying
in the US over the next few years, and this is part of the purchase appeal. power comes into its own.
we anticipate that 70 per cent of the 3. COOT – Convert, own, operate “The fact we negotiate pool product
new business joining the brand will be and transfer. These people are typically purchasing programs on behalf of
through conversion,” O’Brien says. 65 years of age, have been in business our franchise partners means we can
“Comparatively, in Australia there a long time and don’t have any family invariably negotiate better deals and
are about 800 independent retail interested in taking ownership. They are leverage buying power. This leads to
thefranchisereview | 5
reducing costs of goods and improving “...a conversion growth strategy has led to rapid market share and
gross profit margins,” O’Brien says. revenue growth and is now a cornerstone of our recruitment success.”
For a non-franchised small business
owner, the training and support offered
when they join a franchise network is
another big drawcard. Delivering a a recruitment method that has delivered
“Being in business for yourself can conversion strategy for Poolwerx.
be lonely but in franchising there are “There is a perception that conversion
“I am constantly surprised more
strong support teams to guide you. franchise recruitment comes with some
businesses don’t look at conversion as an
From the professional development baggage, and that is true given you can
option, especially those in less saturated
offered by our field management team, be working with businesses owners who
markets where there are fewer players,”
to the comradery established between have been doing things their way for 30
O’Brien says.
franchise partners through regular years, but the bumps are worth it,” says
“To deliver on a conversion strategy
meetings and conventions, there is no is very different to core franchising. We O’Brien.
reason to feel alone,” says O’Brien. had to target a new market and it wasn’t “You get instant market share and
Finally, O’Brien lists access to the one where franchising was top of mind. inevitably learn things from these
latest technology, including a state-of- They were not looking in the typical experienced business owners that can
the-art global website, a world class places we had advertised before. We help shape and grow your brand too.
ERP system and “the quickest most had to make sure Poolwerx established Ultimately though, if an independent has
accurate water testing” as influential to a presence in pool trade magazines. We selected to join a franchise brand, they
potential conversion franchisee’s joining exhibited at expos and used our industry are amenable because they have chosen
his network. supply network for recruitment referrals. to benefit from being part of a larger
“Everything we offer has a clear It worked to introduce the brand and get franchise system.
purpose, to ensure our franchise people thinking about a new way to do “For Poolwerx, a conversion growth
partners can manage their business business. strategy has led to rapid market share
more efficiently, effectively, remotely and And while conversion franchising can and revenue growth and is now a
profitably,” he says. come with its own set of challenges, it’s cornerstone of our recruitment success.”
6 | thefranchisereview
Conversion franchisees
enjoy the benefits of franchising
As non-franchised small CB: The main benefits are: potentially
a better supply chain and pricing;
business owners, Frank better employee training opportunities;
Disher, Seon Jaramillo, potentially better brand recognition and
marketing; having other eyes looking at
and Cal Boothby all faced our company objectively and offering
the challenges of flying advice as to where and how we can
improve; and a network of other franchise
solo as owner-operators partners who support each other and
without the frameworks share ideas.
of franchising to support TFR: What stood out about the way that
Poolwerx managed the process of you
them. Here, these three joining the franchise network?
Poolwerx converts share FD: I felt like Poolwerx worked hard
their stories. to help me preserve the good aspects
from my existing business and bring me
The Franchise Review (TFR): What are around to the Poolwerx way without
the reasons you decided that it would be completely disrupting everything. They
beneficial for your business to join the understand that I have customers that
Poolwerx franchise network? have been with me for several years
and it is important that I maintain those
Frank Disher, Poolwerx franchise partner,
relationships. They are also very patient
Keller, Texas (FD): I would describe Cal Boothby, Poolwerx franchise partner, and encouraging with my lack of proper
myself as a hardworking, ethical person. Redlands, California (CB): We had many business skills.
I would never describe myself as a good reasons but the main ones are:
businessperson. I retired last year as a SJ: What stood out to us after meeting
1. We wanted our company to remain with them over a two-year year time span
Federal Aviation Administration (FAA) air
in business long term and that meant was trust. We had to trust the people that
traffic controller after 27 years. I have had
finding ways to stay competitive in retail we would be joining forces with. We met
my business for 22 years and it has been
by having better buying power, better John O’Brien, CEO along with his wife,
relatively the same size; around $2 million
marketing and better brand recognition. and felt he truly has a connection with
in gross revenue, about 12 employees
and a few hundred service accounts 2. We wanted more extensive training building relationships, people, and their
this entire time. I have been blessed to opportunities for our employees that businesses. Ben was the most influential
bring in enough work and make enough would help them have not only jobs but person in our transition. As I told him, I
money to cover expenses most of that rewarding careers in the pool industry. have to believe in what I am hearing from
time, however there were many months 3. We wanted our company to remain him because it truly affects the lives of
where my FAA job was my only take- intact and our employees to keep their our families and my employees’ families.
home income, and I had to contribute my jobs when we decide to retire. If I did not feel that trust, regardless of the
savings to pay company expenses. I was business model they offered, we would
4. We knew that when the time comes, a
working a total of 70 to 100 hours a week. not have joined forces.
franchise will be easier to sell and will have
I knew nothing about business and I knew CB: The Poolwerx core values are very
greater value than our small independent
that was my weakness. I felt Poolwerx’s much in line with our own and that was
business. A new buyer will be able to
expertise in business was the missing very important to us when we considered
obtain bank financing and will receive
component allowing me to achieve great making this leap. There has been an
comprehensive training through Poolwerx.
success. open line of communication throughout
TFR: What would you list as the main
Seon Jaramillo, Poolwerx franchise the process and that is critical in a major
benefits of operating a franchise as
partner, Austin, Texas (SJ): We decided change such as this. Because we are a
opposed to operating as an independent
to join Poolwerx as a franchise for several larger company that has been in business
small business?
reasons. The first reason is that online sales for 35 years and we are a conversion to
are killing small business retail and we hope FD: For me the main benefit is guidance Poolwerx rather than a new start, there
that joining a franchise with better buying and structure. The path to success is a have been some bumps in the road, but
power, better processes, larger foundation paved road that is well maintained. I was we have always believed that everyone at
and better education at our fingertips in a maze that occasionally crossed that Poolwerx genuinely wants us to succeed
can help us sustain the wave of online path but I had no particular direction to in this venture. We have learnt a great
sales. We also like immediately having an follow. I now understand what numbers deal about franchising from them and
expanded family that I can call upon at any I need, how to track those numbers, and they have been open to learning from us
time for help with pool issues. As a mum how to achieve those numbers. Having a (and other franchise partners) about the
and pop business, creating processes and plan that is structured for my needs and US market and customs, which can be
implementing them is not fun. Poolwerx capabilities is a huge blessing for me. different from those in Australia. They are
stepped in and helped me with processes SJ: The main benefit of operating a committed to ‘finding a better way’, which
that have already been built so I do not franchise rather than a small business is we have appreciated. We have made
have to reinvent the wheel. brand strength. many new friends! n
thefranchisereview | 7
FRANCHISE COUNCIL OF AUSTRALIA
2019 MULTI UNIT SUMMIT
Friday 9th August 2019 | Fenix Events | 680 Victoria Street Richmond VIC
Looking to create successful
growth in franchising?
If you want to grow either • Learn innovative ways to fund expansion of your
business and secure the best deals from lenders
in number of locations
• Learn cutting edge strategies to boost the engagement
or quality of operations,
and performance of your people
the FCA 2019 Multi-Unit • Discover the characteristics of successful multi-unit
Franchising Summit is a franchisees and how to develop these
must-attend event. • Collaborate with other high performing franchisees and
experienced executives from top brands
Top business speakers
• Hear how successful multi unit franchisees have
will be sharing their
achieved greater financial success and lifestyle flexibility
experiences and franchising
The program provides a choice of franchisee panels along
success stories in a with a franchisor concurrent, run by highly knowledgeable
comprehensive, exciting and experienced franchise specialists with many brands
and informative day. represented by multi unit owners and brand area
managers.
Round table topics also give delegates the opportunity
to participate in the discussion and personally contribute
their experience as well as networking drinks at end of
day.
This is the event for multi-unit and multi-brand
franchisees and franchisors looking to build their
businesses to achieve their growth goals.
For more information or to register, visit
FCAmultiunitsummit.com.au or call us on 1300 669 030.Mid 2015 revelations of widespread
underpayment within 7-Eleven’s franchisee
network came to light. Over the past four years,
7-Eleven has embarked on a comprehensive
remediation and reform journey. 7-Eleven
CEO Angus McKay explains how the business
set about remedying those impacted and
reforming operations to be an exemplar of how
to address these issues and better position the
business for growth.
Confronting
the challenge
and emerging
stronger
thefranchisereview | 9Accountability and New leadership • centralising payroll to ensure non-
repaid wages compliance is more easily identifiable;
Providing restitution to affected
• investing in a significant increase in
The plight of underpaid workers employees was only one part of the
field-level investigation and compliance
was the business’ primary focus. journey. The business needed to change,
activity;
Our owners promptly committed to and our reform appropriately started
• creating a sophisticated data
repaying any underpaid individual, from the top.
analytics, monitoring and reporting
without any legal obligation to do so. A new Chairman of the Board
platform to further help identify
The business took accountability for was appointed, along with three new
unusual patterns of behaviour;
not only the issue but also the solution. Non-Executive Directors. These new
• establishing a hotline to ensure
There was a great deal of debate Directors brought diverse and highly
that any employee (including those
and media coverage regarding the relevant skillsets, across corporate
within the franchisee network) can
process and people involved in governance, finance, strategy and cross-
make an enquiry or lodge a complaint
making restitution to those directly cultural engagement.
about non-compliance with workplace
affected. What was lost in that The senior leadership team was also
laws;
debate and coverage was the focus overhauled, including the departure of the • investigating and, where required,
on getting people paid quickly in former CEO and Operations Manager, and acting upon any allegations of unlawful
what is Australia’s largest ever wage the appointment of a new CEO. More than store activity, including termination of
repayment program. The process was two-thirds of the senior leadership team the Franchise Agreement; and
entirely voluntary. More than $160 are new to roles or to the business since • increasing Franchisees’ profit share
million in wages and superannuation the underpayment issue was revealed. and minimum profit guarantees under
had been repaid. our Franchise Agreement, positioning
We communicated directly Business reform 7-Eleven’s model as among the most
and regularly to more than 15,000 With franchisee employees now competitive and attractive in the
current and former employees, and being repaid, a new look Board and franchise industry.
via public calls in a range of national Management team, 7-Eleven also took 7-Eleven also voluntarily entered
and international media over 18 a number of substantial steps to tackle into an industry-leading Proactive
months. Wage claims were handled and stamp out wage fraud at the Compliance Deed with the Fair
confidentially by the Independent franchised store network level, including: Work Ombudsman (FWO) in
Secretariat with its focus on making it • a multi-million dollar investment which we committed to a range of
as simple as possible for the claimant. in innovative store level technology to further reforms. Natalie James, the
We said we would remediate centrally record and capture time and former FWO said “The measures in
underpaid workers as comprehensively attendance records for all Employees this deed are the most robust and
and efficiently as possible, and that is through biometric (thumbprint) sign-on comprehensive that any franchise
exactly what we did. and sign-off; brand has in place in Australia.”
10 | thefranchisereview“We have made mistakes but
have sought to address these
from the front and not retire
from the debate we sparked.
While there’s more to be done,
much more, we are proud of the
progress we have made.”
International education is a booming
sector for the Australian economy, but we
must be vigilant to the increasing number
of vulnerable students now present in
our country, working to pay for their
education, but at the mercy of potentially
unscrupulous employers.
In this regard, 7-Eleven cautiously
welcomed the Government’s Migrant
Workers’ Taskforce report released
in March this year. However, we
were disappointed the report and
recommendations fail to address many
of the key deep-seated cultural issues
and visa enforcement and restrictions
that unfortunately contribute to the
vulnerability of migrant workers which we
shared with the Taskforce based on our
experience.
We have consistently argued that any
Raising the bar of 7-Eleven to pursue through the courts,
let alone the two-thirds of Australian comprehensive approach needs to include
Through these measures and more, we looking at the ‘supply-side’ of the issue,
franchisors that are small-medium
have worked hard to ensure the highest including a mature discussion about the
businesses.
levels of performance and compliance visa restrictions for international students.
7-Eleven was disappointed the Joint
amongst our network. Where those
Parliamentary Inquiry into Franchising
standards are not being met, we will
failed to recommend that the two relevant Business growth
continue to take action.
industry codes – the Franchising Code of Throughout our remediation and
Since October 2015, we have
Conduct and the Oil Code - be amended reform journey, the business has continued
successfully terminated more than
to give franchisors the right to terminate a to perform strongly, beating our financial
20 Franchise Agreements for wage
franchise agreement in the case of serious targets and grown to be Australia’s second
fraud. However, terminating a Franchise largest private company. We still open over
non-compliance with Commonwealth
Agreement is not a decision we take Workplace Laws or Fair Work Instruments. 30 stores each year and have expanded
lightly, nor is it as straightforward as A further area for reform – both from our Corporate Stores to about 15% of the
commonly believed. It relies on having our experience and as is now apparent in network enabling us to better understand
franchisee employees willingly provide many sectors of the economy - is a mature the store environment, trial initiatives, and
evidence to 7-Eleven to support discussion of student visa rules and policy ultimately be better retailers.
terminating the offending Franchisee – settings. It is broadly accepted that current The business has won a number of
evidence that can stand up to the scrutiny visa rules do not allow students to legally industry awards in the last year, including
of the Australian courts and legal system. work enough hours to cover their tuition the NACS Asian Convenience Retail
This requires bravery from those most and living costs, which creates a pool of Technology Award for our 7-Eleven
deeply affected by wage underpayment. vulnerable workers at risk of exploitation Fuel App, a world-first which has been
We should not underestimate the due to economic needs or fear of downloaded by 1.6 million customers and I
difficulty associated with calling out such deportation for breaching their visa. saved nearly $11.5 million off their petrol
behaviour, especially when it requires the
n
A recent 4 Corners story on bills.
individual to step outside strong cultural international students showed universities Most recently, 7-Eleven won the
c
and ethnic groups. allegedly lowering the language Canstar Most Satisfied Customers – Petrol m
Termination is only available to a requirements to admit more students. In and Service Stations Award for second
franchisor if it can be demonstrated that addition, a former Immigration official also year running.
the underpayment has occurred in a way mentioned that their financial capability We have made mistakes but have
that involves fraudulent conduct. to support themselves – as required under sought to address these from the front
Our experience demonstrates that the visa - is also rarely checked. However, and not retire from the debate we sparked.
the barriers to terminating a franchise the story did not link these factors with the While there’s more to be done, much
agreement in cases of underpayment are increasing exploitation of foreign students more, we are proud of the progress we
difficult enough for a company the size being revealed across the economy. have made. n
thefranchisereview | 11Forget the pundits, there are two types of talk
that matter most – taxi talk and pub talk. You
can bet that if the word ‘recession’ is bobbing
up in the front bar of the Railway Hotel or from
a cabbie on the way to the airport, it’s front of
mind for many people.
Tough
time for
small
business
means big
challenges
for the
economy
By Mary Aldred,
CEO, Franchise Council of Australia
thefranchisereview | 13“The footprint of small
business on the rest of the
economy is too big to ignore
and it’s not just a lack of
financing that’s currently
casting a looming shadow
over growth.”
Small business is the canary in the picked this up, saying it wants to see stop lending to small business, and
cage for the rest of the economy. Over unemployment fall. That means seeing warned that it was a serious issue for the
nine out of ten Australian businesses are more people with a job, being able to economy.
small businesses, they pay 12 per cent afford to spend more in the retail sector. As the Fidelity report on retail
of total company tax revenue and with Right now, giving someone a job is the real estate found late last year, online
over 40 per cent of Australia’s workforce best boost you can give the economy. shopping is transforming retail at a time
employed in a small business, are one of There are many legitimate grievances when consumption is struggling and the
our biggest job creators. that have been aired through the role of consumption in growth is waning.
There are a lot of reasons why it’s banking inquiry. But taking a deep, And the speed of change is accelerating.
tough to run a small business right now. narrow dive into the banking sector The level of rents and floor space are
Access to finance is near the top of the without acknowledging the broader becoming uneconomic for more and
list, and the fallout from the banking consequences was always going to more bricks and mortar retailers. Many
inquiry has tightened the tap. The punish small business and penalise small businesses have their business
Reserve Bank of Australia’s annual small Australian jobs. We’re now seeing some finance equity tied up in a real asset, like
business survey reports that one fifth of of that impact come to fruition. their home.
small businesses are now struggling to Announced late last year, the federal The footprint of small business on the
secure finance. government’s investment of $2 billion rest of the economy is too big to ignore
Consider that more than 90 per to facilitate small business lending was and it’s not just a lack of financing that’s
cent of Australian businesses are small aimed at countering this fallout. currently casting a looming shadow over
businesses, and over 40 per cent of Under the initiative, a loan to a growth.
Australian jobs are in those businesses. franchisee or small business is secured Retail leasing, energy prices, industrial
This is particularly significant in only over the business, and not real relations, and the regulatory costs of
franchising, because over 90 per cent estate security or personal guarantees. doing business are all becoming bigger
of the approximately 80,000 franchise This is important, because many small hurdles for small business to clear. With
outlets in Australia are small businesses. business owners use their home to secure new technology and digital disruption,
Of concern, ASIC reported that last a business loan. With a slow down in the the way we do business is changing too,
year the number of companies entering housing market already biting, this will and it’s tough for small businesses to
external administration increased by have a big impact on small businesses keep on top of this let alone ahead of it.
11.2 per cent. This year, there’s an added and their ability to secure finance. The sector needs an emboldened
gauntlet of traps small businesses are Ahmed Fahour, CEO of the non- focus and encouragement to grow jobs
running. bank lender Latitude Financial, has said and invest. If small business takes its foot
In retail, discretionary consumer that small lenders just don’t have the off the peddle, the rest of the economy
spending is dropping. The RBA has capacity to take up the slack if the banks will stall. n
14 | thefranchisereviewThe FCA’s new Franchisee Advisory Committee (FAC) has
now had two meetings to discuss the challenges facing
small to medium businesses and the type of on-the-
ground support and services that can assist franchisees in
the current tough consumer environment.
Franchisees
provide input
through new
Advisory
Committee
The committee was established to give
franchisees a formal avenue to provide
The Franchisee input directly to FCA CEO Mary Aldred
Advisory Committee on relevant policy issues. Mary recently
briefed the committee on the status of
Crystal Petzer the franchising taskforce and its proposed
The Alternative Board approach to stakeholder engagement in
Jane Lombard coming months. “I regularly benchmark
Hire A Hubby
Committee members were asked against leading franchisees,
their views on the parliamentary inquiry’s not just in Australia, but the
Beverley Taylor key recommendations and the resulting
USA and UK.”
discussion focused on Franchising Code
InXpress
of Conduct enforcement activity, the Beverley Taylor
Rob Bruhl Australian Competition and Consumer
Commission (ACCC) complaints
Drug-Safe Workplaces
process and the merits of mandatory
Shannon Hickey legal and financial advice, as well as the
The Lott specific difficulties that franchisees (and
franchisors) face in negotiating retail leases.
Peter Goulis The FCA will provide the Taskforce lead
La Porchetta organisation, the Department of Jobs and
Small Business, with contact details of the
Damian Colefax members of the committee, to facilitate
Just Cuts Franchising franchisee consultation with the taskforce.
Following a discussion about other
Tony Megalli services and information that might be
JAX Tyres of value for franchisees, Mary said FCA
franchisor members would be urged to
Soon Khoo encourage their franchisees to register
Chatime for access to FCA information events,
Mike Downey
webinars and the eDM mailing list. “Every business requires
Franchisors will also be reminded that consistency and effort to
Gutter-Vac individual franchisees can apply for direct
keep it on track.”
membership of the FCA if they wish to
have more direct involvement in the FCA. Crystal Petzer
16 | thefranchisereviewStaying ahead
The views of FAC Members
Beverley Taylor as I love to help other businesses succeed, JAX franchise meetings and have a say. I
InXpress I need to succeed in my business too. suggest that any new franchisee should
Listening skills and good communication speak with other franchisees already
I am always learning, and will never stop,
are key in this business. I am constantly within the franchise to learn how to
and I don’t waste ‘dead’ time. Whether
looking for a way to help our clients achieve the best outcome for their own
I am driving in the car, or at the gym on
achieve their goals. We have this amazing business.
the cross trainer, I am always listening to
online Business Builders Blueprint
training CDs and making the most of the
software to help our business owners
Shannon Hickey
time. I continuously undertake internal navigate their strategy, plans, goals and Nextra (representing The Lott)
and external training courses, on both visions all in one place. This also helps me Newsagencies around the country
running a business/finance and sales/ keep my clients accountable. To keep my are unique in some respects to the
motivation. I continuously read business discipline I set goals and check in every traditional franchise model as we are
books. Always be learning. And take week and month. I also measure my KPIs ‘hosts’ for the franchisor, The Lott, inside
advantage of the education offerings in our system to ensure that I am on our own businesses. Being the first ever
via the FCA. In addition, I regularly track. Having a diary with block out times concept store for the Lott, I feel that as a
benchmark against leading franchisees, really helps too. Every business requires franchisee, we have a need to ‘raise the
not just in Australia, but the USA and consistency and effort to keep it on track. bar’. We have always had the ideology
UK. I analyse marketplace ‘consensus’ Doing lots of small things consistently of ‘look professional, act professional,
on pricing and securing more service works in the long term. be professional.’ Being part of the FCA
offerings, which in turn help diversify our has always given me an opportunity
offering. This is in addition to spreading Tony Megalli to see what other franchises are doing,
my net turnover across a high number JAX Tyres particularly the ones involved in this
of customers, rather than leaving ‘all my As a franchisee the essence of my ever-changing retail landscape. We put
eggs in one basket’ and relying on the business is to provide a quality service a high expectation on staff and suppliers
revenue of a few key customers. to my customers while maintaining the as well as ourselves in competing for
JAX business model. We run the business the consumer’s dollar over the ease of
Crystal Petzer as a team, and every employee plays the online sale. I have always been a
The Alternative Board a key role in the day to day running big believer in the franchise model with
I have been in franchising for more than of the business. I treat my staff well success coming only from the same
25 years in three different franchises and and maintain a safe, clean working level of uniformity across the board from
like to help the franchisor keep on top of environment and conditions. We follow major capital cities to small rural towns. I
the trends in business and generally ask the franchising guidelines and staff are do believe however, every now and then
for the new things that are out there to trained to meet the high expectations the franchisor should step outside the
help the franchise achieve. Franchisees of the customer’s experience, as well ‘cookie cutter’ model and show the world
have to remember that it’s up to them as keeping up to date with technology its vision for the future. This is something
with the franchisor to make their business and what our competitors are doing. I that in partnership with the Lott we
successful. It is a two-way street. As much also make sure that we are involved in achieved at Chermside. n
thefranchisereview | 17Returning
to the
fold in
franchising
Stories about people’s reasons for becoming
franchisees are prolific. However, it’s not often
that you hear about people leaving a franchise
to go independent … and then, coming back to
the fold! That’s exactly what happened in the
case of Sean Kinchington (above) and Jason
Heshusius who have recently returned to the
EFM Health Clubs brand. The Franchise Review
asked to hear more about their reasons.
18 | thefranchisereviewSean Kinchington
EFM Victoria Park, SA
I first bought into an EFM franchise
in 2006, when I was 21. I had only been
in the industry for about 18 months
and the club was one of the most
successful in the nation, so it was too
good an opportunity to pass up. I ran
the club for four years.
The second time around it was 2017
and I was 32. I felt that with a growing
family it was also time to grow as a
personal trainer. I was working for a
Jason Heshusius systems and processes in place that make
life easier for me to just focus on the day
personal training company for the EFM Mawson Lakes, SA to day, month to month operation of the
entire seven-and-a-half years between I bought my first EFM in May 2001 club. It mitigated the risk significantly.
the two EFMs. at age 21 because the fitness industry The EFM Franchise Support Centre
I knew it would be hard to do offered very few opportunities for full provides a model to follow and many
that at the job I was working in since time employment. Buying an EFM things were already in place, for example
leaving EFM, so when there was an franchise meant I got to train people, who insurance is with and how its
opportunity to start up a new club in while having the potential to earn a full- structured, where our equipment comes
an a part of Adelaide that I knew well, time income. The added benefit was that from and who maintains it, the lease
with a company I had been familiar I could do so without having to do it all agreement details, the behind the scenes
with, I felt it was the right time. The and learn it all on my own, and I’d have paperwork and member records and
notion of building something from the an asset to sell at the end. EFM provided tracking systems. All the things that many
ground up also was also a major pull. support so I could follow a plan – the EFM new business owners or self-employed
When it came to starting up the new way – which made the decision so much individuals don’t realise they need until
club, I had then been in the industry easier. I had the franchise effectively for they are in their business and too far
for 12 years and so I was pretty clear nine years. committed to change course. Plus, there
on the type of message I wanted to I bought again in July 2016. The is a great network of franchisees who also
give people in regards to health and reasons were varied: I had worked a job own clubs under the same banner. They
training. EFM messaging across the that required long hours for an average provide a network of people I can reach
entire nation was similar to mine, so it wage, and it was very stressful. I was tired out to if I need, and also an opportunity
felt right to go back to EFM. The model of working for and answering to someone for me to give back by sharing what I
itself meant that I had constant support else. I wanted to be back in control and know.
and the ability to bounce ideas off not missed the training and camaraderie that As a second time around franchisee,
only the head office team but other came with EFM from years gone by. I I’m impressed by the way the EFM
franchisees. briefly considered going out on my own, franchise network has progressed
What stands out to me is that even but when an opportunity came up to buy significantly. The changes I noticed when
though each club is run by a different an EFM franchise that was just missing I returned were huge. They genuinely
trainer who can carry different traits a little TLC, it was a no-brainer to come want to make a difference to the health
and ways of implementing programs back. and wellbeing of our community, to make
to their members, the EFM network I figured that if I went out on my own, the biggest impact they can. To do so,
shares a common goal of wanting I’d only be replicating what EFM already EFM knows that the franchisees need to
changing people’s lives in regards to has established, except I’d have to do all be given the direction and support they
their health and fitness, which can in the little things that consume so much need to be successful. So that’s what they
turn change other aspects of their lives. of your time and resources. EFM has set out to do – set us up for success. n
When
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which Australians trust and love!
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the help of our retailers, Australia’s Official government-regulated
dreams,
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communities with over $1.1 billion^ available for hospitals, schools
and sporting groups. ^State Lottery Taxes FY18 Australia-Wide (ex.WA).
we all win! We are Australia’s largest franchise network with almost 4,000
franchisees, operating across all of Australia, except for WA.
For more information please email franchiseenquires@thelott.com
Why join us at the Lott? *The Lott represents Australia’s Official Lotteries which are sold by licensed entities:
Tattersall’s Sweeps Pty Ltd, Tatts NT Lotteries Pty Ltd, New South Wales Lotteries Corporation Pty Ltd,
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thefranchisereview | 19The world of retail food franchising is changing more rapidly than
ever. Go back just a few short years and the idea of a taxi service
delivering your food seemed far-fetched. Now it’s used by millions as
part of everyday life. Keeping up with the evolving landscape, and
staying ahead of the wave of change is perhaps one of the biggest
challenges faced by any food franchise. What are these changes, and
how can food retailers adapt and change with the market, to ensure
that no matter what lies ahead, they continue to survive and thrive?
Redcat’s
IT platform Customers
driving change
is helping
Let’s look at the way in which
customers are driving change in the
landscape. They are more powerful
food retail
than ever – with increasing competition
for their dollar, they are in the driving
seat, knowing that retailers are wooing
them hard for a share of their wallet.
franchises
This means they can be ever more
demanding, insisting on the highest
standards of food, service, convenience
and information. They want to feel
adapt for
valued by and connected with the
retailers where they do choose to
spend.
Technology is driving changes in the
success
way they interact with food providers
too – there’s a smartphone in every
pocket and consumers want to harness
its power and convenience. Just about
the only thing they don’t do via their
phone is actually eat the food!
20 | thefranchisereviewBusinesses responding Redcat helps deliver the loyalty Uber Eats has generated enormous
to change programs that customers really want, revenue opportunity for franchise food
use and value. Customers want to use retailers. But without integration, it can
What do the changes in consumer
apps to do a whole host of things – cause a logistical headache. Nando’s,
behaviour mean for food franchise
find restaurants and opening times, home of peri-peri chicken, has been an
businesses? How are they having to
view menus, place orders, pay, collect early adopter of Redcat’s integrated
change and adapt?
and store points, check points, spend Uber Eats option. ‘We’re delighted
They understand that the only way
points, update their preferences, by what we have helped Nando’s to
they can meet increasing customer
play games and receive offers and achieve’, says Jeff Lamb, Redcat CEO.
demands and still run a profitable
incentives. Redcat helps its retail ‘Integration is the key in hospitality
business is through information and
franchise customers to do any or all of systems – the more parts of the
connection delivered by technology.
this, in a tailored, branded app. business you can connect, the more
Technology that gives them insights
Using Redcat loyalty, clients have business benefit you can deliver. It’s
into their customers, and their business.
seen sales from members increase by the principle behind Redcat’s constant
Technology that pulls together every
12 per cent, return visits increase by 20 drive towards seamless integration
element of their operation, front of house
per cent and overall sales jump by 4 throughout the supply chain.’
and back. Technology that goes outside
per cent. And because it’s part of that
their four walls to connect them to
fully integrated system, key information
customers and suppliers.
is shared so that, for example, there Tailored systems
What are some of the ways food
is a single version of the menu, with There is little that is more frustrating
retail franchises can address this rapidly
any changes visible in the app in real for a business of any kind than being
changing world, and use technology to
time; customer data is available to told that if they want to implement
support new ways of doing business?
the reporting system; customer online technology, they’ll have to adapt their
The Franchise Review spoke to leading
orders go straight into the POS, the business processes to fit the system. It
specialist hospitality IT platform provider
accounting and inventory systems, just goes completely against the grain of
Redcat, about how they are helping
as if they’d been placed in store. Which innovation, and differentiation, which
franchise food retailers to keep up to
makes life simpler and responding to are the lifeblood of competitive edge.
speed and succeed.
market changes faster. Imagine instead an organisation knows
its IT platform provider will work with
Delivery services Integration them to adapt the system to do exactly
The biggest change in the retail food what they want it to do. That’s what
To move fast and adapt to customer
franchise market over the last three years Redcat customers can do – Redcat
demands with functionality like the
has been the rapid growth of aggregation helps them build systems that fit
delivery service integration and
and delivery services. In Australia, Uber their ideas, not have to contort their
loyalty described above, food retailers
Eats, Deliveroo and Menulog are the business to processes to someone else’s
need be able to exchange and share
primary players, offering an incredibly parameters. Redcat’s approach plays a
information between all parts of their
wide range of food and beverage options big part in helping some of the country’s
business. Duplication, re-entry and
delivered to the door. For the food leading franchise organisations to
manual handling are ‘brakes’, slowing
retailers, the extra business this generates rapidly adapt their business.
down the rate of change. Food retail
is a boon, but until now, it has also been a
businesses that adapt to rapid change
big effort and cost to process the orders.
can only do so because their systems And the rest …
The issue is that orders from Uber Eats,
seamlessly work together – point of While loyalty and delivery are
Deliveroo or Menulog came in on their
sale, accounting, payroll, inventory, two of the biggest, most visible and
own separate, dedicated terminal, and
loyalty, kitchen management and ‘sexiest’ features that Redcat offers,
then a staff member has to re-key them
every other piece in the puzzle. It’s they’re by no means that only way
into the POS. Meaning loss of counter
not as simple as it might sound – that its approach of integration and
space, staff with less time face to face
there are lots of so called ‘integrated’ tailoring helps retail food franchises
customers, and the risk of errors creeping
systems that are actually a collection win in the market. Online ordering,
into the orders. Redcat has changed the
of miscellaneous, mismatched parts, payment gateways, paperless kitchen
game for its clients, with the industry’s
which never quite join up. Redcat management, digital marketing boards,
first full integration of Uber Eats, Deliveroo
designed its Polygon system from real time reporting dashboards – the
and Menulog with a POS. Redcat’s clients
scratch to be a single end to end list is extensive and impressive. And the
can now receive aggregator orders
system, which could be implemented reason that Redcat does it so well? It’s
directly into their point of sale, increasing
piece by piece. With point of sale at its because they’re focused and they’ve
efficiency, and reducing cost and risk. The
core, it is extendable by simply adding been in their customers’ shoes. Almost
customer demand for delivery services
other elements, like loyalty and digital everyone at Redcat has worked in the
doesn’t look like diminishing any time
apps. By allowing franchise businesses food service industry and Redcat only
soon, but Redcat clients stay ahead of
to easily implement new functions, does hospitality. They understand their
the wave by being able to process them
without long and painstaking (not to clients’ business and they are truly
rapidly and profitably.
mention expensive) integration work, dedicated to helping them evolve, in
Redcat helps them adapt rapidly and order to succeed in the industry’s new
Loyalty
keep up with where their customers landscape. n
One of the biggest drivers of customer
want them to be.
insights, personalised marketing, and
increased sales is a loyalty system. A
great loyalty system makes it a ‘no-
brainer’ for customers to use it and stick
with your brand.
thefranchisereview | 21You can also read
