Staying the Path Hire a Hubby - ISSUE 57 EDITION 1 2019 - OFFICIAL JOURNAL OF THE FRANCHISE COUNCIL OF AUSTRALIA
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ISSUE 57 EDITION 1 2019 Staying the Path Hire a Hubby Focus on Franchising ACCC Deputy Chair Monitoring Employment Compliance ER Strategies OFFICIAL JOURNAL OF THE FRANCHISE COUNCIL OF AUSTRALIA thefranchisereview | i
ii | thefranchisereview
Contents
2 A message from the CEO
4 Staying the path to become Franchisor of the Year
7 Existing staff: the key to a successful franchise
8 New Policy Advisory Committee to
capture franchisee input on strategic issues
10 ACCC’s continued focus on franchising in 2019
4 12 The importance of compliance
15 Kwik Kopy commits to gender parity by 2020
16 What does monitoring employment
compliance really mean?
20 STP reporting for the franchise industry
25 Competitive advantage through strategic compliance
29 Legal compliance in the new climate
32 Australian health and wellness provider
set for rapid growth
10
35 The key to selecting territories
39 March 2019: Positive Franchising & Chatime
40 Underpinning franchisee success
45 The challenge of taking the next step
48 Compliance implications for both
Franchisors & Franchisees
50 Insurance: Lessons learned along the way
16 52 Expand your network at the Franchising Expo
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thefranchisereview | 1
A message
from the CEO
By Mary Aldred, The FCA will continue to advocate
strongly for franchising and small
CEO, Franchise Council of Australia business to achieve a fair and
better operating environment and
that includes ensuring healthy and
As we move towards the end of the financial productive relationships between big
and small business partners, including
year, I am hearing more stories about what a franchisors and franchisees.
tough year it has been for small to medium In 2018, the FCA closely followed and
enterprises because of lower consumer considered the issues raised during the
hearings of the Parliamentary inquiry
spend. Factors such as anti-competitive into the franchising code and provided
leasing terms, escalating overheads, lack of detailed submissions to the inquiry.
The problems highlighted were
finance options, and red tape have also been concerning and the FCA will not tolerate
cited as root causes of many problems for poor standards or non-compliant behavior
by either franchisors or franchisees.
SMEs struggling to make a profit. The inquiry showed a need to
strengthen compliance, education and
standards in franchising.
A key message of our submission to
the inquiry is that while Australia leads
the world in franchise and consumer
law, better enforcement of existing
regulations is a priority.
We welcome the fact that
enforcement has been stepped up
recently, with the first prosecutions for
breaches of the franchising code and
consumer law.
The ACCC has also announced that
it is targeting the retail food sector in a
compliance blitz.
The FCA will not tolerate poor
2 | thefranchisereview
“There needs to be a frank conversation about
being willing to address some sensible steps of
reform to boost compliance around franchise
agreement, disclosure and due diligence.”
standards or non-compliant behaviour strong competitive advantages. legal advice would ensure proper due
by either franchisors or franchisees. The concept itself is not new, diligence by prescribing franchisees
We’re committed to improving and while not a complete panacea, to be fully informed before entering a
standards, providing our members mandatory registration could deliver contract.
with better access to information and significant new benefits, by Even though the regulatory
education, and ensuring that regulations • ensuring core fundamental and dispute resolution framework
and rules are adhered to and enforced. compliance obligations are met by for Australian franchising is widely
More broadly, however, there needs all franchise systems, not just those considered to be one of most
to be a frank conversation about being that choose to do so or are audited comprehensive and effective regimes in
willing to address some sensible steps by the ACCC the world, we recognise that there are
of reform to boost compliance around • providing additional information for issues to be addressed.
franchise agreement, disclosure and due prospective franchisees and their Australia is a very franchised
diligence. advisers in an easily searchable economy. There are now 80,000
The FCA is proposing the registry businesses operating within 1,314
introduction of two mandatory • providing an early warning different franchise systems, contributing
measures: a sector-wide registry of all mechanism that could alert the $181.8b annual revenue and employing
franchise systems, and a requirement ACCC to possible breaches of 594,500 people across urban, rural and
for prospective franchisees to obtain the law. regional Australia.
business and legal advice. Australian franchising is heavily
Mandatory requirement oriented to the small-to-medium
A sector-wide registry for prospective franchisees enterprise sector, with over 90 per cent of
of all franchise systems to obtain business and franchisees representing small business.
A mandatory, sector-wide registry legal advice The Franchise Council of Australia
of all franchise systems that is led by will continue to advocate strongly
One of the structural themes emerging
industry and backed by government for franchising and small business to
from the parliamentary inquiry is that too
would be a substantive reform of achieve a fair and better operating
many franchisees are choosing to ignore
franchising in Australia. environment and that includes ensuring
the strong and explicit recommendations
Mandatory registration of franchise healthy and productive relationships
in the Franchising Code of Conduct, and
systems could strengthen compliance between big and small business
the mandatory documents provided
and provide significant additional partners, including franchisors and
by franchisors to every prospective
protection for franchisees without franchisees. n
franchisee, to obtain legal and business
tipping the balance too far or removing advice.
the duality of responsibility in what is Making it mandatory for prospective
a collaborative business model with franchisees to obtain business and
thefranchisereview | 3
Being named Australian Established Franchisor of the Year is a terrific win of itself, but to have two of your franchisees also win major awards on the same night is an outstanding achievement. Staying the path to become Franchisor of the Year Hire A Hubby took out the national win the Franchisee of the Year award, hours, make more money and have less award at the NFC2018, as well as their but to then cap that off by winning the free time. Brendan Green says a growing franchisees Jim Kelly and Crystal Petzer Franchisor award, you can’t imagine number of people are outsourcing being awarded Multi-Unit Franchisee how honoured we are. You really put household chores. of the Year for NSW/ACT and Russell your heart and soul into these sorts of “Australians work as hard as anyone Hampton from Cairns being awarded things – it’s a life’s work.” in the world in terms of the number of Single Unit Franchisee of the year. “We feel it’s our turn to do a little bit hours per week. The earning rates are The idea for Hire A Hubby goes back as far as sharing our learnings with the a lot higher than they were a while ago. to 1996 when the founder was doing others who are emerging and coming Because we are time poor and cash rich, some handyman work in his loungeroom through the ranks in franchising.” the small amount of personal time we when his wife’s friend joked, ‘Gee he’s “Obviously 21 years is a long journey have, we want to keep for personal stuff.” handy! Can I hire your hubby?’ and it feels like Hire A Hubby is my He says a shortage of people with Twenty-one years later there are now oldest child, it’s been part of my life handyman skills has also boosted 375 franchisees across Australia and for such a long time. At the core of it business. Research conducted by the the United Kingdom and approximately is your franchisees. To get two of the franchise shows that Australians are less 50 in New Zealand under a different guys over the line that are running handy around the home than ever before. ownership. extraordinary businesses was a thrill.” “Tradesmen are not coming through in The founder is Brendan Green, Service industries such as Hire a the numbers they did in the baby boomer now its CEO and MD: “I was proud as Hubby are experiencing considerable era. If you have a look at statistics, post- anyone could be for Hire A Hubby to growth as Australians work longer baby boomer era, there’s only 20 per 4 | thefranchisereview
“You really put your heart and soul into
these sorts of things – it’s a life’s work.”
cent of the trade course intake at TAFEs earn ... The correlation of all that type of And, Brendan Green is mindful of
around the country as there was 20 years information will tell us the propensity to the personal needs, lives and wellbeing
ago. There’s a shortage of people with spend on the services we have to offer.” of his expanding team and the broader
these skills, so they call and get someone Recognising that there are hundreds community.
else to do it for them.” of different franchising IT systems “Hire A Hubby franchisees are in an
To be successful requires effort and being used, Brendan Green developed age group that are predominantly at-
drive, but it also requires a disciplined Franchise Cloud Solutions, an end-to- risk when it comes to prostate cancer,
operating framework and good end franchising system to manage every so supporting the Prostate Cancer
management systems. possible function in a franchise. Foundation of Australia with awareness
The company uses valuable census “To improve franchisee retention and raising and the need to get tested to
data to understand its customers and recruitment, franchising has to provide ideally prevent what might be the worst
sell franchises around the country. It better transparency over franchisee of outcomes is something that these
pays particular interest to census data operations and simplify franchisor guys have really been embracing. “
about the age of the population, the compliance.” “We started our campaign back in
structure of households, whether an “People ask how I split my time 2010. We really mobilised it around
area has a large number of blue-collar between Hire a Hubby and Franchise 2014/15. Now on average we are
workers and what percentage of houses Cloud, and the reason I’m able to do that donating anywhere from $100-120,000
are owned and rented. is that I’ve got good people that do the a year from the dollar per invoice that
“The census puts a sensible estimate job at Hire A Hubby to let me look at the franchisees choose to pass on the
on what we think a franchisee might other alternatives that we’ve got now.” PCFA.” n
thefranchisereview | 5
6 | thefranchisereview
High performing staff
who are truly invested in
your business will ensure
franchise success, say a
husband-and-wife team
whose business model saw
them quickly reach the top
of Australia’s competitive
beauty market.
Existing
staff:
the key to a
successful Rizwan and Sandrine
Syed’s tips for success:
franchise
• identify potential franchisees from
within the business
• if a potential franchisee doesn’t
have the capital, invest in them
• find franchisees with purpose, who
are open-minded, possess the
capacity to grow and want to help
Rizwan and Sandrine Syed founded working for us for some time, so they themselves
Zubias Threading in 2008 and are have the same goals and values that we • look for other qualities like
considered pioneers of the eyebrow do, and that’s key to franchise success,” loyalty, resilience, respect and
threading technique in Australia. They’ve he said. perseverance
grown to more than 30 locations in Mr and Mrs Syed created their multi- • remember that by improving the
and around Perth and are expanding million-dollar eyebrow shaping business lives of franchisees, the franchise
nationally. Their team has shaped more with no bank loan, just $5,000 and a will succeed
than 10 million eyebrows and extended great deal of hard work and persistence. • implement training programs with
more than 900,000 eyelashes. And while many franchises fail in clear guidelines on work culture
Rizwan and Sandrine Syed, whose Australia, Zubias franchising is surging and values.
Zubias Threading chain was recently ahead with interstate and overseas
announced Australia’s Beauty Service of expansion in the pipeline.
the Year at the Optus Business Awards, Of their 30 stores across Perth, 10 business model and wanted to upgrade
believe they have the secret to a winning are franchise outlets, all run by long- their lifestyle. They have full faith in the
franchise: The right staff to run your serving, results-driven employees, who way it’s operated.”
franchises more than likely already work were identified for their potential as the The Syeds also said when choosing
for you. business grew. franchisees, capital was not an issue if
“Find loyal staff and they’ll remain “If someone has reached the top of the person was right for the role.
loyal to the franchise model. Your people the ladder in our business, it’s time for “We love to help people who want
are the franchise, and they need to have them to have their own franchise, and we to help themselves. If their mindset is
a passion for what they do,” said Rizwan. can help them with that,” said Rizwan. right, we can help them to buy into the
“Our franchisees have often been “Our franchisees believe in our business,” said Mr Syed. n
thefranchisereview | 7
New Policy
Advisory
Committee
to capture
franchisee
input on
strategic
issues
Franchise Council of The committee will give franchisees a “We work hard to listen to and
formal avenue to provide input directly represent all our members. This
Australia CEO Mary to the FCA CEO on critical current and committee will help strengthen that
Aldred has invited emerging sector policy issues. mission,” she said.
The committee will be made up of 10 “This will be one more way for
franchisee members to members from a broad range of industry franchisees to contribute to the work we
be part of an exciting sectors, preferably from each state. do,” Mary said.
Representatives from multi-unit, single- The committee will meet four
new initiative to be known unit and mobile unit franchisees will be times a year, with meetings held by
as the FCA Franchisee included. teleconference to make it as easy as
Members will be selected to join possible for busy franchisees.
Policy Advisory the committee based on their sector Committee members may also be
Committee. knowledge, experience and credibility in invited to join the CEO in meetings
franchising. with government, regulatory and other
Mary said that she has already had stakeholder bodies to provide franchisee
strong interest in the committee from input.
franchisees, and its establishment was The committee is advisory in nature,
especially important given the increased with appointments approved by the FCA
public focus on franchising. Board for a duration of two years. n
8 | thefranchisereviewARE YOU ACROSS YOUR
EMPLOYMENT OBLIGATIONS?
Don’t put your business at risk
Pay Rates &
Conditions
Counselling &
Discipline
Matters
EMPLOYMENT
COMPLIANCE HELPLINE Legal
1300 108 486 powered by
Obligations
Employee
Service included in your FCA membership Disputes
Capped at 30 min per issue
Discrimination
Matters
Best Practice
Employment
Standards
erstrategies.com.au
Audits | Employee Helplines | Employment Compliance Training | Franchise Employment Compliance SolutionsACCC’s continued focus on franchising in 2019 By Mick Keogh, Deputy Chair of the Australian Competition and Consumer Commission The ACCC has had a busy start to the year in the franchising sector with the announcement of our continued focus on franchising as a priority in 2019, and two judgments handed down by the Federal Court in relation to national franchises. We have also announced an increased focus on the food services sector for our next round of compliance checks. Last year there was also much public interest in issues involving the franchising sector including a Joint Parliamentary Committee Inquiry. In February this year, we released our annual compliance and enforcement policy and priorities, which directs the ACCC’s work and resources for the year. Franchising remains a priority in 2019, along with business-to-business unfair contract terms laws. We consulted with industry bodies, consumer groups, and other domestic and international regulators when determining these priorities, to ensure they reflect the current concerns of Australian businesses and consumers. The information in this article is for guidance purposes only and does not constitute or substitute for legal advice. When considering a franchise opportunity, seek advice from a lawyer, accountant and business advisor with franchising expertise. 10 | thefranchisereview
Recent enforcement action • whether a franchisor receives rebates Site and territory history
or benefits when franchisees purchase Franchisors are required to disclose
In February 2019, the Federal Court
from certain suppliers whether or not the proposed site or
handed down its judgments against
franchisors Ultra Tune Australia Pty • site or territory history territory has been the location of one
Ltd and Geowash Pty Ltd (a former • pre-payments, and reasonableness of their franchised businesses in the
franchisor). This was as a result of two of amount retained by franchisor on previous 10 years. If so, details of the
separate proceedings commenced by the cooling off previous franchised business, including
ACCC in May 2017. • current and former franchisees’ contact the circumstances under which the
The action against Ultra Tune was our details. previous franchisee ceased to operate,
first proceedings against a franchisor for must be disclosed.
an alleged breach of the obligation to Why have we chosen these
act in ‘good faith’ under the Franchising areas? Franchisee contact details
Code. We have chosen these areas because Enabling prospective franchisees to
Ultra Tune, Australia’s second largest without adequate disclosure, it would contact existing and former franchisees
independent motor repair organisation, be difficult for a prospective franchisee is a vital aspect of due diligence. This
received a $2,604,000 penalty for to make reasonably informed decisions due diligence cannot be done if contact
breaching the Code and Australian about whether or not to purchase details for existing and former franchisees
Consumer Law. The Federal Court ruled a franchise. Clause 8 of the Code are not properly disclosed.
that Ultra Tune failed to act in good faith states that the purpose of a disclosure
in breach of the Code, and made false or Refund of payments after
document is to give:
misleading representations, in its dealings • ‘Information from the franchisor to ‘cooling off’
with a prospective franchisee. help the franchisee make a reasonably In the event a prospective franchisee
In the second case, the Federal Court informed decision about the franchise’ signs a franchise agreement and makes
found that Geowash, a former hand car and an initial payment and then decides
wash and detailing franchisor, made not to proceed with the franchised
• ‘a franchisee current information from
false or misleading representations business, the amount of the payment
the franchisor that is material to the
without reasonable basis on its website retained by franchisors on ‘cooling off’
running of the franchised business’.
about expected revenue and profit of must not exceed franchisors’ reasonable
In addition to disclosure requirements
franchises, acted unconscionably towards expenses. The retention amount or the
under the Code, franchisors have
franchisees in relation to charging method of calculation must be set out
an overarching obligation under the
franchisees for the establishment and fit- in the franchise agreement. The right
Australian Consumer Law not to mislead
out of its sites, and failed to act in good to ‘cool off’ does not apply to franchise
prospective franchisees. Irrespective of
faith in relation to the sale and marketing agreements being extended, renewed, or
whether the information reflects well or
of its franchises. transferred.
badly on the franchise system, it must be
These Federal Court decisions are
disclosed.
a strong warning to franchisors about Education and information
the serious consequences of failing to
Establishment and running costs The ACCC plays a key role in
comply with the Code and ACL. educating franchising participants.
Effective disclosure enables a
We produce and distribute a range of
ACCC compliance checks franchisee to understand early on,
guidance materials to help franchisees
the realistic costs of establishing and
The ACCC as the regulator of the and franchisors understand their rights
operating a franchised business. At a
Franchising Code in Australia conducts and responsibilities under the Code. Visit
very basic level, effective disclosure of
an active compliance check program. the ACCC website for information on the
these costs should assist a prospective
Under the Competition and Consumer Code, FAQs, a manual for franchisors
franchisee to determine whether
Act 2010 we can require franchisors and factsheets: www.accc.gov.au/
they can make enough money to pay
to provide certain documents and franchisingcode.
themselves.
information. The ACCC’s free pre-entry franchise
The current series of compliance education program delivered by
Supplier restrictions and rebates
checks targets franchises involved in FranchiseED can also help prospective
We continue to receive reports from
the café, restaurant and take away food franchisees assess franchise business
franchisees about transparency of
services industries. We have chosen opportunities.
rebates and supply relationships, and
these industries because we receive more To keep up to date with events, court
the costs or quality of goods or services
Code related reports from franchisees in cases, and changes to the law in the
they are required to purchase from the
these industries than any other sector. franchising sector, sign up to the ACCC’s
franchisor, its associate or an approved
In particular, we will closely examine Franchising Information Network at www.
supplier. Although supply restrictions
the adequacy of information disclosure in accc.gov.au/fin
can assist in ensuring consistent quality
the following areas: Anyone can also contact the ACCC
across a franchise network, they also
• costs of establishing and operating a for further information about their
can limit the ability of franchisees to
franchised business obligations under the Code or to report
shop around for the best deal on goods
• limitations on where franchisees can alleged breaches. n
and services essential to running the
buy goods and services
franchised business.
thefranchisereview | 11SPONSORED ARTICLE Compliance remains one of the most crucial foundations of any successful franchise model, and underpins all effective relationships between a franchisor and its franchisees. The adherence to compliance from both parties allows this symbiotic relationship to flourish, and ensures a consistent experience for customers across the brand. A franchise model is built on a set of systems and processes that represent the core of its brand promise. Compliance to these processes allows franchises to maintain consistency across the network, and move towards greater profitability and a more successful business. The importance of compliance As one of the most loved and well- known juice and smoothie brands across the globe, Boost Juice has to ensure this is implemented Boost Juice has in place a number built a league of dedicated and loyal consistently across the network. of initiatives to ensure compliance fans with over 485 stores across 14 “We work off a three-tiered model, across the network. One of the most countries and a franchise partner where we focus first and foremost crucial elements of its compliance network spanning across 315 stores on compliance as the foundation program is the overarching ‘Quality domestically. of the business, and then move to Assurance Reviews’ (QARs) that are For Boost Juice, compliance talking about sales and subsequent conducted with stores on a regular remains the foundation of the profitability. We need to make basis throughout the year. These franchise business. Michael Ermer, sure our partners and stores are all QARs are divided into sections Boost Juice National Operations delivering on the brand promise and pertinent to the business, including Manager understands the importance adhering to the systems we have in operational procedures, OH&S, of compliance to the success of a place, and to do this before looking at cleanliness, store presentation and franchise, and works with partners any other area of the business.” customer experience. 12 | thefranchisereview
As one of the most important to offer feedback in real-time and up to the Proactive Compliance
fundamentals of any retail business, provides important information on Deed (PCD) with the Fair Work
customer service underpins all the level of service, product and Ombudsman, to ensure it, and
elements of the Boost Juice brand overall experience they received equally important its partners, remain
so it is important the network is in store. We also run a significant compliant in the employment of all
providing a consistent and positive training and communication platform their team.
experience for all. for our partners and Boosties, with The benefits of a compliant
Given the importance of customer consistent training modules that need franchise model are clear. From
experience to our business, we to be met to ensure all partners are customer satisfaction and
implement many programs to make delivering on the Boost Juice brand engagement, to increased sales and
sure everyone is leaving our stores promise. profitability, compliance remains the
‘feeling just that little bit better!’ Boost Juice was also one of the fundamental building block of any
Our 5-star program allows customers first franchisors to voluntarily sign successful franchise. n
thefranchisereview | 13Need someone who understands your business? You’re an expert at your business. We’re experts at ours. Kwik Kopy is a complete one-stop-shop for all your franchise business marketing needs. Whether you need quality print material, great graphic design, eye-catching signage or a professional website; with our decades of experience, you can trust us to produce quality products to achieve your business goals. Talk to us about your franchise printing needs today. kwikkopy.com.au/fca
Kwik Kopy
commits
to gender
parity
by 2020
Women in Print: Wendy Mulholland has risen to the challenge and
enjoys running her Kwik Kopy franchise in Tuggerah, New South Wales.
Kwik Kopy has made a the franchise is keen to attract more flexible, and something I would enjoy.”
women to the business to highlight how “I know we definitely have clients
commitment to increase diverse and dynamic it really is. who want to work with us because we
the participation of “From head office to all our centres are all women. It’s a great space for
we are keen to support and see more women to be involved. It provides a nice
women in its workforce women enter our industry,” he said. mix of creative, hands-on and customer
to at least 50 per cent One of the new female entrants into service responsibilities.”
the Kwik Kopy franchise network is “Since I’ve started, we have had
by 2020. Wendy Mulholland, who heads up an some really great results, which I think
all-female centre in Tuggerah. comes down to not only our attention
Print was once a traditionally male- She believes running a Kwik Kopy to detail, but our attentiveness and the
orientated industry, but the industry has centre is an attractive proposition for care we show every one of our clients
made excellent inroads in recent years. women who are looking to run their as well.”
Currently, 42 per cent of all locations own business while gaining flexibility. “People seem genuinely impressed
have a female owner or operator, “I’ve been with Kwik Kopy since April that we are all women,” she said.
with the company well on its way to 2018,” Wendy said. In total there are 93 Kwik Kopy
achieving gender parity within the next “I purchased the centre as an centres across Australia, of which 10 are
two years. established business and was previously run by women.
Only 33 percent of business owners working as a contract software trainer As a major sponsor of Women in
and operators Australia-wide are while raising my two children.” Print, Kwik Kopy wants to provide a
women, putting Kwik Kopy ahead of the “They are now both at school, so network for women to expand their
curve. I thought it was time to find a new knowledge and create a supportive
David Bell, CEO at Kwik Kopy says challenge. It had to be local, somewhat environment. n
thefranchisereview | 15What does FWO Guide
Since the introduction of the new
monitoring
laws and in response to repeated
requests for more guidance on
“reasonable steps”, the Fair Work
Ombudsman (FWO) released a
employment
“Guide to promoting workplace
compliance in your franchise network”
with their view of what the laws
require of franchisors. The FWO
compliance
breaks down franchisor activities into
four main categories:
1 Setting expectations
2 Education and training
really mean?
3 Monitoring compliance, and
4 Taking further action
The Fair Work Ombudsman’s
specific views on the 3rd category,
monitoring compliance, includes -
“The nature of the audit, which you
Reasonable Steps may conduct, may vary depending
It’s now been over under the Fair Work Act on your particular circumstances,
a year since the Fair The Vulnerable Workers legislation,
including factors like the size of your
business and available resources, and
Work Amendment introduced in the second half of
the level of influence or control you
2018, contains a defence for the
(Protecting Vulnerable franchisor from an assumed liability for
have over franchisees in your network,
but might include:
Workers) legislation franchisee contraventions of Australia’s
• Requiring your franchisees to
employment laws. The defence applies
came into effect. where the franchisor can demonstrate
conduct self-audits against
Rightly or wrongly, this it took reasonable steps to ensure
key criteria such as minimum
wage, leave and record-keeping
legislation targeted the franchisee compliance.
requirements, and report the
In determining if reasonable steps have
franchise sector, aiming been taken, the following factors are
results to you annually with a
declaration from a director or
to make franchisors taken into consideration:
officer of the franchisee entity that
1 The size of, and the resources
take positive steps to available to, the Franchisor;
the information is accurate and
complete.
prevent franchisee non- 2 The ability to influence or control the
• Annual audits of a sample of
compliance and potential franchisee – for example, under the
relevant franchise agreement;
the network randomly selected
for record-keeping and other
underpayments made by 3 Any actions of the franchisor to employment law compliance.
the franchisee. ensure the franchisee had reasonable
“The number of audits you
knowledge and understanding of
conduct and how you go about
its obligations under employment
doing them will depend on your
legislation and elsewhere;
circumstances and the size of your
4 Whether the franchisor assessed network. If you have a suspicion or
compliance with employment laws you’ve received a tip-off that there
by its franchisees; might be an issue with a particular
5 Whether the franchisor had business in your network, it’s a good
established mechanisms for idea to start your audit there.
receiving and addressing franchisee “Ensure your audit covers a mix
employees’ complaints about of full-time, part-time and casual
alleged underpayments or other employees as well as apprentice or
contraventions; junior employees, if your franchisee
6. The extent to which the has any. It’s also a good idea to
arrangements with the franchisee speak to some employees directly as
encouraged or required compliance another source of information. This
with the legislation and other increases the chance you’ll pick up
workplace laws. any issues.”
16 | thefranchisereviewThe Fours Steps
Who do the
Four steps to compliance by
Vulnerable Worker
ER Strategies’ General Manager, David Price
laws apply to?
The new provisions generally “One of the common questions we get away. With the reverse ‘onus of proof’
apply to hold a ‘responsible asked is how does a franchisor actually record-keeping obligations under the
franchisor entity’ responsible start monitoring compliance? Vulnerable Worker legislation, your
for contraventions of the Act “We often see the only compliance franchisees are immediately exposed.
by their franchisees (Editor - activities franchisors have ever The basic step we recommend would be
the same provisions also apply completed is having their franchise providing education to the network via
to holding companies and business development or area managers modules using a Learning Management
their subsidiaries, but that falls checking in-store as to what their System – ‘LMS’ to use the jargon - that
outside the scope of this article). franchisees are doing. can track completion of modules, to the
A responsible franchisor “Australian industrial relations and best practice solution over time of also
entity applies where there is a workplace laws are extremely complex, implementing and mandating Time and
franchise relationship and the and it would be like asking me why your Attendance systems.
franchisor has “a significant car is not running properly. I would be • Poor Understanding / Education – a
degree of influence or control able to check the basics like ‘is there fuel majority of the time that problems occur
over the franchisee entity’s in the car, or is the battery working?’, but is because the franchisee does not know
affairs.” that’s about it. I would call in a mechanic any better. The solution is measured,
Unfortunately, the legislation to find the real problems.” consistent and understandable
does not go onto define “If you have not started to monitor education. It is important to understand
“significant degree of influence compliance employment our advice is to your audience and not overload or
or control”. However, the FWO’s start small and have a plan. We explain confuse it. This education can be in
guide gives a good indication our simple formula to clients - Review – the form of regular training updates, IR
as to how it may prosecute Plan Deliver – Check (and then Repeat). updates at state or national meetings,
franchisors under this section So, what does that all mean? David LMS modules, and access to specialist
of the Act, including the set out the following explanation of the advice for the network.
observation that there “will recommended 4 Steps. • Reporting mechanisms – The earlier
be some degree of influence issues are identified, then the simpler
or control in all franchise Step 1 Review it is to remedy them. This can be as
arrangements.” We generally start all our new clients simple as having an employee helpline
The Guide goes on to say off with an online survey of their network. to encourage reporting of issues and
that “in order for the extended This survey should be crafted to give you using business data that is already
liability provisions to cover a a snapshot of the systems and processes being captured but not analysed. For
franchisor, a significant level of used in the business and identify any example, identifying a labour to sales
involvement in the franchisee’s knowledge gaps. percentage that is outside normal
business affairs is needed. standards.
“Determining whether Step 2 Plan
influence or control is significant Unless you have unlimited resources Step 4 Check
will depend on the franchise - and nobody does - you cannot achieve “This is when you audit your network.
model and the parties. It looks at: ‘world peace’ overnight. However, by People always ask us how many outlets
- the rights of the franchisor using the snapshot of the online survey, or franchisees they should audit, which
to direct, manage, regulate, you can do very simple risk assessments is like asking, ‘how long is a piece of
determine or command to allow you to on focus on the highest string?’ We generally recommend 5% of
the franchisee entity about risks and thereby make the biggest a network as a minimum but there are
financial, operational and/ impact in your network. The common common triggers that may influence you
or corporate matters. For risks we see time and time again to do more or even less. These triggers
example things like trading are insufficient time and attendance include a franchisee’s lack of engagement
hours, sales targets or quotas, record systems, lack of understanding/ in education activities, information
staffing levels, expenditure on education, and poor reporting garnered from employee helplines, or
business expenses and costs; mechanisms. from data analytics i.e. labour cost too
- how the relationship works in good to be true.
practice, such as how much Step 3 Deliver David concluded that the key point
the franchisor influences or How would you deliver on the three of this four-step process is the need to
contributes to management common issues identified above? REPEAT it. “The way the Australian IR
or operational decisions of the • Insufficient time and attendance laws are constantly changing and their
franchisee business, or affects systems – If the information is not being complex nature means you cannot set
the franchisee’s ability to kept that you are legally obligated and forget - a measured thoughtful
generate revenue or profits.” to, and you need to check to ensure approach will give you the best changes
compliance, you’re hamstrung straight to mitigate compliance risks”.
thefranchisereview | 17“It has been a challenging but
rewarding period, setting up
and implementing a robust
governance framework. With the
desire to be proactive rather than
reactive to legislative changes, ER
Strategies has assisted us with a
measured approach to deliver a
compliance program in line with
our priorities and values.”
Brett Houldin
CEO & MD of Craveable Brands
Case Study Best Practice
ER Strategies has worked with clients Year 4 After having the entire network records are not provided, and/or
who it considers “best practice” amongst audited, some might then think it was rectification of identified issues are not
franchise systems when it comes to time to ‘ease off the throttle’. But rather remedied?
monitoring compliance. They put forward than doing that, Price relates how • Cost of audit – This can vary depending
Craveable Brands as a good example Craveable Brands then implemented on the period to be audited and issues
of best practice and how a measured an ongoing program that required identified.
approach achieves the best results. Price any franchisee selling their franchise
- Sample 4-week audit period can cost
explains how their journey started over to be audited, and any new franchisee
from $1500,
4 years ago, well before any talk of the to be audited at the 3-month mark
- An entire year can cost up to $20,000
Vulnerable Worker laws. He provided this of operating, in addition to actioning
employee helplines and continued - For fraudulent behaviour where you
summary of how they went about it.
random audits. need to establish a repeating pattern
Year 1 Conducted an online survey of
involving private investigators, the
their network, provided access to expert In assisting Craveable Brands and
cost can be anywhere from $30,000
advice and commenced a random audit other clients over the years, Price
to $50,000 for 2-3 weeks surveillance.
program of 10% of their network. says there are many considerations,
difficulties and costs to consider when • Cost of audit – Who is going to
Year 2 Implemented an employee
helpline, started the process of monitoring compliance, especially pay for the audit? The Franchisor
implementing a standardised time and before commencing an audit program. or Franchisee, is there a shared
attendance system across the business Commonly missed considerations and responsibility?
and again conducted a program of audits overlooked hurdles include: • Cost of rectification – If you identify
across 10% of the business. This time • Franchisee engagement – No one likes an issue in a sample period, who
rather than totally random audits, they to be audited against their will! How do and how is it going to be calculated.
used information from the employee you get the network on board? Imagine having to do 7 years’ worth of
helpline to guide their approach. • Franchise Agreement – Does it calculations!
Year 3 With the Vulnerable Worker laws entitle you to get access to records • Identified contraventions – Can all
looming and their people now the key to be audited and what remedies contraventions be remedied? How or
pillar of their corporate identity and do you have to enforce provision of can a franchisee rectify visa breaches.
culture, they made the decision (and huge documents? • Mediation – You dot your I’s and cross
undertaking) to audit their entire network • Franchise agreement – can you and your T’s , but you are still forced into
over the year. will you be willing to terminate if mediation under the Franchise Code. n
18 | thefranchisereviewAustralian Employment
Australian Employment
Laws
Lawsare Complex
are Complex
Discovering your franchisees failed to meet their employment
Discovering your franchisees failed to meet their employment
compliance obligations
compliance obligationscould be aafinancial
could be financial disaster
disaster for you.
for you.
Franchisors can be held their obligations are and how
Franchisors can for
responsible be theheld
wrong- their obligations
to meet them. Letareusand how
guide
responsible
doingfor thefranchisees.
of their wrong- The to you
meettowards
them. meeting
Let us yourguide
doing of Vulnerable Worker Laws
their franchisees. Thewere youreasonable
towards steps requirements
meeting your
introduced over a year ago and give your franchisees
Vulnerable Worker Laws were reasonable steps requirements
and it still is challenging for access to tools they need to
introduced over ato understand
franchisors year agowhat andmakegive your
the right franchisees
decisions.
and it still is challenging for access to tools they need to
franchisors to understand what make the right decisions.
Protect your brand, make the right decision for your business
www.erstrategies.com.au
Protect your brand, make the right decision for your business
www.erstrategies.com.au
Confidential Telephone advisory Unlimited
employee service for consulting for
helpline franchisees franchisors
Confidential Telephone advisory Unlimited
employee service for consulting for
helpline franchisees franchisors
Employment Payroll audits for 5 % Annual reporting
compliance training of your network pa and
for franchisees (3 outlets minimum) FRANdata report
Employment Payroll audits for 5 % Annual reporting
compliance training of your network pa and
erstrategies.com.au
for franchisees (3 outlets minimum) FRANdata report
Audits | Telephone Advisory Service | Employee Helplines | Employment Compliance Training | Franchise Employment Compliance SolutionsSTP
reporting
for the
franchise
industry
Single Touch Payroll (STP) is now upon us for
employers with 19 or fewer employees. But what
does this mean for Australian franchise businesses?
by Pam Madytianos
20 | thefranchisereviewThe Australian government has forged Some franchises have already begun Are you wondering ‘Why STP?’
ahead with plans for employers to report accepting the challenge, with the likes
The ATO wants to have greater
STP come 1 July 2019. of Retail Zoo (Boost Juice, Salsas Fresh
visibility into employers’ payroll to ensure
Treasury Laws Amendment (2018 Mex) and Soul Origin rolling out their STP
they pay their PAYG withholding and
Measures No. 4) Bill 2018 has been setup as I write.
SGC super obligations.
passed by both Houses, The House of Regardless of whether you’re a
The ATO will be able to cross-check
Representatives and the Senate on 12 franchisee or a franchisor, if you have
superannuation payment information
February 2019, so it is now a reality for all 19 or less employees STP is something
provided by employers and super funds
Australian business employers. you’ll have to now come to terms with.
much more accurately as well.
This bill is designed to encompass But there are some additional concerns
The benefits to employers are also
numerous things all at once, specifically for franchisors who wish to ensure their
huge, as it will save you time at the end
around superannuation reporting, franchisees are also up to speed.
of the financial year, as you will no longer
however STP reporting lies at the very
be required to issue group certificates to
pinnacle of the legislation. For franchisors
your employees.
According to ABS data, there are How can a franchisor prepare their It will, in fact, make life so much easier
approximately 781,908 businesses franchisees for STP while preparing for you and your employees.
with 19 or less employees in Australia. themselves simultaneously? Our government has been
That’s about 36.8 percent of Australian Well, to avoid a meltdown the key is to encouraging Australian businesses to
businesses that will now be required to be plan ahead. embrace technology and to operate in a
STP-ready come 1 July 2019. Here are three hot tips on how a more streamlined and digital way and to
STP reporting is already in place for franchisor can prepare for STP success: embrace electronic payments.
businesses that qualified with 20-plus 1 Educate, educate and educate your This will deter those who would prefer
employees as of 1 July 2018, whereas franchisees all about STP to hide any payroll-related discrepancies
smaller businesses have had some grace
2 Direct them to reach out to their by making sure it’s harder for them
time and will therefore be set to begin
bookkeeper, advisor or accountant for to avoid paying their employees’
reporting come 1 July this year now that
help entitlements such as superannuation and
the law has been passed.
3 Ensure they have STP-ready other payments. It also helps the honest
accounting software operators by ensuring there is less
Part of the education process is likelihood of errors.
understanding what it all means and The forward plan is for the ATO to
how it will impact your franchise, and have the ability to match data provided
that’s why I’ve included the following to them during each pay run, and cross-
information for added context. reference that with the employees’ super
fund. If there are discrepancies, then an
ATO employee will reach out to you.
With the benefit of real-time
information available, the ATO no longer
needs to wait until the end of a reporting
year to act. So where there may be
instances whereby super may not have
been paid for a long period of time
and in turn the employer is faced with
massive bills and penalties to pay, they
will be alerted much earlier, which will
help employers stay on track and in turn
be more on top of cash flow.
Overall, it will really make life easier
for honest employers and their hard-
working employees.
thefranchisereview | 21set to be available, including the option of
allowing your registered BAS or tax agent
to report quarterly on your behalf, rather
than each time they run payroll.
Interestingly, micro-businesses with one
to four employees account for 584,744
of that total 781,908 businesses, and the
remaining 197,164 are businesses with five
to 19 employees. That’s no small number.
Exemptions to STP reporting will also
be made available to those businesses
that have no internet connectivity or
unreliable connections.
So where to from here?
Six steps to get your Once set up for STP the following
franchisees started changes will apply: There is no reason to wait, STP
• With each pay run, employers are is now upon us and you will have to
1 Ensure they have STP compliant
required to report wages and salaries, get yourself STP ready come 1 July
payroll software, like MYOB. Your
PAYG withholding and superannuation 2019 so don’t leave it to the eleventh
franchisees will be required to go
information directly from your payroll hour. Today is a good time to seek
through a setup process
solution electronically to the ATO. This the required advice from your advisor
2 Encourage them to speak with an to begin the process and, if you’re a
will include each employee’s YTD totals.
advisor about the change and book in franchisor, to begin communicating with
• Payment summaries will no longer
for setup and training your franchisees.
be issued to employees, as the
3 They’ll need to review all employee What are our already STP-compliant
information will be available to them
payroll information, making sure it’s clients saying? Well, they’ve found the
through their myGov account.
correct in their software process almost too easy. In fact, it has
• Employees will need to create a
4 Have their software connect to the taken the compliance stress away. They
myGov account in order to access
ATO using their Auskey no longer have to provide our employees
their information via this online service.
5 They’ll nominate a person who will their end of year payment summary, as
be making the declaration when End of Year Process remains the same: this information is now available live to
reporting STP • Same reconciliations them through their myGov account, so
6 Finally, advise them to speak with • Same verifications they are ready to lodge their tax return
their employees about the change • Same process to add: whenever they’re ready.
and why they should set up a myGov o Reportable employer super And many small businesses have
account contributions for the year already beaten the curve by starting
their STP reporting early. MYOB
For many employers and payroll o Reportable Fringe Benefits Tax
research has found 13 percent of
officers, getting a business STP- (RFBA) for the FBT year (31 March)
businesses with 19 employees or less
compliant means they’ll need to be up o No payment summaries to
have started using STP – and this is set
to speed with system updates, as well employees
to rise quickly now the new legislation
as learn how to use them for STP. Their o No separate EMPDUPE file to be has passed.
advisor can guide them through with lodged Don’t let your franchise business
ease if you don’t have internal resources
o Must be lodged by 14 July as per run afoul of the ATO because your
to do so.
normal processes or your franchisees processes
STP does not have to be a daunting
o Extensions until 28 August and 31 aren’t up to scratch. Get in touch with
process, so allow your advisor to fully
July 2019 your advisor and begin discussing your
demystify it for you and your franchisees.
o If you don’t you must provide the payroll systems today. n
The main preparation for STP-
readiness is to ensure payroll software employee with a payment summary.
has all the payroll categories correctly Overall, payroll processing remains the
MYOB can help you and your
set up. These categories include: normal same, with the added task of reporting
franchisees to make the introduction
hours worked, overtime, commissions, the information electronically directly to
of Single Touch Payroll as stress free
redundancy, unused termination, tax, the ATO.
as possible, with MYOB’s Connected
super – plus any other payroll categories
Are your franchisees micro Franchise. This powerful tech platform
in the software that’s used to process a connects tens, hundreds, even
payslip.
businesses (no software and
thousands of franchise locations in
Each business may vary and have with four or less employees)?
real time to give you the visibility and
many varied payroll categories that will Major accounting software providers control you need. The Connected
be required to set up accordingly. have announced their low-cost STP Franchise will allow you access to
The good news for you and your products for the micro-business sector the data you need, financials at your
franchisees is that this is a once-off for both employers as well as tax and fingertips and real time benchmarking
process. After it’s set up correctly they’ll BAS agents. The costs for these will be that is done in minutes not weeks.
be realistically processing a payment less than $10 per month.
For further information or
summary with every pay run (as will you) So what does this mean for those
to book a demo, please visit
that is also uploaded to the ATO. Without employers? It means they won’t be forced
www.myob.com/connectedfranchise
a compliant STP-ready payroll system, the into purchasing an expensive payroll
alternative is a lot of hard work. solution and some alternate options are
22 | thefranchisereviewAFR Poster_HIGH_PRINT.pdf 1 4/10/17 4:00 pm
C
M
Y
CM
MY
CY
CMY
K
TAKE YOUR FRANCHISE
TO NEW HEIGHTS
Free registration is now included in your FCA Membership
Leading Australian franchises are now using the registry to:
- Promote their transparency and compliance
- Find higher quality prospective franchisees
- Obtain priority access to coming new pools of franchisees
- Significantly improve finance options for their franchisees
Register today at www.thefranchiseregistry.com.au
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The Australian Franchise Registry is endorsed by The Franchise Coucil of Australia and
powered by FRANdata Australia ACN 163 778 461Competitive
advantage
through
strategic
compliance
By Bill Lang
Chair, Institute of Advanced Business
Over the last two years, They are: In turn, consumers, including potential
• unexpected shifts in the political small business owners like franchisees, are
a number of significant leadership of many western countries, becoming more skeptical, less trusting,
changes and pressures facing particularly the US Congress, Brexit, or more aggrieved and more likely to join
in Australian Prime Ministers movements that can tarnish the brands
consumers and business and reputations of people, businesses
• the increasing rise of social media,
owners have emerged or smart phones and the rapid growth of and organisations. This inevitably leads to
media amplification, prompting politicians
accelerated. consumer movements seeking change
and regulators to take action to increase
in numerous areas of business, culture
and law regulations and the enforcement of those
regulations.
• the increased speed of digitisation of
Does additional regulation and
many business processes and tools,
enforcement automatically mean only
meaning competitors can come from
extra expense for businesses and therefore
anywhere and are increasingly global;
less profit and lower business valuations?
witness the entrance of new and
Will increased compliance destroy business
aggressive competitors like Uber Eats,
value or create more business value?
Airtasker and Trivago
In my view, whether the answer is Yes
• the fracturing of the foundations of
or No will depend on how the business
many formerly stable and widely
responds.
respected institutions in sectors like
Two of the presentations I heard at
financial services, aged care and
NFC2018 gave great insights into this
vocational education.
challenge and are worthy of highlighting.
They were presentations by David Christie
and Elise Gillespie from Bakers Delight,
and by Dustin Hansen, CEO of InXpress
Americas.
thefranchisereview | 25You can also read
