Franchises in Your Price Range from Business Franchise Australia Mar/Apr 2020

VOL 14 ISSUE 03 mar/apr 2020

franchises in

your price range

Snap-on Tools

100 Years of Excellence

Know

your

Price Range

why non-bank finance is leading the way in small business funding Business Franchise Australia and New Zealand 39

Resources at your fingertips!

CURRENT TITLES INCLUDE: Business FRANCHISE Australia and New Zealand magazine The Magazine for Franchisees, Bi-monthly publication The Australian and New Zealand Business FRANCHISOR magazine The Magazine for Franchisors, Quarterly publication Australian and New Zealand Business FRANCHISE DIRECTORY Annual publication The FRANCHISE GUIDE Annual publication CGB’s website also provides an additional advertising and information format and complements our publications.

www.businessfranchiseaustralia.com.au

40 Business Franchise Australia and New Zealand

Contents

46

On the Cover 44 Cover Story: Snap-on Tools - 100 Years of Excellence 60 Expert Advice: Know Your Price Range

50

50 Expert Advice: Why Non-Bank Finance is Leading the way in

Small Business Funding

42 What’s New:

Announcements from the Industry

44 Cover Story: Snap-on Tools - 100 Years of Excellence 46 Feaure Article: Top Franchises in Your Price Range

56

50 Expert Advice: Why Non-Bank Finance is Leading the way in

Small Business Funding James Scurr, Founder and Managing Director, Cashflow It

54 Snapshot: Bakers Delight - 40 Years in Business 56 Expert Advice: The Danger of Dissent Amongst Franchisee Ranks

Corina Vucic, Director, FC Business Solutions

60 Expert Advice: Know Your Price Range

Dominique Lamb, CEO, National Retail Association

60

62 Expert Advice: Five Ways to Aggravate the Local Reporter

Pete Burdon, Founder and Head Trainer, Franchise Media Training

A regular of Business Franchise Magazine, our special supplement in franchising showcases a different industry each issue To share your specific expert industry advice or to feature your franchise in the next issue, please contact: Vikki Bradbury Phone: 03 9787 8077 Email: vikki@cgbpublishing.com

Business Franchise Australia and New Zealand 41

what’snew!

Greenhouse Asian Salads aims for healthy franchise growth in 2020 Healthy restaurant franchise, Greenhouse Asian Salads has announced exciting plans to grow a network of franchisees in prosperous locations across Sydney.

Greenhouse Asian Salads has a delicious and unique menu covering an extensive range of salads, smoothies and soups as well as fresh juices.

Their fresh and healthy mission is to uphold their values of using local, organic and fresh produce, and to create a healthy and nutritious menu that doesn’t compromise on flavours.

With two flourishing company-owned restaurants located in Edgecliff and Lane Cove, Greenhouse aims to expand the franchise in shopping centres and suburbs across Sydney. Key locations that have been identified as potential opportunities for success include Macquarie, Wynyard, Sydney CBD, Mosman, Newtown and Bondi.

Joesef Huber, Co-founder of Greenhouse Asian Salads said, “Myself and Lanna are incredibly passionate about promoting and living a balanced and healthy lifestyle.

Our menu consists of fresh, high-quality ingredients and an incredible fusion of dishes which our customers can’t get enough of!

“We are growing in popularity throughout Sydney and we’re excited to be working

with DC Strategy to develop our franchise network. We are looking forward to seeing new franchisees join the Greenhouse Family!”

James Young, DC Strategy Head of Franchise Sales & Development said, “The Greenhouse Franchise is exciting and innovative. In our health-conscious society, there is an increasing demand for healthy, affordable and delicious

food in Australia and Greenhouse are perfectly positioned to grow with this trend.”

Greenhouse is seeking enthusiastic individuals who are passionate about tasty, healthy food options and personify their ‘love-life’ ethos.

Franchise partners will be supported by a dedicated team of experienced professionals and proven systems to help lead to success.

McDonald’s bolsters delivery reach with Deliveroo partnership McDonald’s has strengthened its delivery reach in Australia, following a new strategic partnership with Deliveroo.

MacDonald’s customers will be able to order from the full menus, excluding specific limited time offers.

The partnership will see 422 McDonald’s restaurants across the country available to Aussies on the Deliveroo app.

Deliveroo said it experienced a 30 per cent increase in its restaurant offering in 2019 and is now partners with 14,000 restaurants around the country.

“Close to two million people nationally visit a McDonald’s restaurant everyday so we anticipate that they will be a popular choice,” Deliveroo Australia CEO Ed McManus said.

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“Delivery is an important part of our business as we look to continue to respond to the evolving needs of our customers. We know our customers love convenience,” McDonald’s Australia head of home delivery Jennifer Evans added.

Sandwich Chefs set to launch drive-thru store With 50 locations across the country, the Sandwich Chefs chain continues its venture into the drive-thru segment with the launch of a drive-thru store in partnership with Fresh Trading Co. in QLD. If proven successful Sandwich Chefs will look to roll out the venture nationwide.

Nambour was chosen as its location, citing the town as a “gateway area” of travellers from Brisbane, Noosa and other Sunshine Coast areas and the Gold Coast.

“The drive-thru will offer everything on the standard menu, only excluding the ‘Roast Meals’ and ‘Make Your Own’ range which can be ordered in store,” Sandwich Chefs National Marketing Manager Ollie Mann said in a statement.

Continued growth across Australia for Stagecoach Performing Arts International children’s services franchise, Stagecoach Performing Arts, has enjoyed unquestionable success in recent years.

In Australia alone, they’ve doubled the size of their franchise network and, since launching the first sessions in Perth, over 300 students now walk through the doors of the four schools on a weekly basis.

As we enter a new year and decade, Stagecoach are taking time to reflect on the growth of their children’s performing arts opportunity across Western Australia. Mum of two, Alison, launched her Stagecoach Performing Arts franchise in Como, a nearby suburb of Perth, in February 2019. Less than a year on and Alison is preparing to welcome students at her second school.

“2019 was such an exciting and rewarding year,” explained Alison. “I launched my franchise because of the demand for children’s performing arts opportunities outside of central Perth but, with that being said, I still can’t quite believe how much the business has grown in such a short space of time.”

Serena Kipling first launched her franchise in 2000, after relocating from the UK with her family. Having previously operated a successful school back in Britain, she was keen to replicate this success by launching in Perth, Australia. Twenty years on, she now has 250 students, attending five sessions at three different locations around central Perth.

“It’s incredible to see how far the franchise

has come since I launched the first Stagecoach school in Australia. We’re now regarded as one of the best performing arts opportunities for children in the area.”

“At Stagecoach, we’re passionate about offering the best opportunities to our students around the world as this contributes to our market appeal when parents look for performing arts schools for their children,” said Andrew Walters, Director of International Business

Development at Stagecoach. “We’re proud that our brand is held in such high regard across Perth and the surrounding areas and look to increase our offering in other parts of Australia in 2020. We’re looking to meet with prospective franchisees to discuss our franchise opportunities and answer any questions at the Franchising & Business Opportunities Expo in Sydney from the 20th-21st March.”

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c ov er sto ry: S n a p - o n To o l s

Snap-on Tools

100 Years of Excellence You may know that Snap-on Tools is the top choice of professional tool users, mechanics and engineers around the world. What you may not know is that Snap-on Tools is also a great franchise opportunity.

A Snap-on franchise is a mobile showroom on wheels that brings the complete retail-shopping environment straight to their customers – right where they work.

The Snap-on business model is a proven system that has made Snap-on a market leader since 1920. With 4200+ franchised mobile stores, the franchise brand is one of the largest non-food franchisors in the world - operating in 130 countries, including franchise operations in 13 countries.

As Snap-on Tools prepares to celebrate 100 years of excellence, Business Franchise

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With an increasing number of franchisees achieving success and even joining Snap-on’s Million Dollar Club, Snap-on Tools provides a clear franchise framework to pursue a new career path to financial freedom.

Daniel Pirozzi, an ex-franchise support employee, now a Snap-on franchise owner, and Million Dollar Club member, says financial freedom was his initial motivation for becoming a franchisee. Still, he also wanted to be involved with a company he could follow with pride and passion.

“We are solutions providers. I make sure I’m consistent with my visits, make my tools affordable and invest in knowledge to help my customers achieve an increase in productivity. Partners in profitability, we call it,” explains Daniel.

magazine spoke to three of their highest achieving Australian team members.

Endless opportunities Neil Southey is the Business Manager for Queensland and New Zealand and is Snap-on Tool’s longest-serving Australian employee.

From a young age at school, Neil always had ambitions of one day being self-employed and running his own business. “I saw Snapon as an opportunity to head down that path,” Neil says, “and the opportunities have been endless.”

On the most rewarding part of his job, Neil says “I would have to say over the last 30 years working with Snap-on it would have to come down to relationships formed, through the sharing of knowledge with individuals who have a common goal to succeed. My role is that of a facilitator in guiding people through their tenure with Snap-on and making tomorrow better than it is today.”

“I surround myself with influential people who are motivated and committed to helping people succeed in small business. Motivated and committed people drive sales and this is important to our franchise network.”

“A franchisee’s success is my management team’s success and a win/win for the franchise network. We ride all the highs and lows with our franchisees and in return, they help grow a base of happy customers. I try to maintain a high level of expertise in the areas that enable my franchise performance team to fulfil our customer promise and earn the right to their business,” explains Neil.

Daniel says, “Joining the Million Dollar Club was excellent. I far exceeded my own personal expectations for my first year of business. It gave me even more faith in the business model, and obviously awarded me a nice income for the year as well.”

Confidence to invest Allan Honess, a Multi-Unit Franchisee and the 2020 Franchisee of the Year, has also added the Million Dollar Club to his list of achievements with the Snap-on brand.

Although lost for words when we talk about his achievements with Snap-on, Allan says, “It certainly was a great honour to win these awards. I don’t really believe in luck or being lucky as such, but I do believe that the harder you work - the luckier you seem to get, so that’s what I stick to. Having excellent support at home also helps. Erin, my lovely wife, is usually close by late at night helping with orders or taking care of the bookwork, as most will know it’s never down to one person, it’s always a team effort.”

On his reasons for investing with Snap-on Tools, Allan says, “I had come to a time in my life where I was looking for a change.

I was already working long hours in my current career and not seeing any form of financial benefit, so I started looking at options. Snap-on had an awesome franchise programme, support and long history behind it, which gave me the confidence to invest in the franchise.”

Day-to-day Allan says, “I enjoy seeing the products and service we provide create excitement and having our customers tell us how good the items are next time we visit and how it helped them do their job easier or quicker.”

“We really try to make sure we are the

“I surround myself with influential people who are motivated and committed to helping people succeed in small business.

Motivated and committed people drive sales and this is important to our franchise network.” - Neil Southey

highlight of our customers day, anything from fixing an issue they have, down to just having a laugh and putting a smile on someone’s face. We try to find the right products for their requirements and hopefully make their job a little easier,” explains Allan.

Advice for future franchisees All three men can agree that potential franchisees should follow their passion, do their due diligence and go for it!

“As a franchisee, you enter into a franchise system and if I had any words of advice, it would be, do not reinvent the wheel.

Keep sight of the values that drew you to make your decision to go into a franchise of your choice. Always maintain open communication channels as franchising is like a marriage and everything needs to be a two-way street,” explains Neil.

“Do your due diligence and fully research all the pros and cons of franchising. Snapon is a partner in your profitability and to achieve this; it requires mutual respect. Cooperation, commitment and communication are the real building blocks of success in any franchise chain,” says Neil.

“Basically, you get out what you put in, if you are interested, it is not hard to contact Snap-on and see what they can do for you.

It is an awesome business and if you want to work for yourself, not scared to get in and have a go, then the foundations are there.

You need to get in and build on it and grow your own business,” says Allan.

On advice for other potential franchisees, Daniel says, “Do it! If you’re not afraid to get out of bed and work for your money, there’s no reason you can’t succeed in this business.

There are 100 years of proven business success. The model, if applied as intended – in my opinion, can’t fail.”

If you would like to enquire about investing in your own Snap-on Tools franchise, please visit www.snaponfranchise.com.au

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Financial freedom

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FE AT U R E A R T I C L E

Top Franchises in Your Price Range

The franchise industry offers first-time business buyers a wide variety of options. Not only are there thousands of franchise categories and companies to choose from, but there are a variety of franchise opportunities in different price ranges. So, where do you start?

Why buy a franchise?

Wanting to trade under an established brand is usually the motivation for franchisees purchasing an existing franchise. However, franchising, similar to starting a business from scratch, can be a costly business venture, and before jumping straight in, it is essential to consider all of the costs and financial obligations involved.

Franchisees are advised to carefully examine all franchise documents to determine all the costs involved. In particular, franchisees should carefully read and understand the disclosure document because, as required by the Franchising Code of Conduct, franchisors are required to disclose all actual or potential associated costs of the franchise business, including the initial franchise fees and expenses through to the ongoing fees or royalties. The document should detail costs, including upfront documentation fees and all day-to-day operational expenses. Potential franchisees should seek specialist advice from the very start of their franchising journey to ensure they have a full understanding of these obligations.

Is the price, right?

One of the critical factors in deciding on a franchise business is whether or not you have the capital to cover an initial fee and any ongoing costs.

To determine what you can afford to invest in a new franchise business, you need to have a good understanding of your current finances. You can start figuring your net worth by compiling a balance sheet that lists all assets and liabilities and also seek specialist advice.

46 Business Franchise Australia and New Zealand

Most franchise businesses require a new franchisee to pay an initial fee to become a franchisee. This fee can be as low as $5000 to $15,000 or as $1,000,000 or more. According to the Franchising Australia 2016 report by Griffith University, the average upfront fee for a retail franchise is $31,500 and $28,000 for non-retail franchises.

The initial franchise fee varies from business to business and is paid by the franchisee when the franchise is granted. The initial franchise fee will cover things like the cost of training, recruiting, territory planning and analysis, site selection, specialist equipment, stationery and the launch.

This fee comes on top of the capital required to fund shop fit-outs, plant and equipment, inventory and lease commitments - these are not paid for by the franchisor. The report notes that the average start-up cost for a new retail franchise is approximately $287,500 compared with $59,750 for a non-retail franchise.

Are there any other ongoing fees?

Franchisees are usually also required to pay an ongoing franchise fee or royalty. This fee is typically expressed as a percentage of the gross revenue of the franchised business but can also be a fixed periodic amount either per week or per month, regardless of income. These fees can vary depending on the franchise.

Some of the most typical costs and fees paid to the franchisor (or to direct partners or suppliers of the franchisor) can also include: • Marketing Fees. Franchises often require contribution and participation in a traditional advertising or marketing fund.

This fund is frequently a national program, but it can also have a regional or local market focus.

What can you afford?

Some franchise experts believe you should not invest more than 15 per cent of your capital, but this percentage may vary. Seeking the consult of a financial advisor is wise because they can help you determine how much of your own money, you can afford to invest based on your specific financial situation.

Unless you are interested in a low-cost franchise, you will likely need to borrow the majority of the funds to purchase your business. In general, lenders require you to provide 20–25 per cent of the total investment. For example, if you have $50,000 to invest, you will want to research franchise opportunities in the $200,000 range. Before approaching any lender, make sure you are not behind in any bill payments, correct any mistakes on your credit report, and be prepared to explain any blemishes.

Let’s take a look at some top franchises SuperGreen Solutions have been globally trusted energy efficient products specialist for over 20 years’ with over 81 locations in nine countries. SuperGreen have recently released a mobile version of the bricks and mortar model in the form of SuperGreen ‘Direct’. The initial franchise fee is $48,000 and an $85,000 minimum investment which includes franchise fee, sign written, equipped van plus the vehicle lease.

Boost Juice is one of the world’s most famous and loved smoothie and juice brands. Boost Juice offers a healthy alternative to fast food. Founded by Australian adventurer and entrepreneur, Janine Allis, the first Boost Juice store opened in Adelaide in 2000 and is now an international success story with over 500 stores in operation. The initial franchise fee is on the lower scale at $2200 and a minimum investment from $220,000-$350,000.

The Lott is one of Australia’s largest franchise networks with almost 4000 franchisees operating across all of Australia, except WA. Their franchise system complements a range of businesses including convenience stores, convenience supermarkets, convenience fuel outlets, pharmacies, tobacconists, newsagencies and hotels and clubs (SA). The initial franchise fee is between $5500 - $27,000 and the minimum investment between $34,000 to $56,000.

With more than 1,350 locations across Australia, Subway is the largest restaurant chain and serves nutritious and delicious subs, salads and wraps along with its iconic cookie rang. Subway customers can choose from 37 million combinations of premiumquality meats, cheeses, fresh vegetables, cookies & bread baked daily. The initial franchise fee comes in under the average at $15,000, and the minimum investment required is dependent on the site location.

Snap Print & Design is a multi-award winning Australian franchise operating in the growing digital-print market space.

Their focus is on delivering innovative and high-quality business print and design solutions for their customers. Boasting a 120-year history in the print industry and with 40 years in franchising, Snap is 100 per cent Australian owned and operated.

The initial franchise fee is $35,000 and the minimum investment at a lower than average cost of $50,000.

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• Required Purchases of Products or Services. Some franchisors also require that a franchisee purchase certain required products or services either from the franchisor or from affiliated partners or suppliers of the franchise company.

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Snap-on Tools Australia & New Zealand is a mobile franchise operation, putting high-quality tools and equipment into the hands of mechanics, engineers, and other professional tool users across the country. Their initial franchise fee is $50,000, and potential franchisees can take advantage of an exclusive finance package to assist new franchisees.

Established in 1986, Bathroom Werx specialises in quick and affordable bathroom makeovers saving their clients thousands of dollars on bathroom renovations. The minimum investment required for the Bathroom Werx franchise is $45,000 plus vehicle investment.

Bedshed is an accredited franchise business model backed by over 35 years of successful operation, Bedshed provides support, specialised advice, training and a proven structure which takes a lot of the risk out of running your own business. The initial franchise fee is $75,000 and the minimum investment between $500,000-$750,000.

Bakers Delight are an iconic Australian brand. The brand has been baking bread since 1980 and currently have over 600 bakeries across Australia, Canada and New Zealand. Bakers Delight offer franchisees the option of opening a brand new Bakers Delight or an established bakery and prices vary accordingly from $50,000 up to $1,000,000.

InXpress is a global express logistics business with over 380 franchisees, located in 14 countries, providing consultative services and innovative software for small and medium enterprises. Founded in 1999, InXpress has a long history in managing successful businesses, with the knowhow to train and support franchisees in running a sales and business management franchise. The initial fee is $64,950.

Polished Diamonds Australia is an internationally recognised, award-winning Jewellery retailer and are looking for franchisees with strong sales and marketing experience and the ability to think laterally. Manufacture of the product is supplied so excellent selling skills are essential. The initial fee for a Polished Diamonds franchise is $50,000, and the minimum investment required is $100,000.

IWG plc offers an opportunity to diversify away from traditional franchise markets, and benefit from strong cash returns and attractive returns on investment with the global operator of leading workspace providers. With brands to match every requirements and style, like Regus and Spaces. The initial franchise fee is $50,000, and you will need an investment of $1,000,000.

To help to narrow down the full range of franchise systems available in Australia and New Zealand readers can head to the Franchise Listing Directory located in the back of the magazine and on our website. We have also just released our Annual Franchise Directory which includes the most comprehensive list of over 2000 franchise systems and franchise service providers by category across Australia and New Zealand, as well as, expert articles, global franchise associations, useful information and helpful organisations.

Head to our website for more details. www.businessfranchiseaustralia.com.au/directory www.businessfranchiseaustralia/annual-publications

48 Business Franchise Australia and New Zealand

When Australia dreams, we all win!

Why join us at the Lott?

The Lott* offers Australia’s official lottery games which Australians trust and love!

Each year Australia’s Official Lotteries make dreams come true. With the help of our retailers, Australia’s Official government-regulated Lotteries play an important role in helping to support Australian communities with over $1.4 billion^ available for hospitals, schools and sporting groups.

We are Australia’s largest retail franchise network with almost 4,000 franchisees, operating across all of Australia, except for WA.

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e x pert adv i c e

Why Non-Bank Finance is Leading the Way in Small Business Funding In 2016 it as reported that by 2020 Australia’s alternative lending sector would be mainstream.

Today in 2020, it is fair to say that this prediction has come to fruition with Australian small to medium enterprises (SMEs) more likely to use non-bank financiers to funds their business growth.

This reflects the significant change that Australia’s lending landscape has undertaken over the past few years. However, the rise of alternative finance as a mainstream option doesn’t stop here. An overwhelming 83 per cent of small business owners surveyed stated that they planned on using their own funds to fuel revenue growth. This aligns with research that found many business owners don’t fully understand the process and benefits of non-bank funding, suggesting there is more work to be done in educating consumers about their options.

Change a long time in the making The banks have long held a prominent position within Australia’s lending landscape, with the big four raking in a profit pool of $30 billion annually.

Competing with these legacy brands is tough, but over the past five years, Australians have begun to broaden their financial horizons.

While the recent Banking Royal Commission may seem like a trigger for this shift away from traditional lenders. FAST Group CEO Brendan Wright notes that this trend was well underway before the Commission, beginning four to five years earlier.

There is no doubt that finance is still a major thorn in the side of aspiring small business owners, with 60 per cent stating that access to money has stifled their plans of small business ownership, according to the Australian Banking Association. What has changed in the way in which consumers are going about solving this problem?

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In 2019 the total loan value of Australia’s major banks declined 12.5 per cent. This isn’t due to a drop in the amount of finance being sought; however, as non-bank lenders, total loan value jumped an outstanding 42.4 per cent. This suggests that alternative lenders 11 per cent slice of the market will continue to grow, potentially giving the banks a run for their money.

The appeal of alternative lending Banks step back When we look at the reasoning behind this shift away from traditional lenders, and towards non-bank options, there are a wealth of factors at play. However, one reason is becoming increasingly common; people’s desire to avoid putting their property up as security.

Interesting, 21.3 per cent of SMEs stated that this was the reason that they looked elsewhere for their finance, which is more than in 2018 survey results. This suggests

FE ATUR E : fr anch ises i n you r pr ice r ang e that the security requirements of traditional lenders are a growing problem. Additionally, other notable reasons included reduced compliance paperwork which was mentioned by 19.8 per cent of applications, and short applications times at 17.1 per cent.

While the flexibility in security requirements and simplified application processes are major selling points for non-bank lenders, there is more than just ‘pull’ forces driving this change in consumers behaviour. The banks’ disclosures during the Banking Royal Commission and reduced credit appetite are significant ‘push’ factors driving consumers to look elsewhere according to survey results.

One in every four SMEs have their finance applications rejected by the bank, and once this happens, business owners are unlikely to return. An AltFi report found that the time taken to access finance with traditional lenders had a negative effect on 29 per cent of SMEs, even if they were eventually successful. For those who weren’t able to secure funds, the number is higher at 65 per cent of applicants.

“The aftermath of the banking royal commission left many business owners struggling to access funds, as the banks tightened their lending conditions in an effort to be more risk-averse.”

James Scurr | Founder and Managing Director | Cashflow It

Experience is key In addition to the tightening of lending conditions among the big banks, the overall customer experience is a significant consideration for many small business owners. While in the past consumers displayed enduring brand loyalty towards their banks, the diversification of the market has highlighted to many that they have options. As a result, consumers are taking the liberty to explore the range of lenders available to them, and many are finding that the customer experience at the banks doesn’t stack up.

An outstanding 90 per cent of SMEs surveyed by Banjo stated they preferred their experience with alternative lenders to that of banks. This can largely be attributed to a shift away from relationship-based lending among Australia’s traditional finance institutions. Significant downsizing and restructuring efforts meant that efforts to maintain long-term relationships with small business owners were somewhat left behind.

It is not just the end consumer that is making a move towards alternative finance, with Australia’s broker network beginning to favour non-bank lenders. Sentiment

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among brokers is that the investment by alternative providers in technology has made the application process smoother, while assists in managing large workloads. Further, non-bank lenders have received praise for their ability to handle unique cases that don’t fit into the cookie-cutter approach of the big four, tackling variables such as seasonal income.

What’s next Overcoming new challenges Non-bank lenders have always played an important role in bridging the gap between the offerings of traditional financial institutions and the unique needs of small business owners. However, there is a growing barrier to finance among Australian SMEs, the volatile property market.

“Non-bank lenders have always played an important role in bridging the gap between the offerings of traditional financial institutions and the unique needs of small business owners.”

91 per cent said they would be willing to compromise on a higher interest rate to avoid using their home as security. Many non-bank lenders are embracing the trends towards securing against business assets rather than personal property assets, which many banks are resisting.

Awareness and education

The Australian Bureau of Statistics found that one in three Australians don’t own a home, and for those that do tumultuous market conditions are impacting property prices. This means that applicants have less equity to source when trying to secure finance and the bank’s insistence on SMEs offering property as security is becoming increasingly unrealistic and restricting.

Despite the number of non-bank lenders available in the Australian market, the concept is still faced with apprehension by many small business owners. Awareness and understanding are significant barriers to growth in the use of non-bank lenders. This is simply because Australia’s finance industry has been dominated by the big four, leaving little room for smaller independent lenders to build the same comfort and trust levels that the banks hold.

This is creating a challenge for the 60 per cent of small business owners who are seeking funds in order to take advantage of their strong growth projections. So much so that according to the SME Growth Index,

Despite the fact that only two in 10 SMEs that apply for bank funding are successful, according to Banjo, research shows that only six per cent of rejected applications turn to non-bank lenders. This suggests that there

52 Business Franchise Australia and New Zealand

is a need for further education within the sector about alternative finance in order to remove pre-conceptions or stigmas.

James Scurr is the Founder and Managing Director of Cashflow It Group, a specialist equipment finance company servicing Australia’s franchise, accommodation, fitness and pharmacy sectors. He has almost 20 years’ experience in the franchise industry having spent time as a successful multi-unit franchisee for companies, including Boost Juice Bars. James has extensive franchising and small business experience and has an acute understanding of franchisees’ requirements. James holds a Bachelor of Business, majoring in Management and Accounting from Queensland University of Technology. He is also a member of the Franchise Council of Australia, a Certified Franchise Executive and a Registered Franchise Lending Specialist.

0488 998 035 james@cashflowit.com.au www.cashflowit.com.au

WHAT DOES YOUR WORKING WEEK LOOK LIKE?

The hardest part of owning a MANAGED LAUNDROMAT SERVICE BY ANDREW BARTON is deciding how you will spend your “work” day.

If you are looking for a truly passive income with an excellent return on investment, get in touch today!

CALL 1 800 30 40 30 EMAIL mls@andrewbarton.com.au VISIT www.andrewbarton.com.au

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sna psh ot: b a ke r s D e li g h t

Bakers Delight 40 Years in Business

Baking since 1980, Bakers Delight is one of Australia’s best known and loved bakery brands.

As Bakers Delight enters its 40th year in business, the brand is stronger than ever with over 600 bakeries across Australia, Canada and New Zealand.

Business Franchise magazine spoke with the team at Bakers Delight about their success, ongoing innovation and passion to delight their customers.

Can you share some key product sales stats with us?

Our most popular item by far is the Hi-Fibre Lo-GI White Block Loaf. Families love it because it looks like a white bread, but offers plenty of fibre, generates longer lasting energy and tastes great. In 2019 we sold over 10 million loaves so it must be good.

What happens to the unused product?

All of our franchisees are strongly connected to the community around them and go out of their way to support those groups that need a helping hand, from local sporting clubs and schools through to major charities and welfare organisations. Wherever possible our end of day waste is donated to an organisation that is working toward building a better community.

How many team members does a franchisee typically require?

A typical bakery would employee 15 –30 (casual and full time) staff depending on turnover and volume sold. This would include bakers, apprentices, retail staff and sometimes a Bakery Manager.

How are bakery staff trained?

All of our staff are trained to varying levels depending upon the engagement of their employment. Bakers Delight has created a dedicated e-learning platform called ‘Breaducate’. This valuable resource allows Franchisees to track staff training module completion in crucial areas such as OH&S, marketing campaigns and food handling, to name a few.

What does the ideal site look like?

Located in a strip, shopping centre or mall is ideal. A good site must have a supermarket nearby, a fresh food offering and convenient parking and local transport.

How many new bakeries do you plan to open in the next five years?

In the short term, our growth strategy focusses on our Canadian and USA expansion which is going very well.

In New Zealand, our goal is to ensure we are ready to take advantage of new opportunities as they arise. That means sourcing the right location (ideally in an area we don’t already

54 Business Franchise Australia and New Zealand

have a presence in), having the right operator ready to step in and alignment with the right food and convenience offer.

What new business models are in the pipeline?

In 2020, Bakers Delight will celebrate its 40th anniversary, so we know our model works and works well. We are always on the lookout to innovate in both the way we do things and our product offering.

Bakers Delight is currently looking for individuals with the passion and drive to build a successful business of their own with one of Australia’s most loved brands.

If you’d like to enquire about purchasing an established bakery or a brand new Bakers Delight, please contact the Franchise Recruitment Team at: Phone Australia: 1300 309 759 Phone New Zealand: 0800 225 388 franchise.recruitment@bakersdelight.com.au www.bakersdelight.com.au/franchise

WORK SMART

NOT

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IFG 50/50 - A Different Franchise Approach!

NO

Staff Premises Long hours Paper Inventory

WE BUY INVOICES TO ACCELERATE OUR CLIENTSâ&#x20AC;&#x2122; CASHFLOW! WE DO NOT LEND MONEY!

GET A FREE eBOOK www.Interfacefinancial.com.au/franchise

AS A FRANCHISEE: s 7ORK IN A MATURE lNANCIAL SERVICE ARENA s 7ORK FROM A HOME BASED ENVIRONMENT s "E PART OF A YEAR OLD INTERNATIONAL ORGANIZATION s 9OUR GROWTH COMES FROM HELPING YOUR CLIENTS GROW s #ONDUCT BUSINESS ON YOUR OWN TIMETABLE s 7ORK ANYWHERE NO TERRITORY s 6IRTUALLY NO PAPERWORK FRANCHISOR HANDLES ALL DAY TO DAY PAPERWORK s .O COLD CALLING TELEMARKETING ADVERTISING OR DIRECT MAIL s 3TART WITH A MODEST WORKING CAPITAL AND GROW AT YOUR OWN SPEED

For more information contact David Banfield, President E: ifg@interfacefinancial.com Business Franchise Australia and New Zealand 55

FE ATUR E : fr anch ises i n you r pr ice r ang e

e x pert adv i c e

The Danger of Dissent Amongst Franchisee Ranks Weâ&#x20AC;&#x2122;ve all seen the headlines. Small franchisees who have apparently been driven out of business by uncaring, bullying franchisors. Franchisees are banding together to take legal action against the franchisor.

This media coverage not only tarnishes the franchising system as a whole, but also trashes the franchised brand publicly and presents the franchisor with a significant distraction that takes the focus off the day-to-day franchise operations, not to mention the financial cost.

- either deliberately or through neglect - and so they steadily

Why do things get to this point? Can these franchisors look back and identify processes, decisions or policies that led to this damage to their business?

1. Lack of clear, frequent communication

There is usually not one issue that leads to franchisee unrest, but a collection of niggling points that havenâ&#x20AC;&#x2122;t been adequately addressed

56 Business Franchise Australia and New Zealand

compound.

What are the most frequent causes of unrest?

2. Over promising and under delivering 3. Lack of transparency both on business direction and financials 4. Personality clashes between franchisor staff and franchisees

Corina Vucic | Director | FC Business Solutions

5. Franchisees who are strong influencers within the group, provoking dissent 6. Challenging market conditions The problem: Lack of clear, frequent communication People buy a franchised business because of the reassurance it provides to what is essentially a small business owner. They want the comfort of a network of likeminded people facing similar experiences.

They want to know that there’s someone competent running the franchise, caring about every franchisee and exploring all possible avenues to improve the franchise offering.

When there is very little communication from the franchisor, the franchisee can feel like they are operating in a vacuum.

The answer: 1. Implement weekly email updates – including new marketing, proposed

training schedules, changes to policies or procedures and details of planned events 2. Regularly scheduled liaison visits by performance coaches. From an annual meeting to review and establish business plans to catch-ups when financial reporting shows a downturn, to monthly phone calls. This program catches problems early and establishes a relationship of trust between the franchisee and performance coach.

3. Emails or phone calls from other corporate office experts – marketing, human resources, technology etc. - just to talk about new initiatives/changes to processes.

4. Hold events where your franchisors have plenty of opportunity to network.

5. Take every opportunity to make your franchisees proud of the brand, e.g. conferences and awards nights.

6. Utilise technology. Use Zoom, Hangout, video conferencing etc. to hold forums and provide avenues for open dialogue.

7. Use this technology to have monthly CEO Q&A sessions. It can be challenging to organise, but the reward is feedback, pulse-taking and enhanced trust.

The problem: Over promising, under delivering You’ve done a fine job of recruiting franchisees: they’re onboarded and excited about the future. But where’s the high level of support you promised them, where are the manuals? Where’s the product upgrade that you said was on the horizon? Where are the sales you said would drop into their laps?

And that highly accredited subject matter expert that you had at the corporate office has quit – what now?

The answer: 1. Be honest when you’re recruiting.

“People buy a franchised business because of the reassurance it provides to what is essentially a small business owner. They want the comfort of a network of like-minded people facing similar experiences.”

Yes, it’s a sales pitch, but it needs to be balanced. The Franchising Code requires disclosure of a range of issues to potential franchisees, but there can be a lot of difference between cold words on a document and a clear discussion between people on their implications.

2. Go over the finances with a potential new franchisee and make sure they are realistic.

Nothing generates ill-feeling more than negative money issues.

3. Be clear on your product development plan and if there’s slippage on your schedule, re-set everyone’s expectations.

4. Guide a new franchisee and ensure that once they are set up, they know where to go for information, who to call for help.

5. Talk frequently to the influencers amongst your franchisees – listen to them and act quickly on any issues they raise.

6. Understand that sometimes a franchisee will call just needing to talk, share, be heard and ask questions with no judgement. Always make the time to allow them to do this.

7. Franchisees are sensitive to changes at the corporate office – let them know when someone is leaving (along with a plan to fill the gap) – let them know when you hire and talk up the credentials of your new person with an emphasis on how the experience/expertise of this person can impact positively on the group.

The problem: Lack of transparency both on business direction and on financials Nature abhors a vacuum, and where there’s no information, rumours fill the space.

This can generate a real level of distrust between franchisor and franchisees. While the franchisor has the right to privacy about the financials of their business, when you get into the area of sponsorships and rebates from suppliers, the Franchising Code requires you to disclose this. It’s also good practice to put this money into the Marketing Fund so that it can be used for the greater good of all franchisees.

The answer: 1. Marketing Funds, requests for location refurbishment and product upgrades are all hot issues and need to be communicated about clearly. While the Franchise Code has a regulatory framework around these topics, consultation then timely communication to all franchisees explaining the process are important to keep your franchisees reassured.

Business Franchise Australia and New Zealand 57

FE ATUR E : fr anch ises i n you r pr ice r ang e

“Franchising is often juggling diverse personalities, fluctuating marketplaces and products. But strong systems, two-way communication and an agile, flexible approach will often head off problems before they form.”

FE ATUR E : fr anch ises i n you r pr ice r ang e

e x pert adv i c e

2. Have at least one meeting a year (more, if the distance isn’t an issue and if it is, consider video conferencing) with your franchisees to share your vision with them. Talk about upcoming innovations and other issues that will impact on their business. Be clear on timelines and be very clear if there is no discretion for franchisees to opt-out of any planned changes.

3. Share benchmarking data. It can be made anonymous and reduced to percentages: e.g. “Best Practice business spends X per cent of operating budget on stationery.”

This will help franchisees understand what areas of their business are sucking up (against the average) a greater percentage of their budget.

The problem: Personality clashes between franchisor staff and franchisees This is just human nature acting out in the franchising space, but it can be incredibly damaging when you have a franchisee who needs help but, because of personality clashes, is unable to access the support.

The answer: 1. Use personality profiling when recruiting your corporate office team. Someone who has succeeded in the industry isn’t always a great choice as a mentor and motivator.

2. Train your corporate office staff on how to handle different personality types.

3. Train your corporate team to listen, listen, listen and not judge if the problem is in their realm of expertise, and act quickly.

If it’s not, get help and follow up to ensure the problem is solved in a timely manner.

4. Don’t force a franchisee to deal with a set person. Yes, it’s convenient to have a list of which performance coaches handle which franchisees, but often a franchisee will gravitate towards a personality type that they relate to. If a performance coach receives a call from someone not on their list, they should liaise with their colleagues for a co-ordinated response that doesn’t just “hand them off.”

5. If you are a smaller franchise with only one performance coach and there is a conflict between the coach and a franchisee, seek a mediator to unearth the problems, air them, solve them and provide a clean slate for the relationship to move forward.

The problem: Franchisees who are strong influencers within the group, fermenting dissent If you are recruiting innovative, intelligent franchisees, you are setting up your franchise

“There is usually not one issue that leads to franchisee unrest, but a collection of niggling points that haven’t been adequately addressed - either deliberately or through neglect - and so they steadily compound.” for success as well as creating respected business owners who are role models for the rest of your franchisees. However, these same franchisees, if unhappy, can be the ringleaders in fermenting dissatisfaction.

This is especially true if they are long-term franchisees with a powerful emotional and financial investment in the business.

3. Be hyper-alert to signals of distress. If a franchisees KPI’s are not being met, if they are disengaging with the group – immediate action is required.

The answer:

4. Have an Intensive Care Program ready to roll out to those franchisees in business distress. Assess, understand, re-set, retrain, support. Action the plan then monitor the outcome.

1. Bring these franchisees firmly into your sphere of influence. Keep in frequent contact with them, taking their pulse and acting immediately to investigate any complaints

5. A healthy mind is the key to success.

Make sure your team knows the symptoms of mental health issues. Set up support organisations they can consult with or refer people to.

2. Establish a Franchise Advisory Council (FAC) and encourage your leading franchisees to join and contribute. An FAC is a sounding board between you as franchisor and the franchisees. It is the FAC’s responsibility to receive feedback and suggestions on areas that impact on the whole group and to investigate, discuss and provide recommendations.

6. Listen, listen, listen. Train your teams in situational awareness, reading the clues, hearing the sub-text.

3. Consider letting these influencers know about upcoming plans so they can spread them and provide feedback.

The problem: Market conditions Economic conditions are beyond your control, but they can gut your franchise if despair sets in. Similarly, if your main product is a fad, then when fashions change, you are exposed to a plummet in sales.

The answer: 1. Half the battle when facing poor economic conditions is state of mind.

Gather your franchisees together and have a brainstorming session to work out what you can practically do to provide additional support (PR campaign, marketing, specialised training) and then ask your franchisees to consider what, in the current situation, they can control and what they can’t. Ask them to focus on those areas that they can control – even if they are things such as providing sensational customer service, attending more local events etc. These onepercenters do add up and focus on them can alleviate depression.

2. Over-communicate in these times.

Help your franchisees understand the conditions, break it down to their level.

Help dispel the media hype that may be feeding their mindset.

58 Business Franchise Australia and New Zealand

7. To avoid being left with an obsolete product, invest in research. This could be continual surveys to map consumer engagement, looking at future trends, keeping aware of what market leaders in your field are doing and, of course, planning your own innovation. Once again, liaise with your franchisees, who are at the coalface, to get real-time intel.

8. Have a culture of innovation within the franchise. Encourage ideas, reward them, share them then hand over to a task force for franchisee input.

Franchising is often juggling diverse personalities, fluctuating marketplaces and products. But strong systems, twoway communication and an agile, flexible approach will often head off problems before they form.

Corina Vucic is the Director of FC Business Solutions. With over 20 years in the franchise industry, and extensive operational and management experience, she works closely with leaders to take their business to the next level.

Whatever their goals, Corina coaches, mentors and supports business owners and executives to maximise success and minimise risk for long-term business prosperity and security.

To discuss how Corina’s expertise can help take your business to new heights, contact: 03 9533 0028 cv@fcbs.com.au www.fcbs.com.au