Australian and New Zealand Franchise Guide 17th Edition

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The Franchise Guide 2024 is published by CGB Publishing Pty Ltd PO Box 17 Pomona QLD 4568 Australia Phone: 07 5485 2704 *** The information and contents in this publication are believed by the publisher to be true, correct and accurate but no independent investigation has been undertaken. Accordingly, the publisher does not represent or warrant that the information and contents are true, correct or accurate and recommends that each reader seek appropriate professional advice, guidance and direction before acting or relying on all information contained herein. Opinions expressed in the articles contained in this publication are not necessarily those of the publisher.

PUBLISHER’S SUGGESTED RETAIL PRICE $14.95 © 2024 CGB Publishing Pty Ltd all rights reserved.

ISBN 978-0-9803923-9-5

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Contents Preface

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Chapter 1: A New Era For the Franchise Council of Australia...................................................... 7 Franchise Council of Australia

Chapter 2: What Does The Franchising Code of Conduct Really Mean for Franchisees?................................................................................................................................ 11 Jason Gehrke, Director, Franchise Advisory Centre

Chapter 3: What Franchisees Should Know Before Taking Up a Franchise................. 19 Robert Toth, Special Counsel, Sanicki Lawyers

Chapter 4: Tips to Help You Get Your Tax Right This Year.................................................................... 31 Emma Tobias, Assistant Commissioner, Australian Taxation Office

Chapter 5: What to be Aware of in Relation to Franchising in New Zealand............ 37 Stewart Germann, Franchising Lawyer, Stewart Germann Law

Chapter 6: What Should I Consider in Opening my First Stores................................................. 47 Peter Buckingham CFE, CMC, FIMC | Managing Director, Spectrum Analysis Australia Pty Ltd

Chapter 7: Financing Your Franchise Business............................................................................................. 57 Phil Chaplin, CEO CFI Finance Group

Chapter 8: The Myriad of Franchise Brands in Australia Today.............................................. 63 Brian and Prue Keen, Founders, Franchise Simply and Systems2Grow

Chapter 9: Expanding My Business Understand Your Business Lifecycle and Make Franchising Work for You.............................................................. 69 Roger Dickeson, Senior Franchise Consultant, Wollermann Franchise Developments

Chapter 10: The Franchiser Role in Marketing Success ........................................................................ 75 Lauren Clement, The Brand Navigator, Finding your Brand True North

Chapter 11: Reimagining Team Leadership as a New Franchisee.................................................. 81 Carmel Brown | Founder & Director The Proven Group

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Chapter 12: Franchising Your Business Unlocking the Next Stage of Growth.......... 87 Tania Allen | Head Consultant & Director Vision Alliance

Chapter 13: Selling your Franchise Legal Strategies for a Trouble-Free Exit........................................................................................................................................... 93 Helen Kay, Founder, Rise legal

Listings: Aramex........................................................................................................................................................................................................................ 97 CFI Fianance............................................................................................................................................................................................................ 98 Franchise Simply.................................................................................................................................................................................................. 99 IP Partnership...................................................................................................................................................................................................... 100 Madgwick Lawyers......................................................................................................................................................................................... 101 Morgan Mac.......................................................................................................................................................................................................... 102 Rise Legal................................................................................................................................................................................................................ 103 Sanicki Lawyers................................................................................................................................................................................................. 104 SGL............................................................................................................................................................................................................................... 105 Shop Insurance................................................................................................................................................................................................... 106 Stagecoach............................................................................................................................................................................................................ 107 Vision Alliance..................................................................................................................................................................................................... 108 Helpful Organisations:................................................................................................................................................................................... IBC

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Preface Vikki Bradbury | Publisher CGB Publishing Pty Ltd

W

elcome to the 17th Edition of Australian and New Zealand Business Franchise Guide.

Franchising, with its proven low-risk/high chance of success formula, has helped realise the business dreams of tens of thousands of Australians and New Zealanders. With so many systems to choose from, franchising offers anybody the opportunity to own and operate a business. No matter what your work background is or qualifications are, there is a franchise system to suit your finances, family, skills and lifestyle.

Originally all about food – with café, restaurant and takeaway sectors continuing to evolve and expand – franchising has grown to include practically every type of product and service imaginable.

Categories include accommodation, building and construction, business and financial services, computers, couriers, dog washing, domestic cleaning, Maintenance, hair and beauty, education, entertainment, furniture and bedding, garden and landscaping, health and wellness, printing, real estate, recreation and sport, and retail just to name a few.

This book is set out to assist new and potential franchisees as they proceed on their way to becoming a member of a very special community of business owners. It begins with an explanation of the basic fundamentals of franchising, the legal requirements under the franchising code of conduct, financial related information, taxation considerations, and developing a franchise to maturity.

Every chapter has been written by respected specialists within the franchise community.

So no matter where you are on your franchising journey, from simply toying with the idea of buying a business, to having signed a franchise agreement, to buying multiple units or multiple systems – this book will help you every step of the way.

Enjoy the Read!

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Chapter 1

A NEW ERA FOR THE FRANCHISE COUNCIL OF AUSTRALIA Franchise Council of Australia

ABOUT THE FRANCHISE COUNCIL OF AUSTRALIA (FCA) The FCA is Australia’s peak body for franchising, representing franchisees, franchisors, and service providers to the franchising sector.

With a strong voice focused on raising awareness of the benefits of franchising, the organisation works hard to educate and advocate issues and concerns of franchise to governments, regulators, other government decision makers and the broader community on the important economic and social contribution franchising makes in Australia.

Membership of the FCA is open to any organisation or individual involved in the franchise sector including franchisors, franchisees, and suppliers to the sector.

The FCA adds value to the businesses of its members by advocating on their behalf and by providing education, information, networking services and opportunities to support a prosperous and growing franchise sector – as well as offering a wide range of networking, education and events focused on the topics that matter to the sector.

IBISWorld Research’s July 2022 report found that franchising in Australia contributes $172bn annually to the national economy through 94,524 individual business outlets employing 565,251 Australians.

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hile the pandemic reshaped the business landscape across the world, franchising has emerged after COVID-19 as one of the fastest growing following the global pandemic and now heading into 2025, it has become one of the most thriving sectors in Australia.

In the latest round of research, the FCA’s business “Pulse Check” survey series found that although pandemic trading restrictions have ended, significant new obstacles were hindering the recovery of Australian businesses.

These surveys, which include responses from diverse franchised brands comprising thousands of business outlets across Australia, found that finding suitable employees for franchisee outlets (and staff for franchisors’ support offices) was a significant challenge in the sector and one that businesses across the board experienced.

For the first time since the surveys began in March 2020, rising interest rates and persistent inflationary pressures were also identified as a challenge, alongside supply chain issues and franchisee recruitment.

There has never been a greater need for the Franchise Council of Australia and its advocacy, support and assistance to its members, underpinning franchising as the preferred model for small business success.

The role of the Franchise Council of Australia The FCA is the peak body for the $172 billion franchise segment in Australia, encompassing franchisors, franchisees, professional advisers, and suppliers.

Our mission is to support and connect the Australian Franchising Community by helping them grow through education and advocacy.

Committed to building a strong franchising culture in Australia based on the view that meeting legislative and regulatory compliance obligations is a minimum standard: FCA is constantly striving for best practice in franchisor-franchisee relationships and business conduct.

A strong advocate for franchising as the best model for small business, the FCA promotes the needs and concerns of all small businesses, whether they be franchisors or franchisees.

FCA objectives and commitments The FCA is committed to ensuring the sector is at the forefront of the minds of the decision makers and ministers in Canberra, by regularly arranging delegations to meet with national leaders and decision makers on the state of franchise and the matters concerning the industry.

Our objectives are outlined below: • To establish standards of international best practice for Australian franchise systems.

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A NEW ERA FOR THE FRANCHISE COUNCIL OF AUSTRALIA

• To provide information and education about franchising to existing and potential franchisees and franchisors.

• To inform State and Federal Governments on issues relevant to the sector.

• To develop a vital, strong and financially viable franchising sector.

• To advance the interests of members in Australia, the international franchise community, franchise advisory councils, small business forums, and property leasing organisations (particularly shopping centres).

Looking ahead at franchising in Australia Heading into 2025, the Franchise Council of Australia is focused on three key priorities: • Advocating and representing the interests of its members, partners, stakeholders, and the wider franchise community to all levels of government on the issues, concerns and needs of FCA members and the small business sector more broadly. Representing the sector strongly and remain a robust voice the franchising sector to ensure we are focused on best practice and the future success of franchising in Australia.

• Enhancing the standing and reputation of franchising as the preferred model for SME success, including highlighting the resilience of franchise systems in a tough economic environment through.

• Offering opportunities to network, engage and learn via mentoring, online events, conference, state breakfasts, and a wide range of specially developed functions that connect members, partners, suppliers, and members of the franchising community.

The FCA will continue to provide a dedicated program of education, mentoring and information sharing through an incisive series of webinars, mentoring and discussions focusing on subjects including industrial relations, taxation, sustainability, wellbeing, and broader business and legal issues. These sessions and online webinars typically feature industry experts, franchisors and/or politicians who have generously shared their time and knowledge to educate and inform FCA members.

The National Franchise Convention was held this year in beautiful Cairns in May, with the consensus among franchisors, franchisees and other participants being that it was the FCA’s best convention yet. The 2025 convention, to be held in Melbourne, promises to be bigger and better than ever with a sell-out crowd expected with national and international speakers and keynotes.

As well as the national convention, the National Excellence in Franchising Awards offers a unique opportunity to highlight and celebrate those within the sector by acknowledging the dedication, innovation, and outstanding contributions of individuals and organisations within the franchising sector.

The future of franchising in Australia is extremely positive, and the innovation and resilience demonstrated by franchised businesses in recent years, against a backdrop of trying economic conditions, will ensure the franchising sector continues to lead national business recovery in 2025 and beyond.

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For more information on membership or becoming a partner of the Franchise Council of Australia please contact us via the details below.

Franchise Council of Australia 1300 669 030 info@franchise.org.au www.franchise.org.au

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Chapter 2

What does

the Franchising Code of Conduct

really mean for franchisees?

Jason Gehrke MBA CFE | Director Franchise advisory centre

About the Author Jason has more than 30 years’ experience in the franchise sector and is the founder of the Franchise Advisory Centre, and publisher of Franchise News, Australia’s leading email news bulletin on franchise trends and issues.

He is an experienced non-executive director of franchise brands, as well as past chairman of the World Franchise Council and past board member of the Franchise Council of Australia.

Jason is also a longstanding member of the ACCC’s Small Business & Franchising Consultative Committee. He teaches best practice in franchising to both franchisors and franchisees, and has delivered franchise education throughout Australia, as well as New Zealand, the United States, Canada, the United Kingdom and the Philippines.

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What is the Franchising Code of Conduct?

The Franchising Code of Conduct (the Code) is the national set of regulations that govern franchising in Australia. It has been in force since 1 July 1998 and has been amended and updated in one form or another nearly a dozen times in the last 26 years. (Even as this article goes to press, the Code is about to be further updated.)

The original intention of the Code was to regulate the behaviour of franchisors toward potential and existing franchisees, and this is still its primary purpose today, however it also has some elements which touch former franchisees as well.

How does it protect franchisees?

The Code seeks to protect franchisees from poor practices by franchisors which are incompatible with a healthy and mutually-beneficial franchise relationship. There are three main elements to the Code which are: 1. Access to specific information about the franchisor and the franchise opportunity that must be provided at least 14 days before a franchise agreement can be signed. This is known as Disclosure, and all franchisors must follow the same template for their disclosure document regardless of how big or small their network, and regardless of how young or old their brand. Since November 2022, franchisors have also had to list certain information about themselves on a government website called the Franchise Disclosure Register (www.franchisedisclosure.gov.au – see more details below).

2. The second primary element of the Code sets guidelines on what franchisors can and cannot do before, during and sometimes even after the franchise relationship has ended to protect franchisees from poor or exploitative behaviours.

3. The third element of the Code are processes for dispute resolution that can help resolve disputes more quickly, often at lower cost, and for generally quicker and more equitable outcomes compared to slow and costly litigation via the court system.

Who is responsible for enforcing the Code?

The Australian Competition and Consumer Commission (ACCC) has overall responsibility for enforcing the Franchising Code of Conduct. The ACCC can receive and investigate complaints from potential, existing or former franchisees. It can also impose fines for relatively minor breaches of the Code, or seek more substantial penalties through the courts for serious and potentially deliberate breaches of the Code.

The ACCC has produced various information resources for potential and current franchisees and franchisors to help better understand the Code, including a compliance guide (for franchisors) and a free online course for potential franchisees (see below for more details).

What do potential franchisees need to know about the Code?

The Code protects existing and potential franchisees from poor behaviour in the franchise relationship. Every potential franchisee should know that the Code exists for

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What does the Franchising Code of Conduct really mean for franchisees?

their protection, but also to focus them on having access to better information about a franchise investment, and a better understanding of franchising more broadly before signing a franchise agreement.

The Code does not absolve franchisees of the responsibility to undertake their own due diligence before investing in a franchise. Nor does it absolve franchisees of the obligation to adhere to the terms and conditions of the franchise agreement (assuming it complies with the Code), simply because the franchisee later decides they don’t like certain clauses.

The Code does not cover every possible instance of poor behaviour that might cause difficulties in a franchise relationship. Neither does a franchisor’s compliance with the Code guarantee that a franchisee will have a profitable and rewarding business, as the Code only regulates conduct in franchise relationships, and not the commercial outcomes of the relationship itself. There is risk in any business venture, and while a franchise mitigates that risk, it can’t eliminate risk altogether.

Early proponents of the Code argued that it would give people greater confidence to invest in a franchise, and that the franchise sector in Australia would grow as a result.

While the sector has grown since the Code was introduced, there is no evidence that the existence of the Code has led to the franchise sector in Australia growing at a rate any faster than in countries such as the United Kingdom and New Zealand which do not have any kind of national franchise regulations.

Information overload?

There is generally a very low level of awareness of the Franchising Code of Conduct among potential franchisees in Australia. Most only learn about the existence of the Code some time after they have started their search for a franchise, and often only at a very late stage of the process when they receive an Information Statement or a copy of the Code from a franchisor they may in discussions with, along with a disclosure document and franchise agreement for signing. (By law, franchisors must provide a copy of the Code with these other documents).

As a result, a potential franchisee may easily feel overwhelmed at the sheer volume of documentation they receive. Although most reputable franchisors will require franchisees to get legal advice before signing a franchise agreement, there is no reliable data to indicate that potential franchisees will actually read the documents for themselves, although anecdotally less than 10% may actually do so.

The Code itself is a document of 106 pages from start to finish, but this includes 16 pages outlining the template for a disclosure document (which the franchisee should receive anyway, but filled with relevant information about the franchisor and the franchise offer), plus around a dozen other pages including a table of contents, endnotes, and a table outlining the history of amendments to the Code.

Meanwhile, the Disclosure Document might be up to 70 pages, and the franchise agreement itself could run to more than 100 pages, which, combined with the Franchising Code could result in a potential franchisee being confronted with around

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300 pages of information (plus anything else required to be provided, such as a copy of the lease of the premises from which the business will operate).

The sheer volume of information provided, plus the legal language in which it is written can be challenging for even the most enthusiastic reader to digest, and has often led to claims that potential franchisees are overloaded with too much information before buying a franchise. Even if this was true, providing potential franchisees with less information upfront is not possible under the Code, and so potential franchisees must make the effort to work through the volume of information they are given.

Start at the beginning and rush slowly The journey to becoming a franchisee will be different for different people.

Some people start their journey subconsciously as customers of a brand, then later decide they like the products or services so much that they can see it as a business opportunity for themselves and make inquiries accordingly. Usually this means they focus on just the one brand during their franchise journey.

Other people come to franchising in response to a desire to work for themselves in an industry they already know, or a completely new industry altogether. Unlike the enthusiastic customers who may only consider one brand, the potential franchisees driven by a desire to be their own boss may instead look into two or three different brands simultaneously (especially as there are so many different franchises across so many industry segments now operating in Australia).

In the first instance, a potential franchisee may visit the website of a franchisor, then perhaps search online for additional information about their franchise offer, or visit various online commercial directories.

However, since November 2022 another highly useful information resource that allows potential franchisees to compare one franchise against another is the Australian Government’s online Franchise Disclosure Register at www.franchisedisclosure.gov.au

The Disclosure Register website is a free public information resource developed by the

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What does the Franchising Code of Conduct really mean for franchisees?

Australian Government to allow potential franchisees to more easily compare franchise offers. It does not have pop-up ads, animated gifs or videos unlike privately-operated online franchise directories.

Potential franchisees will need to click on the Search button on the front page of the website, then agree to the Terms of Use before proceeding.

The user will then land on a page that might look like the following:

Figure 2: The search page of the Franchise Disclosure Register

The Register lists every business that offers franchises in Australia, even if they are franchisors and master franchisees of the same brand (eg. XYZ Franchisor Australia Pty Ltd, and a state master franchisee - eg. XYZ Queensland Pty Ltd - as the franchisor may offer franchises in states other than Queensland, where another company has the right to grant franchises).

Because the Register lists all businesses that offer franchises, there are far more listings on the register (1,900 as at the time of writing this article). After allowing for multiple listings for brands which operate via master franchises, there are about 1,200 different franchise brands listed on the Register.

The Register classifies brands according to the ANZIC (Australian and New Zealand Standard Industrial Classification) categories for businesses used by the Australian Bureau of Statistics, with a major classification heading followed by a sub classification heading to help narrow down the search results. (This includes classifications in which no franchise businesses operate, such as Mining). A search for a franchise opportunity can be further refined to include states or territories in Australia where the brand currently operates, or where it intends to grow.

Some classifications may not be immediately apparent and need patience to find. For example, a potential franchisee interested in a fitness business would need to select the main industry division of “Arts and Recreation Services”, and then a subdivision of “Sports and Recreation Activities” to shortlist around 85 results.

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The Register also includes the ability to search by brands which have provided their Disclosure Document, however as it’s voluntary for franchisors to provide this document and the document itself often contains commercially sensitive information, only a very small number of franchisors have provided this information (less than 4% of all listings as at the time of writing).

Once a user has identified a listing of interest, clicking on it will provide more details about the franchisor and the franchise offer, including: • The number of years it has been operating; • How many franchised and corporate outlets exist; • The states in which it operates or intends to expand; • The anticipated setup cost for a new franchise; • Fees and royalties payable under the franchise agreement; • The length of an initial franchise term;; • Contact details for the franchisor and other basic information about the franchise.

The listing should also include a link to download the franchisor’s Key Facts Sheet (ie. a template summary of information about the franchise offer to be read alongside the Disclosure Document), and may also include links to download their disclosure document and standard form franchise agreement (if these have been provided to the Register as it is not compulsory to do so).

What is the Information Statement and online course?

The Information Statement for Prospective Franchisees is a government-mandated fivepage handout containing generic information about franchising that must be given by franchisors to potential franchisees as soon as possible after receiving an initial franchise inquiry.

The purpose of the Information Statement is to alert potential franchisees of the sorts of questions they should explore when considering a franchise, provide an overview of the process, and provide details of additional sources of information such as the free online course for potential franchisees at www.accc.gov.au/franchising-education-program.

This free course is an updated version of one launched in 2010, and which had been undertaken by more than 20,000 potential franchisees before its recent relaunch. It takes only 90 minutes to complete but provides vital insights for potential franchisees to consider before committing to a franchise. Australia was the first country in the world to offer a free online course for potential franchisees, and set a precedent which several other countries have since followed.

What next?

If you are seriously considering investing in a franchise, be sure to learn as much as you can about franchising before signing on the dotted line. Links to all the resources mentioned in this article, plus additional resources can be found online here: https:// www.accc.gov.au/by-industry/franchising

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What does the Franchising Code of Conduct really mean for franchisees?

Other useful online resources include: www.business.gov.au This is an Australian government website full of tips and tools for new and existing small business owners. www.franchiseadvice.com.au/best-practice-for-franchisees/ The Franchise Advisory Centre has an online library of more than 50 advice articles for potential franchisees. Its regular interactive online course Introduction to Franchising (www.franchiseadvice.com.au/introduction-to-franchising/) is also very useful for potential franchisees to rapidly increase their understanding of franchising and small business, including how to avoid common mistakes.

The last word Finally, just take your time. You should never rush into a potentially life-changing decision. The more effort you put in to researching your proposed franchise investment, as well as franchising and small business more broadly, the more likely you will avoid unpleasant surprises along the way, and to enjoy a profitable relationship with your franchisor.

As a rule of thumb, consider taking up to an hour of your time on research and selfeducation for each $1,000 to be invested. It might feel like this initially slows things down at the start of your franchise journey but it will be worthwhile to know that you have gone into business with your eyes wide open and have given yourself the greatest possible chance of success.

Jason Gehrke MBA CFE | Director Franchise Advisory Centre www.franchiseadvice.com.au

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Chapter 3

WHAT FRANCHISEES SHOULD KNOW

BEFORE TAKING UP A FRANCHISE Robert Toth | Special Counsel Sanicki Lawyers

About the Author Robert is an Accredited Commercial Law Specialist with over 35 years expertise in franchise, license, and distribution law, acting for local and international franchisors and companies, advising franchisees and master franchisees with extensive experience in dispute resolution and mediation.

Sanicki Lawyers is a dynamic and progressive law firm based in Melbourne and Brisbane with a talented team of lawyers who advise clients on Intellectual Property, Franchising and a broad range of corporate and commercial matters.

Robert regularly publishes articles online and internationally on Franchising, Licensing and Distribution and is a Member of the Franchise Council of Australia (FCA), the International Franchise Lawyers Association (IFLA) and the Global Referral Network a network of specialist lawyers around the world.

Robert is highly recognized as a leading Franchise Lawyer in Australia having been named as a Leading Franchise Lawyer in Australia in Who’s Who Legal: Franchise 2021 and nominated again in 2023 and is on the Advisory Board of a number of clients, as well as acting as a resident director for overseas companies.

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f you are in the market to take up a franchise opportunity there is no lack of franchises on offer these days..

We have seen over the past 2 years a huge increase in franchise opportunities on offer both from overseas and locally.

We have over the last 12 months seen an increase in many business sectors closing down and going into liquidation and many companies reducing their staff levels leading to redundancies.

This means more prospective franchisees in the market looking to be trained and take up a franchise to earn an income from low cost mobile franchises to professional service franchise in the areas of bookkeeping, accounting finance, broking, home care and conveyancing.

So many franchises so little time With so many franchises on offer how do you pick the right franchise for you?

We have also seen an influx of new franchise systems from overseas from the US, UK, and Europe as well as many new local franchise systems in the hospitality, home care and children’s education and sports sectors as well as the influx of the health and beauty services.

Some of these franchise systems have come into the Australian market successfully while others have failed and left many people losing a lot of money, so you need to be careful in doing your due diligence on the franchisor just as much as they do their due diligence on you.

A new franchise from overseas can be a great “first on the ground” opportunity but it may also have greater risk as opposed to joining a well-established franchise system that has been up and running for many years.

Some recent franchisors that were not so successful included UFC Gym, Godfreys, 85 Degrees coffee chain and Carl’s Jr to name a few and they all failed due to a variety of reasons.

At the same time there have been a number of new franchise systems entering the market in various sectors such as Home care, Finance, Mobile media, Childcare and education centres and the hospitality sector.

Covid changed many people’s views on their employment and made people take stock of their lives wanting greater independence and more flexible work hours.

Franchising allows you to operate your own business supported by the franchisor its brand and systems with training provided by a franchisor. The process of selecting the right franchise for you should be taken slowly with input from your family, partner and with expert legal and financial support.

It can be filled with excitement, and trepidation at the same time and as with any business venture it comes with risk.

The Franchise register and Key Fact Sheet Franchisees can now look up a franchisor on the ACCC Franchise Register (which is a

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mandatory obligation for franchisors) and which will give some high level details about the franchise system.’ If a franchisor is not on the register, you should not deal with that franchisor as it is a breach of the Franchising Code of Conduct. All Franchisors must update or confirm their information yearly.

Franchisors also have to register online with the ACCC the Key fact sheet which will give similar information to that on the register. The key fact sheet is given to franchisees with the suite of franchise documents at least 14 days before the franchisee is required to sign the agreement or pay any non-refundable money.

Franchisees now more than ever, due to the complexity of the legal documents should seek specialist franchise legal advice before entering into a franchise to understand their key obligations, responsibilities and risks.

Blue skies ?

As a franchisee you can get caught up with the hype gloss and sales pitch of the franchisor’s glossy brochures, and their marketing spiel about “being your own boss” and sign up in haste, only to find that it was not what was represented.

But once you are signed up it can be very difficult to exit without crystalizing a loss.

We have seen franchisees go into a franchise for the wrong reasons some of these (which are real life cases) were: a. Taking up a franchise for their adult children to operate- the problem here was that the child didn’t like the business, it was hard work, and they left after a few months leaving the parents to run the business. b. Acquiring a franchise for their wife as she was lonely and depressed to give her motivation – the problem here was she found the stress of business too much and they had to abandon the business and crystallized a huge loss. c. Acquiring a Charcoal chicken business having been made redundant from middle management at a large company – the problem here was after 12 months selling charcoal chickens in the middle of summer, the client was over it and got out selling at a loss.

Do what you are good at or do what you love We often ask clients to consider their skill set and work history and to then look forward and ask if they can see themselves working in the franchise selling the products or services in say 3 or 4 years’ time. So, ask yourself these questions: Why am I doing this? And does it suit me and my skills and experience?

• Do I want to be selling charcoal chickens in 3 years’ time?

• Even with training, do my skills and personality suit the proposed franchise?

• Is this something I will enjoy and feel rewarded doing each day?

Specialist advice The best way to make an informed decision is to get advice from a Specialist Franchise Lawyer and accountant who are members of the Franchise Council of Australia (FCA).

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Seeking advice from your local conveyancer, family lawyer or neighbour over the fence is not proper legal advice and will not reduce your risk! Specialist Franchise lawyers know what is going on in the sector – the good, bad and the ugly!

Financial considerations Irrespective of how attractive and compelling the franchisors marketing and sales pitch may be, the decision to join should not be an emotional one.

If the numbers don’t work, after doing your own cash flow projections (with support from your accountant or financial advisor) then you are better off walking away!

As much as there is always risk you can limit that risk by asking the franchisor to provide you with some indicative cash flow models from existing franchisees and then ensure you have those reviewed by your accountant.

You should consider the following: • Can I take a reasonable wage for my hours worked.

• Does the cash flow show I can cover my finance to fund the franchise.

• What percentage of my expected revenue are my occupancy cost? (rent, outgoings insurances, security bond) - Ideally this be low end around 12% to 15% and no more than 20 to 25% of your revenue.

• What amount of working capital do I need for the first 6 to 12 months of operation?

• What opening stock do I need and how will I fund it?

• Will I need to employ staff outside of you and your family?

• Do I need to lease a vehicle for the business?

• What do I expect as a return on my investment (ROI) in the future?

These are all things to consider and factor into your cash flow projections before you decide to go ahead.

Franchise Code Changes The most recent changes came into play on 1 June 2021 to the Franchising Code following the Government’s response to the Fairness in Franchising Inquiry in 2019.

The key changes are greater disclosure by the franchisor with an updated Disclosure document around supplier rebates, leases, on line sales, social media, earnings information, capital expenditure and end of term arrangements.

The irony in all this, is that franchisees now have more documents, not less, to review and absorb before deciding whether to take up a franchise.

The Sign up Process Franchise opportunities are advertised and promoted online, on mobile cars and billboards and via word of mouth and through business agent’s consultants or the business franchisor sales manager.

When dealing with a business agent or sale representative bear in mind their goal is to

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sign you up as fast as possible as that is how they make their commission or reach their targets.

On enquiry you will be asked to sign an NDA (confidentiality agreement) before the franchisor releases further financial or other confidential information about the franchise system and complete a detailed application form with personal and financial details for the franchisor to review to give you preliminary approval.

In this period, you should have met the franchisor founders or directors, if possible, to gauge whether you can work with them and their support staff.

You are forming a business relationship with them and one of the key measures of success is that “people like to do business with people they like “a simple but important concept.

If you meet the BDM and the Franchise team and you don’t get a good positive feeling about them, why would you risk going into business with them?

With a larger system they tend to be more corporatized and you will be unlikely to meet the actual founder or directors.

Once you are approved, the franchisor will ask for a deposit or Document fee to be paid before they prepare and issue the suite of franchise documents which will commence the 14 day disclosure period. In this period, you cannot sign the franchise agreement.

The suite of franchise documents should include: • The disclosure document with attachments in the form required by the Code; • The franchise agreement in the form required to be signed by the franchisee; • Any lease, offer to lease, sublease or occupancy License negotiated by the franchisor; • A receipt form to acknowledge receipt of documents – This starts the 14-day disclosure period; • The legal, accounting, and financial advice certificates to complete and return with the signed franchise agreement and related documentation.

• In some cases, there may be a “no prior representation statement” which requires the franchisee to set out any statements or representations made by the franchisor (or their agent) on which the franchisee relied.

The no prior representation statement This statement is an important document the franchisor can rely on if there is a dispute down the track so franchisees should not ignore it. Franchisees should set out in the statement any special promises or concessions offered by the Franchisor (or its agent or broker).

This document protects the franchisor, so, if there have been any special concessions don’t rely on verbal promise, make sure it is in writing and set out in the franchise agreement or the prior representation statement.

Any concessions should be set out in the agreement and signed by both parties and dated prior to or on the date the franchise agreement is signed.

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Seeking legal advice It is not compulsory for franchisees to seek legal, accounting, and financial advice however many franchisors will now insist their prospective franchisees get legal and financial advice as this reduces risk to the franchisor.

Seeking legal advice from a Franchise Specialist Lawyer will assist you to work through the volume of documents and the sign on process.

An experienced lawyer will focus on the important commercial issues and identify issues of concern where there may be room for negotiation, rather than recommending wholesale changes to an agreement which are unlikely to be accepted and aggravate the relationship with the franchisor or their legal team from the very beginning.

The four commandments from the desk of Toth !

One- Irrespective of whether you seek legal advice (which we highly recommend) you should still read and become familiar with the documents as it is your contract and sets out your rights and obligations and those of your franchisor.

Two- Do not rely on advice from your suburban conveyancing lawyer, next-door neighbour, or your mate at the pub! That’s not advice.

Three- Accept that entering into a franchise carries risk. It is therefore a risk and reward decision and although easy to get into a franchise they are not so easy to get out of if it doesn’t work out or you pick the wrong franchise. You may then crystalize a loss.

Four- Franchisors will often say their agreements are not negotiable, – which is not always the case, and in fact we often negotiate reasonable concessions particularly when it is a new franchisor as they are keen to roll out.

Things to reasonably negotiate might be a reduced royalty over the first 12 months to get a chance to build the business, or minimal or no marketing fees for the first 12 month period, a reduced minimum performance criteria and other concessions.

Any Concessions should be clearly set out as special conditions in the agreement.

Disclosure Document Franchisors need to give the franchisee the disclosure document with the key fact sheet to franchisees at least 14 days before they either enter into an agreement or make a non-refundable payment.

The 14-day disclosure period only starts once the franchisor has made the full and proper disclosure required and provided all relevant documents including the leasing information and includes earnings information in the disclosure.

If lease information is given later or differs, the franchisee has another 14-day disclosure period from that date. Neither the franchisor nor franchisee can reduce or waive the 14day disclosure period as it is a minimum mandatory period under the Code.

Lease/occupancy Information The franchisor must provide full details of the lease and occupancy rights with a copy of any lease documents for example – the offer to lease- agreement to lease- lease-

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WHAT FRANCHISEES SHOULD KNOW BEFORE TAKING UP A FRANCHISE

sublease- occupancy license and lease disclosure statement issued by the landlord.

If the franchisor does not provide full and accurate information about the lease rights in the disclosure document the 14-day disclosure period does not start until they provide that information.

If the final lease details are different to the information in the disclosure document previously given, the 14 cooling off period only starts when that information is given, so the franchisor risks a franchisee being able to walk away.

This means the days of signing up a franchisee without a site or while in negotiations for a site are fraught with risk for the franchisor.

Franchisors must also disclose if they have any interest in the lease or freehold and any rent incentives they receive.

Rebates and financial benefits The percentage of rebates the franchisor receives (financial benefit) from each supplier over the last financial year as a percentage of all purchases by franchisees in the group (this excludes supplies by the franchisor or associate of a franchisor) now has to be provided.

There is no need to disclose this information if the agreement allows the franchisee to buy from non-approved suppliers or the rebate is paid to a cooperative fund controlled by the franchisor.

Rebates do not include payment by a franchise to the franchisor, master franchisor or associate for a wholesale supply and a lease incentive is not a rebate, but franchisors still need to disclose the lease incentives.

Earnings Information Franchisors must if they give earnings information give it in the disclosure document (not before or after signing the agreement) and include a statement that the information is correct to the best of their knowledge or state that the information may not be accurate.

A breach may attract a civil penalty of $66,000 and failing to provide the information means the 14-day disclosure period commences only when the information is given and attached in it.

Capital expenditure Franchisors can only require a franchisee to undertake capital expenditure if a majority of franchisees agree where it affects the majority, or the express consent of the individual franchisee is given.

Term and restraint Franchisors need to disclose if the franchisee has any right to goodwill at the end of term and if the agreement has a restraint or non-compete clause. The Code has been amended to provide that a franchisor can only rely on a “serious breach” of a restraint of trade clause. Serious breach is not defined, and the breach would have to be before the term ends.

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This means restraint of trade provisions are more difficult to enforce for franchisors as they must be reasonable and no kore than is reasonable to protect the franchisors goodwill. Franchisors will still be able to protect their IP, know-how and confidential information.

Termination rights The seven grounds for a Franchisor to terminate for “special circumstances” now require the Franchisor to give a franchisee 7-day prior notice of termination even for special circumstances which then allows the franchisee to raise a dispute.

The franchisor cannot terminate the franchise if the franchisee raises a dispute, and the parties must try and resolve the matter in the 28-day period or refer the matter to the ASBFEO for mediation or arbitration. In the meantime, the Franchisor can require the franchisee not to operate the business in the 28-day period.

Franchisee exit rights Often a franchisee may feel they were put under some pressure to sign up a franchise and they may feel they have little choice but to go ahead, however under the Franchise Code franchisees have a number of opportunities to exit the franchise in the following circumstances.

• Disclosure Period In the 14 day disclosure period from when the franchisor has issued the full suite of franchise documents to the franchisee – In this case the franchisee is entitled to a full refund of any money paid including a deposit or document fee • Cooling off rights In the 14 day Cooling off period being the period after the franchisee has executed the franchise agreement In this case the franchisee is entitled to a refund of all money paid less a Retention Sum. The retention sum must be set out in the disclosure document and be a fixed fee which the franchisor can retain to cover their costs for having interviewed and processed the franchisee • Early termination rights for franchisees By giving 28 days’ notice to the franchisor during the term under the Code.

The Code gives franchisees a right at any time during the term to write to the franchisor and seek early termination of the agreement giving reasons.

The franchisor then has 28 days to respond and state whether or not they agree and give reasons why they do not agree. It is highly unlikely the franchisor will agree to allow a franchisee to exit and there is no guidance under the Code of what are considered good or acceptable reasons. This will be something to be tested in the future and likely lead to the parties mediating.

• Mutual Agreement - If the parties agree to end the franchise.

Legal costs The Franchisor can no longer charge franchisees legal costs for any undetermined and future legal service costs, other than an upfront fixed fee set out in the agreement. The

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WHAT FRANCHISEES SHOULD KNOW BEFORE TAKING UP A FRANCHISE

upfront “fixed amount of dollars” (fixed fee) can only be for preparing, negotiating, and executing the agreement.

Selling a franchise business Franchisees now benefit from a 14-day cooling off right after settlement of the business has occurred. Therefore, when selling a franchise business there should be special conditions that make the settlement conditional upon the 14-day cooling off period in favour of the purchaser ending.

Marketing funds The Code uses the word marketing, instead of advertising to clarify the Code applies to more than just advertising. It also now extends marketing fund obligations to the “fund administrator” who could be the franchisor, a master franchisor or a third party authorised to administer the fund for the franchisor or master franchisor.

The operations manual Most franchise agreements include provisions requiring franchisees to comply with the Operations manual and therefore franchisees should ask to see the Operations manual before entering into the franchise agreement or in the disclosure or cooling off period.

The Franchise Agreement This is the contract setting out the parties’ rights and obligations, (generally weighted in favour of the franchisor) with consequences for a failure to comply which may give rights to serve a breach notice and even termination.

It is often assumed that the agreement will contain positive obligations on the franchisor however most agreements will state the franchise “may” not that they “must” do certain things. This makes it difficult to allege a franchisor has breached the agreement where they do not have a positive obligation.

Franchisees do have protection under the Franchise Code, the Australian Consumer Laws and unfair contract provisions and can instigate the dispute resolution process and seek mediation or arbitration via the ASBFEO where a dispute cannot be resolved directly with the franchisor.

The Fees Payable to the Franchisor?

Franchise Fees Franchisors are tending to reduce the up-front franchise fee to make their franchise more attractive and affordable and often include the training fee into the up-front franchise fee.

Royalty The service fee or royalty is usually expressed as a percentage of the franchisee’s gross sales, or it can be a fixed weekly or monthly fee.

Most franchises, however, charge a percentage royalty for example 8% of the gross revenue. This works for the franchisor as they receive their royalty on the franchisees

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turnover while the franchisee carries all the costs of operating the business!

This is the key reason many franchisees fail if the royalty and associated franchise fees are too high and there is insufficient margin on sales.

It is therefore critical for franchisees to do their own objective financial analysis and prepare cash flow projections with their accountant before they commit to see if the business model will work for you. Will you be able to take a reasonable salary for your effort, cover your overheads rent and staff costs? tip: If relying on the franchisor’s earnings information, ensure their model makes provision for a salary to the owner /operator before showing a profit.

Working capital We often find that the working capital requirements set out by franchisors in their disclosure documents are grossly understated particularly for a new greenfield site, so check with your accountant what a reasonable amount of working capital is needed to avoid financial stress in the first 6 to 12 months of operation.

Term and renewal Due to changes to the Code and the franchisees right to seek early termination of the agreement long term franchise agreements are less likely and most systems tend to offer 5 year terms with options, but it does depend on the nature of the business.

Just bear in mind that if you sign up to a 20 year term the only way you can exit really is by selling the business during the term.

Sites and territories Mobile franchises (such as those providing gardening or cleaning services) will generally be granted for a specific territory – listed as a number of postcodes or marked on a map attached to the agreement.

The territory may be exclusive or non-exclusive and this should be understood so you are aware if the franchisor or other franchisees can operate or market in your territory.

This has also been affected by on line sales and the Code requires franchisors to now disclose what occurs when there are on line sales.

What the Code does not do is to make franchisors allocate revenue for on line sales to the franchisee, so you need to carefully check the franchisors agreement and policy on this issue.

Retail franchises (such as cafes or gyms) generally are not allocated a territory just a site from which they operate.

Goodwill Most franchise agreements provide that any ‘goodwill’ developed in the franchise business remains with the franchisor on the basis that the franchisee has only developed its goodwill due to the rights granted by the franchisor to use its system, brand, and IP and therefore once that ends there is no goodwill the franchisee can claim.

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WHAT FRANCHISEES SHOULD KNOW BEFORE TAKING UP A FRANCHISE

Under the new Code disclosure requirements, the franchisor must set out if the franchisee is entitled to retain any goodwill at the end of the term.

It is generally accepted that both the franchisor and franchisee generate their own goodwill however the franchisees goodwill is very much tied to whether they have a lease or occupancy right and some term left on their franchise agreement to sell.

If you have 6 months left on your lease and franchise term, then you have little to sell!

Summary There are many tricks and traps to be aware of and the best insurance is to get Specialist Franchisee Legal and financial advice.

The franchisor does their due diligence on you as the franchisee so do your due diligence on the franchisor and talk to other franchisees in the system to get feedback.

Once you are in a franchise it is not easy to get out without crystalizing a financial loss and franchisors are not in the business of buying back franchises.

Most franchise businesses have a lifespan after which you will likely want to sell and move on.so just as you consider taking up a franchise, so think about how long you may stay in the business before you want to move on and sell.

Discuss the plan to become a franchisee with your wife, partner or beloved other and make sure everyone in the family is on board with your decision as it is a huge step emotionally and financially.

The best investment is getting the right advice from Franchise Law Specialist before you commit so you can make an informed decision.

Robert Toth Accredited Commercial Law and Franchise Specialist Special Counsel | Sanicki Lawyers Melbourne/Brisbane 0412 673 757 robert@sanickilawyers.com.au Member: Franchise Council Australia (FCA), International Franchise Lawyers Association (IFLA), US Commercial Service, AICD and Global Referal Network

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Chapter 4

Tips to help you

get your tax right

this year

Emma Tobias | Assistant Commissioner Small Business Area of the ATO

About the Author Emma Tobias is an Assistant Commissioner for the Australian Taxation Office in the Small Business line. Her focus is to help support small businesses by leading and influencing their experience across the tax, super and registry systems. As part of her role, Emma collaborates with small businesses, industry partners and government agencies to drive an improved small business experience and digital services. Her team also helps small businesses manage cash-flow and digital readiness, assisting them as they look to recover and get back on track after the challenges of the last few years.

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T

he ATO wants to make it as easy as possible for you to get your tax and super right. Here are some tips to help you with your franchise in 2025.

Using business income, what you need to know Using money or assets from your company or trust for private purposes can have tax consequences if you don’t account for these transactions correctly. That’s why it’s important to get it right.

If you’ve used business money or assets for private purposes, following these 2 steps will help you avoid unintended tax consequences: • Account for your transactions in the applicable company, trust or individual tax return.

• Keep accurate records of the transactions.

Remember, there are different reporting and record-keeping requirements for each type of transaction. It’s important to make sure you know how to keep accurate records.

You can complete a self-paced course on using your business money and assets, on Essentials to strengthen your small business.

For more information, visit ato.gov.au/businessmoney, smallbusiness.taxsuperandyou. gov.au/using-your-business-money-and-assets

Know what business income to report Business income can come in many shapes and sizes. It can be cash or other forms of payment you receive in exchange for your goods or services, such as clothing, jewellery, flights, vouchers or crypto assets.

If you receive these, or any other non-cash benefits instead of money for the work you provide, you need to record them as income at their market value on your tax return.

You may be able to reduce the assessable amount of a non-cash benefit you’ve received, by deducting the amount you would have been entitled to claim had you paid for the benefit yourself. For example, if you had purchased the item for business purposes.

There are some payments that aren’t assessable income, so you don’t need to include them on your tax return, these include: • non-assessable non-exempt (NANE) government grants • bona fide gifts or inheritance • GST you’ve collected.

For more information, visit ato.gov.au/businessincomeanddeductions

Business losses vs non-commercial losses Your business makes a business tax loss when the total deductions you claim in an income year exceeds the total of your assessable and net exempt income in the same year.

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Tips to help you get your tax right this year

If your business makes a loss, you may be able to carry forward the loss and claim a deduction in a later year, if you meet the requirements.

Remember, your business structure can affect whether you offset and claim the loss in the current year, or carry it forward and claim it as a deduction in a later year.

A non-commercial business loss is a loss you make, either as a sole trader or in a partnership, from a business activity that isn’t related to your primary source of income.

The business activity needs to have business-like characteristics and a significant commercial purpose or character.

The losses from a non-commercial business activity can’t be offset against other assessable income in the year the loss was made, unless an exception applies, or you made a profit.

For more information, visit ato.gov.au/businesslosses, ato.gov.au/noncommercialloss

Claiming deductions You can claim a deduction for most expenses you incur running your business, if they are directly related to earning your assessable income.

Remember the 3 golden rules so you only claim what you’re entitled to: 1. The expense must have been for your business, not for private use.

2. If the expense is for a mix of business and private use, you can only claim the portion that is used for your business.

3. You must have records to prove it.

For more information, visit ato.gov.au/businessdeductions or take a self-paced course on claiming deductions, visit smallbusiness.taxsuperandyou.gov.au

Supercharge your super knowledge Super guarantee (SG) is a compulsory payment you must make to eligible employees’ super funds. To meet your super obligations, it’s important to make sure that your payments are received by your eligible employees’ super funds on time and in full.

You need to pay SG contributions at least 4 times a year by the quarterly due dates.

These are the 28th of January, April, July and October. It’s a good idea to take note of the super payment due dates so you can meet your super obligations on time.

For the 2024-25 financial year, the SG rate is 11.5% of an employee’s ordinary time earnings (OTE). From 1 July 2025, the SG rate will increase to 12%.

If an SG payment is not received in full and on time by your employee’s super fund, you’ll need to lodge a super guarantee charge (SGC) statement and pay the SGC to the ATO within one month of the quarterly SG due date. The SGC is more than the SG you would have otherwise paid, and also includes nominal interest and administrative fees. Unlike SG payments, the SGC is not tax deductible.

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The ‘handy simple checks for super success’ checklist outlines what employers need to do to meet their SG obligations, and what steps to take if mistakes are made. Check out ato.gov.au/superquickcheck For more information about meeting your super obligations, visit ato.gov.au/superforemployers The Australian Government has announced that from 1 July 2026, employers will be required to pay their employees’ SG at the same time as their salary and wages.

Keep up to date by visiting ato.gov.au/paydaysuper

Enhance your employees with the skills and training boost If you provided external training to your employees from 7:30pm AEDT (or by legal time in the ACT) on 29 March 2022 until 30 June 2024, you may be eligible for the small business skills and training boost.

The boost was available to businesses with an aggregated annual turnover of less than $50 million and allowed an additional 20% tax deduction for external training courses delivered to employees, either in person in Australia or online, by registered training providers.

Find out more at: ato.gov.au/skillstrainingboost

Energise your franchise with the energy incentive If you invested in upgrading your energy efficiency, you may be eligible for a bonus 20% tax deduction between 1 July 2023 and 30 June 2024 with the small business energy incentive. The incentive was available to businesses with an aggregated annual turnover of less than $50 million and applies to the cost of eligible new assets, and improvements to existing assets, that support more efficient energy use.

Eligible new assets must have been first used or installed ready for use, both for any purpose and for a taxable purpose, between 1 July 2023 and 30 June 2024. For eligible improvements, you must have incurred the improvement costs during this period to claim the bonus deduction.

Up to $100,000 of total expenditure is eligible under the incentive. The maximum bonus deduction is $20,000 per business.

For more information, visit ato.gov.au/energyincentive

What you need to know about ESSTs Electronic sales suppression tools (ESSTs) are designed to interfere with electronic sales records.

They can be linked to a physical or online point of sale (POS) system and may come in the form of software, hardware or as a third-party subscription service. Any POS system can have an ESST linked to it.

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Tips to help you get your tax right this year

ESSTs may be used to change or delete sales records to avoid paying the correct amount of tax, by creating a digital version of a second set of books.

Businesses using this technology gain an unfair advantage over businesses that do the right thing.

Cloud-based ESST subscription services also pose a risk to your business because they can allow a third party to access your records.

It’s illegal to manufacture, supply, possess, use or promote this technology in Australia and it attracts strong penalties.

For more information and to find out what to do if you think you have an ESST, visit ato.gov.au/ESST

Record keeping and digital services Have you tried our record keeping evaluation tool? It can help you check how well you’re keeping your business records so you can make improvements in the future.

You can also check out Essentials to strengthen your small business – Record keeping for a self-paced course on good record keeping.

The right digital tools can help you perform daily activities easily and securely, making it easier to work with us when it’s convenient. Make sure you’ve set up your digital ID, such as myID, and Relationship Authorisation Manager (RAM) to access our online services, including Online services for business which allows you to manage your business reporting and transactions in one place.

If you’re switching to a new registered agent, or changing the authorisations you give your existing registered agent, you’ll need to nominate them in Online services for business before they can access your account and act on your behalf. This agent nomination process currently applies to all types of entities with an ABN excluding sole traders.

For more information, visit ato.gov.au/recordkeepingevaluation, smallbusiness. taxsuperandyou.gov.au, ato.gov.au/onlineservices

Support and resources We have a range of tools and services on our website to make it easier for you to get your tax and super right.

Each year, we update the Tax Time toolkit for small business. The Toolkit includes updated factsheets and has a directory of links to useful information, tools, calculators, learning resources and other support and services.

If you want to build on your tax and super knowledge, you can take self-paced courses using Essentials to strengthen your small business. All the courses are free, easy to use and designed for all stages of business.

The Cash Flow Coaching Kit is another resource that can help you better manage your cash flow across the income year.

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You can also subscribe to our Small business newsletter to keep up with all the latest tax and super information that could affect your business.

For more information, visit ato.gov.au/sbtaxtimetoolkit, smallbusiness.taxsuperandyou.gov.au, smallbusiness.taxsuperandyou.gov.au/cash-flow-kit ato.gov.au/sbwhatsnew

Emma tobias | Assistant Commissioner Small Business area of the ATO

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Chapter 5

WHAT TO BE AWARE OF

IN RELATION TO FRANCHISING IN NEW ZEALAND Stewart Germann | Franchising Lawyer Auckland, New Zealand

About the Author Stewart Germann founded Stewart Germann Law Office (SGL) in 1993 as a boutique law firm at Auckland, New Zealand, specialising in franchising, licensing and business law.

SGL is New Zealand’s longest established specialist franchising law firm and Stewart is included in the International Who’s Who of Franchise Lawyers 2024.

Stewart Germann has over 40 years’ experience in franchising law and acts for franchisors in New Zealand, Australia, USA and the UK. SGL also act for franchisees and provides legal advice. Stewart has spoken at franchising conferences in New Zealand, Australia, Italy, South Korea and USA and he was on the Board of the Supplier Forum of the International Franchise Association (“IFA”) for 6 years until March 2007.

SGL clients include many of New Zealand’s best known national and international franchise brands and Stewart has extensive franchising contacts worldwide and locally. He is actively involved in international franchising and has written many articles which have been published overseas including in the International Journal of Franchising Law. Stewart is a past Chairman of the Franchise Association of New Zealand (FANZ) and wrote the original Franchising Code of Practice for the FANZ. He has also written many published articles on franchising.

Stewart is the only lawyer in New Zealand to graduate Certified Franchise Executive (CFE) following an accreditation ceremony held at Australia’s National Franchise Convention and at the IFA in Orlando, Florida in 2020.

Stewart is also Adjunct Professor of Law at the University of Auckland Law School and is teaching Franchise Law in 2025.

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N

ew Zealand is one of the most deregulated countries in the world to conduct small to medium-sized business. There is no specific legislation controlling the operation of franchising in New Zealand and other countries like New Zealand include Singapore and the United Kingdom.

2024 Survey The 2024 Survey results only released in October 2024 reveal several key findings about the growth and impact of franchising in New Zealand: • Franchise Sector Turnover: the sector’s revenue has risen by $10.4 billion since the last survey in 2021 to $47.2 billion which is equivalent to 11% of NZ’s GDP • Franchisors and Units: New Zealand is home to 546 business format franchisors, with 27,300 franchise units operating across the country • Employment: 114,340 people are employed directly in business format franchising • Community Engagement: nearly 90% of franchises contribute to their communities through financial donations, sponsorships, and other means • Technology: the adoption of modern technologies, including artificial intelligence, is becoming essential, with 72% of respondents either using or planning to implement AI • Disputes: only 1.5% of franchisees were involved in a dispute in the last 12 months and 19% of franchise brands were involved with mediation being very successful • Franchise Units by Sector: administration and support services as the most popular followed by retail (non-food), accommodation and food, and construction.

Legal Position Although there are no specific franchising laws, there are existing laws which protect franchisees; and the three main laws which provide such protection are the Fair Trading Act 1986, the Commerce Act 1986 and the Contract and Commercial Law Act 2017.

Those Acts focus in particular on misrepresentations and restrictive trade practices which include anti-competitive behaviour.

Once a franchisee has chosen a particular brand and franchise system and wishes to progress further with enquiries, the first question to ask is whether the franchisor belongs to the Franchise Association of New Zealand (FANZ). The FANZ was formed in 1996 and publishes the Code of Practice and the Code of Ethics which all members must comply with. Many franchisors belong to the FANZ but some have chosen not to join yet still comply with the Codes. Others may choose not to join and do not comply with the Codes so be aware.

The Code of Practice has four main aims which are as follows: 1. To encourage best practice throughout franchising.

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WHAT TO BE AWARE OF IN RELATION TO FRANCHISING IN NEW ZEALAND

2. To provide reassurance to those entering franchising that any member displaying the logo of the FANZ is serious and has undertaken to practise in a fair and reasonable manner.

3. To provide the basis of self-regulation for franchising.

4. To demonstrate to everyone the positive will within franchising to regulate itself.

The Code applies to all members including franchisors, franchisees or affiliates such as accountants, lawyers and consultants and all prospective new members of the FANZ must agree to be bound by the Code before they can be considered for membership.

What does the Code cover?

1. Compliance - all members must certify that they will comply with the Code and members must renew their certificate of compliance on an annual basis.

2. Disclosure - a disclosure document must be provided to all prospective franchisees at least 14 days prior to signing a franchise agreement. This disclosure document must be updated at least annually and it must provide information including a company profile, details of the officers of the company, an outline of the franchise, full disclosure of any payment or commission made by a franchisor to any adviser or consultant in connection with a sale, listing of all components making up the franchise purchase, references and projections of turnover and possible profitability of the business.

3. Certification - the Code requires franchisors to give franchisees a copy of the Code and the franchisee must then certify that he or she has had legal advice before signing the franchise agreement.

4. Cooling Off Period - all franchise agreements must contain a minimum 7 day period from the date of the agreement during which a franchisee may change its mind and terminate the purchase. This is very important and the cooling off period does not apply to renewals of term or re-sales by franchisees.

5. Dispute Resolution - the Code sets out a dispute resolution procedure which can be used by both franchisor and franchisee to seek a more amicable and costeffective solution. The Code requires all members to try to settle disputes by mutual negotiation in the first instance. However, this process does not affect the legal rights of both parties to resort to litigation.

6. Advisers - all advisers must provide clients with written details of their relevant qualifications and experience and they must respect confidentiality of all information received.

7. Code of Ethics - all members must subscribe to the Code of Ethics which sets out the spirit in which the Code of Practice will be interpreted.

All franchisor members of the FANZ must have a franchise agreement which contains a dispute resolution clause and a cooling-off provision. In order to resolve disputes,

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mediation is the favoured method and it has a high success rate in relation to franchising disputes. However, if mediation does not work then there is always litigation which is certainly at the divorce stage of the relationship.

What is a franchise?

It is helpful and essential to understand the definition of the franchise. The term “franchise” is defined in the Rules of the FANZ as follows: “Franchise” means the method of conducting business under which the right to engage in the offering, selling or distributing of goods or services within New Zealand includes or is subject to at least the following features: • the grant by a Franchisor to a Franchisee of the right to the use of a Mark, in such a manner that the business carried on by the Franchisee is or is capable of being identified by the public as being substantially associated with a Mark identifying, commonly connected with or controlled by the Franchisor; and • the requirement that the Franchisee conducts the business or that part of the business subject to the Franchise Agreement, in accordance with the marketing, business or technical plan or system specified by the Franchisor; and • the provision by the Franchisor of ongoing marketing, business or technical assistance during the term of the Franchise Agreement.”

Consideration should also be given to the definition of a franchise agreement which “means a contract, agreement or arrangement, whether express or implied, whether written or oral, between two or more persons by which one party to the agreement (“the franchisor”) grants, authorises or permits the other party to the agreement (“the franchisee”) the right to operate a franchise. Any contract, agreement or arrangement which purports to be a franchise agreement shall be deemed to be a franchise agreement for the purpose of this definition, notwithstanding that it may lack any or all of the requirements or attributes referred to in the definition of “franchise””.

Code of Practice Prospective franchisees will usually be given a disclosure document and franchise agreement by a franchisor. The Code of Practice states that franchisors must provide the disclosure document to prospective franchisees at least 14 days prior to the signing of the franchise agreement. The disclosure document must provide certain information including the following: • Details of the franchisor and its directors including experience and a viability statement with key financial information of the franchisor; • Details of any bankruptcies, receiverships, liquidations or materially relevant debt recovery;

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WHAT TO BE AWARE OF IN RELATION TO FRANCHISING IN NEW ZEALAND

• Criminal, civil or administrative proceedings within the past five years; • A summary of the main particulars and features of the franchise; • A list of components making up the franchise purchase; • Details of any financial requirements by the franchisor of the franchisee; and • Other information as listed in the Code.

Franchising in New Zealand covers goods and services in many areas and according to the Survey, those areas include administration and support services; retail trade (nonfood); accommodation and food retail; transport, postal and warehousing; construction; financial and insurance services; education and training; and rental, hire and real estate services.

Competition Law The Commerce (Cartels and Other Matters) Amendment Act 2017 changed the Commerce Act 1986 by replacing the previous prohibition on price-fixing between competitors with an expanded prohibition on cartel provisions, which extends to market allocations and output restrictions, as well as to price-fixing, by competitors. The New Zealand cartel prohibition is very wide and will have quite an impact on franchise networks. Some additional clauses must be inserted into franchise agreements and there must be explanations, in plain language, as to why certain clauses are necessary.

Consideration must be given to cartel clauses in franchise agreements; for example, clauses that set or influence prices, restrict output or allocate markets will be caught. The possibility that alternative arrangements might achieve the same or a similar commercial outcome as a cartel clause should also be considered. Another consideration is whether the collaborative activity exemption or the vertical activity exemption would apply.

Expert legal advice should be obtained in relation to this Act. There will not be a cartel arrangement in place where parties are not in competition with each other. In most franchise systems the franchisor will not be in competition with its own franchisees but that is not always the case. For example, a franchisor that owns its own outlet might be found to be in competition with franchisees. Similarly, where a franchisor sells online direct to the end consumer, yet at the same time has franchisees who sell to those consumers, it may also be in competition with its franchisees. There may also be instances where the franchisees are in competition with each other. Where a franchisor is in competition with a franchisee or where franchisees are found to be in competition with each other, there will be a competitive relationship, so the franchisor needs to be cognisant that there may be provisions in its franchise agreements that amount to cartel provisions.

The Commerce (Criminalisation of Cartels) Amendment Act 2019 has introduced a new criminal offence for cartel conduct and the criminal sanctions reflect the covert nature of cartels and the harm they cause to consumers and the economy. The Commerce

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Act 1986 provides a number of statutory exceptions that would not constitute a cartel arrangement and may be pro-competitive. These exceptions relate to collaborative activities (for example, joint ventures or franchise arrangements), joint buying, vertical supply contracts and specified liner shipping arrangements as stated earlier in this paper.

There are no defences for mistakes of fact relating to the elements of joint buying and promotion and vertical supply contracts. Therefore, it would be possible in the future for a director of a franchisor company to be criminally liable under the Act for a cartel offence. For an individual who commits an offence the penalty on conviction could be imprisonment for a term not exceeding 7 years or a fine not exceeding $500,000, or both. For a company which commits an offence the penalty could be up to $10 million so great care must be taken.

Restrictive Covenants The New Zealand courts have recognised that it is reasonable for a person in the position of a franchisor to impose a contractual restraint upon competitive conduct by a franchisee or an ex‑franchisee, but such restraints must not exceed the boundaries of the court’s notion of reasonableness. The first principle is that it is reasonable for a person to stipulate that if he or she is willing to disclose all secrets of how to establish a particular business enterprise, then the recipient of the information cannot immediately terminate the contract and set up a competitive business using the information received during the course of the relationship. If the courts did not provide protection to franchisors against conduct like this, there would be no incentive for the owners of established businesses to share their secrets with others and enhance their business skills. The second principle is that it is important for the well-being of the community that every individual should, in general, be free to advance his or her skills and earning capacity.

The Contract and Commercial Law Act 2017 in New Zealand gives the courts authority to rewrite a restrictive covenant and to allow an excessive covenant to be enforced at a lesser level. Section 83 of the Act states as follows: “83 Restraints of trade (1) The court may, if a provision of a contract constitutes an unreasonable restraint of trade – (a) delete the provision and give effect to the contract as so amended; or (b) modify the provision so that, at the time the contract was entered into, the provision as modified would have been reasonable, and give effect to the contract as so modified; or (c) decline to enforce the contract if the deletion or modification of the provision would so alter the bargain between the parties that it would be unreasonable to allow the contract to stand.

(2) The court may modify a provision even if the modification cannot be effected by deleting words from the provision.”

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The ability of the courts to modify excessive restraints is constrained by the principle that terms that could never have been considered reasonable will not be modified, as to do so would be contrary to the public interest. This is the doctrine of restraints that are in terrorem, which translates into ‘contracts that terrorise a contracting party’. If a franchisor could only ever have reasonably sought a two-year restraint within a 5-kilometre radius of the business in which the person established goodwill, then a nationwide restraint for 10 years could never be regarded as reasonable; and in that case the courts would refuse to rewrite the clause to determine that the period of 10 years should be two years and the area of the restraint should be 5 kilometres rather than the entire country. What then is a reasonable restraint? There are two factors – area and time. So the message is clear in New Zealand – for a restraint to be enforceable, it must be reasonable.

There have been a number of restraint of trade cases in the franchising sector both in Australia and in New Zealand in recent years. Two interesting are Water Babies International Ltd v Williams & Others and M and L Holdings (2018) Ltd v Whenua Productions Ltd & Kuang.

There was an interesting interim injunction case called Top Ten Group New Zealand Ltd v Tasman Tourism New Zealand Ltd & Coromandel Holiday Park Ltd which was issued on 10 June 2024.

Non-compete and other restrictive covenants need to be included in the relevant franchise agreement to be enforced during the term of the agreement. The type of clause that I often include is as follows: “The franchisee shall not during the term or any renewal period or at any time following the termination of this agreement or its expiration through the effluxion of time except with the prior written approval of the franchisor carry on or be directly or indirectly engaged or concerned or interested whether as principal, agent, partner, shareholder, investor, financier, lender, director, employee, consultant, independent contractor or otherwise howsoever in any business conducted in competition with the business, the franchisor and its other franchisees, or any similar business.”

In other words, a franchisor and a franchisee have a relationship for the term of the franchise agreement. During that period the franchisee must not compete with the particular franchise system and must not divulge confidential information to any third party outside the system without the consent of the franchisor. A breach of these covenants will usually give rise to an event of termination allowing a franchisor to terminate the franchise agreement with the particular franchisee plus it will allow the franchisor to enforce the personal covenants given by the directors and shareholders of the franchisee in relation to the restraint.

Unfair Contract Terms The Fair Trading Act 1986 (FTA) which was amended by the Fair Trading Amendment Act 2021 came into force on 16 August 2022. The FTA has new obligations and restrictions

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relating to unfair contract terms, unsubstantiated representations, extended warranties, shill bidding, unsolicited goods and services, uninvited direct sales and lay-by sales, consumer information standards, product safety and product recalls, internet sales and auctions and auctioneers.

The existing prohibition on unfair contract terms has been extended in consumer contracts to small trade contracts worth under NZ$250,000 so this will affect franchising.

A contract is a standard form small trade contract if each party is engaged in trade (i.e. two businesses), it is not a contract between a business and a consumer, and the relationship between the two parties in trade in relation to the goods, services or interest in land provided does not exceed the annual threshold. Any contract signed prior to 16 August 2022 will not be subject to the new amendments.

The Commerce Commission can apply to a Court for a declaration that a term in a contract is unfair. If it is found to be unfair by a Court then that business must not include a term (or is amended with the Court’s approval) or attempt to enforce or rely on the term. A business may also face: • In the case of an individual fines not exceeding $200,000 and a company a fine not exceeding $600,000 • Court orders stopping that business from applying or enforcing that term and or orders directing a refund or payment of damages

Unconscionable Conduct The same Amendment Act introduced unconscionable conduct in trade provisions which are much broader and they apply to all conduct and not just contractual terms.

The unconscionable conduct in trade provisions are much broader as it applies to all conduct not just contractual terms. The term unconscionable conduct is not defined but the Amendment Act states that a Court can take the following into consideration: • The relative bargaining power of the parties; • The extent to which the parties acted in good faith; • Whether the affected person was reasonably able to protect their interests; and • Whether unfair pressure or tactics were used.

It may be that New Zealand will take guidance from Australian cases but at this stage no guidance or comment has been provided by the Commerce Commission.

The Commerce Commission can seek penalties and fines as above. The Commerce Commission could also could bring civil proceedings; for example seeking a declaration from the Court in relation to unfair contract terms. The remedies include damages, injunctions and other Court orders.

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Whether the new amendments apply to any contract will depend on whether it falls within the definition of a standard form small trade contract. When looking at the annual value threshold this is assessed when the relationship first arises.

No definition is provided in the Act. However, the prohibition is intended to address similar conduct as in Australia, where the courts have found conduct unconscionable that is ‘against conscience by reference to the norms of society’. The intention is that New Zealand courts will be able to draw on existing Australian case law.

Franchise Agreements All franchise agreements in New Zealand should contain a robust force majeure clause.

The author would go so far to say that if any franchise agreement does not contain a force majeure clause then the drafter of the document may be negligent. The type of force majeure clause that the author invariably includes in his franchise agreements states: Neither party shall be liable to the other and neither party shall be deemed to be in default for any failure or delay to observe or perform any of the terms and conditions applicable to the party under this Agreement (other than the payment of money) caused or arising out of any act beyond the control of that party including (but not limited to) fire, flood, lightning, storm and tempest, earthquake, strikes, lock-outs or other industrial disputes, acts of war, acts of terrorism, riots, civil commotion, explosion, malicious damage, government restriction, unavailability of equipment or product, disease and/or virus of epidemic or pandemic proportions or other causes whether the kind enumerated above or otherwise which are beyond the control of that party and where such failure or delay is caused by one of the events above then all times provided for in this Agreement shall be extended for a period commensurate with the period of the delay.

The purpose of the above clause is to ensure that neither party will be liable to the other for any events outside their control. Common events are listed in the clause like fire, flood, lightning, storm and tempest and, of particular relevance to current events, the phrase “disease and/or virus of epidemic or pandemic proportions.”

No one can predict the future and all parties, especially a franchisor and a franchisee, should be afforded the protection of a well-drafted force majeure clause. COVID-19 is merely a symptom of the greater problem of unexpected or unanticipated events, be they in the form of the next pandemic or some other future disaster. Uncertainty will always pose a risk to interference with contractual relations, and a well-drafted force majeure clause is a necessary component of mitigating contractual risk.

Independent Legal Advice It is essential for prospective franchisees to obtain independent legal advice from a lawyer experienced in franchising as well as independent accounting and taxation

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advice. A franchisee should have a number of meetings with the franchisor and its representatives and all questions and answers should be written down and carefully kept for future use if required. Prospective franchisees should be able to rely upon everything they are told but be wary of financial projections provided by the franchisor.

That is a dangerous area and in my opinion franchisors should not provide financial projections at all but should provide actual financial results with the direction that the franchisee must go to its own independent accountant.

Attractive Market New Zealand is very attractive for franchising and many overseas systems have entered the market including from Australia, USA, Canada and the United Kingdom. International franchising is thriving and New Zealand is very desirable because there is no franchise specific laws.

The FANZ has been very successful in promoting self-regulation and high standards in franchising, and its Code of Practice is widely understood and accepted by many franchisors in New Zealand. At the end of the day, it is for a franchisee or master franchisee to make the decision whether or not to proceed with the purchase of a franchise or master franchise. Careful due diligence should always be undertaken so that franchisees are fully informed before signing any documentation.

Stewart Germann Franchising Lawyer - Auckland, New Zealand stewart@germann.co.nz | www.germann.co.nz

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Chapter 6

What should I consider in opening my first stores?

Peter Buckingham CFE, CMC, FIMC | Managing Director Spectrum Analysis Australia Pty Ltd

About the Author Peter Buckingham is the Managing Director of Spectrum Analysis Australia Pty Ltd, the leading Geodemographic, Strategic Network Planning and Retail Sales Modelling Company in Australia.

Spectrum assists many retailers and franchisors in better understanding the retail market from a site and area selection view.

Peter spent 20 years with Caltex Australia Ltd in a previous life, including roles in most states of Australia, one year overseas and spent around four years in property development.

Peter was State Chapter President and a Federal Director for Vic / Tas for the Institute of Management Consultants, a Certified Franchise Executive (FCA) and a Fellow of the IMC, and a Certified Management Consultant (CMC).

Peter is a regular speaker at the National Franchise Convention, FCA State Conferences, School’s Conferences and has spoken internationally at conferences including in New Zealand (FANZ & ISNZ) and in Singapore (FLA) in recent years.

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Y

ou are about to invest much of your hard earned money into your new venture, and you must be asking “Where should I open my first, second, third store?” – and it doesn’t get any easier? Entering the world of franchising may lead you to an encounter with the fickle world of site selection and site analysis?

As we are experiencing inflation and economic turndown this has thrown a spanner into the works, as site rental negotiations are fairly unpredictable, depending on what the vacancy rates are and what the future holds for a shopping centre or shopping strip. Shopping Centres and especially CBD’s have been the most affected, and people’s unwillingness to visit has put a dampener on this sector of retail. This makes for a good time for negotiations if you want to open your site within a shopping centre.

Whilst your franchisor should assist you, there will be a degree of responsibility you will have to shoulder, and this probably means thinking as a retailer.

You have all heard the adage that the most important thing in Real Estate is Location, Location, Location, and I guess retail site selection is definitely a subset of Real Estate.

You can have the greatest products, best fit out, fantastic look and still fail miserably, if you have not given site selection some really hard consideration.

It continually amazes me how much effort some clients put into selecting a new store without addressing the biggest issue – WHAT DO I THINK THIS WILL SELL ($)?

Court decisions have shown that a franchisor does have some degree of responsibility for site selection, and it also shows that the decisions must be based on facts and data.

If you feel the “wet finger in the air” is all you need, maybe you need to try adding the words “Your Honor” to each sentence!

What should I expect from my Franchisor?

Franchisors will normally not tell you their SALES forecasts for a store (mainly for legal reasons). They should offer you information about the area – maybe demographics, maps of where the competition is, information about the shopping centres etc. However they will tell you that it is your responsibility to make the call on your future sales.

Most franchise systems will offer to give you the names / contact points of other Franchisees, so we can only recommend you take them up on that, and try and make contact.

The simplest method of sales prediction is what we call the ANALOGUE model. This means find like stores, see what they are selling, and then make your judgment from that.

If I am planning to open a kiosk for a particular brand in Knox City (Super Regional Shopping Centre in Melbourne), then the analogues I would be looking for is what sales other kiosks are selling in the likes of Chadstone, Fountaingate, Southland, Northland, Highpoint, Chatswood, Warringah Mall and other Super regional sized shopping centres

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What should I consider in opening my first stores?

around Australia. What is NOT relevant would be the sales in strips or the CBD or small shopping centres.

Maybe you can also take into account which shopping centres (above) are most like Knox City in size, demographics, position you are being offered etc, and this will help to decide which of the comparative sites are most relevant.

Once we have some comparisons, you should be able to at least have a feel for a range of SALES the store should achieve.

The forecast Profit and Loss Before signing a lease for any store – you must have done some forecast Profit and Loss?

My most simplistic view is this can be broken down to Six Lines: Sales (Gross Revenue) Less • Cost of Goods Sold • Rent • Labour • Other = Profit <or Loss> If we ask ourselves how accurate we can be with the various factors, it should look something like: Sales – NEED HELP TO HAVE A CLEAR UNDERSTANDING OF WHAT THIS LOCATION WILL SELL. Naturally the real estate agent or the shopping centre leasing executive will have a great positive spin on how good it will be, but they are not putting in their money!

Cost of Goods Sold – easier – should be a % of Sales (or a range) Rent – we know that from the lease in front of us Labour – we should have a good idea of staffing requirements Other – we should have a fair idea – Petty cash, telephone, uniforms etc etc.

The point is the BIGGEST Source of Error that will make or break this Profit projection will be that line called SALES or Gross Revenue.

This chapter is partly what to think about as far as the site is concerned, to make the SALES as high as possible.

Available information for good decision making The 2021 Census of Population and Housing is produced by the Australian Bureau of Statistics (ABS) and was released in June 2022. This will be the best data to consider for the next 5 years.

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The other ABS data we see as highly relevant is released every 5 years and covers population forecasts. By now we should have the data released in around October 2024, and we expect it to cover population forecasts by age group (0 – 4, 5 – 9, 10 – 14 etc) and cover the years 2022 – 2037.

The Census is available on the Australian Bureau of Statistics website, and I suggest you may want to try the following to experiment with what information is readily available for free: • Go to www.abs.gov.au • Go to Census (top of page) • Go to Find Census Data (right hand side) • Go down to the box called Search QuickStats • Put in the area you want – suburb, postcode etc You can now see a map of the area and much of the relevant information for that area, and you can scroll down, comparing it to the State and National averages.

Business data on how many businesses are in an area is not that simple, but at the time of writing, we have this data as per the numbers, type and size of businesses at 30th June 2023.

For most business decisions, these are the most relevant data sources to describe the area you are looking in to.

Should I be looking in Shopping Centres or Strips?

Many businesses have a preference to go into big shopping centres (or malls) whilst others believe shopping strips are the go.

Shopping centres definitely have higher attraction power for the customers as the volume of traffic is normally higher (and therefore the rent). In Australia we can gather the basic statistics on shopping centres from the Property Council of Australia, who produce on line data giving a page of details for nearly every shopping centre in Australia, unless the owner is not a member of the Property Council of Australia and does not wish to be included.

The Property Council data tells us the owner, manager and their contact details. It then tells us the GLAR – gross leasable area retail and MAT – moving annual turnover of the Centre. It also gives details on the major tenants and their leased area, number of car parks, who many of the Specialty stores are, estimated Pedestrian Counts and details on major refurbishments of the centre.

Different owners may collect data in different ways, so we are at the mercy of the details supplied to the Property Council.

In the case of strips, there is no formal collection procedure or body that acts like the Property Council. We use our own product called “Strip Locator” which is a method of comparing one strip to another as an indication of the strength of the strip.

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What should I consider in opening my first stores?

Shopping Centre

Strip Shopping

Traffic

Normally higher in a SC and measurable

Lower and unpredictable

Product mix (competitors)

Some governance in a Mall depending on the owners as they can limit the competition if they wish

No protection from your competition acting any way they wish

Rents

Normally much higher with little long term protection

More chance of a lower rental

Long term renewals

Currently most SCs will give only a 5 year lease with no options, so you are at their mercy at time of re leasing

More likely to be able to negotiate longer tenure, including options for lease renewals

My tips on what is Important: For a Free standing store – FSDT – or Free Standing Drive Thru The FSDT store is the very high investment that McDonalds, KFC, Hungry Jacks or one of the supermarket chains or oil companies make. If food is the main sale, then it is often known as a Quick Serve Restaurant or QSR. The first Driver they must be looking for is traffic, and how many vehicles per day pass the store. Traffic measurement can be done in many ways, State Roads Dept, Councils or standing outside with a counter! The normal measurement you are looking for is 24 hr, both directional, weekday traffic counts.

The second Driver is visibility, because you can have a great store, great traffic, but it needs to be seen, preferably from far enough away so the drivers can make a conscious decision to turn in. Visibility of signage and the building both contribute to a highly visible FSDT. My next item is the demographics. It is no good having a store selling one product range when either there are few people in the area, or they are not likely to be your customer.

Whilst companies like ours can provide detailed demographic information, you can always look up any area in Australia yourself on the ABS website, www.abs.gov.au and then look for Census Data, and then Quikstats. You can put in a postcode or suburb, and find out from the Census 2021 about that area.

Think in terms of what you are selling, the pricing point and who you are selling to. If your average meal price point is very high, then selling into low socio economic areas is probably less attractive than high socio economic areas. If you are selling kids meals and ice cream, then young kids and their parents should be the best target audience. A Target Market Index is one way of putting together 2 or 3 demographic variables to see which areas are best for what you are selling.

Site suitability is the next on my Drivers list, and this is the physical items the site can offer. Many years ago when working with KFC, we use to see huge variation from the little, original stores that had 20 seats to the more modern 100+ seat restaurant. If leasing an existing store, these areas must be considered. ie. Number of tables, counter

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length, outside seating, drive-thru windows and queuing, access, parking and many more physical attributes.

My final point is competition. In food QSR’s we have seen the advent of what we call a Cluster. A cluster is a group of 3 or 4 QSR’s that may share common access and parking, and partially they are successful as they offer a variety for a family to shop at. As well, the average rental may be slightly lower than a pure stand alone, as the site efficiency is better with shared parking and multiple access points.

Our view is that it is a “friend and foe” situation, where the others in the cluster actually work for each other to bring in a greater amount of business than the sum of the individuals would bring in. On the other hand being a single store, say 1 km away from a strong cluster is detrimental, as a single store does not have the attraction of a cluster. In $ terms, we use to estimate each additional store in the cluster added around $800 pw. sales to the client we were working with.

In summary, my 5 top things for consideration for a FSDT are Traffic, Visibility, Demographics, Physical site issues and Clustering.

For an Inline store My definition of an Inline site is normally in a shopping strip, or amongst other sites facing on to a road and / or footpath. A shopping mall such as Pitt St Mall, Bourke St Mall or Rundle Mall (with no cars allowed) are also Inline sites.

The first thing I feel is important is the power of the shopping strip you are planning to enter. We call this the Generator rating, and what is it that is around you that will attract business to your immediate area.

We run a product called StripLocator, which is a methodical way of measuring the number of stores in the strip, and the proportions or mix of stores, and look to how they suit the business proposed. As I said earlier you can look for the daytime generators in the form of supermarkets, banks, chemist shops, post office and newsagents. If you are a night time product or a café or restaurant, you probably are best clustering in the vicinity of other similar businesses. For example, why do you find many restaurants and coffee shops near picture theatres? Because they draw a continuous flow of people before and after the films.

StripLocator allows you to compare shopping strips in each capital city in the same way, and create a ranking or priority order for how you will lay out your future network.

Secondly, before selecting a site, you need to think in terms of how my product rates in terms of Impulse vs. Destination. If we think of it in terms of a line, where do we sit on that line?

High Impulse Low Destination

Low Impulse High Destination

QSR

BMW Showroom

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What should I consider in opening my first stores?

High impulse items are usually low cost, spontaneous purchases such as buying a carton of milk, a packet of cigarettes for a smoker or a newspaper. You may make some decision where you go, but convenience normally drives this purchase.

When we look at the most High Impulse business we can imagine, think of a Busker.

In this case, they are very mobile, and are able to move to the best traffic flow at no cost, other than moving their instrument and case and walking to the other side of the pavement or whatever.

The rental you pay for a property is probably defined by the owner’s view on whether the premise is on high traffic flow and high visibility. What you need to do is pay the appropriate rental for the appropriate store, and if you have a high Destination type product, then you do not want to be paying top rental for the peak corner on the strip.

If you are a high Impulse product, then you do need high passing trade, or you will not sell your goods. No point being down the side street paying cheap rental if you have a high impulse product such as phone cards, sandwiches or other food items.

Store Suitability in a strip is pretty much a function of size, window frontage, whether you are on a corner or not, and to an extent being at ground level with easy access.

Store suitability is having the right size and shape of store for what you are selling (and rent you are paying). If you need 80 sq m, it is no good having 120 sq m. If you need to display your goods in the window, it is no good having a 3 metre frontage, with the door taking up the first 1.5m!

The fourth is the demographics. It is no good having a store selling one product range when either there are few people in the area, or they are not likely to be your customer.

Whilst companies like ours can provide detailed demographic information, you can always look up any area in Australia yourself on the ABS website, www.abs.gov.au and then look for Census Data, and then Quikstats. You can put in a postcode or suburb, and find out from the Census 2021 about that area.

Think in terms of what you are selling, the pricing point and who you are selling to. If your average meal price point is very high, then selling into low socio economic areas is probably less attractive than high socio economic areas. If you are selling kids meals and ice cream, then young kids and their parents should be the best target audience.

My final point is competition. Whilst you may not want to be exactly beside your main competitor, being in a group of like-minded businesses tends to draw the public to the area, and gives you a higher turnover than being out on your own.

I speak with many FSDT and QSR operators, and I hear comments like – we just go near a McDonalds, or in a strip, let’s just go near the Grill’d. This is probably quite a complement to their site selection procedures; however they do draw business to the immediate area. Why do we see high concentrations of QSR’s in the likes of Glenferrie Rd, Malvern or Northbridge in Perth? Basically, because they work well together.

In summary, my 5 top things for consideration for an Inline are: 1. Generators 2. Pedestrian traffic

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3. Store Suitability 4. Demographics 5. Competition / Clustering.

The reality of selecting a commercial site The first thing you learn is all real estate agents are born optimists. You have the power to negotiate – so use it! The reality is they will advise you that the site you are seeking will be hard to find, and that they have the perfect opportunity, (normally if you sign up quickly)!

Reality is that out of about 20 stores you will see, probably only one or two will truly meet your requirements.

I normally recommend you write a ‘Property Guideline’ that you can show agents and others what you are seeking.

At Caltex, we would be offered about three or four ‘opportunities’ a week. The oil industry works to some reasonably clear parameters, and it was just a matter of filtering real opportunities from time wasting ones.

My property guidelines to address the following types of issues: • Size – we were looking for mid blocks of around 80 m long X 45 m wide approx. If a corner block, then around 60 m X 60 m • Physical characteristics – our preference was a flat block, or if possible slightly above the road rather than below. We would prefer to be on a flat section or slightly uphill section of the road, definitely not a steep decline • Side of road – we would prefer to be on the ‘going home’ side of the road, or the ‘neutral’ direction. Inbound was not so good • Competition – we obviously did not want to be on the same traffic flow as any of our other sites. Even better if few or no other competitors were servicing the area • Road type – traffic flow was important, and the more, the better in general. You can now find traffic data for any capital city area, hopefully covering the area you are investigating.

• Demographics – in Australia probably the highest fuel users are medium income people, living in outer suburbs of the capital cities • Visibility – we would want good visibility for our signage. The best was on the outside of a right hand curve in a road, so our signage was directly ahead of the traffic • Access – you had to be able to come in and out easily. No much good if you could not come in off the main road • Suburbs or areas – we would nominate suburbs or specific areas we were actively seeking new sites in, and not be afraid to mention areas we were not looking at, either because we were well serviced in the area, or we knew the land cost would be prohibitive.

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What should I consider in opening my first stores?

Once this was all formed in the property guideline, it was willingly sent to all agents, developers and other interested parties we knew.

Summary There is no magic formula to selecting a commercial site, rather a process you need to follow and a line of thinking to make sure the site you finally select meets all the criteria YOU feel is essential for your new business venture.

I cannot tell you to look at the left hand side compared to the right hand side of the road, or look for the busiest, most expensive store in a shopping centre compared to the $2 discount store at the back.

What I can tell you is THINK on what your business is about and try and match as best you can the commercial sites being offered to yours and your customer’s needs. There will always be the attraction of a better/bigger site – at more rent, and you have to evaluate that to your REAL needs, not the sales pressure being placed on you by a leasing agent.

Appendix – Terms Used MAT – Moving Annual Turnover 12 month figure telling us the total dollars have been sold by all the retailers in a Centre.

GLAR – Gross Leasable Area Retail Shopping centre term for how large a Centre is based on the total area that is leased to retailers.

Pedestrian Count The number of visitors the shopping centre claims have come through in a year.

Both the figures above are available through the Property Council of Australia in data they sell, or the likes of companies like ourselves. The input for these comes from the shopping centre owners, who are normally members of the Property Council of Australia.

MAT figures are normally derived from the individual retailer’s figures as they normally have to disclose their sales to their Lessors as part of the lease conditions.

Peter Buckingham, Managing Director Spectrum Analysis Australia Pty Ltd (AUS) 03 9830 0077 or 0411 604921 peterb@spectrumanalysis.com.au www.spectrumanalysis.com.au.

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Chapter 7

Financing Your Franchise Business Phil Chaplin | Chief Executive Officer CFI Finance Group

About the Author Phil Chaplin the Chief Executive Officer of the CFI Finance Group, a specialist finance company servicing the franchise, accommodation, and fitness sectors as well as small businesses more broadly across Australia and New Zealand.

Phil has over 20 years’ experience in providing finance to businesses across Australia and New Zealand and has managed finance companies in the private and banking sectors, he is a former chair of the Equipment Finance division of AFIA.

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tarting a franchise business can be exciting, rewarding, and potentially lucrative. However, like any business venture, it requires careful planning and adequate financing to get off the ground and to thrive. ‘Financing’ can refer to either equity (the cash you’re putting in to start your business), or debt (money you borrow to help fund your new venture). In this article we’ll consider both sides of the financing equation and provide some pointers that we hope will help to set you up for franchising success. Ready to dive in? Let’s go…

What is franchising?

It’s rare these days for any new business to be funded wholly from equity, and equally rare to be funded from debt alone. Most businesses will be funded from a combination of the two, but before we get into the mix of funds it’s probably useful for us to brush up on what makes up each side of the financing coin.

Firstly equity, sometimes referred to as capital or just cash, might come from savings, or money you’ve earned selling an asset, or just about anywhere really. The key thing about equity is that it’s generally not money that you have to pay back. Sometimes you might find that friends or family might be willing to invest capital in your business, perhaps for a share of the business or profits. One thing is certain however, if you are seeking to borrow any money to help start your business it’s pretty much guaranteed that lenders will want to know what capital you’re putting in, and where it’s coming from.

The other side of the coin is debt. This might be a loan from a bank, a non-bank finance company, or perhaps vendor finance from the franchisor. It could also perhaps be a loan from family or obtained under some other private arrangement. The key thing about debt is that it does have to be paid back, usually within a specific timeframe with regular repayments.

When is a loan not a loan?

Now that we’ve looked at the simple version of debt and equity, we can consider where it all gets a little bit murky…

For example, a landlord contribution might form a significant part of your financing structure. A landlord contribution is common when leasing business premises.

Landlords may agree to help cover the upfront costs of making the premises suit your requirements (the fitout), in return for the money they will receive over the lease term.

Or perhaps a loan from a family member that has no formal repayment requirements, ‘pay it back when you can’ money as it were. And how for example do you treat money that has been drawn down off your home loan through refinancing or a mortgage redraw facility? Are these things debt or are they equity? Both? Neither? The answer probably depends on who’s asking.

Generally, a lender will treat a landlord contribution or loan from a family member as equity, at least from the perspective that there are no debt repayments from the business (of course you still must pay your landlord rent). Likewise, your mortgage

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isn’t an obligation of the business, so it’s not going to be treated simply as debt (it may however factor into determining how much money you need to be able to pay yourself or draw from the business each month).

So, equity can be a bit confusing, but debt is just a loan, right?

Right! OK, maybe not, but it would have made for a shorter article. Debt can take many forms and might be viewed differently depending on a range of factors including what sort of debt it is (the financial product such as a line of credit or equipment loan), what’s it’s secured by (e.g. your home or specific assets) and where it’s obtained from (a bank vs. vendor finance).

When it comes to debt, there are two key things to consider: Number one, use the right sort of debt for your specific circumstances. For example, landlord contributions are often only paid after the work is complete, so while you might need a short-term loan to cover costs until the job is done you wouldn’t take out a long-term loan for this. Conversely, if you’re funding business equipment that has a long useful life, you probably don’t want to strangle your cashflow with expensive short-term finance.

Number two is to make sure you have a handle on the different types of debt funding your business needs, and to understand how they will work together (or where they don’t). For example, a bank may loan you money for your business secured against your residential property, and a non-bank lender might be happy to provide you funding for your equipment and fitout even though you already have the bank finance. However, in some cases lenders may not be willing to work together as they might perceive a conflict between the finance they’re offering.

One of the best approaches is to lay it out in two columns, on one side categorise and write out all the major costs in setting up your business, including franchise fees, legal and soft costs, equipment, fitout, lease bonds, etc. On the other side set out your various source of capital and debt, including savings, landlord contribution, vendor finance, equipment finance, etc. Once you’ve set it out in this way, hopefully all of your costs are less than the total of your capital plus any debt, what’s left over is your working capital, the money you need to run the business until you start generating funds to pay bills.

Now that we’ve wrapped our heads around what financing is we can talk about how to get it…

Most business ventures require a combination of capital and debt to get underway, and certainty that debt (and maybe some capital) is going to be provided by someone else.

So, how do we get those people to make their money part of your financing solution?

We can of course try to rely upon natural charm and charisma, but that will usually only get you so far. Once your winning smile and magnetic personality has opened the door (be it of an investor or a lender) let’s consider what else we can do to close the deal…

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First things first, do your homework!

Before diving into any new business venture, it’s crucial to be prepared. Whilst franchise networks can offer a lot of support and to some extent a ‘cookie cutter’ approach, this doesn’t mean all the work is done for you. Thorough preparation not only increases your chances of securing funding but also sets the stage for a successful business future.

Most of the items touched on below are elements that you would include in a formal business plan, and indeed, a strong business plan is probably one of the best tools that you can have when it comes to obtaining finance. As part of preparing your plan, or alongside it: 1. Have your house in order. Be on top of your personal finances, understand your personal credit rating and address any adverse history. Pay down personal debts if you can and stay on top of your expenses. Most lenders now will look at your banking conduct and use that information as part of their assessment. Lenders want to know that you pay your bills on time and watch where your money goes.

2. Know your numbers. If you’ve ever watched Shark Tank or the Dragon’s Den, this one should already be etched in your brain. Anybody that goes in front of the camera without a good handle on their key financial metrics is doomed to be eaten alive for our entertainment. At the very least you should have a complete handle on all your costs in setting up the business, as well as a financial forecast that covers the first year or two of operation. This should be both a profit and loss statement, and equally important a cashflow forecast. It pays to remember that profits (and losses) are not always the same as cash!

3. Be realistic. Whether it’s your financial forecast or any other aspect of your business it’s important to be realistic. Include best and worst cases for things like how long it will take to get up and running. What happens if you’re three months late opening or customer take up is slower than expected? Also consider what costs might move, fitouts for example are notorious for running over budget, so make sure you have a buffer.

4. Be thorough. A good business plan will cover everything from the franchise concept and product, to financials, market analysis, competition, marketing strategy, and more. Find a good template and take your time to flesh it out with answers to all the questions a lender or investor might ask.

5. Remember, you’re selling you. Whether you’re dealing with an investor or a lender, it pays to think of yourself as the product you’re selling. What makes you a product they’ll want to buy? Can you easily convey why this business is the right one for you, and how you’ll make it a success?

It can be easy to think of all this work as something you’re doing for others, but remember ultimately, you’re doing it for yourself. A realistic and comprehensive plan can help you spot business issues and plan for them before they arise, or better yet you can make sure they don’t ever have the chance to become issues. Take guidance and input from

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mentors, industry experts, business groups and wherever else you can get it. Particularly ask to talk to other franchisees and pick their brains, ask them what they wish they knew starting out and what they’d do differently if they had their time again.

Look in the right places If you’re seeking finance, it pays to look in the right places. For very small businesses, friends and family may be the perfect investors, but for larger business ventures you might need to look further afield. If it’s investment finance you’re seeking then get out there and network, talk to people that have done it before, and don’t be shy about telling your story to people with deep pockets.

Likewise, when it comes to loans it pays to go to a specialist where possible. Some banks have specialist franchise teams and there are also non-bank lenders that have tailored their products and services to the needs of franchisees. Your franchisor will likely have several contacts that they can direct you to rather than running all over town. It also pays to remember that too many credit hits on your file from lending applications may impact your credit score and could make finance harder to get!

In conclusion Sorting out the finance for your franchise business is a significant step towards achieving your business ownership goals. To succeed, thorough preparation is crucial, and understanding your financing options is equally important. By developing a strong business plan, assessing your costs, and exploring various funding sources, you can navigate the path to franchise ownership with confidence. Whether you choose to leverage equity in your home, to work with non-bank lenders, or to explore other funding avenues, careful planning and research will pave the way for a successful franchise venture in these dynamic markets.

australia www.cfifinance.com.au hello@cfifinance.com.au 1300 659 676

new zealand www.cfifinace.co.nz hello@cfifinance.co.nz 0800 456 687

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Chapter 8

The myriad of

franchise brands in Australia today

Brian and Prue Keen | Founders Franchise Simply and Systems2Grow

About the Author Brian Keen has been involved in the franchise industry for more than 30 years and Prue has been involved with systems and business for as long. Together they founded Franchise Simply, Systems2Grow and Microloan Foundation Australia.

Brian’s on-the-ground business experience as a multi-unit franchisee, franchisor and consultant helping many of the big names create their own franchise systems and growth over the years combined with Prue’s structured approach has been fed into Franchise Simply, helping today’s SMEs and Franchisors grow their business by franchising.

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ecently the Franchise Council of Australia published The State of Franchise Report, and we are sure everyone is talking about the results shown which are so encouraging.

It shows the franchise sector is composed of 94,000 franchise outlets (nearly 10% of the 1 million businesses employing staff in Australia today by my rough calculation), generates $174 Billion into Australia’s economy, and employs almost 600,000 people.

This is significant.

The thing these stats hide though, is that the sector is not just represented by the big franchise brands everyone knows.

The big players.

Yes, the big players are very visible – Jim’s Group, Seven Eleven, and Subway take pride of place, each with thousands of outlets and people involved.

But this big group includes some surprises too.

Metcash, which owns IGA (every IGA store is a franchise) seems to top the list alongside Harvey Norman and then Maccas. The others listed above fall below Maccas.

But think about Jetstar Group which is owned by Qantas and has franchised its Singapore, Japan, and Vietnam operations to be managed in those countries.

And IKEA which is owned by the Swedes with franchises in Australia. Not to mention Elders Rural Services with about 91 franchised outlets, and virtually all the fuel and car dealerships through Australia.

It’s the smaller players who take up most of the field This is where most of the franchise brands lie, and some are very different. The IBIS World report notes the range is vast from cars to childcare.

The FCA report shows that the whole franchise sector is predominantly made up of small business with fewer that 20 employees. 95% of all franchisors and almost all franchisees sit hidden in this group.

The IBIS World report also remarks that the past few years have been tough, and we think especially on these smaller franchises. COVID had a big impact and despite a return to ‘COVID normal’ trading conditions, IBIS World notes mounting cost of living pressures have made it difficult for businesses to regain lost ground.

We are all feeling the pinch.

But it is this sector which is worth a look because it is where the variety and potential sit.

The big thing is the diversity.

There are a few reasons.

The new growth areas Although still at the top of the list are retail outlets, restaurants, and quick service food outlets, it is the sections called ‘other’ or ‘personal services’ that we think are exciting.

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The reason – COVID again – we see the franchise market changing fast in response to the demand for personal growth, personal service, and escape. Our workshops and enquiries are more and more filled with those in the service industries – beauty, creative arts, home renovation, recreation…

Here are some we have come across - some new and some have been around for years.

The wellness industry A real growth area is the wellness area encompassing fitness, health food, allied health and many of the art industries delivering art therapy.

While food and fitness have been represented as franchises for many years, allied health and the arts are newcomers. The reason, people involved in the industry are not naturally entrepreneurial which makes it tricky to get them to help scale a franchise by becoming business partners.

But there are examples which work well.

Paint and Sip Studios Paint and Sip is a company which represents much that is going on in the art area.

We love this concept where friends can meet up over food and wine (well not for the kids!) and express their creativity with lots of fun and relaxation. They opened in 2018 and today have studios and mobile units. The group is 44 franchisees, and 73 franchisor units. They operate everywhere in Australia except the Northern Territory and have plans to go there too.

This growth in just 4 years is remarkable.

The thing about these outlets also, is that they grew the enterprise through COVID and are still expanding.

Paint and Sip are no orphans, there is a demand we see across all the creative arts to experience this kind of escapist, relaxing, fun activity that gives time away from all normal work and family life.

Floatation and Wellness Centre Wellness centres are alive and well across Australia.

Recent entrant is LoKAHI Wellness in Melbourne who’s Kerry & Scott Thurrowgood have expanded their five-years old flotation tank offering to include vitamin infusion, cryotherapy, oxygen therapy, brain tap and several more options – whose healing therapies are proving very popular, especially with sports people and those with longer term health issues…soon expanding nationally.

Another good and fast-growing example is City Cave which aims to increase longevity in our communities through a range of tailored health care. Each site offers a range of Float Therapy, Infrared Saunas, Massage, and specific practitioners.

City Cave has been operating in Australia for just 5 years but already has 70 outlets in NSW, NT, QLD and Victoria. and as follows, the successful pathway of many Australian franchise grouped by establishing themselves in New Zealand and the US..

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NDIS services Then there is the burgeoning NDIS sector.

The best groups servicing this sector focus on care of their clients This includes groups such as Nurse Next Door, Just Better Care, Simply Helping, Pearl Home Care, all providing home care options.

Day care and specific services such as Blue Tongue Adventure providing day programs and specialist services such as Taking Care Mobile Massage giving remedial massage to the elderly.

The list of providers is as wide as the list of services.

Allied Health Falling into a similar service sector allied health is a big sector but with a wider community clientele. Physiotherapy, acupuncture, podiatry, chiropractors, dietitians, optometrists and dentists…

Talking about dentists, one prominent Melbourne dentist has spread their wings and launched Charlie Wilde, a mobile, same-day teeth whitening service that services their clients in home office or at an event.

Best known is probably Specsavers which now delivers optometry services to the bulk of Australians (over 70% of us when I last looked). They have completely disrupted the industry since they first arrived from the UK because they were able to supply product at such a competitive price. Now not small with close to 900 outlets they show what can be done in the industry…. And their destruction of the market continued last year with the introduction of their audiology services.

At the other end of the scale is probably Physio INQ is with 18 franchisees developed in the last 4 years – good going we think.

Home renovation Staying home for work and recreation obviously was essential through the COVID years but since, with the economic stress of recovery, people are still wanting to stay home and do up their homes rather than sell and upgrade. Tradies have cottoned on to the fact that they can leave general building industry and build a business in one of these very focused spaces. The result is there is a demand for niche trades that can provide specific services. Outdoor living, kitchen renovation – the list is long.

A good example is Refresh Renovations which has developed a software system to help its franchisees manage home renovation with one point of contact overcoming problems with what can often be a disconnected and troubled process for the customer.

This is an international brand with 77 franchisees in Australia built over the 7 years they have been operating here which is a great achievement.

Other examples we see are niched groups which deal with single issues – prefabricated outdoor structures or kitchens for example or groups which specialise in cleaning gutters or roof renovation or house washing.

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At your local farmers and weekend markets Keep your eyes open and you will be surprised what you can see… as well as popular popcorn trailers, in Brisbane you’ll find Gnocchi Gnocchi Brothers, now matured into restaurants in Sydney and Brisbane. Then, for the kids, they won’t miss Teddy & Co Funland in SE Queensland and show days around the country.

Happy to keep it small We become a little frustrated when we hear consultants advise that a business must have reached a certain size before the business owners can think about franchising.

There are many who choose to franchise, not because they have great ambitions to build an empire, but to help them better manage business at their own scale. And this is a perfectly appropriate use of this business model.

Done properly, franchising does help with managing staff and the daily tasks of delivery and sometimes sales, but it comes with added responsibilities for looking after your franchisees. Keeping the group small reduces the problems that can come with dealing with numerous franchisees.

These guys have successfully found their balance and we see a lot of groups happily choosing to not grow enormous.

Especially in the regions where this model will help with managing outlets through several small towns for instance while celebrating the local features of the brand. Bakers and local food specialities come to mind.

Old Macdonald’s Travelling Farms This is an excellent example of a specialised country franchise group.

They bring the farm to you and no event is too small or large – we believe they attend the Easter Shows each year. Key here is the fact they love their animals as much as they love the kids they entertain. And it shows in the cute, cuddly unstressed creatures they take around each year.

Established as a franchise in 1991, these guys have been around for years, but they have just 10 outlets. They can be found in the Eastern States and WA. What they show us is that you don’t have to be huge to be successful. It depends on your objectives, and it looks as though here it is the care of the animals that is the priority.

We applaud them.

Sandwich Express Holdings This is such a good example of a small regional franchise where the franchisor obviously is using this model to run a great very specialised business in one town (Townsville) with three franchisees.

They only serve sandwiches (well – croissants, muffins, wraps too but you get the drift) and are happy with how this is going.

We come across many small family run regional franchises which fit this mould.

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New but with an eye to future expansion So many franchises fall into this category today.

Just starting out it is tricky to grow the group at the beginning. Franchisors need to check out their model with the first few franchisees who come on board, and this is the time that franchisors learn to move from being boss to becoming the leader of a systemised group. It can be a challenging journey. Those who make it in four years or so are doing well.

Here are some great examples we think are worth following.

Little Boomer’s Basketball These guys have only been around for two years in NSW and have 4 franchisees with 1 the franchisor outlet which is good going in that timeframe. I love the fact they are focused on the children’s sport market which is a growth area.

And their website shows expansion is on the horizon for them and with a clear love of the game and the kids, they will be successful we believe.

To conclude The mind-boggling scope and flexibility of the franchise model is clearly illustrated when comparing two 30-year-old examples: Old McDonald’s Travelling Farms with 10 outlets and Poolwerx who have expanded their model to 550 units and growing.

So, there you have it. Is there any other approach to business growth that offers such prospects together with the benefits that franchising affords?

It is exciting to see the wide range of businesses that explore franchising as another model to help manage their business and more exciting to see the range expand.

Just remember, there is one thing that keeps each of these groups successful – look after your franchisees and they will look after you.

Brian and prue keen www.franchisesimply.com.au www.systems2grow.com www.microloanfoundation.org.au

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Chapter 9

Expanding My Business

Understand Your Business Lifecycle and Make Franchising Work for You Roger Dickeson | Senior Franchise Consultant Wollermann Franchise Developments

About the Author Roger Dickeson is an experienced franchising professional and has worked in the sector as a consultant, adviser and business planner for over 30 years.

Roger’s specialty is business development for small to medium enterprises and as a strategist in the franchising, licensing and capital raising fields.

His clients include new start-up ventures, established but expanding companies using franchising, and large corporations with expansion visions, in Australia and internationally. With formal qualifications in Business and Marketing, Roger has been a leading consultant in developing franchising and licensing systems for clients throughout Australia, New Zealand and the AsiaPacific region.

As a regular writer and commentator on small business and franchising topics, Roger seeks to inform, educate and challenge ideas in the increasingly complex, but exciting and rewarding world of business franchising.

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tart-ups and newly minted IPO’s might be the glamour stocks of the business media, but the reality of life as a business entrepreneur is a lot more about time, commitment and hard work before realising that dream. Remember the ‘overnight success’ of that rock & roll band that spent a decade refining their craft before their first big hit? Well, it’s the same with most businesses!

Every business moves through a series of stages as it passes from start-up through to maturity. Along the way, business owners are constantly looking for ways to expand their business whether that be in terms of sales, market coverage, product range, brand profile or a combination of all of these, and more. And while this expansion mindset applies to businesses generally, it is particularly relevant to franchises as franchising, by its very nature, is about business expansion.

Like everything else, a ‘one size fits all’ approach to business expansion means that, at best, the business owner would have a mediocre set of strategic tools, and at worst, will completely miss the mark in achieving an expansion objective, inevitably wasting a lot of time and money along the way.

Therefore, it is critically important to understand where, along the business lifecycle, your business is when it comes to developing and implementing expansion strategies.

The business lifecycle generally comprises six stages. Each of these stages requires a focused and unique response from the decision makers to ensure the correct strategies are implemented to achieve successful outcomes, before moving the business forward.

The Six Stages of Business Every business commences as a Start-up, moving quickly to Entrepreneurial, which becomes more formalised into Systems, before the business is able to Diversify and Expand, often accompanied by an emphasis on Bureaucracy in which the business can stagnate, unless management takes steps to rejuvenate its operations in a series of Projects, leading to the cycle starting over again.

Each of these stages requires its own strategic planning and policies relevant to the circumstances of the business at that point and which would not be appropriate at a different stage. For example, a financial plan for a Start-up would be quite different to the financial requirements for a business in the Bureaucracy stage, just as a marketing plan in the Entrepreneurial stage will be very different to one for the same business at a later Systems stage.

What does each Stage of Business look like?

1. Start-up. This is where the initial idea for a business starts to take form. It is heavily reliant on planning by its entrepreneurial owner. Planning is the discipline that turns a dream into a reality. Of course, every plan is partially flawed, but the commitment to preparing a plan means that when things get off-track, recovery is much easier.

And remember the adage, ‘failing to plan is planning to fail’. The more a new business owner puts into the planning effort, the quicker the new enterprise can find its niche

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and move on through the early stages of business. To consider franchising at the Start-up Stage is impractical as the business has no substance or capability yet.

2. Entrepreneurial. This is a very outward bound stage where initial revenue is generated and the business gains momentum. It is the stage where the typical owner is wearing multiple ‘hats’ – marketing, sales, finance, production, HR and so on. It is also the stage where essential systems start to be identified. Recognising this and taking action is the precursor to the Systems stage. Although some business owners consider franchising at this stage, in reality the business is not ready, and franchising is best factored into the future plans. Such plans must include development of systems that allow the business to run autonomously without the constant oversight of the entrepreneurial founder.

3. Systems. To avoid problems that come with increasing complexity, the business owner now needs to step back from the overly hands-on role and start to delegate to key people. With this delegation comes the need to formalise operating systems, initially so the business can function under line managers, but also so it becomes capable of expansion. For many businesses, this is the ideal stage to expand with franchising. It will typically now have the personnel, operating systems and market presence to attract and support franchisees.

4. Diversified Expansion. The business has now been trading for many years and built up a loyal and reliable customer base. It is time for the owner to broaden the horizons and develop new product categories or new market opportunities. As the company grows in this stage, it may split its operations into a number of business segments which are managed by a central administration. The Diversified Expansion Stage lends itself ideally to franchising, as the business is mature and nimble enough to support franchisees, but not yet slowed down with cumbersome bureaucracy.

5. Bureaucracy. At the bureaucracy stage, there are a number of business units competing for the same resources within the company. Sometimes misguided business decisions are made as managers are less hands-on. Staff become emersed in bureaucratic processes and a ‘silos’ mindset can hinder development and lead to missed opportunities. But the separate business units are often substantial businesses in their own right. Any progression from here calls for a reset which can include selloffs or, in some cases, ‘branchising’. This is where a company retains control of its business systems and sells outlets to interested incoming owner-operators. It’s a variation on franchising that works well in some industries.

6. Project to Project. The business is now large, well established and may even be ASX-listed. Here is a good time to explore entering new market segments or even new industries. This will be best achieved by assembling management teams specifically resourced and tasked to plan and manage the new project as a standalone venture. Spinning off satellite ventures from the main company is an ideal way to take advantage of the benefits of franchising where corporate strength and owneroperator energy and flair combine to rapidly move into new markets. By doing so, the business is returning (at least in part) to a fresh, new Systems Stage business.

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Aligning Strategy to Lifecycle Stages There is a real danger here. The enthusiasm essential for entrepreneurial success can often lead to mismatched plans, resources, and management responses when the business lifecycle is not properly understood. This is one of the contributing factors to the high rate of business failures, particularly in the first 1 to 3 years. All business owners and managers are acutely aware of the constant pressure to correctly match available resources (cash, finance, inventory, personnel) to the demands of the ‘here and now’, whilst planning for expansion in a manageable way; that is, moving to the next stage.

Owners and managers should not be tempted to bypass a business evolutionary stage due to eagerness or a lack of discipline. Although It is definitely possible to take a shorter period to pass from one stage to the next, there are vital business lessons to be gained by growing through each stage. If bypassed, these lost learnings will not benefit the owner or CEO when it comes to handling similar or more complex problem-solving situations in the future.

Preparations for Franchising Business owners at every stage of business look for ways to build and expand their business and quite often this includes investigating franchising as a possible strategy.

Irrespective of the stage of business, expansion using franchising still requires thorough pre-planning before franchisees can be appointed. It is only the detail of the planning that needs to be adapted to the company’s stage of business so that it is aligned to, and relevant for, the circumstances of the organisation.

In general terms, planning for franchised expansion must always include the essentials of a Franchise Strategy Plan, followed by a suite of Legal Documentation before systems are developed and documented into a set of Policy and Procedures Manuals. It is only then that the business opportunity in the franchise is crafted into Franchise Marketing Materials.

By developing and implementing each of these franchise expansion steps, the business is making itself franchise-ready. Such preparedness will ensure that the expansion strategy will be: • Right for the stage of business of the company, • Achievable considering the resources of the business at that point, • Saleable to a suitably qualified franchisee applicant, • Fully compliant with all statutory and regulatory obligations, • Able to build on initial momentum to achieve the long-term goals for franchising by the business owners.

Bearing in mind the need to fit with available resources and the stages of business, the steps to franchising will include the following.

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The Franchise Strategy Plan This is effectively the business plan for the expansion strategy. Like all business plans, it must start with identifying the capabilities and resources of the business at this point and progressively build a model for how franchising is to be developed. Although the strategy plan is weighted towards financial modelling, it must also identify and scope out how franchising will be implemented in practice including franchisee induction and training, control systems for managing the franchise network and so on. Remember, for most businesses whose personnel are employees, it is a big cultural shift to manage an expanding network of owner-operator franchisees. Such a shift requires careful planning and often a re-alignment of ways of doing things and all in the context of the stage of business.

Legal Documentation Franchising in Australia is heavily regulated which comes with a compulsory burden of compliance on franchisors, and where the penalties for non-compliance can be severe. Apart from the need for a Code-compliant Disclosure Document, the suite of legal documents includes the Franchise Agreement. The Franchise Agreement is never a templated contract (like sale of real estate) and must always be drafted to reflect the individual circumstances of the business being franchised. It is after all, the legal framework for a long term working relationship between franchisor and franchisee.

Policy and Procedures Manuals Systems are the foundation of all franchising. Franchising is the replication of a standardised, proven set of operating systems across every new outlet in the franchised chain. Documenting these operating systems, and the policies on which they are formed, is the purpose of the Manuals. Without a comprehensive set of operations manuals, a business, whether new or mature, cannot hope to franchise effectively and risks a collapse of the essential elements that make it franchise-able in the first place.

So, pre-franchise preparation must include the development and documentation of operating systems manuals.

Franchise Marketing Materials Buying a franchised business is a major financial investment for any franchisee. No-one is going to make such a commitment without proper investigation and due diligence. A Franchise Information Kit prepared by the franchisor provides a comprehensive, single source, reference pack for a prospective franchisee.

As such, preparation for franchise marketing must include a Franchise Information Kit containing introductory brochure material that allows the prospective franchisee to picture him or herself in the business that will become theirs. The information pack also includes specifics about the territory or shop site, financial investment and returns from operating the business and the complete set of franchise legal documents.

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With this Franchise Information Pack, the prospective franchisee has everything they need to seek independent advice before committing to the purchase of the business.

WFD’s Role as Franchise System Developers WFD’s role as specialist franchise consultants is to provide franchisors with a complete one-stop source for the development of all components necessary to successfully expand a business through franchising. Most importantly, WFD’s services start with identifying the stage of business of a company considering franchising, so that the strategies developed reflect the realities of that business, ensuring a best-fit to achieve success when franchising is launched.

Roger Dickeson | Senior Franchise Consultant Wollermann Franchise Developments Australia (03) 9999 5488 rdickeson@franchisedevelopments.com.au www.franchisedevelopments.com.au

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Chapter 10

The Franchiser’s Role in Marketing Success Lauren Clemett | The Brand Navigator Finding Your Brand True North

About the Author Told as a child that she had wordblindness and would never be able to read or write properly, she went on to become a 5 time best selling author and now uses her dyslexia as her greatest asset - helping others understand how the brain sees brands.

She has worked at leading advertising agencies and in brand management since before the internet, helping launch hundreds of global brands and appears in worldwide media, as the sought after personal branding specialist.

As a keynote speaker, Lauren shares how you can turn distraction into attraction and get a clear direction to stand out from the crowd as a magnetic leader.

Contrary to expectations, franchising isn’t a ticket to sit back while all the marketing magic happens. Instead, it’s a partnership where both franchisers and franchisees play active roles in promoting and growing the business.

As a potential franchisee, understanding what you need to do as a franchiser is crucial. Far from resting on the laurels of the franchise brand, you need to be prepared to work on developing your own personal brand.

It’s a myth that as a franchise owner all marketing is done for you and it’s also vital before you even consider franchising to align your personal brand with the right franchise.

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ontrary to expectations, franchising isn’t a ticket to sit back while all the marketing magic happens. Instead, it’s a partnership where both franchisers and franchisees play active roles in promoting and growing the business.

As a potential franchisee, understanding what you need to do as a franchiser is crucial.

Far from resting on the laurels of the franchise brand, you need to be prepared to work on developing your own personal brand.

It’s a myth that as a franchise owner all marketing is done for you and it’s also vital before you even consider franchising to align your personal brand with the right franchise.

Making An Aligned Decision Your personal brand isn’t something separate from your franchise; it’s an integral part of it. Before you jump into bed with a franchise brand, reflect on your personal values and professional goals. Ensure they align with the franchise’s mission and values. This alignment will not only make you more passionate about your work but also help you convey authenticity and connect effortlessly to your customers.

Consider the things you hold sacred, the way you communicate and the values you place on everyday aspects of life as well s business. Are you a clean freak, do you like music on in the background while you work, are you a no-nonsense person who likes to focus quietly? How do you like to dress, behave, communicate? How important is regular, open discussion and feedback to you, or do you prefer to delegate and let people get on with it? What sort of leadership style do you prefer from others? What sorts of brands and businesses do you already like and feel a natural affinity towards? All of these personal traits will help you choose a brand to align with that enables you to effortlessly be the business leader you need to be.

It may seem odd to consider your own personal traits, but it will make life a lot easier for you as the owner of a brand and business that you have natural affinity and alignment with. When your heart is in the business it becomes second nature to live the brand and have purpose behind everything you do as a business leader.

When you have brand alignment, every step you take is on track with your own personal goals. Making decisions about your marketing and promotion becomes instinctive because you are the brand. As a franchisee it also makes it easier to provide feedback to head office, to provide ideas and to ask for assistance to get your message out there.

As the “face” of your franchise it’s up to you to drive the direction of the business though.

Whether through community involvement, public appearances, or personalised customer interactions, infuse your personal brand into the franchise’s image. People connect with people, not just brands. So knowing which brand you want to endorse with your personal brand is vital when choosing who to buy into.

As the business owner you are also the leader of the business and your team will look to you for guidance and direction. They will follow your lead on how you conduct yourself.

How you speak to and treat customers will be duplicated by them. Your staff are your marketing and sales team as well, and if you want them to create a steady stream of

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referrals and recommendations that flow through your business and turn into loyal raving fans, you need to set an example for them.

It’s almost impossible to do that if the brand you have aligned yourself with does not fit with your own core values and belief systems. So shop around and ask questions about how the franchise markets and promotes itself, ask to see the latest corporate communications or newsletters, or even better go and chat with an existing franchise owner or visit as a mystery shopper and see how they treat their customers and team. If it fits with your natural way of doing things, then you’ve found the right fit.

Embracing Your Role in Marketing When you become a franchisee, you’re not just buying into a brand; you’re becoming a vital part of its marketing engine. You are where the rubber hits the road and although it’s tempting to assume that the franchisor will handle all marketing efforts, and most head offices do create a marketing plan and provide resources or even advertise for you, that’s only half the story. As a franchisee, you must actively participate in executing marketing strategies. This includes understanding the franchisor’s marketing framework, guidelines, and target audience and how they want you to behave as a representative of their brand.

While the franchise provides a proven marketing blueprint, you’ll often need to tailor it to suit your local market. Understanding the demographics and preferences of your community is crucial for effective marketing at a local level. You are the face of the brand and you need to make sure you become recognised as a local business leader.

The power of being a franchisee is that you can leverage your unique skills, knowledge, and personal experience to enhance the business brand. When you position yourself as an expert in your field, sharing valuable insights related to your franchise, it not only establishes credibility but also fosters trust among your customers. To be known, liked and trusted is your major marketing goal as a franchise owner.

In a noisy digital landscape, social media is a potent marketing tool and depending on what systems the franchise might have in place and level of restrictions on your activity online, you should engage with the franchisor’s social media strategies. Whatever you do, make sure you consider localising and personalising them. Your active involvement online can significantly boost your franchise’s visibility and credibility but you also need to build your brand as well as the business brand. Don’t be afraid to put yourself and your team in front of the camera! Sharing stories, providing insight and being real is vital if you want to truly connect with your local audience.

And it’s not all online! Don’t think for a minute that if you sit back in your office creating memes or sharing company marketing posts that people will flood to your door and your phone will ring off the hook. Don’t underestimate the power of networking. You can create massive impact and influence over time by attending local business events, joining chambers of commerce, and establishing relationships with neighbouring businesses.

These connections can lead to valuable collaborations and cross-promotions that

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benefit both your franchise and your personal brand. Don’t be afraid to reach out to the local business owners and form partnerships that can create a cascade of influence for you and your business. Word of mouth marketing is still one of the cheapest and most sustainable forms of promotion.

One action you can take to create a connection plan is to consider the world of your ideal client and map out the customer journey. Who else do they need services from before and after they come to you? If you clean their pool, who mows their lawn? If you serve them a meal, who drives them home? Consider a day in the life of your ideal client and who they interact with, then go looking for those service providers and create a collaborative relationship with them.

And never forget the basics. For example, if you are providing a service in someones home, make sure you use all the resources you can to leverage your time by dropping fliers into neighbouring letterboxes and having an frame sign propped up outside, making sure your well signed vehicle is viewable on the street! Marketing is something that should be built into every aspect of your daily business, otherwise you’ll never get around to it.

Part Of The Family Successful franchising is not about going it alone, and the franchise brands which have become well known over the years are the ones who support everyone in the team. It’s more like being part of a big family than being part of a franchise. Sucess in any business requires support and collaboration, so don’t feel you need to go it alone, and certainly be prepared to share your insights and journey with others in the franchise brand - a rising tide lifts all ships!

Franchisors typically offer various support services, including marketing assistance which is awesome because most of the time, new franchisees are not particularly skilled in this area. If you’re facing challenges in marketing, don’t hesitate to ask for help.

They may provide additional training, resources, or connect you with marketing professionals who specialise in your industry. And if they offer training event, webinars or conferences, definitely go! Not only will you learn from guest speakers abut you’ll also get to chat with others who are in the same boat as you and you never know what ideas might be generated over a cold one at the end of the day.

Even if you can’t attend events, connect with other franchisees within your brand and those other franchises in your area. Sharing success stories, challenges, and marketing strategies can be incredibly beneficial. Franchising is a supportive network where you can learn from others’ experiences and adapt successful marketing approaches to your location.

Becoming a franchisee involves more than just buying into a brand; it’s about actively participating in marketing efforts, aligning your personal brand, and seeking help when needed.

Sure there the major benefit of buying into a franchise is that so much is already done

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for you, but you can maximise the ROI on your investment and build a successful and fulfilling franchise business if you lean in and learn how to market your self and your business.

Remember, while franchising provides a framework for success, it’s your dedication and personal touch that will truly set you apart and lead to long-term prosperity in the wild world of franchising.

Lauren Clemett | The Brand Navigator Finding Your Brand True North www.yourbrandtruenorth.com https://www.linkedin.com/in/laurenclemett/

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Chapter 11

Reimagining Team Leadership as a New Franchisee:

Building Trust, Culture, and Success

Carmel Brown | Founder & Director The Proven Group

About the Author Carmel Brown is The Trusted Authority on Business Culture and Staff Performance. As a human resources expert par excellence, Carmel has grown her People & Culture Consultancy Company ‘The Proven Group’ into an industry powerhouse that delivers HR, Safety, Wellbeing and Training programs throughout Australia, New Zealand, Asia, Europe and Africa.

As the Founder of The Proven Group, Carmel has built a reputation for her innovative and creative approach to business, and her unwavering dedication to helping her clients achieve their goals. She believes that building strong relationships and creating a culture of trust and respect are critical to success in business. Carmel is a proud member of the Franchise Council of Australia (FCA) and has accredited an extensive set of training courses through the prestigious Certified Franchise Executive Program (CFE).

Carmel’s newest book, “Less Headaches, Happier Team, More Success!” has become an instant best-seller among Franchise Owners Australia-wide.

With clients across all sectors of franchising, The Proven Group’s approach to supporting Franchise Owners and Leaders within businesses has enabled a true alignment between business goals, strategies, leaders and their teams.

In a day and age where productivity is a real challenge, where there is more to achieve in a day than ever before, as Jenny Boymal can attest, Carmel has been able to break through this noise and develop a system that addresses root causes of problems in businesses and empowers Franchise Owners and Leaders to focus on areas of the business where they really thrive.

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s a new franchisee, your journey into the world of business ownership is filled with excitement, challenges, and opportunities for growth. One of the most important aspects of running a successful franchise is learning how to lead, develop, and empower your team. Rather than simply focusing on compliance and performance management, the key to unlocking your team’s potential lies in creating a culture of trust, communication, and shared purpose. This article takes a deeper dive into how franchisees can nurture a team that thrives—not just by checking legal boxes, but by inspiring a sense of ownership and collaboration.

Leadership Beyond Compliance: Focus on Building Relationships While it’s essential to stay compliant with employment regulations, franchisees who want long-term success should think beyond the standard HR checklist. Compliance is foundational, but culture is the game-changer. Instead of viewing HR obligations as a burden, see them as an opportunity to foster trust and integrity within your team.

Being proactive in addressing workplace safety, fair pay, and clear communication sends a message to your employees: you value them as individuals, not just as assets to the business.

Creating a Strong Workplace Culture: The True Investment The most successful franchisees recognize that a thriving team culture doesn’t happen by accident. It requires ongoing investment in relationships, team dynamics, and shared values. As the business owner, you set the tone for how your team interacts, how conflicts are handled, and how successes are celebrated. A positive workplace culture motivates employees to not only meet their responsibilities but to go above and beyond.

Consider this: Are you making time to get to know your employees beyond their job roles? Do they feel valued and heard? Have you created an environment where they are willing to step up and take initiative, even without direct oversight? This requires a different kind of leadership—one that involves empathy, listening, and genuine care.

Moving from “Managing” to “Leading” Your Team New franchisees often make the mistake of thinking their primary responsibility is to manage people—track hours, enforce policies, ensure compliance. But the most effective franchisees lead, not just manage. This means shifting your mindset from micromanaging daily tasks to empowering your team to make decisions and contribute ideas.

One way to shift from managing to leading is by fostering open communication and giving your team the autonomy to solve problems. When employees feel trusted, they are more likely to take ownership of their work and to step up in times of need. Regular one-on-one meetings, rather than solely focusing on performance, should emphasize

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employee aspirations, concerns, and suggestions for improvement. This collaborative approach helps employees feel invested in the business and its success.

The Importance of Emotional Intelligence It’s easy to get caught up in the numbers—sales targets, payroll, and compliance audits—but the human side of leadership often gets overlooked. Franchisees who prioritize emotional intelligence (EQ) create stronger, more cohesive teams. Emotional intelligence involves being aware of your own emotions and those of others and using that awareness to manage relationships more effectively.

Incorporating emotional intelligence into your leadership toolkit can help address common challenges like resolving conflicts, managing difficult employees, or keeping morale high during tough times. Employees who feel their emotional needs are understood are more engaged and loyal, leading to lower turnover and higher productivity.

Hiring for Cultural Fit, Not Just Skill One common challenge for franchisees is finding and retaining the right employees. It’s not just about qualifications or experience; cultural fit is just as important, if not more so.

During the recruitment process, don’t just look at what the candidate can do; consider how they will fit into the team dynamic and align with your franchise’s values. Someone who may not have all the technical skills could still be a better long-term investment if they exhibit the right attitude, willingness to learn, and ability to mesh with your team.

Coaching and Mentorship: Your Role as a Guide As a franchisee, you’re not just the boss—you’re also a coach and mentor. Providing ongoing training, not just during onboarding but throughout an employee’s tenure, is essential for their development and your franchise’s success. But beyond technical skills, you should focus on coaching your team members on leadership, problem-solving, and customer relations. Investing in your employees’ personal and professional growth leads to higher job satisfaction and, in turn, a more successful business.

Encourage team members to take part in decision-making processes, giving them the confidence to handle challenges on their own. When employees feel, they are contributing to something bigger than themselves, they are more likely to stay motivated and loyal.

Recognizing Success and Celebrating Milestones Recognizing the efforts of your employees is another essential component of successful leadership. It’s not just about formal performance reviews or bonuses—though those are important. It’s also about creating a culture where small wins are celebrated, and people feel appreciated for their contributions. Whether it’s a simple “thank you” after

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a job well done or celebrating a team member’s anniversary with the franchise, these gestures go a long way toward building a positive, inclusive atmosphere.

Navigating the Growing Pains of Team Expansion As your business grows, your team will too, and managing a larger workforce comes with its own set of challenges. It’s common for franchisees to feel overwhelmed by the expanding responsibility of leading more people. But instead of seeing this as a burden, view it as an opportunity to develop future leaders within your team. Delegating responsibilities to trusted team members not only lightens your load but also empowers others to step into leadership roles themselves.

Regular team-building exercises, leadership workshops, or even informal gatherings can strengthen bonds and ensure that your team stays aligned with your franchise’s mission as it scales.

Facing the Challenges Head-On Inevitably, challenges like interpersonal conflicts, compliance concerns, or underperforming staff will arise. But the difference between a struggling franchise and a successful one lies in how these challenges are addressed. By fostering a culture of openness and accountability, you create an environment where problems can be solved collaboratively and efficiently.

Moreover, you don’t have to go it alone. Consider leveraging the expertise of HR professionals to help address deep-rooted challenges. Bringing in external support when necessary is a sign of strength, not weakness. With the right help, you can tackle even the most difficult issues while staying focused on growing your business.

Final Thoughts: Lead with Vision, Build with Purpose Building and leading a high-performing team as a new franchisee goes beyond compliance and management tactics. It’s about cultivating a vision for your franchise and aligning your team with that vision. By investing in your team’s growth, creating a positive workplace culture, and addressing challenges head-on, you’ll lay the foundation for long-term success. After all, the strength of your business ultimately rests on the strength of the team behind it.

In this journey, remember that while expertise in regulations and compliance is important, the true mark of great leadership is the ability to inspire and connect with your team on a deeper level.

How do I do all of this?

We have explored the key considerations and best practices for employing and managing a team as a new franchisee. By understanding your team’s needs, recruiting the right candidates, fostering team dynamics, promoting effective communication,

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implementing performance management strategies, and resolving conflicts, you can build and lead a high-performing team that contributes to the success of your franchise.

Remember, investing time and effort in your team is crucial for the long-term growth and profitability of your business.

The great news is that you do not need to do this alone. HR Consultants are experts in helping businesses comply with the legislative requirements as well as supporting them in building a team culture that aligns with their personal values. It’s never too early to get a professional involved in supporting you in building a thriving team!

Carmel Brown | Founder & Director The Proven Group 1300 312 502 info@TheProvenGroup.com.au www.TheProvenGroup.com.au

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Chapter 12

Franchising Your Business

Unlocking the Next Stage of Growth

Tania Allen | Head Consultant & Director Vision Alliance

About the Author Tania Allen is the Head Consultant and Director of Vision Alliance, an integrated business growth, franchise consultancy, and marketing agency.

A business owner and entrepreneur since 1990, Tania has been helping businesses grow and scale through franchising since 1999. With hands-on experience as a franchisor, franchisee, and master franchisee, she has worked with thousands of businesses worldwide, specialising in franchise development, business strategy, and marketing. Under her leadership, Vision Alliance provides tailored, end-to-end support that empowers and equip business owners and franchisors to achieve sustainable growth and seize new opportunities.

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s your business ready for something bigger? You’ve built a brand you believe in, tackled every challenge, and created something customers’ trust. You’re ready for a whole new level of growth. Maybe you’re wondering—how do you expand in a way that creates leverage and helps others build on the success you’ve created?

This chapter is for business owners ready to consider franchising. Franchising is more than adding additional locations, or vans on the road; it’s about creating an opportunity for others to step into a proven model that they can confidently grow. When done right, franchising allows you to scale faster, build a network of passionate partners, and empower new business owners, all while expanding the reach of your brand. Done poorly, however, it can lead to brand inconsistency, strained relationships, missed opportunities, and even failure.

So, let’s explore the steps to take your business from a local success to a thriving franchise network. We’ll start with the foundation and cover each essential phase to build a reliable, scalable model that others can grow with. Here’s what it takes to franchise successfully and elevate your business to the next level.

Step 1: Finding and Closing the Gap To franchise successfully, the first step is ensuring your business model is truly ready to be replicated. It’s about taking an honest look at your operations, finding hidden gaps, and closing them before expanding. Even the most established businesses often have areas that aren’t fully optimised or clearly documented. In franchising, any small inefficiency can multiply with scale. Are your processes clear and repeatable? Is your customer experience consistent across every touchpoint? And is every part of your business, from marketing to finances, aligned to run seamlessly without your daily involvement?

This first step is about uncovering and closing these gaps, ensuring your business model is solid, scalable, and primed for replication. By addressing these areas and closing these gaps as the first step in franchising your business, you’re creating a foundation that franchisees can depend on. This isn’t just about replication; it’s about building a reliable, scalable model that others can confidently grow within.

Step 2: Crafting the Blueprint – Designing a Scalable Franchise Model The next step is to build a blueprint for growth—a franchise model that’s designed for scalability and success. This is about taking what works and shaping it into a system that others can step into confidently, knowing exactly what it takes to deliver the brand experience you’ve perfected.

In this phase, you’re not just defining logistics; you’re designing the structure that will support and empower your franchisees. This means establishing: • Franchise Fees and Royalties: Setting fair, sustainable fees that allow you to profit while keeping your franchisees motivated to succeed.

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• Territory Mapping: Carving out protected areas where franchisees can grow without competition from within the network.

• Ideal Franchisee Profile: Identifying the traits, skills, and values that will align best with your brand, ensuring every franchisee is the right fit.

But more than numbers and profiles, this step is about creating a clear, reliable framework.

It’s about making sure that each franchise location operates as a true extension of your brand. Here, you’ll also start preparing for essential legal documentation, the Franchise Agreement and Disclosure Document, which protect your business while setting clear expectations for all involved.

By designing a scalable model, you’re not just setting yourself up for growth; you’re building a roadmap that others can follow confidently. This blueprint is the foundation on which your franchise network will grow, thrive, and deliver the experience that customers have come to expect from your brand.

Step 3: Building a Modern Playbook - Your Dynamic Operations Manual Gone are the days of bulky, outdated operations manuals gathering dust. Today, an effective operations manual leverages the latest technology, making essential resources accessible, engaging, and easy to follow. This digital playbook equips franchisees with everything they need, available anytime, anywhere, in formats that work for them.

Your operations manual is now a multi-platform resource that might include: • Videos, Audio Guides, and Online Manuals: A blend of media that franchisees can access on any device, offering training, processes, and guidelines in formats that fit into their busy schedules.

• Comprehensive Business Standards: Covering everything from brand guidelines and local marketing to sales strategies, finance, and operations.

• Tailored Processes for Different Business Types: If you’re a retail food business, this might include front- and back-of-house procedures, customer service protocols, and health and safety guidelines. For a service-based business, it could cover service fulfilment, client relationship management, and strategies for repeat business.

Whether franchisees are training staff, managing finances, or setting up daily operations, your dynamic manual becomes their go-to resource. It’s designed to be mobile-friendly, interactive, and constantly updated,ensuring franchisees are fully equipped to maintain your standards, adapt to new challenges, and deliver a consistent customer experience across all locations.

Step 4: Protecting Your Brand – Establishing a Strong Legal Foundation As you prepare to bring others into your business model, a solid legal foundation becomes essential. Franchising is more than just expanding locations; it’s about building

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a network that’s legally protected, consistent, and aligned with your standards. This step is about setting clear guidelines and boundaries that ensure both you and your franchisees are secure and aligned from the start.

In Australia, all franchisors must adhere to the Franchise Code of Conduct,a mandatory regulatory framework designed to promote transparency, fair dealings, and informed decision-making. Compliance with this code is essential, as it sets clear expectations for franchise relationships, covering disclosure, conduct, dispute resolution, and termination protocols.

As a franchise consulting firm, we work closely with you to prepare a legal brief that aligns with your unique business model, key operational elements, and fee structure.

Collaborating with our franchise legal team, we ensure that your legals are prepared by an expert team. This includes essential legal documents, such as: • Franchise Agreement: The backbone of your franchise structure, outlining the rights, responsibilities, and expectations for both you and your franchisees.

• Franchise Disclosure Document (FDD): The FDD offers prospective franchisees a comprehensive overview of the business, including financial performance, brand standards, and key policies.

• Key Facts Sheet and Information Statement: Required by the Franchise Code of Conduct, these documents provide accessible summaries of key financials, commitments, and obligations.

• Additional Legal Documents: This may include IP Licensing, Confidentiality Agreements, and other documents to safeguard your proprietary assets and processes.

These legal documents are essential to creating a consistent, secure franchise network.

They protect your brand, ensure compliance, and give franchisees the peace of mind to operate with confidence. With the right legal foundation in place, you’re building a franchise that’s positioned to grow, protected to last, and ready to thrive in a competitive marketplace.

Step 5: It’s Time to Launch – Attract, Recruit, and Grant Your Ideal Franchisees With your model designed, legals, operational and training systems in place, it’s time to launch your franchise opportunity and bring in the right partners. A successful launch isn’t just about generating interest—it’s about finding franchisees who believe in your brand, share its values, and have the drive to grow alongside you.

To build a strong network, focus on creating a targeted sales and marketing engine that attracts, engages, and qualifies potential franchisees, while remaining fully compliant.

Striking the right balance is essential: while building interest and desire, it’s equally important to ensure transparency, avoid misrepresenting the opportunity, and comply with all regulations. Here’s how to set the stage for success: • Crafting Your Franchise Journey: Take the time to create a well-defined franchisee

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journey that highlights your brand’s unique value, educates the prospective franchisee, and what franchisees can expect when they join.

• Setting Up a Recruitment Pipeline: Establish a marketing & sales CRM system designed specifically for franchise recruitment, allowing you to build an automated and structured pipeline to help you attract, nurture and convert leads into franchisees consistently.

• Launching Targeted Campaigns: The quickest path to launch is through paid advertising, helping you reach a wide and qualified audience quickly. Implementing an omni- channel strategy and working with experts can help you generate the right leads at the right time.

By focusing on the franchise journey and your value proposition, an efficient recruitment pipeline, targeted outreach, and paid advertising—all while ensuring full compliance— you’ll build a franchise network that’s not only successful but also deeply aligned with your brand’s vision.

Step 6: Scaling with Support – Building a Thriving Franchise Network Launching your franchise is just the beginning. To create a strong and sustainable network, it’s important to provide franchisees with the support, training, and resources they need to grow. Scaling isn’t just about adding locations; it’s about empowering franchisees, fostering leadership, and building a culture aligned with your brand.

Key areas to focus on as you scale include: • Ongoing Training: Keep franchisees aligned with brand standards, updated processes, and industry best practices.

• Performance Tracking: Use structured performance tracking to recognise achievements and address areas for improvement.

• Community and Support Systems: Foster a sense of community through forums, events, or online platforms where franchisees can connect and share insights.

• Local Marketing Assistance: Provide tailored support to help franchisees succeed in unique markets.

• Strategic Growth Planning: Partner with experienced advisors for sustainable growth strategies and proactive problem-solving.

• Attracting Top Talent: Prioritise recruiting franchisees who align with your brand’s values and vision.

• Working with External Experts: Collaborate with specialists to refine systems, enhance support, and maintain brand integrity as you grow.

By focusing on training, community, strategic planning, and leadership, you’re building a network that thrives at every stage, strengthening your brand’s impact as you grow.

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Taking Your Business to the Next Level Franchising is more than just expanding your business—it’s a path that allows you to share your success with others while growing your brand’s presence. Each step in this journey, from preparing your business model and creating a strong foundation to attracting ideal franchisees and supporting their growth, plays a critical role in building a thriving franchise network.

By finding and closing operational gaps, you ensure that your business is solid and ready for replication. Through crafting a scalable franchise model and developing a modern, accessible playbook, you give franchisees the tools they need to succeed.

With a strong legal foundation in place, you protect your brand and set clear expectations. Then, by strategically launching with targeted marketing and automation, you’re able to attract and recruit the right franchisees who align with your brand’s vision.

Finally, scaling with ongoing support ensures that each franchisee is set up for longterm success, strengthening the network as it grows.

With these steps, you’re creating a strong and sustainable franchise network that not only expands your reach but also upholds the quality and integrity of your brand.

Franchising done right is about more than just growth; it’s about creating a legacy that others can build on confidently.

So, are you ready to take the next step? With a solid plan, a scalable model, and the right support, your business has everything it needs to succeed through franchising. The journey to your next level of growth starts here.

Tania Allen | Head Consultant & Director Vision Alliance 1300 76 49 20 | 0419481203 tania@visionalliance.com.au

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Chapter 13

Selling Your Franchise?

Legal Strategies for a Trouble-Free Exit Helen Kay | Founder rise legal

About the Author Helen Kay, is accomplished business and franchise lawyer with over two decades of legal expertise. As the founder an of Rise Legal, Helen specialises in delivering strategic and practical commercial and franchise legal solutions. Her exciting career has seen her in pivotal roles at prestigious law firms, consistently offering exceptional legal counsel. Her unique combination of hands-on experience and visionary leadership positions her as an invaluable asset in the realm of commercial law and franchise expertise, assisting franchisors and franchisees in safeguarding their business through comprehensive commercial legal support.

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elling a franchise business can be rewarding, but it comes with its own set of complexities. Navigating these challenges successfully requires a thorough understanding of the legal obligations and processes involved. As an experienced franchise lawyer, I’ve helped countless franchise owners through this process, ensuring they sell their businesses smoothly and without defaulting on their franchise agreements or leases. Here’s what you need to know.

Understand the Transfer Clauses in Your Franchise Agreement One of the first steps in selling your franchise business is to fully understand the transfer clauses within your franchise agreement. Franchise agreements generally require that you obtain permission from your franchisor before you can transfer ownership of the business and only then can you transfer to an approved prospective franchisee. This is a critical aspect that must be addressed as soon as you start considering a sale.

• Sellers Due Diligence: Before initiating the sale, conduct a Sellers Due Diligence.

This involves reviewing the business’s legal standing, including contracts, assets, and compliance with regulations. Addressing any legal issues early can prevent delays or complications during the sale process.

• Franchisor Permission: Your franchisor will likely have specific criteria that the buyer must meet before they approve the transfer. This could include the buyer’s financial stability, operational experience, and even their personal background.

• Legal Advice: It’s crucial to engage a franchise lawyer early in the process to explain these transfer clauses and help you navigate them. Without proper legal guidance, you might face delays or even the possibility of the sale being denied.

Post-Sale Restrictions: Know What You Can and Cannot Do Another critical aspect to consider is what you can do after the sale. Franchise agreements typically contain restrictions on your ability to operate a similar business after you’ve sold your franchise. These restrictions are designed to protect the franchisor’s brand and prevent direct competition.

• Non-Compete Clauses: Most franchise agreements will include non-compete clauses that prevent you from operating a similar business within a certain geographic area and for a specific period after the sale.

• Rebranding Limitations: You may not be able to simply rebrand the business and continue operating in the same industry. Legal advice is essential here to fully understand the scope of these restrictions and to ensure you don’t inadvertently breach the agreement.

Requirements for the Transfer of Lease If your franchise operates from a leased premises, understanding the requirements for the transfer of lease is critical. This involves not only the legal aspects but also the practical steps of transferring the lease to the new owner.

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Selling Your Franchise? Legal Strategies for a Trouble-Free Exit

• Franchisor Rights and Lease Transfer Obligations: In most cases, you will not be able to retain occupancy of the premises after selling the franchise. This is due to provisions in the franchise agreement that typically require the lease to be transferred to the franchisor if they choose to take over the location or to the new franchise. The franchisor’s right to step into the lease ensures continuity of the franchise operations at that site. It is essential to carefully review these obligations with your lawyer to understand your rights and the franchisor’s options regarding the lease transfer.

• Landlord’s Consent: Similar to franchisor approval, you’ll need the landlord’s consent to transfer the lease. This process can be straightforward or complex, depending on the lease terms and the landlord’s policies.

• Lease Transfer Options: The buyer will either need a new lease, a license to occupy, or a transfer of lease by way of a deed of assignment. It’s essential that your lawyer is involved in this process to ensure that your interests are protected and that the transaction complies with all legal requirements.

The Sale Process: Key Parties Involved Selling a franchise involves coordination between several parties: the buyer, the seller (you), the landlord (who may also be the franchisor), and the franchisor. Understanding the role of each party and the documentation required is essential for a smooth transaction.

• Buyer’s Due Diligence: The buyer will need to conduct thorough due diligence, which will include reviewing the franchise agreement, lease, and financial records.

This process is crucial for the buyer to ensure they are making a sound investment.

• Sale of Business Agreement: This agreement, prepared by your lawyer, outlines the terms and conditions of the sale, including price, payment terms, completion obligation and post completion obligations.

• New Franchise Documents: The buyer will need new franchise documents, which are usually prepared by the franchisor’s lawyers. These documents will outline the terms of the franchise moving forward.

• Lease Transfer: As mentioned earlier, the lease will need to be transferred to the buyer, a process that requires the involvement of the landlord’s solicitors.

In the Settlement Stage, beyond transferring the lease, finalising the transfer of business names, licenses, and employee entitlements. Accurate settlement statements and handling any stocktake, if applicable, are essential steps to ensure all financial and legal obligations are met on settlement day.

Understanding Timings and Cooling Off Periods Timing is a critical factor in the sale of a franchise. The franchise agreement will likely specify timelines for the buyer to receive the necessary documents and complete training. The Franchise Code of Conduct also dictates strict requirements.

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Business FranchiSe Guide

• Document Timelines: The franchise agreement and the Franchise Code of Conduct will specify how long the buyer has to review and sign the necessary documents.

Delays in this process can result in penalties or the termination of the agreement.

• Training Requirements: Many franchisors require the buyer to complete a training program before they can take over the franchise. The timing of this training needs to be coordinated with the sale process to ensure a smooth transition.

• Cooling Off Periods: The Franchise Code of Conduct mandates a 14-day cooling-off period for prospective franchise buyers. During this period, the buyer has the right to withdraw from the franchise agreement without penalty, even after signing the contract. It’s crucial to understand this cooling-off period and how it can impact the sale timeline. This period gives the buyer time to reconsider the purchase and can affect when the sale is considered final. Proper legal advice is essential to navigate this period effectively.

Engage a Franchise Lawyer Early Navigating the sale of a franchise business without legal guidance from an experienced franchise lawyer is risky. The franchisor will provide assistance but you must engage your own independent lawyer to assist you. Engaging a franchise lawyer early in the process can help you avoid common pitfalls and ensure that the sale goes smoothly.

• Avoiding Default: A lawyer will help you understand your obligations under the franchise agreement, lease, and other relevant contracts, ensuring you don’t default during the sale process.

• Smooth Transition: Legal advice ensures that all parties involved are on the same page and that the transition to the new owner is as seamless as possible.

Conclusion Selling your franchise business is a significant decision that requires careful planning and a thorough understanding of the legal processes involved. By understanding transfer clauses, post-sale restrictions, lease requirements, the roles of involved parties, and the timing of the sale, you can ensure a smooth and successful transaction. Engaging a franchise lawyer early in the process is crucial to navigating these complexities and achieving the best outcome.

Whether you’re just starting to think about selling or are ready to begin the process, make sure you have the right legal support to guide you every step of the way.

Disclaimer: This article is intended for informational purposes only and should not be considered legal advice.

Consult with a qualified commercial lawyer for personalised advice related to your specific circumstances.

Individual liability limited by a scheme approved under Professional Standards Legislation.

helen kay | Founder Rise Legal Gold Coast | Perth | Sydney T: 1300 064 707 | E: info@riselegal.com.au | https://riselegal.com.au - 98 -

courier Services

Aramex Level 9, 491 Kent Street Sydney NSW 2000 Australia Shed 5, Lever Street, Ahuriri, Napier 4112 Email: recruitment@aramex.com.au | recruitment@aramex.co.nz Web: www.aramex.com.au| www.aramex.co.nz

BUSINESS DESCRIPTION:

COMPANY DETAILS:

We began as Fastway Couriers more than 40 years ago and joined the global Aramex network in 2016. The Aramex network across New Zealand and Australia now includes 40 regional franchises and over 1000 courier franchise partners.

Date of first franchise: 1994

We offer our franchise partners an awardwinning system, world-class technology, training and support to help them run their own rewarding business in their territories.

Thousands of Courier Franchisees have succeeded with our proven franchise model in the past 40 years, with local knowledge and the backing of a global brand.

Training provided: Extensive training and ongoing support is provided – no previous business experience required.

Territories available: Exclusive territories available across Australia and New Zealand

REGIONAL FRANCHISES AUSTRALIA & NEW ZEALAND: Current: 40

FINANCIAL DETAILS: Initial franchise fee: Available upon application Minimum investment: Dependent on territory. Please visit our website to see current opportunities.

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automotive products & services finance

CFI Franchise Finance Australia: 1300 659 676 Email: hello@cfifinance.com.au Web: www.cfifinance.com.au

New Zealand: 0800 456 687 Email: hello@cfifinance.co.nz Web: www.cfifinance.co.nz

BUSINESS DESCRIPTION: About Us CFI Finance is a specialist funder to the franchise sector. We have unrivalled knowledge of franchisee’s funding requirements as well as direct relationships with the franchise networks in Australia and New Zealand. Founded in 2014 by directors with a background in franchising, we have remained committed to offering flexible funding solutions that allow franchisees to start a new business or grow their existing business.

What Can We Fund?

CFI Finance have a solution for all business funding requirements including: • New Store Fitouts • Store Refurbishments • Business Acquisitions • Equipment Purchases • Vehicles, Trailers & Vehicle Fitouts • Refinancing Existing Finance Contracts Why Choose CFI Franchise Finance?

• Competitive Rates • Excellent Customer Service • Preserve Precious Capital • Fast Online Application Process • Broad range of products and terms • Repayments Can Be 100% Tax Deductible

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Franchise automotive Consulting products and Development & services

Franchise Simply Subsidiary of AN Global Group Holdings Ltd A Texas Corporation, USA

805/100 Walker Street, North Sydney, NSW 2060 Contact: Brian Keen | Phone: (AUS) +61 417 211 366 Email: brian@franchisesimply.com.au | Web: www.franchisesimply.com.au BUSINESS DESCRIPTION:

Why Choose Us?

Unlock Global Potential with Franchise Simply, a subsidiary of AN Global Group Holdings, USA

• Expert Guidance: Our experienced consultants provide tailored strategies to help you navigate the complexities of international markets.

• Comprehensive Services: From initial development to strategic expansion, we’re with you every step of the way.

• Proven Results: Join countless successful franchisors who have expanded their reach and maximized their potential with our support.

Are you ready to take your business to the next level? At Franchise Simply, we specialize in Franchise Development, Franchise Consulting, and Franchise Sales, with a strong emphasis on International Expansion.

Our Offerings Franchise Development • FDD and Legal Documentation • Business Plan & Financial Modelling • Operations Manual

Let’s turn your vision into a global franchise success story!

Contact us today for a consultation and discover how we can help you grow your franchise.

Franchise Consulting • Strategic Growth & Turnaround • Marketing Solutions • Operational Support

In Business Since: 2010

Franchise Sales • Lead Generation • Screening and closing the lead • International Expansion in 10 countries

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automotive products & services lawyers

IP partnership Contact: Samuel Rees | Phone: 07 5591 2522 Email: sr@ippartnership.com.au | Web: www.ippartnership.com.au

BUSINESS DESCRIPTION: IP Partnership is a modern boutique commercial law firm specialising in Franchising, Intellectual Property (‘IP’) and Commercial Law. IP Partnership view client’s brands and intellectual property as if it were music or poetry. IP, whatever it may be, is a creative contribution to the universe which is something really special. It the firm’s absolute pleasure to assist clients leverage their valuable intellectual property by way of franchising, licensing or other methods.

Since 1995 IP Partnership has been developing and maintaining long term relationships with Australian businesses. IP Partnership are here to assist you if you are looking to buy a franchise business or any business for that matter. IP Partnership are also the experts in assisting those looking to turn their businesses into a franchise.

Call IP Partnership Lawyers if you are an Australian or New Zealand based business looking to: • Turn your business into a Franchise (to operate in both Australia and New Zealand); • Buy or sell a Franchise; • Expand offshore and require protection of Trade Marks internationally; • Prepare or review your businesses’ contracts and terms & conditions; • Lease commercial premises; • Engage a legal team as your business’ external inhouse commercial legal team.

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lawyers

MADGWICKS Level 6, 140 William Street, Melbourne, VIC 3000 Contact: Chris Verebes | Phone: (AUS) 03 9242 4744 Email: chris.verebes@madgwicks.com.au | Web: www.madgwicks.com.au/franchising

BUSINESS DESCRIPTION: Franchising in Australia is a regulated environment. When considering establishing a franchise system, entering into a franchise agreement or navigating a dispute with a franchisee or franchisor, it is important that you use a law firm with extensive knowledge of the franchising business model and the Australian legal landscape.

Madgwicks is a full service business law firm. Our team of experienced lawyers regularly advise franchisors, franchisees and franchise industry service providers.

Our lawyers also have extensive experience advising groups that operate under similar business structures, including cooperatives and strategic alliances.

We regularly advise on: Franchise system establishment | Franchise due diligence | Franchising Code of Conduct compliance | Franchise agreements and disclosure documents | Business structures appropriate for franchise systems | Supplier and terms of trade agreements | Commercial and retail leasing, as well as general property advice | Trade practices advice, including ACCC notification/authorisations | Acquisition, disposal, joint venture and partnership advice | Employment and workplace relations | Tax, duty and GST advice | Branding, intellectual property and trade marks | Litigation and dispute resolution Madgwicks’ Franchising team is an active member of the Franchise Council of Australia and has an established network of accountants, business advisors and brokers to assist our clients when required.

Madgwicks also provides clients with the benefit of our international affiliation with Meritas, connecting them with member firms across Australia and globally, providing expertise wherever they need it.

In Business Since: 1973

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automotive products & services lawyers

Morgan Mac Lawyers Suite 27, Level 6/445 Upper Edward Street, Spring Hill, QLD 4000 Phone: 07 3221 2221 | Email: info@morganmac.com.au | Web: www.morganmac.com.au

BUSINESS DESCRIPTION: We are a boutique firm specialising in Commercial Litigation, Dispute Resolution and Franchising.

We have extensive experience in complex commercial litigation involving disputes between franchisors and franchisees and in providing legal advisory services to franchise businesses.

The franchise related legal services we provide include: • Franchise dispute litigation • Dispute resolution and franchise mediation • Franchise dispute solutions and strategies • Purchase or sale of franchise businesses • Advising on franchise documents • Advising on franchise renewal or exit • Preparing franchise documents • Risk and compliance advice • Corporate and business structuring • Commercial and retail leasing • Privacy and privacy policy advice Commercial litigation and franchising are complex areas of law. We help our clients to resolve or navigate legal matters and obligations in the context of their businesses. We recommend strategies to clients that minimise and manage the risks of legal non-compliance and legal disputes.

We work with our clients to implement their commercial objectives. We strive to achieve the best possible outcome for our clients.

In Business Since: 2016

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lawyers

Rise Legal Business Lawyers 1/109 Upton Street, Bundall, QLD 4217 Phone: 1300 064 707 | Email: info@riselegal.com.au | Web: https://riselegal.com.au

BUSINESS DESCRIPTION: Why Choose Rise Legal as Your Business Law Partner?

At Rise Legal, we’re more than just a law firm – we’re your strategic partner in building and protecting your business. Serving clients across Australia, we specialise in forward-thinking, proactive legal strategies designed to shield your business from risk and empower you to pursue growth confidently.

Our unique “Business Protection” approach ensures you have a strong legal foundation from day one.

Whether it’s structuring your business, safeguarding intellectual property, managing client relationships, or securing supplier agreements, we provide clear, actionable legal advice that aligns with your specific goals and values.

What Sets Us Apart?

• Fixed-Fee Transparency: No surprise costs – our fixed-fee pricing model gives you complete control over your legal investment.

• Tailored, Personable Service: We listen closely to understand your needs, making complex legal matters easy to navigate with personalised guidance.

• Comprehensive Expertise: From contract law and intellectual property to franchising, our breadth of experience means we’re equipped to address all aspects of your business.

• Trusted Franchise Advisors: As active members of the Franchise Council of Australia, we stay ahead of industry trends to deliver cutting-edge insights and practical solutions.

At Rise Legal, we don’t just help businesses avoid pitfalls; we empower them to thrive. If you’re ready to set up robust business agreements, protect your intellectual property, or simplify franchise complexities, Rise Legal is here to support your journey every step of the way.

Let us provide you with the peace of mind to grow your business with confidence – we’re only a call away.

In Business Since: 2020

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automotive products & services lawyers

sanicki Lawyers 9 Regent Street, Prahran VIC 3181 Contact: Robert Toth | Phone: (03) 9510 9888 or 0412 673 757 Email: robert@sanickilawyers.com.au | Web: https://sanickilawyers.com.au/ BUSINESS DESCRIPTION: Sanicki Lawyers is a commercial and intellectual property legal practice with offices in Melbourne and Brisbane specialising in the creative music sector, arts, franchise and licensing and corporate sectors.

Apart from being well recognised in the music sector acting for Australian and overseas artists, the firm has a specialised Commercial Practice and is well recognised as a Leading Franchise firm acting for many Franchise brands here and overseas.

The firm has expertise in online and digital sector including Trade Marks, Intellectual property and copyright, and acts in the sale and purchase of businesses in many sectors.

The firm has expertise in Early Learning and Childcare, Hospitality, Medical & Allied health professionals, and New Energy sectors (solar and EV).

We are members of the Franchise Council of Australia (FCA), International Franchise Lawyers Association (IFLA)and Global Refferral Network (GRN) with member firms across the world to assist our client’s overseas expansion.

The firm has clear and upfront fee options providing fee estimates and fixed fee based on the scope of work.

We support our clients in all aspects of their business including Corporate compliance, due diligence on acquisitions and provide sensible commercial advice from over 35 years of experience.

Robert Toth regularly publishes articles on Franchising Licensing and distribution and also acts as a Resident Director for overseas companies and as an Advisory Board member for clients in the solar and franchise sector. The firm has a network of allied professional consultants to assist our clients.

We work hard for our clients and enjoy finding solutions and strategies to support their business and being a part of their trusted advisory team! founded in: 2009

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automotive products & lawyers services

Stewart Germann Law Office Ground Floor, 2 Princes Street, Auckland PO Box 1542, Auckland 1140, New Zealand Contact: Stewart Germann | Phone: (NZ) +64 9 308 9925 Email: stewart@germann.co.nz | Web: www.germann.co.nz BUSINESS DESCRIPTION: Stewart Germann is acknowledged as New Zealand’s leading franchising lawyer and has over 40 years’ experience in this area.

Stewart Germann Law Office (SGL) is New Zealand’s longest established specialist franchising law firm and has won multiple awards in franchise law both nationally and internationally. The firm is passionate about franchising and business law.

The firm has acted for many Australian franchisors who have brought their systems successfully into New Zealand.

Stewart is a recognised national and international guest speaker at franchise conferences (New Zealand, Australia, South Korea and USA) and he is listed in the International Who’s Who of Franchise Lawyers 2024. SGL’s clients include many of New Zealand’s best known national and international franchise brands and the firm has extensive franchising contacts worldwide and locally.

SGL belongs to the Franchise Association of New Zealand (FANZ), the Franchise Council of Australia and the International Franchise Association (USA).

Stewart was instrumental in the formation of the FANZ in 1996 and he wrote the original rules, as well as being a Past Chairman and a current member.

Stewart was awarded Life Membership of the FANZ in recognition of his significant contribution

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to franchising. He was also a board member of the supplier forum of the IFA from 2001 to 2007.

He is actively involved in international franchising and has published articles in the International Journal of Franchising Law and the Franchise Law Journal (USA). In 2018 the Franchise Council of Australia acknowledged Stewart for his “Outstanding Contribution to Franchising” in recognition of his longstanding legal service to franchising.

Stewart is the only lawyer in New Zealand to hold the CFE (Certified Franchise Executive) qualification following an accreditation ceremony at Australia’s National Franchise Convention and at Orlando, Florida in 2020.

Stewart is a Notary Public and can witness documents for use in overseas jurisdictions and he is also a qualified mediator. Stewart regularly advises international clients on legal issues relating to franchising in New Zealand and welcomes enquiries from overseas.

In addition, Stewart is the Managing Director of The Franchise Coach and please visit www.thefranchisecoach.co.nz. He is able to help emerging franchisors and all the services are listed on that website.

In Business Since: 1993

insurance

Shopinsurance.com.au Suite 13, 317 Whitehorse Road, Nunawading, Vic 3131 Contact: Fred Nadde | Phone: 1300 123 300 Email: fred@steadfasteastern.com.au | Web: www.shopinsurance.com.au BUSINESS DESCRIPTION: Shopinsurance has been looking after the needs of franchisees and franchisors for over 15 years.

We offer via our website automated business insurance solutions backed by “one on one” personal advice, to ensure all our customers receive a personal level of care.

We look after the needs of franchisees such as Just cuts, Hairhouse Warehouse, Gloria Jeans, AFL stores, Michel’s patisserie, Subway and Schnitz.

All it takes is one phone call or email and we take the worry out of what insurance coverage you need, how much it costs and best way to structure your insurance for one shop or for a franchisor insurance facility for all.

Give our director a call on 1300 123 300 Australia wide.

In Business Since: 1999

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childrens automotive performing products arts & education & services

Stagecoach Performing Arts 12th floor Export House, 5 Henry Plaza, Victoria Way, Woking, Surrey GU21 6QX Phone: +44 (0)1483 247 400| Email: franchiserecruitment@stagecoach.global Web: https://australia.stagecoachfranchise.com/

BUSINESS DESCRIPTION:

COMPANY DETAILS:

At Stagecoach Performing Arts we are all about performance – on stage, in life and in business.

Date of first franchise: 1988

We are here to inspire children and provide them with the confidence to be themselves.

The demand for extra-curricular performing arts opportunities for children continues to increase. Stagecoach’s unique model of running three disciplines (singing, dancing and acting) simultaneously, means its franchisees are well placed to capitalise on this demand.

Stagecoach developed Educational Framework which is pinned around skills development for each stage of learning. Stagecoach enriches the lives of 60,000 students worldwide, each week.

As a Stagecoach franchisee, you are responsible for driving and growing your business and managing a team of talented teachers. You will not be required to teach any classes yourself, but our model actively encourages you to put your own stamp on the creative process.

From marketing to recruiting and retaining teachers, Stagecoach will provide you with the guidance and support you need, when you need it.

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Training provided: Extensive training and ongoing support is provided.

Territories available: Across all territories

FRANCHISE OUTLETS AUSTRALIA/ INTERNATIONAL: Current: 300+ worldwide, 2 in Australia

FINANCIAL DETAILS: Initial franchise fee: $20,000 Minimum investment: $17,000 Royalty fee: 8%-12.5% Financial assistance: No Advertising/marketing fee: 2.5%

automotiveConsulting Franchise products & services Development

Vision Alliance Head Office: Suite 302, 33 Lexington Drive, Bella Vista, NSW 2153

By Appointment: 100 Walker Street, North Sydney, NSW 2060 Contact: Tania Allen | Phone: 1300 76 49 20 or +61 419 481 203 Email: tania@visionalliance.com.au | Web: www.visionalliance.com.au BUSINESS DESCRIPTION: Vision Alliance is an integrated business growth & franchise consultancy, and digital marketing agency dedicated to helping growth-focused business owners, franchisors, and franchisees. Led by Tania Allen, a seasoned business owner since 1990 who has been helping entrepreneurs grow and scale since 1999.

Vision Alliance provides comprehensive, tailored services and solutions for sustainable and impactful growth.

Our specialised services include: • Business Growth & Franchise Consulting: Strategies for business development, leadership, and operational efficiency.

• Franchise Strategy & Development Plans: Custom growth frameworks, feasibility studies, and development plans.

• Franchise Operations Manuals: SOPs, training guides, playbooks, and systems.

• Territory Mapping & Franchisee Profiling: Strategic expansion planning and franchisee selection.

• ●Franchise Recruitment & Sales: Systems to attract, qualify, recruit, and onboard franchisees.

• ●Marketing & Lead Generation: Targeted Facebook and Google Ads to maximise lead generation and growth.

• Done-for-You Marketing & Automation: An experienced team to provide hands-free scaling solutions.

• All-in-One Growth CRM (GetOptimo.io): Automate sales, marketing, and operations.

• ●Franchise Intranet Software: Centralises manuals, policies, and documentation to ensure consistent communication.

• ●Advisory & Mentoring: Flexible, pay-as-you-go or ongoing support.

• ●Advisory Board Representation: Industry expertise through strategic board roles.

We proudly serve clients locally, nationally, and internationally. Contact us today to discover how Vision Alliance can take your business to the next level of success.

In Business Since: 1999

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Helpful organisations APRA (Superannuation)

FRANCHISE COUNCIL OF AUSTRALIA

GPO Box 9836 Sydney, NSW 2001 Phone: (AUS) 1300 55 88 49 Website: www.apra.gov.au

Level 3, 21 Victoria Street Melbourne VIC 3000 Phone: +61 3 9508 0888 Email: info@franchise.org.au Website: www.franchise.org.au

AUSTRALIAN COMPETITION & CONSUMER COMMISSION GPO Box 3131 Canberra ACT 2601 Phone: (AUS) 1300 302 502 or + 61 2 6243 1305 Website: www.accc.gov.au

AUSTRALIAN FOOD AND GROCERY COUNCIL Locked Bag 1 Kingston ACT 2604 Phone: +61 2 6273 1466 Email: afgc@afgc.org.au Website: www.afgc.org.au

AUSTRALIAN RETAILERS ASSOCIATION Level 1, 112 Wellington Parade, East Melbourne VIC 3002 Phone: (AUS) 1300 368 041 Email: info@retail.org.au Website: www.retail.org.au

FAIR WORK OMBUDSMAN GPO Box 9887 Your capital city Phone: 13 13 94 Website: www.fairwork.gov.au

FRANCHISE ASSOCIATION OF NEW ZEALAND 4 Whetu Place, Rosedale, Auckland 0632 Phone: +64 9 274 2901 Website: www.franchiseassociation.org.nz

OFFICE OF THE FRANCHISING MEDIATION ADVISER Suite 205, Level 2, 370 Pitt Street Sydney NSW 2000 Phone: 1800 472 375 Email: office@franchisingmediation.com.au Website: www.franchisingcode.com.au

REAL ESTATE INSTITUTE OF AUSTRALIA Level 1, 16 Thesiger Court, Deakin ACT 2600 PO Box 234, Deakin West ACT 2600 Phone: 02 6282 4277 Email: reia@reia.com.au Website: www.reia.com.au

SMALL BUSINESS ASSOCIATION OF AUSTRALIA 138 Juliett Street, Greenslopes, QLD 4120 Phone: 1300 413 915 Website: www.smallbusinessassociation.com.au

VICTORIAN CHAMBER OF COMMERCE & INDUSTRY Level 3/150 Collins Street Melbourne VIC 3000 Phone: 03 8662 5333 Website: www.victorianchamber.com.au

WORKPLACE SAFETY AUSTRALIA Westfield Tower, Suite 1303, Tower 2, 101 Grafton Street Bondi Junction NSW 2022 Phone: +61 2 9387 1248 Fax: +61 2 9387 1488 Email: info@worksafe.com.au Website: www.worksafe.com.au

ISBN 978-0-9803923-9-5

SUPPLIER FORUM

9 780980 392395 >