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HOW TO BUY, MANAGE AND PROFIT FROM YOUR OWN FRANCHISE EXPERT ADVICE FROM INDUSTRY LEADERS


The Franchise Guide 2013 is published by CGB Publishing Pty Ltd PO Box 968 Mt Eliza VIC 3930 Australia Phone: 03 9787 8077 Fax: 03 9787 8499 *** 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 $29.95 Š 2012 CGB Publishing Pty Ltd all rights reserved. ISBN 978-0-9803923-5-7


Contents Preface .................................................................................................................................................................... 1 CHAPTER 1: What is franchising?. .................................................................................................... 3

Steve Wright, Franchise Council of Australia

CHAPTER 2: Choosing the right franchise system.................................................................13

Kevin Bugeja, Franchise Selection

CHAPTER 3: How to be a successful franchisee....................................................................23

Jim Penman, Jim’s Group

CHAPTER 4: Buying an existing versus new franchise.......................................................31

Jason Gehrke, Franchise Advisory Centre

CHAPTER 5: Financing your franchise...........................................................................................41

Darryn McAuliffe, NAB Franchise Banking

CHAPTER 6: Understanding the legal documents..................................................................51

Elisabeth Ritchie, HWL Ebsworth Lawyers

CHAPTER 7: Ongoing obligations.....................................................................................................65

Robert Toth, Wisewould Mahony Lawyers

CHAPTER 8: Investing in an international franchise..............................................................77

Rod Young, DC Strategy

CHAPTER 9: Franchising in New Zealand. ..................................................................................87

Graham Billings, Franchise Association of New Zealand

CHAPTER 10: How to structure your franchise business.....................................................95

John Sier, Mason Sier Turnbull

CHAPTER 11: Where should we locate our business?. ......................................................103

Peter Buckingham, Spectrum Analysis

CHAPTER 12: Growing the franchise.............................................................................................117

Vicki Prout, Sherpa Group

CHAPTER 13: Investing in your future...........................................................................................129

Tim Kilham, Lanyon Partners

CHAPTER 14: Franchising your business....................................................................................139

Andrew Kelly, Corina Vucic, Gary Carter, FC Business Solutions

CHAPTER 15: The Franchise Council of Australia..................................................................149

Franchise Listings.........................................................................................................................................159 Professional Services Listings. .............................................................................................................205 Publications .....................................................................................................................................................226 Helpful Organisations. ................................................................................................................................227 Index . ..................................................................................................................................................................228


Preface By Stacey Evans, Editor CGB Publishing Pty Ltd

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ranchising is a solid formula for success, based upon tried and tested systems. It paves the way for dedicated and driven individuals to achieve their dreams of owning their own business by joining forces with a strong, stable, and established business network. No matter what your work background is, or qualifications are, there is a franchise system out there to suit your skills, finances, family and lifestyle. There are more than 1,000 franchise systems across Australia, contributing a staggering $128 billion to the Australian economy. With over 70,000 individual franchise owners, employing over 700,000 people across the country, the franchise world is certainly big business. New Zealand has twice the number of franchisors and almost twice the number of units per capita as Australia, making it the highest per capita franchised country in the world. The franchising community is a major provider of employment opportunities in New Zealand, with total direct employment assessed as 80,000 people. So, whether you’re in Australia or New Zealand, how do you become part of this exciting industry, and what are the steps you need to take before you join a franchise system? This book aims to answer all your questions. The more information you read, especially by franchise sector experts, the more you will discover that franchising is a fantastic opportunity for you to become your own boss. We have included a wealth of information from leaders in the franchising industry – giving you professional insight on how to research, select, buy and successfully run your own franchise. We have asked the top franchise bankers, lawyers, accountants and consultants to share with us their tips and tricks to achieving personal and financial stability and success through franchising. Many of our experts also refer to two key elements of franchising: The Franchise Agreement and the Franchising Code of Conduct. If you are planning on becoming a franchisee (or even a franchisor) you must become 1


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very familiar with both of these essential elements within the industry. The chapter on the Franchise Council of Australia (FCA) gives detailed information on the services provided to both franchisees and franchisors. Also included is a chapter on how to franchise your business. If you have an excellent existing model that could possibly be expanded into a franchise, then this chapter is for you. Once you are convinced that a franchise system is the right move for you – we have some of the leading franchise systems listed in the back of the book. Browse through the categories and see which franchises interest you most. By gaining as much knowledge as possible and utilising all the available tools and resources to guide you on the right path, and by selecting a franchise system with proven success, you will give yourself every chance to succeed. I wish you all the best as you embark on this exciting journey.

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Chapter 1

WHAT IS FRANCHISING? By Steve Wright, Executive Director Franchise Council of Australia (FCA)

About the Author Steve Wright is a media and communications professional with more than 15 years of experience in industry advocacy and stakeholder relations, including investor, media and government relations and regulatory affairs. Steve is currently the Executive Director of the Franchise Council of Australia, the primary governing body for the franchise industry. Prior to joining the FCA, Steve was Director of Communications with Gavin Anderson & Company, one of the nation’s leading public affairs, corporate and government relations consultancies. Steve was Director of Stakeholder Relations at Hutchison Telecoms, a network owner and licensed operator of the Orange and 3mobile phone services in Australia and overseas, before joining Gavin Anderson. Prior to that, he was Director of Public Affairs for Cable and Wireless Optus and SingTel Optus. Steve has also run his own small business and played a central role in the start-up of successful internet publishing business, Alan Kohler’s Eureka Report, purchased by News Ltd in mid 2012.

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veryone can picture a familiar franchise business. They cover retailing and service delivery and a mixture of the two. The quick service restaurants like McDonald’s, KFC, Subway and Red Rooster spring to mind. Bob Jane T-Marts, Midas, Autobarn and Battery World sell mechanical goods and service. Bakers Delight, Brumby’s and Michel’s lead baking and Lenard’s is known for its fresh chicken. Many new car sales dealerships, some petrol retailing chains, like United, and convenience stores such as 7-Eleven are franchises too. Bulky goods retailers using franchising include Clark Rubber, Forty Winks, Snooze and Freedom Furniture. Snap, Kwik Kopy, Spec Savers, and OPSM are all franchises. Over the last decade, and continuing today, service franchises are becoming more numerous, with brands like Mortgage Choice, Bendigo Bank, ANZ Mobile Lending and Aussie Home Loans playing a big role in financial services. Jim’s, VIP, Fastway Couriers and Pack & Send are extending their reach, both in Australia and overseas. Cartridge World is Australia’s most successful franchise export, with thousands of stores in dozens of countries.

Major contributor to national economy The sum of all this, in addition to the 1000 plus franchise systems not mentioned, is a $128 billion contribution to the Australian economy each year. That represents a significant proportion of gross domestic product; plus a strong contribution to the nation’s export income. The sector now has about 70,000 individual franchise owners and employs about 700,000 people nationwide. While franchising started in the 1970’s with a strong American flavour, this has changed dramatically over the years. More than 90 per cent of franchise systems operating in Australia today are home grown.

Franchising – the model Successful franchise businesses will proudly declare they have a model that is working well. They are talking about the way their franchise system works, as well as how well their franchise owners are selling their branded products or services. Most successful franchisors base their business concept on a unique offering, a specialist technique or a technical innovation which gives them an edge over their competitors. What they have in common is a franchising system which has helped them to expand their ‘footprint’ – the geographic reach of their product/service – via a franchise ownership format. 4


What is franchising?

So, what we have is a franchisor with a business concept. Most commonly, this concept has been tested in two or three locations, over a few years, before it is offered up as a franchise opportunity. Sometimes it will be a family business looking to expand using a successful formula. The system expansion occurs as more franchisees (individual franchise owners) join it. So the franchise system becomes a way for the franchisor to extend the reach of his or her product or service to new markets. For this reason, some people describe franchising as a distribution model.

More than just distribution A franchise system can be a format for distribution of products or services. However, there is something more powerful involved in successful franchising – the human factor. At its heart, every successful franchising business has a franchisor and a franchisee – two business owners applying their entrepreneurial skill, experience and hard work collaboratively to achieve the best end result. In this sense, franchising is like a business partnership, maximum success will only be achieved if both partners work together. The same applies to franchising: maximum success will only be achieved if franchisor and franchisee work together. The beauty of the franchising model is that the business relationship will not be confined to a single partnership. In a franchise network, there are many ‘partnerships’ and there are many business owners, all working together to achieve the same goal; the success of the system and their individual franchise units within the system. Working together, they are able to leverage greater buying power to get a better deal from suppliers, and they are able to pool resources to market their goods and services more efficiently and effectively. It may be that individuals are more readily able to get into a franchise business because of a bank’s willingness to lend money into a business which has an established track record. The franchise business may actually enable business opportunities which may not be available to a stand-alone business start-up.

A meeting place for aspirations So what does this amount to? It shows that franchising can be a lot more than just a method of distribution. Franchising represents a way for business owners to get together, for their own enhanced success, and be a part of building something bigger. We could say then, that a franchise is a meeting place, where the franchisor and the franchisee come together to achieve their mutual and complementary goals 5


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of business success and expansion. It is a meeting place of aspirations – the aspiration of the franchisor to grow the scale of his or her business concept and the aspiration of a business owner to get into business in an established system with a track record of commercial viability. In the most successful franchise businesses, this meeting place is not a onceoff; it is visited constantly. Franchisor and franchisee need to stay in step if harmony of aspirations is to be maintained. This combination of entrepreneurial aspiration is one of the reasons why the franchise model often yields superior results compared to company owned chains. In the franchise situation, both parties have profit incentive. In the employer-employee scenario, the profit motivation often does not exist for the employee. A good employer might introduce a profit-based incentive for a store manager, but this is usually a small portion of profitability. In the franchise scenario, the franchisee owns 100 per cent of the profits. The Australian Bureau of Statistics does not separate franchise business from the general small business population in its statistical reports, so it is impossible to be sure what portion of small business profitability is earned by the franchise sector. However, the profit-fired franchise model surely punches above its weight compared to non-franchised businesses, in terms of unit profitability. It is sometimes said that small business is the engine of the economy. If that is so, then franchising is surely the turbo charger on that engine.

The franchise agreement As in many businesses, there is an underlying contract in franchising. This is called the ‘franchise agreement’. A major difference between franchising and other business models is that the underlying franchise contract, the franchise agreement, is prescribed by law. A franchisor must provide a franchise agreement conforming to the Franchising Code of Conduct, which is a set of regulations specifically designed to protect the rights of franchising participants and to give confidence to new entrants to the sector that they are doing so with certain rights, entitlements and protections. The franchising model is legally defined in the Code, which has been a mandatory addition to trade practices law in Australia since 1998. In essence, a franchise agreement is defined as an agreement where one party (the franchisor) provides to another (the franchisee) the right to carry on business under a system or marketing plan using a trademark or symbol owned by the franchisor, in return for a fee paid by the franchisee. 6


What is franchising?

The four key elements are described in the Code as follows: 1. The agreement is written, oral or implied in whole or in part. 2. The franchisee’s business operation is substantially or materially associated with a trademark, advertising or commercial symbol that is either owned, used, specified or licensed by the franchisor. 3. The franchisee pays the franchisor fees – except for four payment categories excluded by the Code. 4. There is a grant, by the franchisor to the franchisee, of a right to carry on a business of offering, supplying or distributing goods or services in Australia, under a system or marketing plan substantially determined, controlled or suggested by the franchisor. These criteria apply irrespective of how the parties describe their arrangements. While there are legitimate reasons to establish arrangements that fall outside the Code, the franchising policing body, the Australian Consumer and Competition Commission, takes a dim view of organisations that do so with the intention of avoiding the Code’s provisions. This very broad definition covers almost every conceivable type of franchise and branded distribution arrangement. When the term ‘franchise’ is used in common parlance, it is normally used to describe what is called ‘business format franchising’, where the franchisor specifies much of the business format under which the franchisee must operate. However, the broad definition is useful as it highlights that franchising comes in many and varied forms, and franchising techniques can be used selectively if desired. This means that franchising contracts are many and varied. They contain elements prescribed under the Code, but they then contain many aspects, clauses and so on which are specific to the business in question. It is essential for all new entrants to franchising to pay close attention to the detail in the franchise agreement.

Operating procedures Franchising techniques are used by different companies in different ways, and franchise formats vary widely in levels of sophistication. Some businesses, such as major fast food systems, mandate processes for almost every aspect of the franchisee’s business. Other franchisors are less prescriptive in terms of operating format. The key to franchising is the creation of a synergistic 7


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business relationship between independent business proprietors that enables each party to focus on their strengths to provide a superior offer to consumers.

Franchisee obligations Some of the most common and important elements of a franchise agreement relate to the commercial terms between franchisor and franchisee. In addition to providing the licence to operate the brand, a franchisor will often offer initial and ongoing training, as well as marketing support and sometimes other support services. In return, a franchisor will often require a franchisee to provide the following compensation: Franchise fee: This is an up-front fee, paid by the franchisee to the franchisor, for the right to use the brand name and systems required to operate the business in a specified location or area for a specified period of time. Royalty: The franchisee may pay ongoing fees to the franchisor for management and technical support and other ongoing services provided. This may be a flat fee, paid on a monthly basis or, more commonly, a percentage of sales. Marketing levy: A regular flat or percentage based fee paid into a central advertising or marketing fund. This is used by the franchisor to promote the whole business network. The key ideas here are that the franchisee fee buys the right to use the brand for a specified period. There will usually be rules written into the franchise agreement about the way franchisees must represent the brand. Franchisors will often police these rules stringently, in order to maintain the consistency of product or service delivery, which is an essential part of overall consumer brand recognition and integrity.

The way it works In most cases, the franchisor sets the operating format for the business and takes responsibility for developing and managing the franchise network. The franchisee gets the right to use the franchisor’s system and brand, and the right to use intellectual property such as trademarks, business and operating systems and procedures; many of which may be confidential or the subject of copyright. Franchisors will often manage activities, such as marketing and the purchase of products for sales, across the franchise network. Stock may be supplied by 8


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the franchisor or sourced through third party arrangements established by the franchisor. Taking care of these tasks on behalf of the entire franchisee network allows the franchisees to focus on operating their individual businesses. Franchisees will generally own the equipment, vehicles, fixtures and fittings used in the business (if there are any) and will take care of ordering and holding stock. Employees involved in the business are usually principals or employees of the franchisee, and the franchisee will handle most dealings with customers.

A great opportunity – but no guarantee In his book, The E-Myth, renowned US author, Michael Gerber, identifies the advantages of franchising as among the most remarkable in business. Back in Australia, in his book, The Franchise E-Factor, outstanding author, psychologist and franchising educator, Greg Nathan, identifies some of the ‘e’ words which can define a rollercoaster of emotional development for a new franchise business owner. From ‘glee’, through ‘me’ and ‘fee’ to ‘we’, Nathan plots how emotions for a franchisee can fluctuate from initial excitement to questioning, to a satisfactory longer-term trajectory of business success. The message of both authors is simple: franchising offers great opportunity, but it has its challenges. There is no guarantee of success and no substitute for the hard work which is necessary in every small business. It is sometimes said that franchisees are in business for themselves, but not by themselves. They have their franchisor, and a network of peers, who can often be the best mentors. There is plenty of upside from the franchisee’s perspective, but there are also risks. Good advice for the prospective franchisee includes doing all your due diligence and then making sure the decision is right for you.

Advantages of franchising • A franchised business has a track record of commercial viability. Accordingly, there is less risk of failure than in an untried start-up. • Franchisees should receive ongoing assistance from the franchisor, as well as getting access to the franchisor’s know-how, knowledge and experience. • Franchisors may be able to negotiate better rates of finance for funding the business, and/or better lease location and terms, if there are premises involved. 9


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• Franchisors can help with store design and fit-out. • Bulk purchasing power may be available to franchisees through the franchisor. • Access to franchisor research and development may be available to keep the business up-to-date with market trends.

The risks of franchising • Franchisors must instill operating discipline across the network. If franchisees resist this discipline, conflict can occur. • The process for sale or transfer of the franchise rights is likely to be controlled by the franchisor – under the authority of the franchise agreement – though approval for sale/transfer cannot be unreasonably withheld. • Franchisor authority to make changes to the system can affect cash flow and/ or profitability for franchisees. • The behavior of the franchisor or other franchisees may affect the brand integrity for other franchisees. • If a franchisor goes into receivership, franchisees may have to face the prospect of having to change brand name or elements of the system operation (possibly under a new brand owner). Franchise businesses face the same challenges as other businesses. Economic downturn, increased competition, under-capitalisation and many other risks afflict franchises in the same way they do non-franchise businesses. Because of the length of term of a franchise agreement (on average five to seven years) and the degree of interdependence it creates between franchisor and franchisee, it is one of the more demanding business relationships. As a result, it is sometimes described as a commercial marriage. Managing the relationship is critical, from both the franchisor and franchisee perspective, and is one of the most testing factors in sustained success.

Summary Franchising is not a magic formula that guarantees business success. It is simply a method of carrying out business which can offer significant commercial advantages for franchisors and franchisees. Franchising works best when the franchisor provides a proven and successful business formula to its franchisees and the franchisees follow the formula and work as a team. When it works well, it is a system which rewards 10


What is franchising?

entrepreneurial flair, innovation and commitment to team discipline. Like any great sporting team, franchising has a coach, a captain and team of players who each have a role to play. When they each do their jobs, collaboratively and in unison, it can be splendid to watch and rewarding for all.

Steve Wright, Executive Director Franchise Council of Australia (AUS) 1300 669 030 info@franchise.org.au www.franchise.org.au

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Chapter 2

CHOOSING THE RIGHT FRANCHISE system By Kevin Bugeja, Managing Director Franchise Selection

About the Author Kevin has been involved in franchising for over 19 years, beginning with banking at the National Australia Bank, where he became exposed to franchising through lending. His career later progressed to sales and sales management with a large automotive franchise. After six years, Kevin decided that he would continue to pursue his passion for franchising and joined a specialist consultancy firm where he further developed his skills and expertise in franchising. He came to specialise in recruiting franchisees, acting on behalf of many of Australia’s most well known household brands. Several years later, Kevin’s next chapter in franchising saw him undertake ownership of his own franchise with Nando’s. In fact, he became the first franchisee for Nando’s in Australia. Upon selling his business a few years later, Kevin returned to franchisee recruitment for a further two years until he joined a franchisor to work in the operations and development of a franchise system until the business was sold. In 2006, Kevin founded Franchise Selection, a specialist recruitment firm that specialises in recruiting franchisees. Today, his company assists more than 20 small to large franchise organisations throughout Australia and overseas.

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re you thinking about buying a franchise and don’t know where to start? There are so many franchise opportunities to choose from. The process of choosing the right franchise can be very difficult. Most of the people I meet are looking to buy a franchise because they hate their jobs, and will always hate their jobs. One of the greatest advantages you have when buying a franchise is the freedom to choose an industry that you are interested in and start your career again. Many of us make a decision at about 18 years old or when we leave high school on what we want to do with the rest of our lives. Let’s face it, most of us at this age really don’t have a lot of life experience and everything including working and earning money sounds exciting but this usually wears off and the typical applicant we meet is usually tired of working for a boss and making someone else rich and want to work for themselves. Luckily franchising allows these people to start again. But to determine which business we should evaluate, we should first determine if we are in fact suited to franchising.

Top questions for self-assessment of the potential franchisee Before choosing a franchise, you need to ask yourself the following questions: 1) What are my strengths and weaknesses? 2) What type of business attracts me? 3) Am I suited to franchising and will I follow the direction of a franchisor? 4) Do I have the ability, commitment and personality to run my own business? 5) Am I willing to borrow the funds required and can I afford it? 6) Am I prepared to work long hours and do whatever it takes including making sacrifices to make it work? 7) Do I have the support of my family, partner, spouse etc? 8) Do I want a large business or franchise or do I want a business I can run from home? 9) Do I want to buy into a well-established brand name or a start up? When deciding which franchise is right for you, you may wish to take into account the advantages and disadvantages of large franchise versus small franchise systems. What can you expect from each type? 14


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Well-Established Franchise Advantages In large well-established franchise systems, the main advantage is that you are more likely to receive a proven system as well as a valuable and recognisable brand. You are able to determine that these two factors exist by research and talking with other people. In addition, conversing with existing franchisees within the organisation can demonstrate how well the system is working especially if the other franchisees have been in operation for a decent length of time. Another advantage of investing in a large franchise is the lower level of risk you will experience. If the franchise has grown over time, it is likely that most of the kinks have been worked out of the system. When working in a large franchise operation, you are more apt to receive solid support. You will probably work with more experienced personnel within the organisation. This in turn fosters the potential for lower operating costs due to the decrease in possible errors you might make within your franchise. Therefore your potential for better profits is increased.

Well-Established Franchise Disadvantages A possible disadvantage of a larger system is that there are usually stricter rules and regulations regarding operations. You are much less likely to find any flexibility within the organisation. Also, larger operations tend to increase their multi-unit franchises within the organisation since those franchisees have already proven themselves. Therefore it may be harder to obtain a franchise in the first place or end up with the ones that existing franchisees within the network have discarded as just average locations etc.

Small or Start-up Franchise Advantages Smaller franchises are inclined to have simpler more direct systems. Franchisees receive the support that they need with focus on the most important issues, usually with a more personal touch. You will mainly deal directly with the senior people within the organisation. Also, smaller franchises can offer more flexibility. These franchisors tend to allow some freedom for experimentation and are more open to suggestions for improvements. 15


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Small or Start-up Franchise Disadvantages One disadvantage of associating with a smaller franchise is that they usually have smaller budgets and more limited resources than larger organisations. This would hinder access to outside training programs and third party support that the large systems can offer. Technology may not be as up to date either. A second disadvantage of smaller franchise systems is that their operating system may not be as well proven as that of a larger organisation. Therefore the risk is likely to be increased. Overall, you must decide what type of environment you are most comfortable working in. Do your research ahead of time, including talking with existing franchisees to determine what size organisation would be the best fit for you.

Franchise System vs. Small Business When an entrepreneur invests in a franchise, he or she is much more likely to obtain a solid proven system than from an ordinary small business partly because a franchise is a larger company that is overseeing many smaller operations. The franchise company has typically developed a successful structure, with the bugs worked out through trial and error, over a period of time. Research demonstrates that overall franchises have an approximate success rate of over 90 per cent as compared to small businesses started from scratch at only about a 15 per cent success rate.

What is provided by the franchise? A successful franchisor provides its franchisees with a business model that has been proven to work. The franchisors have typically spent a great deal of time and energy developing the most complete overall system to pass along to their franchisees. The better their system, the more success their franchisees and they will ultimately achieve as well. The complete detailed system on how to successfully operate the business is passed to the franchisee including training, continuous support, and an operations manual. As part of the system, franchise operators usually spend a great deal of time analysing methods and narrowing down the best combinations of products and services to market based on need. Demographics are also evaluated, determining the most lucrative locations for the franchises. 16


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Marketing plans for pre-opening as well as ongoing operations are also components of the overall system that is presented to new franchisees.

How to Investigate a Franchise System First, before investing in a particular franchise, it is important to research the operation as thoroughly as possible. Find out how long the franchise has been in existence. If the franchise has been in operation greater than ten years, it is more likely to have made it through several stages of growth; therefore having a more reliable system in place. Also, obtain firsthand information by speaking with other franchisees within the organisation to determine how the franchise has worked out for them. Find out if they have achieved the success that they expected. By and large, investing in a franchise and its proven system offers entrepreneurs great opportunity for success without going through the many painstaking steps of establishing a brand new business. With the franchise they can concentrate on getting to know their customers and bringing in new business.

New vs. Established A good rule of thumb is that a franchise system would be considered ‘new’ if it has been in existence for less than two years. There are several advantages as well as some disadvantages in joining a new franchise system.

Advantages To begin with, new franchisors and their partners typically dedicate a great deal of their own resources to their newborn ventures. They have invested their time and money; therefore they have a vested interest in making every effort to have their franchise become a success. A new franchise organisation can be a nice way for franchisees to be part of a real pioneering effort. Franchisees can often feel as though they are partners in the new endeavour by actively participating in the evolution of the company as well as by recommending improvements. Additionally, new concepts usually offer a great opportunity to get in on the ground floor before others jump on the bandwagon. Therefore the investment can be quite lucrative. At the same time, as a franchisee in a new system, prime locations are more likely to be available. In a more established system, key locations will probably be few and far between. 17


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In order to market to new franchisees, franchisors tend to be more flexible on contract terms. A franchisee may have more leverage to negotiate conditions and costs. Finally, if a franchisee starts out with the franchise at the very beginning, he or she may be able to move up to a higher position within the organisation. Becoming an area developer may be an option.

Disadvantages Since there is little or no history behind the new system, there are typically more risks involved. Also, new franchisors may not possess the experience or skills to provide adequate support and training to their franchisees. Another possible negative of new franchise systems is that it may be more difficult for franchisees to obtain funding. There is little or no record for potential lenders to base their decisions on. Lastly, it can take quite a while for a new brand to become established. Therefore, a longer wait may occur for a return on investment.

What to Look for in a New Franchise System As with any new investment, it is imperative that potential franchisees do their research before committing to joining a new system. Use the Internet and speak to existing franchises to investigate. First, determine if there is enough demand for the product or service. Also, decide if the item can be easily reproduced by someone else. You will also want to find out who the main competition is. Additionally, it would be helpful to find out some information about the franchisor with regard to the type of experience he or she had previous to establishing the franchise. If you find that there has been previous experience in the same field or other types of business experience, it is more likely that the franchise will turn out to be successful. Overall, if you are brand new to franchising you will need to decide if you are comfortable learning franchising from a new franchisor or if you would be better suited for participation in a more established franchise.

How to Find a Franchise with Good Return on Investment Savvy investors always make it a point to estimate the amount of money they 18


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expect to earn (return on investment) regardless of the type of investment they are making. In the case of franchising ventures, it is important to consider not only the monetary investment but the time spent in the business as well. Therefore, the return on investment should be greater than when contributing to a passive investment such as the stock market or real estate.

What is a Good Return on Investment in Franchising? Returns of 10 to 15 per cent are usually considered decent with regard to passive investments. However, since there is also a great deal of time involved in franchising in addition to the monetary investment, the return should be somewhat higher.

How to Determine the Potential Return on a Franchise First of all, a more expensive franchise does not necessarily translate into higher returns. Returns will be driven in part by the management skills you bring to the business as well as the type of industry, the business model, and the market. Studies show that higher returns are more likely to occur with investments of less than $200,000, and may even be quite possible starting the franchise with less than $50,000. In order to discover the type of return to expect from a particular franchise, there is some preliminary investigating that should be done. For example, you should try to find out the average earnings of a typical unit over the initial three years of operation. This information is best gathered by asking the franchisor for some historical sales history across the group as well as speaking individually to existing franchisees in the network.

How to Increase your Potential Return The main key to increasing your return is to find a good quality franchise in which you can make the best use of your particular skills as leverage. The combination of the franchisor’s business model along with your own investment of time and talents should be a good predictor of success. Again, unlike a passive investment, in franchising the monetary contribution is not the only precursor for decent earnings. Therefore it is important to carefully select a franchise that matches well with your particular personality and experience. 19


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Top Ten Reasons to Buy a Franchise Buying a franchise can be a life-changing experience. There are many reasons why you should fulfill your dream of becoming your own boss and open a franchise. The following reasons to buy a franchise will help you to understand why it will be a great investment. Contacting these franchisees should provide you with valuable information on what you can expect to earn. 1. Turnkey Business

There are many entrepreneurs that have exactly what it takes to run a successful business but don’t have what it takes to get their business up and running. Whether it be financing, negotiating lease terms or even the confidence it takes to quit their job and start their own business.

Buying a franchise eliminates all the hard work: finding a location, negotiating a lease, hiring reliable contractors and doing all this on-time and within budget. When you buy a franchise you are buying a complete turnkey business.

2. Proven System in Place

When you buy a franchise you buy a system. All franchises have an already-established system in place that you must follow. These systems are designed to improve the overall productivity and increase sales of each franchise. Having a proven system already in place eliminates the guesswork and errors a common business owner would normally face.

3. Higher Likelihood of Success

Buying a franchise is very different from starting a mum and dad business. Since there is an already established system in place, there is a higher likelihood of success. If you follow the system the franchisor has put in place, you should be on your way to running a very successful business.

4. Corporate Image and Brand Awareness

If you buy into a franchise system that is already established the corporate image and brand awareness is already recognised. Customers are usually more comfortable purchasing items they are familiar with and working with companies they already know and trust.

5. Buying Power

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Your franchise will benefit from the collective buying power of the parent company as the franchisor can afford to buy in bulk and pass the savings


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along to franchisees. Inventory and supplies will cost less than if you were running an independent company. 6. Training

Most franchise companies offer a one to four week training program that is usually held at their corporate offices or at an actual franchise location. This is what makes franchises stand out from every other business or business opportunity. The franchisor will train you to run your franchise exactly the same way their other franchise locations are run. This will ensure that you are running your business efficiently and will help to eliminate any common mistakes a new business owner usually faces.

7. Ongoing Support

When you buy a franchise you are never alone. You will always have the support of the franchisor and the support of knowing you are part of a growing family. You will always be able to pick up the phone and ask questions to the franchisor or even to other franchisees.

8. Marketing

There is usually no need to worry about advertising your franchise other than in your local area as the franchisor usually takes care of handling all of the national marketing. If the franchisor does not handle the marketing, they will have an outline for you to follow and sometimes specific vendors that will have systems in place for you to use.

9. Exclusivity

When you buy a franchise you are also buying exclusivity in which to do business. Franchisors will only allow a certain amount of franchises to be open within a certain geographical region. You will be entitled to a certain area and no other franchises (within your franchise system) can be open within that area and in some cases you may even have a territory or area defined by a map.

10. Multi-unit franchise ownership

Being a part of a franchise system will always offer you more opportunities to grow within the system. Once you have become a successful franchise owner, the next step is to become a multi-unit franchise owner.

After you have one successful franchise open with a great management team you can focus time on opening a second location. Multi-unit franchise owners manage more than one location and are able to sometimes double their income 21


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by taking on more than one location. Owning multiple franchise locations can be very lucrative.

Steps to Take After You Choose Your Franchise Once you have chosen which franchise is right for you, your job has just started. The process of investigating and buying a franchise should be done very carefully.

Do Your Homework Research the history of the franchise and the franchise company via the Internet. Try searching for press releases on the company. Even though a franchise may have a popular name, there may be some issues that you may not be informed about. If the company has been in existence for five years or less, it is wise to pay special attention to the pace of growth and its franchisees’ geographical locations. Find out how many franchises were opened during the last several years as well as how many, if any, have closed. Determine if the franchise has been growing at a reasonable pace so that you can get a good idea of the stability of the operation. Also, talk to other franchisees, including former ones, to find out how happy they have been with the franchisor. Overall, if you take your time and do thorough research before making your investment, you will ensure you are making the right decision in choosing the right franchise and one that best suits you.

Kevin Bugeja, Managing Director Franchise Selection (AUS) 1300 FRANCHISE (372 624), Mobile: 0412 511 630 kevin@franchiseselection.com.au www.franchiseselection.com.au

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Chapter 3

HOW TO BE A SUCCESSFUL FRANCHISEE By Jim Penman, Founder Jim’s Group

About the Author In the early 1980s, Jim Penman was a struggling student working towards his PhD in history, and mowing lawns in suburban Melbourne part-time to help make ends meet. In 1982, with a personal debt of $30,000 and a marketing budget of just $24 he started mowing lawns as a full-time business. His focus on customer service, attention to detail and desire for perfection was appreciated by his clients and he soon had more work than he could handle. He began taking on subcontractors, with the expectation that they would meet his standards of workmanship and customer service and over the next few years his business grew as he built up and sold lawn mowing rounds. In 1989 he began to sell Jim’s Mowing franchises providing support and training to new franchisees ensuring they could meet his standards of workmanship and customer service, before taking on the Jim’s name. Since then Jim’s Mowing has become the largest and best-known lawn mowing business in the world. The Jim’s Group now has 35 divisions including Jim’s Cleaning, Jim’s Dog Wash, Jim’s Antennas, Jim’s Bookkeeping, Jim’s Building Maintenance and Jim’s Pool Care and has more than 3200 franchisees and franchisors.

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eing successful as a franchisee starts a long time before you begin working in your franchise. It starts when you begin thinking about whether to go into business at all. Because while a good franchise system can improve your chances of success, the only real guarantee is your own hard work and business sense. In general, the more successful you have been in previous employment or in business, the more likely you will be to succeed as a franchisee. We find that managers and sales people tend to be especially successful, but any job that requires self-discipline and the ability to work independently is a good background. Then it’s a matter of choosing the right type of business. People often ask me which Jim’s division they should go into, and I always ask them: “What do you like doing?” I became a mowing contractor because I love the outdoors: trees, grass, sunshine and rain, the lot. Others prefer the indoors, or like driving, or want the robust physical challenges of working with trees or building fences. Potential income should always be secondary. You’ll do best at what you most enjoy. Thirdly, and this really counts, is to choose the right system. And here there is one key principle: do your homework! I’m astonished at people who make decisions involving tens of thousands of dollars and years of their life without spending a few dozen hours on research. Don’t be afraid to ask hard questions. Check out all the companies in your chosen industry, and ask: “what makes them the best?” Most importantly, get a list of all their current franchisees, with direct contact numbers, and speak to as many as possible. This should be handed over without even the need for a deposit. Failure to do so is a breach of the law, and highly suspicious. A good franchisor will welcome you phoning their people. A poor one will try not to hand over the list, or restrict it to a few chosen favourites. We have found the best franchisees tend to do intensive and careful research, involving competitors and extensive contact with our own people. Another good clue is to see how selective the system is. A good franchisor will question you intensively, want to know all about your background and skills, require a tryout before even considering your application. A poor franchisor will deliver an intensive sales pitch and try to get a deposit out of you as soon as possible. This suggests low standards, poor customer service and lack of concern for franchisee success. Don’t think this attitude is unknown, or even rare. I once employed (briefly) a salesman from a rival franchise system, and at one stage asked him: “what was their criterion for selecting franchisees?” His answer: “$50,000, and a pulse!” It is no coincidence that this system, once a major player in the industry, is now a fraction of its former size and no 24


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longer franchises at all. Even within our own system, divisions and franchisors who select most intensively have better franchisee satisfaction, better customer service, and faster growth. It has been one of our major challenges in recent years to make our selection systems tougher and more thorough.

The value of customer service Once in business, there is one key principle that counts more than everything else: look after your customers. This should be a matter of emotion and deepseated principle, rather than simply of logic. The second principle of our Jim’s Group values states that we are ‘passionate’ about customer service (our first principle is service to franchisees). This means that we look after customers well because this is a matter of our pride and integrity and sense of identity. I’ve made countless mistakes in my business career, and my character flaws are legion. Yet when I look over a business career that has taken a $24 start-up to Australia’s largest franchise network, there is one principle that was correct from the beginning. I was always passionate about customers. I can still remember the horror I felt, decades ago, when through a bookkeeping mistake, I failed to service and thus lost two of my regular clients. It was not the loss of income that mattered, because I had as much work as I could handle, but the sense of guilt for letting my clients down. In mowing a lawn, I was always looking to do that little bit more. For example, in the early days when edging was done with a wheel, I used to edge first and then run the left side of the mower down the mower strip to create a really clean edge. But it always bugged me that where grass met a retaining wall or tree, there was always that annoying fringe with no possible option (doing it with shears was just too much work for the benefit). One day, and this was in the 1970s, I walked into my local mower shop and saw a strange looking gadget on the floor. It was a long pole, with a handle in the middle, a small engine on one end, and a strange looking fixture with a piece of nylon cord sticking out at the other. It was a brushcutter, one of the first ever imported into Australia, and I had never seen anything like it. I asked the owner what it was for, and he demonstrated. At last, I saw the solution to my annoying furry edges. And though I didn’t have much money and it cost more than a lawnmower, I bought it on the spot. And thus I became one of the first contractors in Australia to own a brushcutter. Edging was such a fetish with me that my contractors said they could go into a street and tell which lawns I had mown, simply from the quality of the edges. To me, a single blade of grass over a cut edge is like a giant red boil on a beautiful face – ugly, 25


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and impossible to ignore. If this seems exaggerated and unreasonable, well it is. It’s an entirely emotional reaction far beyond any immediate financial benefit. And yet, it is exactly this passion that has reduced our complaint rate by 98 per cent since pre-franchise days. Any good franchising system will have standards of service, and sanctions to make sure franchisees stay within them. But this should not be your guideline. Find out what the system requires, and go beyond it. Then try and improve on that. Never be satisfied that any level of service is good enough, given normal constraints of time and money. The aim should be not so much to satisfy clients, as to amaze them. In a mobile service business like ours, the biggest challenge is always to do with time. It’s a matter of responding fast to the first phone call, and then turning up on time. When clients phone our office we promise them a franchisee will call them back within two hours. But we tell our people not to wait nearly that long. The speed of response has a huge effect on the rate at which leads are converted into jobs. Our customer surveys tell the story. Clients who report a call back after two hours have less than a 50 per cent chance of booking the job. If the call was made after ten minutes but before two hours, 78 per cent will book. If it comes within ten minutes, 85 per cent will book. Calling back within two hours meets the client’s expectations. Calling back within ten minutes exceeds them. Customer service is also directly reflected in our franchisees’ income. Of franchisees who rate highest on customer service, which includes calling back within ten minutes and having their work normally rated as ‘excellent’, two per cent report poor income. Of those who rate lowest on customer service, 25 per cent report poor income. The same pattern applies to regions, divisions and even countries. The better the customer service, the more the leads, and the better the reported income. The one area where we do not go all out to please customers is on price. Our franchisees are permitted, even encouraged, to charge what the market will bear. And the better the service, the more they can charge. We even suggest that if their conversion rate of leads to jobs is too high, say above 90 per cent, they increase quotes to lose a few more. But most customers do not mind paying an extra four or five dollars, if it means their property looks immaculate and they don’t have to wait around all morning for someone to turn up. This is not an option available to retail franchisees, of course, since prices tend to be fixed. But better service to retail customers means more people through the door; while a service franchisee can only do the work he or she has time for. Either way, profit increases. 26


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To be a successful franchisee, in other words, is for the most part no different from the road to success in any business. Customer service is number one, as is charging correctly and properly. Other aspects include operating efficiently without waste of time, reducing costs, controlling debts and so forth. But this is exactly where a strong franchising system comes into its own.

Lesson learnt I often say, when talking to franchisees at induction training, that I wish I could have a time machine and attend our course when first starting out in business more than three decades ago! In the beginning I made so many mistakes, some serious, including (for example) being immensely proud of having all my quotes accepted in my first month of full time business. I was even more proud that clients commonly gave me extra money for a job well done. Looking back now I realise I was quoting far too low, and could have earned several hundred dollars more per week. This would have made an immense difference to my quite desperate financial situation at the time. Other hard earned lessons included the techniques for picking up wet grass clean, tricks for getting round trees fast, efficient use of grass bags, brushcutter technique, systems of navigation, mower maintenance principles, and much more. I spent fifteen years in the field and was a hugely successful contractor, giving it up only just before launching our franchising system in 1989. But then I started having regular meetings with franchisees, and immediately found a huge urge to get back out again. It wasn’t that I had too much time on my hands! It was finding out how much better my business could have been run using all the new ideas that were being shared around. Even today I am learning lessons which would make me a better and more successful contractor. For example, one of the keys to success in a service business is offering clients extra services. It makes for happier customers, more income, and a better hourly rate. And yet, often we refrain from asking for fear clients may find us too ‘pushy’. So here’s a simple idea: simply mention to the client something you have done or intend to do. For example, you apologise to a client for being grubby because you’ve just cleared someone’s gutters (the client you are speaking to has leaves poking over the edge of theirs!) This is something I didn’t think of in 15 years in the field, or for 15 years after that. And yet it’s one technique, among many, we now teach all new franchisees. Buying a franchise can have many advantages including an established brand and shared marketing. In the case of a service franchise like ours it usually means quite a bit of work in that crucial early stage when building the business. 27


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But even more important in the long term is the knowledge of how to run a successful business, the immense fund of experience gained by franchisors and your fellow franchisees. Some of this is available to independents through trade associations or similar, but the key advantage within a franchise system is that the people you talk to are not your competitors. They are actually on your side and have a considerable benefit, especially franchisors, in seeing that you do well. One of the most frustrating experiences as a franchisor is franchisees who do not want to take advantage of this. Late last year I was phoned by a cleaning franchisee who was just new in business and not doing well (all my 3200 franchisees have my direct phone number and email address and are encouraged to use it). I looked at the notes and saw that his franchisor was giving him advice on marketing that he simply refused to accept. He was intent on using leaflets instead, which have very poor results. After talking to him for a while, I suggested a few more ideas but basically backed up his franchisor. He still refused to budge, arguing that our way (which he had not tried) was wrong, and his right. And yet he also complained that our ‘system’ was not working for him! This was a franchisee who was failing badly, but refusing the advice of his franchisor who had decades in the cleaning business, and myself with decades as a franchisor.

The importance of learning We divide our franchisees, at least notionally, into gold, silver, bronze and lead. Gold franchisees are people who learn the system, and then go on to improve it. They’re so good at business they would almost certainly succeed without a franchise, but they flourish massively and often go on to take franchisor roles or (with us) even start new divisions. Then there are silver franchisees, who learn and follow the system and can sometimes be mentored and coached into gold. Then there are bronze, who need to be encouraged and helped to follow the system. Outside the franchise they would probably fail, but with the right support they can do very well. And then there are the ‘leads’. It’s not a label we apply lightly, but these are people who cannot learn. Sometimes it’s for sheer lack of ability, in which case we selected poorly. But more often they have the ability but simply don’t want to follow. They have a poor income, often because of poor service to clients, but always want to do things their own way. We sometimes also call them ‘yes buts’, because whatever we suggest they have a reason why it won’t work – in their case. It’s as if they cannot accept that what they are doing could be wrong, seeing it as an attack on their ego. So what is wrong with the 28


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business must be the fault of the system, the franchisor, myself, the economy, anyone or anything but themselves. Such people can be highly intelligent and articulate, but in a franchising system they are hopeless. So one very vital trait for a successful franchisee, unlike the owner of an independent business, is the willingness to follow a system and take advice. This is why people used to operating within a disciplined system, such as bank managers and army personnel, often do strikingly well. What matters is the willingness to keep on learning, mont.h after month and year after year. This is what turns a bronze into a silver franchisee, or a silver into a gold. In our system there are two main ways for franchisees to continue learning. One is through attendance at meetings, which are compulsory in theory but not enforced. A pattern we notice is that those most regular in attending are the new franchisees, and the best ones. What both of these have in common is that they are eager to learn. The established franchisees, who are muddling along but failing to flourish, are often not there. Even though they are the ones we would think had most to gain. The other way our franchisees can keep learning is through what we call ‘pro-active’ calls. Our franchisors are asked to call franchisees wherever possible at least once a month, to give practical advice and encouragement on how to improve their income. We find that when franchisors do this consistently, as reported by confidential franchisee surveys, they have more satisfied franchisees, more sales, and lower attrition. This is a system with proven usefulness and most franchisees are happy to accept and benefit from such calls, but others simply do not want them. I have a story to illustrate my feelings about people who buy into a system and fail to take advantage of the benefits. I’m an absent-minded person, usually with my thoughts far away from the everyday business of life. So when going shopping, I have a frequent habit of paying for my goods and failing to take them away. Sometimes the shop assistant will run after me, or more often I realise the mistake and go back. But either way, what I’ve done is pay for something and then not take the benefit. Someone who buys a franchise but doesn’t follow the system is doing exactly that. What a successful franchisee needs is a certain level of what I might call humility, the willingness to accept and follow someone else’s system. This doesn’t imply a lack of creativity. The best franchisees will learn everything the system has to offer and then extend and improve it, often being the model for others to follow. In fact, a certain level of humility is a very useful trait for a franchisor, because it helps us to pick up and spread around the best ideas. It is not widely known that most of the successful McDonalds meals, including 29


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the Big Mac, were devised and tested initially by franchisees. This is one reason why I make myself readily accessible to franchisees, because they often have ideas and insights that can help the system to keep on improving. In fact, most of the really significant changes in the system over the past ten years have been a direct result of franchisee feedback. Nothing in the world can totally guarantee success. But if someone has the right level of ability, chooses a good franchise with a style of work that suits them, offers great customer service and is willing to follow the system, their chances are pretty good!

Jim Penman, Founder and CEO Jim’s Group (AUS) 131 546 www.jims.net

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Chapter 4

Buying an Existing versus New Franchise By Jason Gehrke, Director Franchise Advisory Centre

About the Author Jason has 20 years’ experience in franchising and has worked at franchisee, franchisor and advisor level. His firm, the Franchise Advisory Centre, advises both franchisors and franchisees on pre-entry considerations as well as on sector best practice across a range franchising issues. The Franchise Advisory Centre also conducts specialised franchise education workshops and seminars around Australia. Jason is often quoted in franchise articles in the business media, writes a regular column on franchising and publishes ‘Franchise News & Events’, a free national email news bulletin on franchise trends and issues. He has a Masters of Business Administration (MBA) and is a former award-winning CEO of a mobile service franchise system. Jason teaches undergraduate and postgraduate franchising programs at Griffith University’s Asia-Pacific Centre for Franchise Excellence. As a former member of the Australian Competition and Consumer Commission’s (ACCC), Jason served on the ACCC Franchising Consultative panel for more than five years. He is a member of the Franchise Council of Australia (FCA) and has made submissions to state and federal government reviews of the franchise sector.

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his chapter explores ten main factors to consider when deciding if it is better to choose a new, start-up franchise (also known as a ‘greenfield’ outlet), or buy an existing franchised business.

1. Location In the first instance, the location of greenfield opportunities or existing outlets for sale will be a primary consideration for any potential franchisee. Most potential franchisees will be looking for opportunities close to their home base, and generally within a 20km radius of where they currently live. This means that if a greenfield site is available in that location, the decision on which type of franchise to buy will be self apparent to the potential franchisee. If there is an existing franchise servicing that location which happens to be for sale, then the potential franchisee may be well-poised to buy the business, however it is not always the case that a buyer and a seller will both exist in the same location at the same time. Even if the business is for sale, there is no guarantee that the buyer will meet the seller’s price or sale conditions. Alternatively, if the buyer makes an unsolicited offer for a business that is not currently for sale, the buyer may end up paying a higher overall price than for a business that is already on the market. Should a buyer not be interested in looking for a business in their home location, but are prepared to relocate (and usually to a place already in mind, such as a specific coastal, regional or metropolitan location for either a sea, tree or city change), then the same problem arises: What greenfield or existing businesses of the franchise are available in that location? If there are none, or none available on such terms that suit the potential buyer, then the buyer may actually change their preference for franchise system and look at competing offers if their location requirement can’t be fulfilled. In certain circumstances, and usually only for exceptional franchise brands or offers, do potential franchisees relocate just for the purpose of acquiring a franchise.

2. Timing Closely linked with the issue of location is that of timing. A potential franchisee may be interested in a particular location, but if a greenfield or existing franchise is not available in that location in a timeframe suitable to the buyer, how much longer might they be prepared to wait and what other 32


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alternative and potentially more appealing opportunities will be presented to them in the meantime? If a greenfield or existing franchise is not available in the desired place at the time that a potential franchisee makes an enquiry, it doesn’t mean that one won’t be available in the near future. For example, a suitable retail site may be offered to the franchisor by a property agent or landlord in the area, or an existing franchisee may be approaching retirement or indicate an interest in selling. If either of these two scenarios are likely, then a potential franchisee may be prepared to wait for the site or business to become available, but this will depend on other factors affecting the buyer. These could include their current employment situation, and if they are approaching the end of a contract or offered a redundancy package. Either scenario may mean that the potential buyer may not be prepared to wait indefinitely for an opportunity to arise, but instead need to move into their next career phase without too much delay. Another factor may be a change in the family or health circumstances of the potential buyer, such as the birth of children which may reduce the buyer’s appetite for the risks of small business and instead re-affirm their commitment to the stability and security of employment, or the development of some health condition which may diminish the potential buyer’s ability to later operate a franchise. Additionally, the potential franchisee’s ability to raise money to buy a new or existing franchise may change over time due to changes in their personal circumstances or as a result of market movements such as the significant decline in share values as a result of the global financial crisis. Potential franchise buyers may be prepared to wait up to a year or more for their preferred franchise to become available in their desired location, although this may be more likely for site-dependent retail rather than mobile services franchises, and linked to the overall investment level and potential returns associated with the business (ie. The greater the investment level and potential for associated profits, the longer a potential franchisee may be prepared to wait for an opportunity to become available).

3. Cost Once location and timing have been taken into account, the next major consideration is cost. 33


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The issue of cost may even have a bearing on a potential buyer’s preference for location and time frame, if for example, a high cost option may become available in the desired location in a year’s time compared to a lower cost option in an adjacent location that is available now. This indicates that the decision factors at play in choosing between a greenfield or existing franchise are often interdependent, and may be considered from a broader perspective by potential franchisees with varying degrees of importance given to individual elements as their consideration of franchising evolves over time. An existing franchise may be offered at a higher or lower price than a greenfield franchise. Subject to the valuation method used, a higher price might indicate that the business is performing well and trading profitably. A price lower than the normal entry cost of a greenfield franchise might indicate a poor performing business, or indicate that the vendor needs to sell the business quickly. Either way, a potential buyer must do their homework to assess the viability and value of the offer. Sale price valuation methods Valuation methods determine both the price range at which a vendor proposes to sell, and which a buyer is likely to buy. Unlike greenfield franchises for which either a universal price is set or is otherwise determined by the sum of the full establishments, costs plus the franchise fee, existing franchises can significantly vary in price. A basic understanding of common valuation methods can help a potential franchisee assess the value of a proposed purchase. These methods are: A. Market-based valuations B. Asset-based valuations C. Earnings-based valuations A. Market-based valuations

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The most recent sale price for the same or a similar type of business will set the standard for the next business. This is known as the going market rate method, and does not take into account the sustainable earnings or asset value of the business. In simple terms, other people are paying at this level to acquire this type of business, therefore this business is worth the same.


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The going market rate method is easily understood by buyers if they have previous experience in buying or selling residential real estate, where this is the main pricing formula relied upon by both agents and home sellers.

Alternatively, another market-based valuation may be determined by the industry sector in which the business operates as a multiple of the business’ turnover. ie The sale price is annual turnover multiplied by a standard industry figure. (For example, an established home services business may sell for 1.0 x turnover, whereas a coffee shop might sell for 0.5 x turnover)

B. Asset-based valuations

An examination of the assets and liabilities of the business will determine a total value for the business by looking at the sum of its component parts

Book value takes the assets listed in the business’ financial records at face value, plus the intangible assets (eg. goodwill and intellectual property), less any liabilities. Book value can often under-value a business if the assets have appreciated over time but the financial records have not been adjusted to show this (eg. Real estate bought for $100,000 ten years ago may still show as a $100,000 asset today when the market would value that same asset at several hundred thousand dollars now).

Likewise, assets can also decrease in value if the financial records have not been adjusted adequately to show depreciation over the useful life of the asset (eg. A $50,000 computer system bought in 1985 would be worthless today).

To overcome the limitations of a book value model, an alternative is to consider an adjusted book value model. This means that the assets are revalued at today’s market values to determine a current asset value (which takes into account the appreciation of real estate, and the depreciation of other items).

Other models including liquidation value (usually where a higher price is realised by breaking up a business and selling its components rather than keeping it as a going concern), and replacement value (where the cost of the business as a going concern is equal or less than the cost of cost of starting the same type of business from scratch).

C. Earnings-based valuations

Perhaps the most common method of valuing a business is the return on investment (ROI) method. Under this method, the sale price is the net 35


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annual profit multiplied by a figure that ascribes a value to the risk being undertaken. The higher the risk, the lower the multiple, and vice versa.

The ROI method will attach a different variable for risk according to the industry in which the business operates, and therefore two different businesses with the same net profits may have totally different valuations.

Next is the discounted cash flow method. Under this method, the value of future cash flows are expressed in today’s dollars. This is a complicated method and takes into account a number of variables including the expected cash flow for the intended period, the required rate of return, the number of periods to be considered, and the value of the business at the end of the period if sold, or conversely, the last period’s cash flow as a perpetuity.

In addition to the three main valuation methods - Market-based, assetbased and earnings-based valuations – a final method may also be applied particularly by vendors of financially distressed businesses. This is known as the “pay-off-all-my-debts-and-give-me-something-to-live-on” valuation which, as the name implies, is based on the requirements of the vendor to get themselves out of a financial hole and set themselves up for their next venture.

This last valuation model has less to do with the performance of the business and more to do with the personal financial circumstances of the business owner, who in such a scenario is likely to have debts exceeding the value of the business under normal valuation methods.

Unless the vendor of such a business strikes a buyer with lots of money and a casual disregard for due diligence, then a business priced in this way may experience a number of dramatic price reductions before it can be sold or else it may be withdrawn from the market or closed down altogether.

4. Capital Requirements After consideration of location, timing, price and valuation method have been taken into account, another factor to consider in the decision whether to buy a greenfield or existing franchise is the capital requirements of the business. This includes investment capital to buy the business, reinvestment capital to maintain the business in good working order, and working capital to pay the obligations of the business until such time as the business is able to pay these for itself. For the majority of franchise buyers, investment capital is borrowed from a bank. Some banks have accreditation processes in place which assess the cash 36


Buying an Existing versus New Franchise

flow available through some franchise business models, and create lending offers accordingly. This means that in some instances, banks may be prepared to lend 50 per cent or more of the value of a loan without real estate security (typically the franchisee’s home) if they are buying into a brand that has been accredited. Accreditation does not apply to all brands and specialised franchise lending is not offered by all banks. In general, franchises with an investment level under $150,000 are unlikely to qualify for accredited lending packages. This means that it may be easier to raise a loan to buy some greenfield franchises than for others. Similarly, for those existing franchises which are part of accredited systems, raising a loan should also be easier. But where the system is not accredited, a bank will look at the real estate security offered by the borrower, and the existing cash flows of the business in making its lending decision. If potential franchisee does not have enough equity in their home or other real estate security, the loan may depend entirely on whether it is an existing business that can demonstrate a trading history. In this instance, a bank could be more likely to lend to a buyer of an existing franchise, rather than the buyer of a new one. However a loan just to buy the business may not be enough if the business has old equipment or outdated inventory, software, corporate image, etc, so the buyer must have access to reinvestment capital. This can be very difficult to raise after the purchase, and is best taken into account with the initial loan to buy the business. The problem is that unless the buyer is an expert in running this kind of business, they may not be fully aware of all the upgrade costs required until after they have already bought the business. On the other hand, buying a new franchise means that everything is new from the start and does not need to be replaced or upgraded for a much longer time (possibly even for the whole initial term of the franchise), and therefore the buyer should not need to raise reinvestment capital at the same time as buying the business. The final capital consideration is working capital. An existing business that is already generating cash would be expected to require less working capital (depending on the nature of the business) than for a new business which will need to build up its cashflow from a standing start in order to pay its bills as they fall due. (This may not always be the case, particularly for businesses where goods or services are sold on credit, and the working capital required may actually be greater than for a new franchise). 37


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In a new franchise, the experience of the franchisor will often provide a benchmark of how much working capital is required to get the business up and running, whereas for an existing franchise the amount of working capital required may be unknown, and cause problems to the buyer if they have not allowed a sufficient amount.

5. Leasing and Franchise Term issues For franchises that are operated from shops or offices, the conditions of the lease and the time remaining on it are critical considerations for a buyer of an existing business. These are equally important for a buyer of a greenfield franchise, particularly to ensure that both the initial term of the franchise and the duration of the lease match-up and are both long enough for the franchisee to get their investment back during this term. Where an existing business is sold, the new buyer may only be able to operate it for the remainder of the lease or franchise term (or both), and if there is insufficient time left on either of these agreements when they are transferred to the buyer, then the buyer may not be able to get their investment back on the business. For mobile service franchises that do not need a shop or an office, a lease is not a concern. In this case, the buyer of an existing franchise may buy for either the balance of the existing franchise term, or the franchisor may choose to grant an altogether new term to the buyer.

6. Training and Support A benefit of buying a new franchise is that the training and support is provided by the franchisor in accordance with the current business model, including the latest products and services and innovations in technology and other work practices introduced to the system. When buying an existing franchise, the training may be provided by the vendor franchisee, who may not be able to deliver the training to the standard of the franchisor, or be as familiar with the new innovations introduced to the system. Buying an existing franchise may also mean that the training is conducted in the business being sold, rather than off-site at a training facility. Either way, it is important to check with the franchisor about training, as many franchisors will train ALL incoming franchisees, regardless of whether they are buying a new or existing franchise, or make it a condition of sale that a buyer 38


Buying an Existing versus New Franchise

of an existing franchise must be trained to an approved level of competency before the sale can be completed.

7. Staff An existing business may already have staff in place who can maintain the operation of the business while the new owner settles in. There can be problems though, if the staff don’t take to the new owner or their vision for the business, and key people could leave or may be invited to leave. Knowing who is critical to the business and getting them onside and securing their ongoing involvement is an important consideration for anyone buying an existing business. For greenfield franchises, employing the right staff for the right jobs still remains a challenge, but at least the franchisee can choose their employees for themselves and start with a clean sheet rather than modifying the behaviours or expectations of existing employees.

8. Transfer of Goodwill When buying a new franchise, the franchisor’s brand and reputation in the marketplace is the goodwill to which a franchisee is granted access. When buying an existing franchise, the same applies but is supplemented by the goodwill that the previous operator has developed with the local market in their conduct of the business. If goodwill is low because customers have experienced poor service or product quality, then a buyer will need to rebuild, which can provide an opportunity to increase the value of the business. On the other hand if goodwill is high (for which the buyer would have paid a premium), then the buyer must also operate the business to the same high standards as the previous operator from the outset or risk losing customers and diminishing the goodwill for which they have paid. This can be a real challenge for inexperienced operators following a successful and experienced business owner.

9. Reasons for Sale Finally, and as important as any of these other considerations, are the reasons for the sale of a franchise. It is easy to assume that a franchisor offers new franchises for sale as part of the natural growth of the network. Potential franchisees should as part of their due diligence look at the financial health of the franchisor and network as a whole to satisfy themselves that the franchisor is not trying to sell franchises merely as way of keeping themselves afloat. 39


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Equally, when dealing with an existing business for sale, the real reasons for the sale may not always be those which the vendor has stated. For example, the reason that “It’s time to move on and do something else” could actually be a disguise for “I’ve never made any money out of it and I’m tired of flogging a dead horse”.

10. A formula for Due Diligence By conducting thorough due diligence on the proposed purchase of a new or existing franchise, a potential business buyer increases their chances for future business success. As a general rule, people who are buying a business for the first time (or buying one in an industry which is not familiar to them) should be prepared to invest one hour of time for reading, research and learning per $1,000 to be invested in the business. Time spent on due diligence = one hour per $1,000 to be invested This time can also include time spent with professional advisors (lawyers, accountants and business consultants whose advice should always be sought prior to buying either a new or existing franchise), time spent in the business as part of the research, and time spent speaking with current and former franchisees, customers and suppliers to the business.

In Conclusion In short, there are benefits and shortfalls when faced with the choice of buying a new (greenfield) franchise against buying an existing franchise. By taking into account the ten factors listed in this article, and undertaking appropriate due diligence, a buyer will be able to make a more informed decision best suited to their requirements.

Jason Gehrke, Director Franchise Advisory Centre (AUS) 07 3716 0400 Jason@franchiseadvice.com.au www.franchiseadvice.com.au

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Chapter 5

FINANCING YOUR FRANCHISE By Darryn McAuliffe, Industry Solutions Executive NAB Franchise Banking

About the Author Darryn McAuliffe is Industry Solutions Executive responsible for the franchise sector at NAB. His breadth of experience and achievement across numerous sales and risk roles positions him well to manage NAB’s Franchise Banking team and strategy. Darryn oversees NAB’s Regional Franchise Banking Managers and a national team of more than one hundred accredited franchise bankers. Darryn monitors the Bank’s franchise banking portfolio and is responsible for the ongoing approval and review of accreditation requests for franchise systems across Australia. He continues to enhance NAB’s franchise banking strategy and distribution model, including dedicated key contacts for accredited brands and above all, Darryn and his team ensure all NAB customers within the franchising sector are having their needs met with tailored financial solutions. Darryn is a qualified CPA and previously held the role of Business Banking Executive where he led a team of business bankers. His sales leadership experience has been complemented by several risk management roles.

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W

hether it is a natural career progression, or a change of lifestyle that you’re looking for, making the decision to buy a franchise can be an exciting yet daunting one. Many individuals are achieving business success by opting into franchises that offer a proven business model and an established brand. As a strong supporter of franchising in Australia, NAB understands this growing sector can be a great way for individuals to achieve their aspiration of having their own successful business.

Which franchise is for you? Before making any decision on which franchise to buy, we recommend that you ask yourself the following questions: • Do I have a passion for the franchise brand and its product or concept? • Will I be motivated to work in the business for the next five to ten years? • Do I see profitable growth in the franchise, and if so, can I acquire more outlets once established? • Do I share the same vision, values and work ethic as the franchisor? • Will I be happy to comply with the existing system without wanting to make my own changes? If the answer to all of these questions is a resounding ‘yes’, then it’s likely the franchise you’re considering will suit you, and importantly your relationship with the franchisor will be a positive and mutually beneficial one. If not, it may be worth considering another franchise system which is more consistent with your business objectives and management style, to avoid issues down the track. The next step is to do some homework on the franchise system including: • How much will you need to invest to buy and operate? • What initial and ongoing training will you receive? • What level of support will you receive with managing your business? • Does the franchise have the ability to remain competitive and maintain its brand value in a fast moving market? It’s also recommended you read the Franchising Code of Conduct to understand your rights as a franchisee and those of the franchisor. The Franchise Council of Australia has an abundance of information relating to the 42


financing your Franchise

Code as well as recent changes and reviews of these changes on their website www.franchise.org.au. If you’re comfortable with the investment required and have decided on your franchise, the next decision is whether to buy an existing franchise site or to open in a new location. Both have merit, however, an existing site will have a proven track record and cash flows (which will be reflected in the goodwill paid). A new site may be cheaper, although may not be profitable for a year or more and may need additional capital to support it during the start up period.

In either case, a detailed and realistic business plan needs to be prepared that outlines: Your business objectives The investment and debt required The location / type of franchise Strengths, Weaknesses of the business Opportunities and Threats for the business Revenue and profit expectations Start up working capital, in addition to any capital required to support the business until it is cash flow positive. The business plan is your blueprint for success, so if you’re not confident in doing this alone, it’s recommended you seek professional advice from a reputable firm with experience in franchising. A NAB Franchise Banker can help you find an accounting firm in your local area, and can also supply you with a business plan to help you on your way. A business plan will cost you roughly one to two per cent of your total investment costs and so is well worth it in the grand scheme of things. The decision to buy a franchise is life changing and not without risks, however there is considerable upside to be achieved if the business is successful. The key is to be honest with yourself, have a passion for the business, do your homework and seek sound professional advice from people with expertise in franchising. Once you’ve done your due diligence and decided to buy a franchise, you will most likely require advice on obtaining financial assistance. The tips below will hopefully provide some guidance on what to consider in your search for finance for your franchise. 43


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Be prepared Before making any business decisions, it is important to assess your passions and personal commitment, get your finances in order and do some thorough research on franchise systems available. When approaching a bank to obtain funding and advice, to give yourself the best chance for approval, I recommend you: • demonstrate that due diligence has been undertaken

• develop a comprehensive, professionally presented business plan

• provide all requested information in a concise and professional manner – missing details will cause more challenges for you in obtaining what is required As always, business fundamentals will drive the appetite of any financier. Character is a key element of the approval process so the more competent and professional you are in your dealings with a bank, the more likely your application is to progress. It is important to determine what funds you can contribute to the business and how much you can afford to borrow rather than ask how much you can borrow. You need to do some homework to establish how you will service any borrowing and what level of risk you are comfortable with. As cash flow fluctuates do some forecasts on how you would cope if incoming cash was to decrease by 20 per cent. Just like you and your customers, relationships forged with your bank have the potential to grow into long and enduring ones which will become key to the long-term success of you and your business.

How do you choose the right bank? Choosing the right bank should be a high priority if you are looking to prosper and build on your business and personal wealth. Your banker should be more than just your finance provider. They should be your business partner who can back you, who understands the franchising sector, your franchise system and wants to understand your personal and business aspirations. It’s important to choose a bank that specialises in the franchising sector – making sure they don’t simply market themselves as specialists. In many cases you can be funnelled through a ‘franchising manager’ only to be referred to a general business banker with little or no franchising experience. 44


financing your Franchise

As a franchisee, you should seek out a banker with franchising knowledge and expertise that will understand the current climate and the dynamics that may affect your franchise as well as industry-specific business acumen to make the buying-in process smoother. There could be other start-up bonuses for dealing with franchise specialists too. For example, NAB can fund accredited franchise systems for up to 70 per cent of the business purchase cost without franchisees having to necessarily borrow against personal assets (subject to credit approval). While finance may be an essential ingredient to making your dream come true, ask your banker about other essential business services, such as staff superannuation plans, business insurance and financial planning advice as well. You want your banker to work closely with you to provide financial, business and personal wealth advice, not just assistance with loans. Business and personal financial goals shouldn’t be separated as it’s likely you can make them work for each other. Wealth creation should be looked at on a holistic level. Ideally your franchise business banker will have access to other specialists within the bank and deliver the right advice for you in the areas of wealth management and financial planning.

Business banker checklist • a passion for customer service and genuine interest in your business and industry with business connections that will benefit your business • a desire to understand your goals and objectives, not only for your business but for you personally as well • a deep industry understanding and an ability to talk the same language • broad business acumen and a thorough understanding of finance concepts and banking expertise • accessibility, including multiple points of contact within their team • a proactive approach to better banking solutions for your business • a demonstrated understanding of the key drivers of your business. Other features that may affect your business bank decision might include: • Location and access: Your business banker should be located in your local area for those business needs that can’t be met on the phone or online. • Service offering: The ability to deal with one bank and have a dedicated 45


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relationship banker to meet both your personal and business financial needs. • Pricing and fees: Competitive pricing should not be the only criteria in determining which bank is right for you. Getting the right capital structure and business insight are also important. • Product and specialist service: Larger business banks will be able to provide additional services and products including point of sale capability and bankers that specialise in the sector.

Do your research – or better yet, get some help! Franchising is a big sector which means there are plenty of people like you looking for information. The Franchise Council of Australia, dedicated legal and accounting practitioners, specialist consultants, trade magazines, expos and government advisory services are all examples of those capable of helping you access the research work that others have already done. The majority of the mature franchise systems will have arrangements with banks that make the basic process of getting finance to buy your business as easy as possible. As well as streamlined lending processes, these arrangements allow the franchisee to repay the money within a reasonable period of time while making a profitable living. A good bank with a specialist franchise banking division will only look to establish packages for franchise systems that appear to be well developed or established, financially sound, provide people support, training, processes, marketing, operational support and, importantly, allow franchisees the opportunity to make a reasonable profit from the business.

Bank accreditation Through the process of ‘accreditation’, a bank examines a franchise system to gain a better understanding of the system and how it operates to assess business risk. This helps it to streamline financing processes and provide consistency across the franchisees within the same system. The accreditation process is detailed and looks at four core elements: • stability • scale 46


financing your Franchise

• systems • strategy The stability of the system includes the franchisor’s background, their industry know-how, financial position and trading history. We investigate activity within the system such as the number of franchisee transfers, terminations (initiated by franchisor and franchisee) and franchisee outlets bought back by franchisor. An attractive feature of a stable franchise system is the achievement of scale (size and number of outlets). Scale can provide important insight into: • the acceptance of the system across different states and territories • a franchisors ability and willingness to support franchisees (particularly those trading below expectations) • the strength and liquidity of the secondary market (for onselling a franchise business), and • the historical financial performance of existing franchisees and their loan servicing capacity Systems refer to ongoing support and training for the franchisee and processes such as recruitment, benchmarking, marketing and territory definition. As part of the system review during accreditation, banks often investigate franchisee satisfaction by asking existing franchisees questions such as: • How well does your experience as a franchisee meet the expectations you had when you bought the franchise? • Would you invest in the franchise system again? • Would you recommend others to purchase a franchise within this system? Strategy relates to the future plans for the system including growth strategies. In particular, is the growth strategy realistic, sustainable and underpinned by a clear understanding of: the current marketplace; the industry outlook; the system’s competitive advantage; and effective back office/support mechanisms? The process is similar to the franchisee’s own review process on evaluating a franchise opportunity as the bank asks ‘why should I invest in this system?’ The accreditation process may uncover issues such as prior litigation and trademark issues that are also relevant to a new franchisee but run the risk of being overlooked. This may offer a certain level of comfort for new business 47


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owners, particularly those buying their first franchise. For franchisors, accreditation is a value-add for franchisees as it makes it easier for them to work with banks for their franchise finance needs and also greatly enhances a bank’s understanding of the business. Once a system is accredited, applications for finance do not centre on a review of the business but more so on the applicant and their plans. The accreditation process is ongoing. We review formal accreditations on at least an annual basis and as part of this process will increase or decrease lending ratios and conditions based on the system’s track record and apparent risk profile. Banks continually look to fine tune and improve accreditation processes to promote a more efficient and predictable process flow with each transaction. A common misconception is banks are not interested in working with emerging systems - most are keen to develop a relationship and understanding of both parties. This assists understanding of what it takes to become accredited if that is part of the franchisor’s strategic growth and system development.

The franchise package Based on the bank’s investigation, a ‘franchise package’ is created for all franchisees that is aimed at making their life easier by offering a package of financial solutions tailored to the needs of the business owner. The bank will already understand the franchise system and the financial and operational requirements of the franchisee and can therefore tailor a costeffective and complete financial package. Not only can the franchisee take advantage of some great ‘group deals’ and obtain lending packages against the value of the franchise system, they can immediately focus their time on actually running their business, comforted by the fact that the bank has already established both their setup and ongoing finance requirements and put together a standard package to meet those. At the NAB, we aim for franchisees of the same system to receive consistent treatment regardless of their location and also, responsible lending that allows them to grow at a sustainable rate. If the bank has specialist franchise bankers as well, they will benefit from the shared knowledge and experience from a financial partner that understands their business model. Your banker can also discuss and recommend appropriate products to help run your business smoothly, such as: 48


financing your Franchise

• business loans to acquire your franchise business • overdraft facility to assist with daily working capital needs • business transactional accounts • EFTPOS facilities • merchant and card facilities • business insurances and superannuation plans • online banking services.

What benefits does purchasing from an accredited system give me in dollar terms? Joining an accredited franchise system means that you may be able to borrow 40 to 70 per cent of the total set up cost of a new franchise, or purchase cost of an existing franchise, without necessarily providing your home as collateral for the loan. As an example, if you were to purchase a bakery business from a NAB accredited franchise system, which has been approved for a maximum ‘loan to franchise business value’ of 70 per cent, and you need to borrow as much as possible of the total set up cost, the NAB franchise loan amount can be calculated as follows:

New business set up costs Equipment, fixtures & fittings

$400,000

Franchise fee

$50,000

Legals & accounting fees

$10,000

Opening advertising levy

$5,000

Opening raw materials

$20,000

Training fees

$5,000

Other fees

$10,000

Total investment/setup cost

$500,000

Calculation of loan required Cash you are contributing

$150,000

Balance of loan required

$350,000

% of loan to franchise business value

70% 49


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Are you ready to buy a franchise? While the initial set up costs of buying a franchise are higher than normal, you are buying into an established brand, defined processes and proven model and if you’ve picked a good system, then you will benefit from ongoing support of your franchisor. Once you’ve decided franchising is right for you, make an appointment with your NAB business banker who can guide you through the process and put you on the right path to achieving your personal and business goals.

Simon Ovenden, Regional Franchise Banking Manager (QLD, NSW, ACT) NAB Franchise Banking Simon.Ovenden@nab.com.au Nick Moutsos, Regional Franchise Banking Manager (VIC / TAS, SA/NT & WA) NAB Franchise Banking Nick.Moutsos@nab.com.au Darryn McAuliffe, Industry Solutions Executive NAB Franchise Banking Darryn.R.Mcauliffe@nab.com.au nab.com.au/franchising

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Chapter 6

UNDERSTANDING THE LEGAL DOCUMENTS By Elisabeth Ritchie, Partner HWL Ebsworth Lawyers

About the Author Elisabeth Ritchie is a Partner of HWL Ebsworth Lawyers, with specialised expertise tailored to assisting clients across all areas of franchising law. She is the lead partner in the firm’s retail, franchising and licensing group and has a wealth of experience dealing with clients from a vast range of industries. She offers expertise in general franchise issues, dispute resolution, as well as the setting up, restructuring and sale of franchise systems. Elisabeth provides regular advice to clients in relation to their obligations under the Franchising Code of Conduct and Trade Practices Act, as well as compliance issues arising through the ACCC. She acts for both local and international clients and provides advice to clients seeking to export their franchise system overseas or entering into master franchise arrangements in Australia. Elisabeth also assists with franchise dispute resolution and is an accredited mediator on the panel of the Office of Mediation Adviser. In 2000, Elisabeth was presented with a national award by the FCA for ‘Outstanding Contribution to the Franchise Education’. In 2006 she received the NSW ‘Contribution to Franchising’ award from the FCA. She has also been recognised by her inclusion in the annual ‘International Who’s Who of Franchise Lawyers’ publication. From 2009-2011 Elisabeth was the New South Wales Chapter President, and a National Director of the Franchise Council of Australia.

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T

he franchise relationship is formalised by the entry into a set of franchise documents. This generally comprises a franchise agreement, and if the franchise is premises based, a lease or licence to occupy. The franchise documents and entry process are governed by the Franchising Code of Conduct (the ‘Code’) and the franchisor must ensure that their documents and processes comply with the requirements set out in the Code.

Documents provided prior to entry into the franchise agreement If you are considering buying a franchise, you will be provided with the current version of the franchisor’s disclosure document, which will be attached to the form of the franchise agreement you will be entering into, along with a copy of the Code. (a) Disclosure document

Franchisors are required to update their disclosure documents annually (within four months of the end of each financial year). Franchisors must ensure that they disclose, in the disclosure document, information necessary to enable you to make a reasonably informed decision.

(b) Franchise agreement

The franchise agreement attached to the disclosure document should be in its final form. This means the schedule of the franchise agreement must be completed with all the commercial details specific to your franchised business. The agreement must be the current version used by the franchisor. You will need to have decided on your franchisee entity (whether yourself, a company, trust or partnership), as disclosure needs to be made to the franchisee entity in order to comply with the Code.

(c) Lease or licence to occupy

For those franchises that are retail based, the premises for the business is central to its success. Usually, either the franchisor will hold the lease and grant to the franchisee a licence to occupy the premises, or it will elect to not hold the lease and the franchisee will be the leasee. Depending on the type and nature of the particular franchise system, the franchisor may or may not have an active role in negotiating the lease.

If the franchisor holds the lease, you will be provided with a copy of the lease, licence to occupy and in some states, a lease disclosure statement.

In both cases, it is important to ensure that you have sufficient tenure on the lease to operate the franchise, as the franchise agreement will usually end on the termination or expiration of lease (unless there is a relocation clause). 52


understanding the legal documents

You should carefully read all of the franchise documents provided by the franchisor and seek legal advice to ensure that you understand their force and effect. In some cases, you may be able to negotiate clauses or special conditions to reflect your negotiated deal with the franchisor or to further protect you. Once the franchisor has served the disclosure documentation on the franchisee, the parties need to wait 14 days before entering into the franchise agreement. This disclosure period is mandated by the Code in order to give you sufficient time to contemplate your purchase and to get advice in relation to the terms. You should also use this time to obtain accounting and business advice and take the time to ensure that you: (i) understand the business you are buying, the return you are likely to achieve from the business (in both the short and long term), and the terms of the franchise arrangement (ii) have researched and properly considered any past performance of the franchise system and the performance of other franchisees (iii) have undertaken proper business planning as to the ongoing costs and potential return of the business This due diligence process should start early with an investigation of the different franchises available. It may even be the case that the best business available is not a franchise. The ultimate decision to purchase a franchise should reflect your experience, the level of financial investment available, the amount of time you are able to commit and the location of the proposed business. It is important to ask as many questions as possible in order to assist you in making an informed decision. If you opt to take up a franchise, there may be an option of buying an existing franchise or being granted a new franchise. There are benefits and risks involved with both options. An existing franchise is established and is usually already generating profits. A careful review of the financial information should give you an idea of its potential profitability. However, the cost of purchasing an existing franchise is usually higher. There are also other pitfalls to look out for if you are purchasing an existing franchise, including considering how much of the franchise or lease term is left, what restraints are on the exiting franchisee and whether it is likely the customers will remain loyal to the business after the changeover. While the grant of a new franchise may not have such issues, there is the risk that the business may not be successful in the area, that it will take some time to establish a reputation or that appropriate premises cannot be secured. 53


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It is best to start this research at an early stage, in order to get as much information as possible, before making a decision to proceed. This will also provide you with an understanding of the fair value of a business and help you to negotiate a good deal.

Disclosure document The franchise sign up procedure, prescribed by the Code, has been designed to assist franchisees with the due diligence process. The Code requires that where a franchise is being offered, the franchisor must provide the potential franchisee with a disclosure document. The purpose of the disclosure document is to give prospective franchisees information to help the franchisee make a reasonably informed decision about the franchise. The form of the disclosure document is set out in the Code and must be complied with by franchisors. This includes providing answers to specific questions on topics such as: (a) the background and business experience of the franchisor and its associates and officers (b) information regarding any legal action being taken against the franchisor or its directors (c) details of past and existing franchisees (d) the intellectual property used in the franchise system (e) territory and site selection policies and details (f) the use of marketing funds (g) the establishment and ongoing costs associated with the franchise (h) a reference to the franchisor’s and franchisee’s obligations in the franchise agreement (i) the financial position of the franchisor company You should use the disclosure document as an opportunity to question the franchisor about any inconsistent or confusing information. While all the sections are important, the key sections for you to look for in a disclosure document are as follows: Litigation (section 4) The franchisor and its directors are required to disclose details of any litigation which they are currently involved in, relevant to the franchise. This may 54


understanding the legal documents

be particularly relevant if a past franchisee has made a claim against the franchisor, such as unconscionable conduct or misleading and deceptive conduct. Information such as this may highlight shortfalls in the franchise system or areas of contention with existing franchisees. Existing franchisees (section 6) This section is very important. It sets out the current number of franchisees and their contact details. This allows you to get into contact with existing franchisees and ask further questions about the business. Section 6 also contains information about past franchisees. This can be helpful as you can contact those that have left the system and find out the reasons why. Note however, past franchisees may elect not to make their contact information available in the disclosure document. Previous operation (section 11) Under this section, the franchisor is required to disclose its policy for the selection of sites and territories, and whether the territory and/or site being granted has previously been occupied by a franchisee. This information may indicate whether a previous franchisee has operated in the same location, but ceased to operate. You should ask the franchisor further questions if such an issue arises. Payments (section 13) This section details all the payments you are likely to incur in setting up and operating the franchised business. This includes not only the costs you have to pay to the franchisor, but also costs payable to third parties such as landlords, suppliers or government agencies. It is still recommended that you seek independent accounting advice to determine whether you can profitably operate the business, however section 13 provides a useful starting point when considering the costs involved in starting and operating the franchised business.

Process of entry In addition to prescribing the form of the disclosure document, the Code also stipulates the process for issuing and signing up a franchisee. Once you have indicated an interest in the business, the franchisor must issue you with a disclosure document, a copy of the Code and a copy of the franchise agreement in the form in which it is to be executed. You must sign and return a disclosure document receipt to acknowledge receipt of the documents from the franchisor. 55


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You should then carefully review all the information provided and seek the necessary advice. You (or your advisor) may seek amendments to the franchise documentation if it does not reflect the agreement reached between the parties, or if any particular clauses seem onerous or unfair. The franchisor will then advise whether or not the amendments are agreed to and reissue the documents if required. The franchisor is required to allow a minimum of 14 days, after the disclosure document is received by you, before the franchise agreement can be entered into. This period is meant to give you sufficient time to consider the offer put forward in the documents. If any changes are made to the franchise agreement, the documents will need to be reissued and a further 14 days allowed. Purchase of an existing franchised business

In addition to the above, if an existing franchised business is being purchased, you will need to enter into a contract for sale of business with the current owner. This agreement will be subject to the franchisor granting the franchise and is often not completed unless and until you have completed the initial training or induction program. Advice

It is important for all new franchisees to seek the proper advice before proceeding with a franchise. The Code recognises the importance of seeking advice and includes a requirement for franchisors to obtain a certificate, signed by the franchisee, acknowledging that the franchisee should obtain legal, accounting and business advice, and whether any advice was received. Representations

During the course of franchise negotiations, representations are often made about the franchised business. These may relate to the site that the franchise will operate from, the profitability of the franchise or the products that will be sold. It is important for you to confirm these representations when entering into the franchise agreement. If this information is not supported in the documentation or other materials, it may be difficult to show the representation was made if there is a dispute at a later stage. It is recommended that you put down in writing any particular representations that the franchisor has made which influence the decision to enter the franchise agreement. In some cases, the franchisor may provide a representations certificate for this purpose. Confidentiality

Prior to, or during the course of negotiations with the franchisor, you may be asked to sign a confidentiality agreement. This is a fairly standard practice 56


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amongst franchise systems and is used to help protect valuable information provided to you in relation to the franchise, prior to entry into a franchise agreement. While this is standard practice, you should still carefully read any confidentiality agreement provided. In particular, it is important to ensure that you are free to discuss the franchise offer with advisors and any other business partners or family members who will be involved with the business.

Franchise agreement The franchise agreement will set out the rights and obligations of both you and the franchisor during the term of the agreement. Franchise agreements are generally structured so that the first part of the agreement deals with what is being granted, the middle with the obligations of both the franchisee and franchisor, and the end of the agreement with what happens if the franchisee wishes to sell the franchised business or the franchise agreement comes to an end (and how it may come to an end). Some sections of the franchise agreement are governed by the Code (termination, transfer and dispute resolution) and you should ensure that the agreement is Code compliant. The following are some of the key terms you should review when given franchise documentation: Grant of franchise The agreement will set out what you are being granted the rights to do. This generally involves the right to market, distribute and sell goods or services using the franchisor’s name and brand and using its particular system. The system could, for example, include a particular method of setting up and operating the business. The system may also have a specific protocol for providing services or preparing products and could also include access to the franchisor’s confidential business information. Term The grant of franchise is usually for a fixed term. This is most commonly for five years with a five year renewal option, subject to certain conditions (e.g. service of renewal notice by you within a certain time frame, compliance with the agreement, adherence to the system, updating of premises or equipment and renewal of the lease). Some agreements are ‘in perpetuity’, that is, they do not have an expiry date. Be aware, however, it is arguable that these agreements may be terminated by 57


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the franchisor on reasonable notice (e.g. six or twelve months). It is important to understand some key points:

(a) You only get the rights for as long as the agreement is current and has not expired or been terminated. Upon expiry or termination, you generally will no longer have the right to operate the business and you will be constrained by post termination obligations. (b) You will be contractually bound to comply with your obligations over the term of the agreement. If you do not comply, you may be exposed to legal action by the franchisor to recover his/her loss of income. Note that you will have a cooling off period of seven days (see below). Cooling Off

The Code stipulates that franchisors must allow a ‘cooling off’ period. This allows a franchisee to terminate the franchise agreement within seven days of entering the agreement, or making payment, under the franchise agreement (whichever event occurs first). The cooling off period will only apply to a new agreement and will not be available to the franchisee when they are renewing, extending or transferring an existing agreement. If the franchisee terminates the franchise agreement during the cooling off period, the franchisor will be required to refund all payments made by the franchisee, with the exception of any ‘non-refundable’ payments (which are for the franchisor’s reasonable expenses) outlined in the franchise agreement. The payments must be reasonable and clearly disclosed to you prior to you entering into the agreement. Territory

A franchise agreement may provide for a defined territory in which you can operate. This is generally more common in service-based franchises. This territory may be exclusive or non-exclusive. The exclusivity may prevent the franchisor from granting any further franchises or operating in the given area. The territory agreement could be some lesser form of protection as well, such as giving you the exclusive right to market (but does not prevent the operation of a similar business in the territory by the appointment of other franchisees or otherwise). The extent of territorial rights will depend upon the type of business and the bargaining power of the franchisor. Nowadays, most retail franchises do not offer (or only offer very limited) territorial protection. Service based franchises will generally still be structured on a territory basis. If the territory is non-exclusive, you should consider what impact this will have on the business if other franchisees are able to actively compete in the 58


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same area. You should also become familiar with the territory boundaries, as there may be restrictions on you providing goods or services, or conducting marketing, outside these areas. Premises

You should pay close attention to any clauses in the franchise agreement that relate to the premises. In particular, it should be ascertained whether you or the franchisor will hold the lease. There are advantages and disadvantages to holding the lease for a franchise, however this decision is usually made by the franchisor. If you do not hold the lease, you will be granted a licence to occupy or sub-lease by the franchisor. However, regardless of whether you or the franchisor holds the lease, you will still be required to comply with all the obligations under the lease. Franchisor’s obligations

The grant of a franchise involves the payment by you of the following fees: (a) an initial franchise fee

(b) an ongoing franchise service fee or royalty (c) a marketing or advertising contribution

These are in addition to the other costs of fitting out and setting up the business. In return for these fees, franchisees can usually expect certain upfront and ongoing support and training from the franchisor and for the franchisor to develop and market the brand and its goods or services. You should consider whether the franchisor’s contractual obligations, as set out in the franchise agreement, are consistent with their expectations of the level of support and training which you have been told you will receive. Franchisee’s obligations

As a franchisee, you will be using the franchisor’s brand and essentially be replicating the franchisor’s business. As such, the franchise agreement will include a range of obligations which require you to: (a) comply with the franchisor’s system

(b) familiarise yourself and comply with the franchisor’s manuals (c) attend upfront and ongoing training in the system (d) attend meetings and conferences

(e) protect the franchisor’s intellectual property (how you use its name and marks, etc) 59


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(f) only offer approved services and products (g) only use approved supplies

(h) undertake certain marketing

(i) regularly report to the franchisor

(j) allow the franchisor access to your business and records A failure to comply with these obligations will usually give the franchisor a right to issue a breach notice and possibly terminate the franchise agreement if the breach is not rectified.

Compliance with system The franchisor will have a particular way of operating the franchised business and providing goods and/or services. The franchisor will want to ensure consistency of these goods and services throughout the network. While one of the benefits of purchasing a franchise is access to this know how and branding, you need to remember that you will have to strictly follow the system. You cannot generally change the way you operate (even if you think that the change is for the better), without the approval of the franchisor.

Operations manual Given the vast amount of information involved in a franchise system and the dynamic nature of franchise systems, the franchise agreement cannot usually encompass all the details related to operating the franchised business. It is for this reason that franchisors create an operations manual to provide further information regarding standards, operating procedures, reporting requirements, product specifications and other vital information. The operations manual is an important document and you should ensure that you are provided with a copy to review, prior to signing the franchise agreement. It is also important to consider whether the franchisor is able to change the operations manual and what processes are in place to implement the changes.

Training In order to familiarise and teach you about the system, you will be trained by the franchisor prior to operating the franchised business. You should then be offered ongoing training throughout the term. The cost of the upfront training will be paid when you enter into the franchise agreement. The extent of the training program will depend upon the type of business you operate. You should find out what training is provided and where it will be held. Will the training be limited to how to prepare or sell the goods and/or services or will you be given more comprehensive business training? Will the training be in 60


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your local area or will you need to travel to another city or interstate? You should also understand who needs to be trained – is it just you or do you need to pay for other staff to be trained? On an ongoing basis, you should be trained on new products and services. You may also be required to attend further training if the franchisor reasonably determines that you require such training. You are also usually required to attend meetings with the franchisor and also franchisee conferences. The latter is a good way to meet with and learn from your fellow franchisees. You will generally need to pay for your attendance at training, meetings and conferences.

Protection of intellectual property The franchisor will want to protect his/her brand. As such, the franchisor will exert controls over the way you use the brands name and logos. You will need to get the franchisor’s approval of your use of these on signage, marketing material, business cards, invoices etc. You will also need to adopt the franchisor’s colour scheme and if required, wear the designated uniforms. You will not be allowed to make any changes to the name or logos or the way the system is operated. Any changes to the system must be approved by the franchisor.

Approved products and services One of the key requirements of a franchise agreement is that the franchisee must offer, and generally only offer, the products and/or services mandated by the franchisor. In a food franchise, this may mean only selling the approved menu items. In a mortgage broking franchise, this may mean only offering the loan products from the panel lenders.

Approved suppliers You will often also be required to only use approved supplies. These may be supplied by the franchisor or by a third party. In the case of the latter, this may be illegal under trade practices legislation, unless either the franchisor has notified the conduct to the Australian Competition and Consumer Commission (and it has not objected) or the franchisor gives you the right to suggest other suppliers for approval. As the cost of goods is an important element in the success of a business, you should ensure that the goods are competitively priced. 61


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Marketing Most franchise systems will include marketing obligations for franchisees. This may be a local marketing requirement, a requirement to contribute to a marketing fund or both. You should be aware of the scope of marketing that you are required to undertake and the costs involved (there may be requirements for additional contributions to be made to certain marketing activities). If a marketing fund is in existence, you should look at the expenditure for the last year and review the franchisor’s rights and obligations in relation to the administration of the marketing fund.

Reporting In operating a franchised business, you are not operating it alone. You are operating it as part of a system and with the franchisor. In order for the franchisor to properly assist the system and mentor the success (and any problems) within the system, the franchisor will need to obtain certain ongoing information from its franchisees. This generally comprises weekly or monthly sales and marketing reports, provision of tax returns and the supply of annual accounts. The franchisor also retains the right to enter the premises of the business and check the franchisee’s business records. These rights are particularly important to a franchisor if its franchisees are paying a franchise fee based upon a percentage of their sales. In addition to the above obligations, the franchise agreement will also govern how the agreement can be terminated and how the franchised business can be transferred. Both of these are regulated by the Code.

Termination provisions The termination provisions in the agreement should reflect the requirements of the Code. The Code provides for termination of a franchise agreement in three circumstances: (a) termination for a breach by the franchisee (section 21)

(b) termination without a breach by the franchisee (section 22) (c) termination in special circumstances (section 23)

Where a franchisor is alleging there has been a breach of a franchise agreement by the franchisee, he/she must give the franchisee a reasonable opportunity to remedy the breach (which need not be more than 30 days). If the breach is not remedied within the prescribed time, the franchisor may terminate the franchise agreement. If the breach is remedied within the prescribed time 62


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limit, the franchisor cannot terminate the franchise agreement for that breach. This section has been drafted with the specific intention of giving franchisees an opportunity to resolve issues and continue operating the business, rather than having the agreement terminated. However, where a franchisee fails to comply with the franchisor’s reasonable directions and rectify the breach, the agreement may be terminated. A franchisor can terminate without the franchisee committing a breach of the franchise agreement, where the franchise agreement provides for such termination. In such circumstances, the franchisor must provide reasonable notice and the reasons for the intended termination. The Code further provides for a series of exceptional circumstances whereby the franchisor would be entitled to immediately terminate the franchise agreement. These include instances when the franchisee becomes bankrupt or insolvent, voluntarily abandons the business, is convicted of a serious offence, operates the business in a manner that endangers the public, is fraudulent in relation to the franchised business or agrees to the termination. Under these exceptional circumstances, the franchisor is not obliged to give the franchisee an opportunity to remedy the situation and the franchise agreement may be terminated immediately by providing notice to the franchisee.

Upon termination If the agreement is terminated or otherwise comes to an end (e.g. expires and is not renewed), then the franchise agreement usually requires the franchisee to cease operating the business and using the intellectual property (system, name, logos, manuals, etc). The franchisee must return the manuals, any other signage and other materials including the name and logos, and to pay all amounts due the franchisor and other trade creditors. In the event that the franchisor wishes to take over the operation of the business, the agreement may require the franchisee to sell the fixtures and fittings, plant and equipment and stock to the franchisor at a pre-agreed price (fair market value or written down value) and transfer the lease to the franchisor, if currently held by the franchisee.

Sale of your franchised business The franchise agreement should have provisions relating to the sale of your franchise in accordance with the Code. The Code provides that a franchisee is entitled to sell his or her franchised business. If a franchisee wishes to sell, he/ she must notify the franchisor. The franchisor must provide a written response within 42 days. The franchisor may only reject the sale on reasonable grounds 63


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and these grounds must be set out in the written response. The grounds for refusal and the process for sale should be set out in the franchise agreement. The franchisor may also have a right of first refusal. You should make sure the grounds for refusal are fair and that any right of first refusal is on no less favourable terms than a third party buyer is prepared to offer.

Dispute resolution The franchise agreement must include a dispute resolution procedure in accordance with Part IV of the Code. This procedure mandates a process whereby the complainant (either the franchisee or the franchisor) serves a notice on the other party setting out the nature of the dispute, what action it requires and the outcome desired. The parties should then try to resolve the dispute within the next 21 days. If not resolved, either party can refer the issue to mediation. Mediation is designed to be non-confrontational and to assist the parties in trying to resolve their dispute. The federal government has set up the Office of Mediation Adviser to deal with mediations under the Code (www.mediationadviser.com.au).

Conclusion Each franchise is different and there is no simple checklist that can be used for all franchise documentation. You should research the business as thoroughly as possible and ask questions of the franchisor. The Franchising Code of Conduct was created to help assist franchisees in this process by setting out documentation and procedures to provide franchisees with the necessary information, and time, to make an informed decision about the business. While there may be a lot of documentation at the time of starting up a franchise, the legal documentation should not be overlooked as a secondary issue.

Elisabeth Ritchie, Partner HWL Ebsworth Lawyers (AUS) 02 9334 8649 eritchie@hwle.com.au www.hwlebsworth.com.au

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Chapter 7

ONGOING OBLIGATIONS By Robert Toth, Partner Wisewould Mahony Lawyers

About the Author Robert Toth is an Accredited Business Law Specialist with over 30 years’ expertise in the areas of: • Franchising – acting for both franchisors and franchisees. • Master Franchise and International Franchising. • Franchise dispute resolution acting for both franchisors and franchisees. • Advice to Franchise Advisory Committees. Robert heads the Wisewould Mahony, Retail Franchise Licence and Distribution group and advises corporate clients in a number of highly regulated industries such as Pharmacy, New Energy and Gaming and Liquor Licensing. His previous experience was in the retail photographic business with his brother Ted in the well recognised Ted’s Camera Stores. Robert holds memberships of the Franchise Council of Australia (FCA), International Franchise Lawyers Association (IFLA), Franchise Association of New Zealand (FANZ), Australian Institute of Company Directors (MAICD), and the US Commercial Service and Asian Lawyers Network. He is a Board member and Company Secretary in charge of corporate compliance of the Elwood Community Bank, established under franchise of the Bendigo and Adelaide Bank Limited. Robert has written and published numerous articles in the Financial Review and Franchise Industry Journals and online with titles such as “Why can’t I sue my Franchisor – Exit Strategies” – “This Contract makes no sense” – “Let’s pretend we are a Franchisor” – “International Franchising in Australia” – “When is it time to sell your Franchise,” and “What happens if my Franchisor goes bust?” 65


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“After the Thrill has Gone” - a classic and insightful song by the Eagles. Little did they know that they were writing a song about franchise relationships. You thought you made the right decision, shopped around, surfed the internet and selected the franchise you thought would deliver the financial security and lifestyle you wanted. The franchisor was welcoming and the training was quite basic but you thought you would learn on the job, you had to mortgage your home to fund the investment but it seemed a reasonable risk looking at the benefits of being your own boss under an exciting new brand. You feel confident that with the systems and support of the franchisor you will be able to run a successful business. The opening promotions and hype are now over and you take a moment to reflect. You remember the wise words from your Lawyer (or the words from your wise Lawyer!) before you signed the Franchise Agreement: • once you sign you are committed! (apart from the cooling off period); • there is no easy way out if it doesn’t work out; • there is no guarantee of a return on your investment, nor an asset to sell at the end of the agreement as the franchisor owns the goodwill; and • you are paying fees based on your gross revenue (not your profit). You also remember the other discussions: “Are you doing this for the right reasons? Does the business suit your skills? Will it deliver your personal and financial goals?” Will you receive a return for your effort (salary) and any return on your investment? The decision to acquire a franchise should always be made with the support of independent and experienced advisors. There are traps and there is no substitute for seeking specialist advice to make an informed decision. With all of the above in mind you close the doors, after the first week of trading with some trepidation. What have I done?

Basic Lessons for Franchisees • You are operating your own business however, you must still conform to the systems, guidelines, policies and training provided by the franchisor. • Don’t buy into a franchise system and then fight the system. 66


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• Positive and constructive feedback is usually welcomed by franchisors. • No two franchise systems are alike, do your due diligence on the franchisor just as they put you through a vetting process. • If you previously owned and operated your own business successfully you are unlikely to enjoy the constraints and reporting requirements under a franchise relationship. • Be aware of not only the entry costs, but also the exit transfer and recurring costs. • Ensure the minimum performance criteria are reasonably achievable. • Are there targets or minimum criteria with rights for the franchisor to withdraw your exclusive territory or terminate the agreement if they are not met? • Prepare cash flow projections and a budget so you can measure your progress against that budget. • Be prepared to walk away if you feel it’s not right for you. This is the hardest part but it just may save you from emotional drama and financial stress. Many franchisors do not provide any financial information and specifically decline from making any statements or providing any data as to expected turnover or returns you may expect from the business. As with any business there is a risk. How resistant are you and your family to the risk? If it fails can you retain your home and bounce back? Getting the right legal advice including asset protection advice to protect your personal assets from the business risk, is vital before you commit.

Financial Obligations The primary financial obligations are apparent, such as paying commission or royalties on sales or a fixed fee and a marketing contribution, a margin on the supply of products or a combination of all of these, as are the obligations to comply with the policies, procedures and systems established by the franchisor. There are additional expenses to attend annual conferences, events and training sessions which all add to the cost of doing business for franchisees. Some costs are up-front capital costs and some are recurring costs to be met from the revenue. 67


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Many franchise agreements provide for a refit and upgrade of fit out at the franchisee’s cost, at the commencement of each franchise term or at the franchisor’s request. As with any business investment, you need to do your homework. This includes preparation of a budget and cash flow projection and obtaining independent advice from your accountant and financial advisor whether the franchise is viable financially, what impact will it have on your existing standards of living. Identify your risk profile. What if the business doesn’t succeed, can you bear that loss or risk? Seek independent expert advice. Tip: You purchase an existing franchise with an outdated fit out. Ask the franchisor if you will be obliged to refit the business once you have taken possession so you can budget for it, or factor it into the purchase price. This also applies to the plant and equipment which may need to be replaced or upgraded. Any statements or promises made by the franchisor or its representative if it departs from what the agreement provides should be in writing.

Contractual Obligations The contractual obligations are set out in the franchise agreement and additional obligations are set out in an operations manual. These can also be contractual terms and a failure to comply with the operations manual may constitute a default under the franchise agreement. Before committing to a franchise ask to see and review the operations manual. Minor breaches of operating procedures do occur and these may be subject to audits by the franchisor with a request to comply. The operations manual sets out in detail the day to day procedures, operations and policies which the franchisee must follow. A franchisee should be aware that compliance with the operations manual has as much importance as the Franchise Agreement itself. The operations manual assists the franchisor to maintain standards and consistency of operations by all franchisees. It is a living document that will be updated by the franchisor as may be required. In some cases financial obligations may vary through the operations manual rather than by a change to the franchise agreement. 68


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Case example: Telco commission rates to franchisees are set out in the operations manual for sale of mobile phones and contracts. The franchisee prepared their cash flow based on those commission rates payable. The franchisor varies the rates payable to franchisees shortly after the franchisee commenced, which puts the franchisee under cash flow pressure. The franchisee argues that this is a material change to their revenue stream and unreasonable. The franchisor may have a contractual right to do so and provided it is acting in its legitimate commercial interests there is little the franchisee can do. Always get advice on the key financial obligations, are they fixed, reviewable annually or at the franchisor’s discretion?

Supply of Goods and Services The franchise agreement will generally require franchisees to purchase approved goods and services from the franchisor or its approved suppliers. The franchisee may also be obligated to supply the franchisor’s entire range of goods and services. These obligations may appear in the franchise agreement and in the operations manual. Case example: A franchisee sees their revenue falling due to the high cost of purchase of stock from the franchisor. The franchisee decides to implement a ‘new range’ of non approved products and services similar to those sold by the franchise system which the franchisee can sell at a greater margin. This increases their revenue however undermines the franchise system. This is a clear breach of the franchisees obligations under the franchise agreement and may entitle the franchisor to terminate the agreement after notice of breach if not rectified.

Performance Targets or Minimum Performance Criteria Most franchise agreements set out minimum performance criteria, which the franchisee must meet throughout the term of the agreement. In some cases, these are not merely targets where the failure to meet them may have no consequences. A failure to meet minimum performance criteria may have serious consequences, such as further training costs, loss of territory or even termination. The criteria should set realistic performance criteria increasing in each year of 69


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the term. The criteria may be set by the franchisor, with or without input by the franchisee. A franchisee should ensure if it is a new and untested system or a greenfield site that they negotiate a grace period, or that the KPI’s increase reasonably over time to enable the franchisee to build the business. Case example: The franchisee is given minimum performance criteria. It is meeting the criteria in some areas however sales in other areas are not taken into account under the Agreement as part of the minimum performance criteria. The franchisor alleges the franchisee is in default even though their gross sales turnover ‘overall’ meet the minimum performance criteria. Is this a breach of the agreement. It was argued by the franchisee that there was no breach as ‘overall’ they had met the performance criteria. The franchisor did not agree and the matter went to mediation to be resolved. These disputes should be mediated if agreement cannot be reached under the Code dispute resolution process.

Keeping Records and Audits Many franchise agreements require the franchisee to maintain records including the provision of profit and loss statements. Franchise systems are becoming more sophisticated and many now have live web based point of sale systems to access sales data automatically. Some franchisees perceive this to be an invasion of their privacy. Franchisors require the data to improve and manage their system, identify areas of profit, those areas in which a franchisee may not be performing, identify products and service sales trends and benchmark franchisees. Tip: Web based live accounts systems are a valuable management tool. We recommend franchisees ensure that any private and confidential information be retained on a separate stand alone computer system, and that the business system only maintain business records. Most agreements allow the franchisor to audit franchisee records and provide that if there is shortfall in reporting of revenue, the cost of the audit is payable by the franchisee. This can also be a breach that leads to termination. 70


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Case example: Q: Franchisor enters the franchisee’s premises and takes a mirror image of the franchisee’s hard drive. The hard drive contains personal information of the franchisee and its customers, including confidential patient information. Can the franchisor take that confidential information? A: The franchisor may have the contractual right to do so provided they comply with the Privacy Act requirements as to use of private information.

Marketing Fund Many franchise systems require franchisees to contribute to a marketing fund. They are the cause of much debate and dispute between franchisors and franchisees. Regardless of whether the franchisor operates a marketing fund, many franchisees are also required to undertake their own local area marketing. Often the franchise agreement will restrict the franchisee to marketing within a limited area (for example, their territory or a radius surrounding their business premises). The franchise agreement will require the franchisee to seek the franchisor’s approval before implementing any local marketing initiatives. The money contributed to a marketing fund may not be utilised directly on a franchisee in their territory or even necessarily the State in which they operate. The franchisor has the sole discretion to determine how the money paid into the marketing fund is spent. The Franchise Code requires franchisors to retain records of the marketing fund and to provide annual audited accounts as to how the funds were disbursed. This is one of the areas where franchisees become disillusioned where they do not see a franchisor productively using the marketing fund to promote the business and brand.

Intellectual Property and Confidentiality A franchise agreement grants a license for the franchisee to use trade marks, brand names, logos and slogans associated with and owned by the franchisor in the operation of their business. Most franchise agreements include provisions requiring the franchisee to retain the confidential information of the franchisor in confidence. Franchisees need to ensure that their employees also maintain the franchisor’s confidentiality. 71


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Non Compete Provisions These are often overlooked when a franchisee enters into the agreement as it is something that only becomes relevant at the time the agreement ends or termination of the franchise. Franchise agreements provide that the franchisee not compete with the franchisor’s business during the term and on termination or expiry. Franchise agreements often restrict a franchisee from being involved in another franchise system without their consent, this may be the case where the franchise wants owner operators and not investors. The non-compete provisions prevents the franchisee (and/or its directors and principals) from being involved in a business similar to the franchised business for a period of time, for example twelve months and within a defined area. These provisions on their face are anticompetitive and unenforceable. However, they are enforceable where they are no more than is reasonable to protect the franchisor’s goodwill. It may be set out as a cascading provision both in time (i.e. three years - two years – twelve months – six months) and in area (Australia – Victoria - 100kms – 50kms – 20km). The reason for this cascading provision, is that if it was ever tested by a Court, if one restraint combination for example, three years and Victoria was considered by the Court to be an unreasonable restraint the Court can then rely on the lesser time and area in the agreement which may still be enforceable for example one year and within 20km of the franchise. Often a successful franchisee may wish to acquire or have an interest in other franchise systems. There may be a restriction in the franchise agreement requiring the franchisee to devote their whole time and attention to the business and this is to be considered and discussed with the franchisor at the time. Tip: Do not rely on any discussions or verbal promises made by a franchisor or their representative. Unless it is in writing, assume you cannot rely on it. If it’s a variation to an obligation in the franchise agreement or a concession then make sure it is in writing. It may be by letter or follow up email. Preferably it is a special condition in the franchise agreement.

Leased Premises If a franchisee is required to operate from a specific premises, the franchisor 72


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may require the franchisee to enter into a Lease directly with the landlord or the franchisor may enter into the Lease and grant the franchisee a right to occupy the premises. Either way, the franchisee will be required to comply with the terms of the Lease. If the franchise agreement is terminated, the franchisor will likely have the right to take possession of the premises. If the right to occupy forms part of the franchise agreement as a licence, it will automatically be terminated on termination of the franchise agreement. If the franchisee holds the Lease, the franchisee will be required to assign the Lease to the franchisor. Franchisees should ensure that they have had an opportunity to review the terms of the Lease prior to entering into the franchise agreement. At a minimum, details of the essential terms (such as rent and outgoings payable) should be provided by the franchisor. Make sure your proposed use of the premises is a permitted use from council and that you can obtain all necessary licenses and permits to operate the business.

Transfer of the Franchise If a franchisee wishes to sell their business, the franchise agreement will require the franchisor’s consent and it is usually subject to a number of conditions such as; • The franchisor will often have a first right of refusal to purchase the franchise. • If the franchise is sold to a third party, the franchisee will be required to seek the franchisor’s approval of the proposed new franchise. The Franchising Code of Conduct provides that a franchisor must not unreasonably withhold its consent to the sale/transfer of the business. Reasonable circumstances for refusal include the proposed transferee being unlikely to meet its financial obligations or not meeting the selection criteria of the franchisor (for example, not being a reputable person with the necessary experience and capabilities). Under the Code, the franchisor may also withhold consent to a transfer where the franchisee owes money to the franchisor or is in breach of the franchise agreement unless an arrangement has been made with the franchisor to remedy the default or pay outstanding money from the settlement proceeds. There is generally a fee for transfer of the franchise payable by the outgoing franchisee. The fee may be a set amount, or a percentage of the purchase price for the sale. 73


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Tip: If you are selling your franchise and are aware there is a transfer fee, ensure that your sale price incorporates that fee as part of the sale price. It is unlikely that you can pass that obligation on to the purchaser and you will be left with less in hand. There is often an issue whether on a sale or transfer of the franchise the franchisor will provide the new franchisee, with a new franchise agreement or transfer the existing franchise agreement. It should be made clear whether the franchisor is expecting the new franchisee to pay the franchise fee to the franchisor, in addition to the purchase price payable to the existing franchisee selling the business. Those issues need to be agreed before the sale contract is finalised.

Default and Termination The Franchising Code of Conduct sets out strict criteria regulating the ability of a franchisor to terminate a franchise agreement. The Code permits a franchisor to terminate a franchise agreement without notice only in certain circumstances, for example the franchisee: - No longer holds a licence necessary to carry on the business; - Becomes bankrupt or insolvent; - Voluntarily abandons the business or the franchise relationship; - Is convicted of a serious offence; - Operates the practice in a way that endangers public health or safety; - Is fraudulent in connection with the franchised business; or - Agrees to termination of the franchise agreement. If a franchisee is in breach of the franchise agreement and the above circumstances do not apply, the franchisor must follow the procedure set out in the Code before terminating the franchise agreement, requiring the franchisor to give the franchisee reasonable written notice that they propose to terminate the agreement and indicate what the franchisee must do to remedy the breach. The franchisor must allow the franchisee ‘reasonable time’ to remedy the breach (no more than 30 days). If the breach is not remedied within the time required, the franchisor can then terminate the agreement. This means that if a franchisee is in breach of an agreement and remedies the breach as required within the time required by the franchisor, the franchisor cannot then proceed to terminate the agreement. 74


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The franchise agreement may also include a provision allowing the franchisor to terminate the agreement without a breach by the franchisee on reasonable notice provided the reasons for the termination are given. Tip: Read the termination provisions carefully as to what you have to deliver up at the end of the franchise term on termination. Often it includes giving up the domain name and telephone number which can create some angst.

Dispute Resolution The Franchising Code of Conduct sets out dispute resolution provisions that must be included in a franchise agreement and the procedure to follow. The procedure is instigated by notifying the other party in writing of the nature of the dispute, the outcome sought and what action is ought to settle the dispute. The parties should then try to agree how to resolve the dispute, and failing that should refer the matter to a mediator (either a mediator the parties agree upon, or a mediator appointed by the Office of the Mediation Adviser) to try to resolve the dispute. If a franchisee instigates mediation the franchisor is required to attend and attempt to resolve the matter acting in good faith. A failure to do so is a breach of the Code by the franchisor. The process of mediation can be used effectively by a franchisee where there are legitimate issues in dispute as; - the cost of mediation is far less than Court action;

- the mediation requires the franchisor to focus on the particular dispute;

- the parties can discuss issues openly with a view to finding practical solutions; and - the outcome is in the hands of the parties, not a third party (i.e. a Judge).

The parties must pay their own costs of attending the mediation and are equally liable for the costs of mediation, unless they agree otherwise.

Renewal A franchise agreement will usually be for a set term (eg. five years) and often provide for a further term or terms at the option of the franchisee (eg. two further terms of five years each). The agreement will set out preconditions for renewal. The franchisee will have a certain period in which they must give notice of intention to renew the agreement (eg. between three and six months before the end of the term). 75


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Often the franchisor will require the franchisee to enter into a new franchise agreement on renewal the terms of which may have been updated. There will usually be a fee for renewal. This may involve the full franchisee fee, or be a lesser amount (for example $5,000) to cover the franchisor’s legal and administrative costs of the renewal. If the franchisee does not request a renewal in the time specified, depending on the terms of the franchise agreement, the agreement will continue as a monthly licence on the terms of the franchise agreement, with either party able to terminate on reasonable notice unless the agreement provides otherwise.

Summary Apart from the contractual obligations and mandatory regulations set out in the Code, there is an abundance of additional regulations such as obligations to employees under the Workplace Relations Act, the Occupational Health & Safety Act, Trade Practices Act (now known as Australian Consumer Law) and Consumer Credit Laws. The key to any good business is good financial management, training, systems and protocols, which will assist you to avoid dispute and keep you away from the attention of regulators. Obtaining specialist advice from franchise specialists will assist you to minimise the risks, and assist you to make an informed decision.

Robert Toth, Partner Wisewould Mahony Lawyers (AUS) 03 9612 7297 robert.toth@wisemah.com.au www.wisewouldmahony.com.au

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Chapter 8

INVESTING IN AN INTERNATIONAL FRANCHISE By Rod Young, Managing Director DC Strategy

About the Author Rod has over 30 years’ experience in franchising, licensing and business development in Australia, Europe, China, South East Asia, India and the United States and is considered one of the world’s leading franchise consultants. He has been a key advisor to some of Australasia’s leading franchise groups. His business interests have also included roles as both a franchisee and franchisor. As well as his role of Managing Director of DC Strategy and DCS Lawyers, he currently serves as Chairman of Hairhouse Warehouse (Australian Franchisor of the Year 2011), is the Executive Chairman and Global CEO of Cartridge World and serves on the Board of several national and international companies. DC Strategy, the firm Rod founded, is the region’s premier franchise consulting and legal firm, providing strategic consulting and legal services to the franchise community. The specialist teams at DCS have been involved in developing many of the region’s most successful franchising organisations.

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ith over 1,000 franchise systems, Australia is over-represented in terms of franchise networks per head of population but its market is only 1.6 per cent of the global economy. There are almost 10,000 franchised brands across the globe and international franchising is growing. But how do you choose that next market leader or that emerging franchise system if you want to invest in an international franchise?

Globalisation of franchised brands While Australia is a small market, it punches well above its weight in terms of profit per unit and has proven attractive to US-based McDonald’s, Burger King, KFC, Subway, Ben & Jerry’s and Jani King as well as many other international franchises. While other jurisdictions will lag in franchise growth until certainty of IP rights and franchise contracts and other matters of a commercial nature can be backed by transparent and enforceable legal rights, Australia is well positioned to attract more international franchises. The world is awash with capital and there are many groups or individuals with substantial net worth, who are searching for the next big idea in their country or region. Many franchise systems have pioneered internationalisation of their brand and demonstrated that master franchising can help a company grow on a global scale. International franchising will become a bigger part of the revenue stream of more successful franchise systems. Governments and financial institutions have recognised that franchising creates economic activity, opportunity, jobs and profits. Delegations of government and semi-government officials from emerging economies are actively encouraging overseas franchise systems to establish franchise networks in their jurisdictions. Countries such as the US, France, Singapore and Malaysia have proactively supported franchise development for many years and today, politicians in most countries understand the link between franchising, SME’s and economic prosperity. The emerging retail, food, service and online businesses of the future are focussed on the needs of a changing consumer attitude shaped by eCommerce and social media. The alignment of the physical offer with an eCommerce and social media strategy designed to capture more walk-in and log-in sales must be a feature of the international franchise of the future. However, local representation will always be a critical part of any business model (even Google has offices in most large cities to sell its services) and international franchising will flourish as a result. 78


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These new-age businesses are reaping the benefit of this changing consumer and economic momentum and franchising is surfing this wave as the need for motivated owner-operators continues to grow.

The investment Investing in an international franchise offers the potential to either expand an Australian franchise business off-shore or import a foreign-based franchise into Australasia. Many Australian companies are doing so now and more Australians are part of that migration of a local brand to an international market by securing Master Franchise rights in foreign countries. The investment usually involves the payment of an initial upfront fee for a defined territory which may or may not include the right to sub-franchise. Further investment will be required to open at least one and sometimes several company owned outlets to prove the franchise model in the market before a franchise can be granted in the territory. An investment in localising the operations manual, sourcing suppliers and developing a localised marketing and advertising campaign will also be needed. Good franchisors will also require you and your management team to attend training in the home market at your cost before the first location is established in your territory. Ongoing commitments to the franchisor typically involve a share of the local revenue from both initial local franchise fees and continuing product or service sales by way of a monthly or quarterly royalty payment. Experienced franchisors look for investors who will be hands on and operate the business on a day to day basis and have some prior experience in business, people management and real estate if it is a bricks and mortar based business. Good franchisors are selective about who they will grant their rights to so expect to prove you are financially and operationally capable.

How do you choose the right international franchise? In developing national and international franchise systems, the DC Strategy team found that the features of many businesses which stood out for their growth trajectory and market share had common elements that were not confined to industry groups or country of origin. These features were present across businesses as diverse as food, retail, service and online networks that built substantial enterprise value for their proprietors and shareholders and offer similar potential to an investor looking to secure an international franchise. It goes without saying that the product or service offering must have consumer demand in the market but if you are seeking to invest in an international 79


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franchise it should also rank highly in the following: 1. Consistent execution of the fundamentals

At the heart of any business is the customer proposition. While this may seem so basic that you may say that every business has one, the best practice franchisors have a focus on the customer proposition which develops loyalty and keeps them coming back.

There is an understanding that each customer is more than just one transaction and they understand that the ‘lifetime value’ of their customers is many multiples of the first transaction with a new customer. This lifetime value is being calculated and benchmarked across the network.

The point of sale experience either in store or online is a key focus to capture new customers and is supported by recognition and acknowledgement that is backed by email and text communication as well as direct mail to build true customer loyalty to the brand.

Included in the fundamentals are the staff / store / uniform / vehicle / website and online presentation that create and reinforce good impressions and a commitment to keeping the customer’s experience fresh.

2. Well defined KPI’s, benchmarking and financial reporting

Alfred P. Sloan, the Head of General Motors in the 1950’s, said “the purpose of an enterprise is to make a profit”. We are always fascinated to hear the excuses used as to why a franchise organisation does not require, collect and analyse the monthly profit and loss statements of all franchised outlets. How can any senior executive build, run and maximise the performance of an enterprise if he or she does not have access to the key metrics and especially the net profit of the franchise outlets?

Franchise systems that flourish have highly developed point-of-sale systems and dashboards linked to management reporting processes that measure and benchmark KPI’s across the network. The better franchisors publish entire networks’ store by store profit and loss and educate their franchisees on how to analyse this data and their performance relative to others in the group.

3. Comprehensive compliance management

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A complaint of many better franchisees in some networks is that the franchisor is soft on compliance and is letting other franchisees operate a poor standard of business which reflects badly on their franchise and ultimately its value.


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These better franchisees soon sell up and migrate to networks with more professional compliance standards. The great franchise systems understand that the customer promise conveyed by advertising and marketing and via the website must be faithfully reflected at the customers end of the business. They define what the standard of the network is during the recruitment, screening and selection of franchisees with a view to weeding out people who do not value standards. Induction and training programs highlight what the standards are and how they are measured, managed and achieved.

The field staff provides a fresh set of eyes to prevent ‘store blindness’. Compliance in reporting is also well ingrained in the culture of great franchise systems to measure compliance to defined standards.

4. Field staff as coaches, not auditors.

The best franchise systems are focused on developing their franchisees to become better business people by education rather than policing. We all know that every light globe should be working but if field staff spend too much time on trivia, or develop a culture of blame, they miss the opportunity to earn the confidence of a franchisee and become a mentor. This confidence is critical before coaching commences and quality field staff develop far better franchisees and businesses when they have invested the time to listen and understand the goals and motivation of a franchise owner and his or her family.

5. A focus on the value of intellectual property (IP)

Real champions are brand champions. They understand that the brand is one of the few ways to add a premium price to an otherwise commoditised product or service. We see the best franchisors don’t just focus on the trade mark and colour scheme which is of course the cornerstone of the brand, but understand their IP also embraces their systems, processes and documentation.

In a world where any tangible item can be easily copied, the true value of IP is often enshrined in the way things are done in the organisation. A respect for these processes and an understanding of how they create value for the business has become part of the culture and is trained into new recruits in the leading franchise systems. Intellectual Capital, which is the collective knowledge in the heads and hearts of the franchisors network of staff and franchisees, also falls under the IP category of an enterprise. 81


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6. Real marketing and advertising muscle

Nothing builds a business like a commitment to advertising. We use the word commitment advisedly because a feature of all leading franchise systems is a focus on advertising and marketing from the very beginning of the network.

While many competitors decide to wait until they are bigger before spending big on advertising and as a result fail to grow, the best franchisors typically allocated a more substantial percentage of turnover to advertising than their competitors and then supplement these funds with additional investment in advertising to help establish new markets.

Another feature we see is highly developed local area marketing activities by franchisees. This does not just happen. The market leaders understand that marketing can drive community engagement and look for, train and expect franchisees to go beyond the store front or vehicle into their local community. The advertising and marketing is multi-faceted with traditional leaflet and direct mail, local newspapers, radio, TV, billboards, public relations and a growing online commitment to internet advertising.

Innovative cross-promotional activities with non-competing business serving the same consumer pool are often evident. These innovations are almost always developed first by the better emerging franchisors that are looking for cost effective ways to create a larger than life image.

7. Continual innovation

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Innovation is where the best franchises keep ahead of the pack. They realise that competitors will eventually copy the market leaders and understand that differentiation is important. This differentiation is not just in product but in every aspect of the business.

The best players have an ongoing innovation program in almost every area of the business. It may be seen by the customers and competitors in new products, services or advertising but the invisible innovation that defends and extends market share is often related to staff training, direct customer communication via email, text, social media, direct mail and online and web communication with new technology to track the nature of the business and customer trends.

This leads to more correct decisions being made earlier that edge better franchisors even further ahead of competitors and re-engage customers who may become jaded without change.


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8. Supply chain management When franchisors start to treat their suppliers as strategic partners they start to approach best practice not only in franchising but in business generally. By harnessing the know-how and experience of their suppliers, good franchisors find a willing partner in new product research and development because suppliers understand that assisting customers to grow will result in increasing sales volumes for those suppliers. There are also substantial benefits being created or costs saved by working with suppliers who understand the strategic plans of their franchisor customers. Many of the better franchisors are deriving substantial income by actively managing the supply chain relationships for the benefit of their franchisees as well as for themselves. The key to supply chain management is firstly ensuring that standards are specified for quality, service and delivery and are not compromised, and secondly, the prices paid by franchised owner/ operators across the full range of approved products result in a higher gross profit than if that franchise owner purchased independently. Many good franchisors have a strong representation of franchisees in supply chain issues with some international brands having the franchisee body control the buying process with the benefits being shared between franchisor and franchisee and/or applied to the advertising fund to boost brand exposure. 9. Sound two-way communication Many franchisors do not appreciate that franchising is a human resource strategy more so than a capital raising strategy. As networks grow, so does the experience of the franchisee body. The very best franchise systems appreciate that ignoring or isolating the franchisees leads not only to a stifling of innovation but the loss of quality franchisees to other more open networks. The franshisor/franchisee relationship is the cornerstone of a successful franchise network and the higher the degree of franchisee satisfaction the better execution of growth strategies. Growth often entails change. Strong communication between franchisee and franchisor including consultation to gain both ideas and support for change build the trust needed to make difficult change management programs successful across the network.

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franchisee concerns. The process of monitoring and responding to these concerns is where great franchise networks excel. Franchise Advisory Councils, franchisee product development input, regional advertising committees and annual conferences are all hallmarks of the better franchisors. 10. Induction and ongoing training

When a franchisee applies for a franchise it is obvious he or she is doing so because they do not have the expertise to operate a business similar to that of the franchisor. If the recruitment screening and selection process is professionally developed and executed, the franchisee will understand the standards expected by the franchisor and the process by which the franchisee will be trained in every aspect of the franchisor business.

Good franchisors understand that the initial induction and training prior to a franchisee taking over his or her business is merely an orientation process. The real training starts once the first few months of trading are under the franchisee’s belt and the franchisee starts to settle into a rhythm which will allow the franchisee to absorb the subtleties for what makes the franchise really tick.

For the best franchise systems, training is an ongoing activity which is directed not just at the franchisee but his or her staff to ensure that execution of the customer service strategies and the customer experience are being faithfully applied.

Training programs at each level of the business are evident, from the most junior new recruit that may be trained by the franchisee via train the trainer programs, to franchisee and manager training supported by suppliers as well as the franchisor both off-site and in conjunction with regular field support coaching and guidance at the franchisees location.

Online learning via intranet and webinar is also emerging as a feature of more progressive and committed franchisors as the best of the best understand that training is a commitment that pays dividends by building franchisee and staff satisfaction, sales and profits and the cost for this training are incorporated into the annual budgeting and planning process.

Trends Over the next five years, the international franchise sector will grow at an annualised rate well exceeding inflation. There will be an increase in the number of franchised owner operators, many of them being multi-unit owners, regional 84


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or master franchisees or area developers. They will emerge as a powerful lobby group enjoying higher profitability levels than their independent counterparts, and will require sophisticated management by franchisors. eCommerce and social media will need to be a core part of brand and sales development to keep up with the demands of the new consumer. Many governments have introduced franchising legislation that will lead to better conduct in the franchising sector and there are only a few countries without a national franchise association. Access to information via the web is creating better decision making. There are more accountants and lawyers who understand domestic and international franchising and are better able to advise prospective franchisees. This franchising education is diluting risk. In summary, the reader can see that the very best international franchise investments also have the very best business franchise and business practices. They are constantly monitoring the outcomes that result from the ongoing application of the ten key features of best practice franchisors. For any franchise to develop into an international brand, how well these features are developed and executed in the local market will determine an organisation’s position in the competitive pack. The value prize is market leadership and the rewards it brings for all stakeholders in those businesses, be they brand owner, franchisee, master franchisees or area developer is the Enterprise Value upon exit. If you want to invest in an international franchise the first step is determining if the franchised business has these features of success and you have the capital, commitment and experience to modify and apply them.

Rod Young, Managing Director DC Strategy (AUS) 02 8220 8711 rod.young@dcstrategy.com www.dcstrategy.com

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Chapter 9

FRANCHISING IN NEW ZEALAND By Graham Billings, Executive Director Franchise Association of New Zealand

About the Author Graham Billings had extensive experience at a senior level in the UK newspaper and magazine publishing industry prior to immigrating to New Zealand to take up a senior role with Wilson & Horton, followed by a similar role with Australian Provincial Newspapers in Melbourne. Whilst in New Zealand, he was elected as President of the Magazine Publishers’ Association and served on similar media associations in Australia. Moving out of the media industry, he was appointed Managing Director of the Australian arm of a UK multi-national company, providing products to the textile and clothing industry and retail sectors. Returning to New Zealand in 2001, Graham spent six years with the Order of St John, Northern region, where he was responsible for marketing and fundraising and other revenue generation. Following a short engagement as National Director of the Multiple Sclerosis Society of New Zealand, based in Wellington, he returned to Auckland in 2008, and was appointed Executive Director of the Franchise Association of New Zealand, the peak body for the franchising sector.

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T

he franchise sector of the New Zealand economy is substantially larger than most people realise. The number of units operating with business format franchise systems has increased considerably since 2003 when the last major survey was conducted. The Franchising New Zealand 2010 survey conducted by Massey University, Auckland and Griffith University, Queensland found 423 active franchise systems in New Zealand compared with an estimated 350 in 2003. The survey also estimated a total 23,600 franchisee units, which was a 92 per cent increase over the seven years. The franchising community is a major provider of employment opportunities with total direct employment assessed as 80,000 people. Current estimates would suggest that turnover is between NZ$15 billion and NZ$20 billion and represents more than 11 per cent of GDP with fuel and motor retailing franchises adding a further NZ$14 billion. New Zealand has twice the number of franchisors and almost twice the number of units per capita as Australia, making it the highest per capita franchised country in the world. A second survey based on the same methodology will be released later in 2012 and will provide useful data on the health of the franchise sector compared with the 2010 benchmark survey. The franchise model is operated across all sectors of business. In New Zealand, franchising has comparatively fewer businesses in the retail sector compared with many other countries, but is comparatively stronger in home and business-to-business services. Indicative of the entrepreneurial spirit of New Zealanders, approximately 70 - 75 per cent of franchises operating here are home-grown and despite the economic situation, there are some franchise systems that are still experiencing growth.

The Franchise Association of New Zealand If you are looking for a business opportunity or needing advice on franchising, our recommendation is that you don’t sign anything until you have asked the question: “Are you a member of the Franchise Association of New Zealand?” Members of the Franchise Association are the franchise professionals, committed to uphold ‘Best Practice in Franchising’ and the Association works hard to promote the benefits of dealing with members, both for those looking to purchase a franchise and also those who need to gain professional advice. The benefit of FANZ membership for franchisees was recognised in the recent New Zealand Prospective Franchisees Survey*. The survey found that 75 per 88


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cent of prospective franchisees considered membership of FANZ important or very important, when considering a franchise to buy into. As the peak body for the franchise community in New Zealand, the Association makes representations to Government on issues of concern to franchisors and franchisees including such issues as proposed legislation, new business support programs, and business taxation. The Association often conducts email surveys of members on key issues to gain valuable feedback prior to making a submission. Unlike a number of other countries in the world, including Australia, franchising in New Zealand is governed by the same commercial laws as any other business. In 2008, the Ministry of Economic Development called for submissions on the possibility of introducing franchise specific regulations following a high profile fraud case. In 2009, however, the Minister of Commerce concluded that there was no need at that time for the introduction of franchise-specific regulations and went on to say that that there was little evidence of widespread problems in the sector. He drew attention to the Franchise Association of New Zealand’s (FANZ) Code of Conduct as an area where self regulation was working. Despite the substantial difference in the regulatory environments between New Zealand and Australia, the two 2010 surveys show remarkably similar levels of franchising disputes, with fewer than 1.5 per cent of New Zealand franchisees being involved in a dispute that had been referred to a third party for action in the previous year.

Buying your New Zealand franchise Buying the right franchise can have many benefits over a stand-alone business, not least of which is that you can potentially purchase into a franchise system that has a proven track record and one where you will receive all the help you need to become successful. As a prospective franchisee, an important part of your due diligence should be to establish whether or not the franchise you are considering is a Member of FANZ. Don’t be misled by a statement such as, “we are not members but we abide by their Codes.” There have been several reports of this in recent times where something has subsequently gone wrong in the relationship but we have been unable to assist the franchisee, as we have no powers to intervene unless the franchise is actually a Member. Of course, there are franchise systems such as McDonalds who are currently not in membership but who operate ethically and provide valuable business 89


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opportunities for the prospective franchisee. In all cases, however, you should ask the franchisor to explain to you why they are not members. For a franchisor to gain membership of the Association requires that they submit their documentation for scrutiny to ensure that their Franchise Agreements contain all the elements required under the Association’s Codes and Rules. Some of the key elements that are required are: • Full and proper disclosure of matters important for a prospective franchisee to know and understand • A seven-day cooling off period before a prospective franchisee is finally committed to the purchase • A requirement that the prospective franchisee produces a certificate from their solicitor to the effect that they have had the agreement explained to them – or a signed statement that they have declined to take independent legal advice • If things go wrong, compulsory mediation by a FANZ appointed experienced franchise mediator as a first step in dealing with the issue The Association’s independent Scrutineer carries out compliance checks on a biennial basis to ensure that documentation maintains the standards that are required. Carrying out your due diligence on every aspect of your intended franchise system is vitally important. The New Zealand Prospective Franchisees* survey found that over 70 per cent of prospective franchisees met with three or more franchisors before making up their minds and nearly 75 per cent talked to three or more franchisees of their intended franchise system as part of their decision making process. If your franchise system is in membership, you have the ability to make a formal complaint to the Complaints Panel if you believe that your franchisor is in breach of the Association’s Codes or Rules. The Complaints Panel is fully independent of the Board of FANZ and its members are experienced in franchising both from a legal and practical standpoint. If your complaint is upheld, the franchisor can be required to rectify the situation or face a range of penalties that are contained within the Association’s Code of Practice. If the franchise you are going to purchase is a Member of FANZ, you too will be required to sign up to the Association’s Code of Conduct and Code of Ethics to ensure that as a franchisee you undertake to maintain ‘Best Practice’. In addition to standards and compliance, franchisors, franchisees and service 90


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provider Members gain much from membership to the Association. Apart from the significant marketing advantage of being able to use the Association’s logo as a sign of credibility, membership also opens up a whole range of opportunities to advance their knowledge and learn from the experience of others. This is a unique advantage not available to non-member franchise systems and is clearly demonstrated at Annual Conferences where first time attendees regularly comment that they are amazed by the amount of advice and information that is freely exchanged by members. As a Member or the franchisee of a Member you have the opportunity to enter the prestigious annual awards, which culminate in a gala awards dinner in November each year. These awards are based on an internationally recognised business excellence system and not only provide you with the opportunity to showcase your business, but also gain valuable insight into the opportunities to improve your business from the feedback reports provided by the evaluators. There are entry categories for both franchise systems and franchisees and winners regularly use their success in marketing campaigns.

Exporting your franchise to New Zealand For an Australian franchisor coming into New Zealand it is a relatively straight forward process from a legal point of view. Most systems that come into New Zealand from Australia set up a local company both to protect intellectual property in New Zealand as well as to ensure a ‘foothold’ in New Zealand. It is important to get trademarks registered in New Zealand as early as possible. It is not an expensive process but should be considered well before actually arriving in New Zealand. If the Australian franchisor is operating directly in New Zealand then the franchise agreement should be reviewed by a New Zealand lawyer and made subject to New Zealand law and to New Zealand jurisdiction for ease of franchise rights enforcement. Reputable Australian systems that come here ensure that they have a disclosure document that is relevant to New Zealand circumstances as well as a cooling off period etc. A number of Australian systems have made, as a key feature of setting up in New Zealand, an early application to join the FANZ especially as the FANZ requirements for disclosure differ in some ways from those required under the Australian regulations. Proper disclosure documents, a cooling off period and mandatory mediation as a dispute resolution process are all part of the voluntary Code of Practice to which all FANZ members are required to adhere. It certainly enhances the reputation of the system operating in New Zealand. Obviously, if a Master 91


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Franchisee is appointed in New Zealand then having that franchisee become a member of the FANZ is likely to be perceived as a system which respects the maintenance of high standards. In spite of a minority of lawyers and accountants seeing franchising as something akin to the Wild West, the vast majority of lawyers, accountants and business brokers throughout New Zealand have a reasonable understanding of franchising and the benefits it can bring to franchisees. There are a growing number of lawyers, accountants and business brokers who specialise in franchising. There is still a good deal of education to be undertaken for the public about avoiding doubtful franchise systems, but the trend is for specialised business brokers to promote healthy systems and to steer people away from the moonlight operators. The majority of the banks in New Zealand now have a strong presence in the franchise industry and bear in mind that all the major banks in New Zealand are Australian owned. There are reputable franchise consultants in New Zealand with well-established track records and for anyone who attends the annual FANZ conference it is manifest to observe that there is a strong and proactive congeniality within the franchise industry in New Zealand. There are a small number of dedicated and respected franchise consultants in New Zealand who can be invaluable in modifying systems coming into this country. Involving their use can considerably diminish the likelihood of a legal claim being brought against a franchisor coming across from Australia. The unemployment rate in New Zealand is presently about 6.5 per cent and is expected to decline slightly over the next year. A recent survey indicates that employers are becoming more optimistic about engaging staff again. Be aware that employment laws in New Zealand are similar to Australia and dismissing staff is not an easy process. Also New Zealand has an act called the Resource Management Act which, coupled with the Building Act, means that obtaining building consents for shop fit outs can be slow and expensive. It is vital to stress the need to do plenty of homework. Obtaining sound taxation advice is essential before coming into New Zealand. There is a withholding tax system for payment of royalties and other fees from New Zealand to Australia but there is plenty of advice available from accountants who understand the taxation laws between the two countries. It is important to remember that GST applies to everything in New Zealand 92


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(even food items) and the tax structure here is somewhat different from Australia. For a start there is no such thing as stamp duty. The government Kiwi Saver superannuation scheme requires contributions from employers to be made when employees opt in to the scheme. It is also important to know that we have the Personal Properties Securities Act which is a system of online registration of all charges (e.g. what used to debentures for companies) against both individuals and companies as security for moneys lent and where goods and services are supplied on credit. New Zealand has recently been named as the fifth highest ranking country based on the United Nations Development Programme which has regard to the standard of living of its people, its population’s access to knowledge and its population’s chances of living a long and healthy life. There are many success stories for Australian systems entering into New Zealand. A point to remember, however, is that the disposable income of New Zealanders is not quite the same as that of Australians. Having said that, the lifestyle differences between Australia and New Zealand are not significant and so long as the homework and planning are done carefully then there are good prospects for Australian systems to enter into New Zealand and becoming successful. For more information or to find out more about the work of the Association and the Codes of Practice, visit www.franchiseassociation.org.nz *New Zealand Prospective Franchisees – Franchize Consultants Ltd and franchisebusiness.co.nz - April 2011 Additional legal commentary provided by Rory McDonald – McDonald Pilcher Partnership

Graham Billings, Executive Director Franchise Association of New Zealand (FANZ) (NZ) 09 274 2901 contact@franchise.org.nz www.franchiseassociation.org.nz

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Chapter 10

HOW TO STRUCTURE YOUR FRANCHISE BUSINESS By John Sier, Principal Mason Sier Turnbull

About the Author John is a Principal and leads the Corporate Advisory and Franchising teams. He acts for public and large private companies and many of the household franchise brands. John has extensive experience in distribution and licensing law and has been involved in the establishment and restructuring of distribution networks of large overseas corporations. John’s international practice has strong networks in many countries and he advises on corporate structuring and growth strategies for franchise systems and companies in Australia, Hong Kong, China, USA, Canada, the Middle East, UK and New Zealand. John was nominated by his peers for recognition in the international publication ‘Who’s Who in Franchising’.

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n establishing a franchise business, the prospective franchisor has many issues to consider. The franchising model needs to be streamlined to allow for growth, effective management and eventual exit. It is critical that the business structure is tailored to the franchising model, in both an operational and a legal sense.

Types of corporate structure The various components of a franchise business can be held in more than one business structure. It is not incumbent upon a franchisor to have one structure for the entire business. Indeed, it is preferable to have multiple structures which work together to achieve the specific objectives of the franchisor. The options available to a franchisor are as follows: • sole trader • partnership • company • trust

Sole trader This is the simplest form of a business structure. It is cost effective to run, but there are limitations. The franchisor is personally exposed to business risks and is unable to bring in partners without creating administrative and tax headaches. All income earned by the sole trader is personal income and there is no ability to retain money within the structure, as in the case of a company. A sole trader’s personal assets are exposed to all business risks and there is no ability to tax effectively deal with the income.

Partnership A partnership, essentially, is a documented relationship between a number of parties who may be individuals, companies or trusts. The terms of the relationship are governed by the partnership deed. As in the case of sole traders, partnerships of individuals create individual risk and exposure.

Company A company is a separate legal entity and is established under the auspices of the Corporations Act (Cth). The company can be owned and controlled by 96


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one or more persons. The main advantage of a company is due to the fact that, as a general rule, any liability of the business is limited to the assets of the company. The company is also able to retain profits, subject to paying tax at the corporate tax rate (currently 30 per cent). Any dividends paid out will be taxed at the shareholder’s marginal tax rate, subject to any imputation credits. Shares may have differential rights, as to dividends and/or differential rights, in relation to the proceeds on a winding up of the company.

Trusts Unlike a company, a trust is not a legal entity. It is simply a set of obligations found in a trust deed. Those obligations are normally imposed upon a trustee. The trustee is generally a company, however, it can be an individual. Normally, the business proprietor would hold shares in the trustee company. He or she would also be appointor of the trust. The appointor is the controller of the trust and therefore should be the owner of the franchise. This ensures that control of the trust remains vested in the owner or his/her legal personal representative. In much the same way as a company protects the personal assets of the proprietor; a corporate trustee of a family discretionary trust also offers the same advantages. This structure also has flexibility in terms of beneficiaries who, at the trustee’s discretion, can be recipients of income and capital from the trust. It is, therefore, a tax effective structure which offers protection from personal liability for the business proprietor. It has generally been the view that capital appreciating assets should be held in a trust, however, this general proposition needs to be considered in the context of the proprietor’s personal circumstances - which vary greatly from case to case. There are three types of trust that a franchisor may consider: • Discretionary trusts • Unit trusts

• Hybrid trusts 1. Discretionary trust: This is a trust in which the trustee has a discretion as to when any payment from the trust fund will be made, who, in a definite class of beneficiaries, will receive it and the amount of such payment. The trustee of a discretionary trust provides flexibility by generally allowing streaming of sources and classes of income to a wide range of beneficiaries in the proportion determined by the trustee. Discretionary trusts are generally inappropriate when there are two or more arms length groups 97


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involved in commercial dealings. These types of business structures are therefore inappropriate in circumstances in which the franchisor wishes to take in additional equity participants, either by way of a form of incentive bonus or staged sell down. There are also complications with this form of structure on sale of the business, as compared with a company. 2. Unit trust: A unit trust, on the other hand, entitles beneficiaries (or unit holders) to a fixed proportion of the capital and income of the trust. Generally, a beneficiary or unit holder, is entitled to a proportion of income and capital of the unit trust - represented by the beneficiary’s unit holding. In this instance, there is no discretion vested in the trustee to make distributions to a unit holder, other than in accordance with their fixed entitlement. Each financial year, the profit must be distributed to the unit holders, in accordance with their entitlements. The unit holding can be held by one or more discretionary trusts. This structure is therefore better suited to a franchising system, where scope is needed to bring in multiple owners, either at the outset or as the business develops. The unit trust is akin to a partnership, whereby each unit holder has a fixed entitlement to income and assets of the trust. The units may be bought and sold, in much the same way as shares are transferred within a company, but always subject to the terms of the unit trust deed. There is no discretion vested in the trustee to make distributions to a unit holder, other than in accordance with their fixed entitlement. Each financial year, the profit must be distributed to the unit holders, in accordance with their entitlement. 3. Hybrid trust: A less common type of trust is the hybrid trust. This structure provides the beneficiaries with both fixed and discretionary entitlements to income and capital of the trust. Essentially, this structure is a mix between a discretionary trust and a unit trust. There is no standard form of hybrid trust and the trust deed needs to be considered carefully before this type of structure is adopted in a franchising context. Specialist advice is critical. There is no single solution which fits all in relation to structuring for a franchise business. Many factors influence the structure, including asset protection, succession planning, partial sale of equity, sale of the entire business, ease of novation of contracts, initial set up costs, ongoing compliance costs, issues of control and duties or responsibilities. In a smaller franchise business, it is common to have all of the assets, including the intellectual property, held by the franchisor in a corporate entity - as a sole proprietor or as a partnership. Compliance costs are kept to a minimum in each of these structures. 98


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It is important that professional advice is sought at an early stage, to ensure that the corporate structure correctly reflects the ongoing needs and requirements of the franchise business. It is also helpful that your accountant or lawyer has experience in relation to franchising, so that the structure selected provides sufficient flexibility to accommodate your business plans as the franchise develops. It is critical in any structure to consider your strategy. In our practice, we are seeing more substantial franchise groups, particularly in retail based franchises, establishing three structures in their franchise model. Two companies, with trusts as shareholders or two unit trusts with discretionary trusts as unit holders, one holding the intellectual property and the other operating the franchise business. A third entity, generally a company, holds all the leases. The advantage of this structure is such that the intellectual property is protected from litigation, but is also in a tax effective structure. It licenses the intellectual property to the franchising company or trust. The realty company licenses the property rights to individual or corporate franchisees. The realty company is generally a trading company, with the advantage that if the business was to be sold at some point in the future, the shares in the realty company can be transferred to the purchaser and multiple sites can be transferred with minimal difficulty. It is normal for leasing agreements to have change of control provisions incorporated into their terms. This is so consent of the landlord is needed for a change in majority shareholding. However, in my experience, it is simpler to comply with those obligations and transfer the shares, rather than be required to formally assign each of the leases. In circumstances where the franchise group has grown to in excess of 20 stores, there is a clear advantage to this type of structure. In my experience, purchasers of franchise groups are prepared to acquire shares in the realty company on the basis that it is merely a conduit for the rental obligations, so there is minimal inherent risk. It is therefore a cost effective way to deal with multiple leases on sale of the business. Providing the franchise agreement has been correctly drafted to incorporate a provision allowing the franchisor to sell its business without requiring the consent of the franchisee, then an exit strategy based on a transfer of units in various unit trusts and a transfer of shares in any realty company makes for an efficient exit by a large franchisor. It also allows for partial sell down of equity as the business grows. 99


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Other issues If the franchise business will be sustaining losses in the first few years, consideration needs to be given to using a number of structures, so that the losses are not quarantined within the structure. In this instance, it may be preferable from a tax perspective to begin operations as a sole trader or partnership. Losses may then be offset against other income derived by the sole trader or partner. When the business becomes profitable, it can be restructured to a more robust structure, providing the parties with asset protection - amongst other things. Naturally, the trade-off for gaining advantage of the losses from a tax perspective, is a distinct lack of asset protection for the sole trader or partner. There may also be limitations on the restructure options available, depending upon the value of the business at the time the business needs to be restructured. Stamp duty and potential capital gains tax are factors that need to be assessed if this type of strategy is adopted. Asset protection is also a critical factor which needs to be considered. Many franchisors separate assets, including intellectual property, from the operational or trading entities which are generally more at risk of being caught up in litigation. Careful planning means the assets can be held in a non-trading company or trust and licensed to the franchisor’s operational entity. Reasonable licence fees should be charged. Accounting support is needed for this assessment. Succession is another factor which needs to be considered when making structural decisions. For the reasons of perpetuity and limited liability to third parties, a proprietary company or discretionary or unit trust (combined with a company as trustee) will be the preferred vehicle for many franchising entities. The complications associated with the death or disability of a franchisor, as a sole trader, mean the early stage compliance and operational savings will be more than offset with the legal and accounting costs associated with assigning or novating the business assets to the legal personal representatives or beneficiaries of the estate of the deceased. Not only tax, but succession and asset protection, are probably the major critical issues which must be addressed by a prospective franchisor in considering its structure options. 100


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In summary, structuring a franchising business requires careful planning, in conjunction with an accountant and lawyer experienced in franchising, so that all of the competing issues can be addressed.

John Sier, Principal Mason Sier Turnbull (AUS) 03 8540 0270 john.sier@mst.com.au www.mst.com.au

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Chapter 11

Where should we locate our business? By Peter Buckingham, CMC, FFCA, 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 has spent around four years in property development. Education is something Peter cares about, and he runs a series of workshops in conjunction with Franchise Advisory Centre, titled “Franchise Site Selection and Territory Planning.� He also lectures for the Diploma of Franchising, as sponsored by the FCA. Peter is a Fellow of the Franchise Council of Australia (FCA), Fellow and a Victorian Chapter President and Federal Director of the Institute of Management Consultants and a Certified Management Consultant (CMC). Peter is a regular speaker at the National Franchise Convention, FCA State Conferences, and has spoken internationally at conferences including in New Zealand (FANZ) and in Singapore (FLA) in recent years.

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oving into the world of franchising probably leads you to an encounter with the fickle world of site selection and site analysis? You 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. 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 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 $’s (OR REVENUE) DO I THINK THIS SITE WILL SELL? Before signing a lease for any store – you must have done a forecast Profit and Loss? This can be broken down into 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 $’s THIS LOCATION WILL SELL. Naturally the real estate agent or the shopping centre leasing executive will have put a positive spin on how good it will be, but they are not the ones putting in their money! Cost of Goods Sold – easier – should be a percentage 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 104


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Other – we should have a fair idea – petty cash, telephone, uniforms etc etc. The point that 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.

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 located, information about the shopping centres etc. However, they will tell you that it is your responsibility to make the call on your own future sales. Most franchise systems will offer to give you the names/contact points of other franchisees, so I 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 you 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 Southland (super regional shopping centre in Melbourne), then the analogues I would be looking for are what sales other kiosks are selling in the likes of Chadstone, Fountain Gate, Knox City, Highpoint, Chatswood, Warringah Mall and other super regional sized shopping centres 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 are most like Southland 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.

What areas should we consider for our products? Before we settle on a shopping centre, strip or the CBD, we need to think of the best areas for what we plan to sell. We like to imagine that there is one person living in each area (be it a postcode, census collection district, council area or whatever), and what is the likelihood of that person wanting your goods or services? 105


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If we imagine that the person is worth one unit of demand on average (or $1.00 sales), then if the fit is good for the area, then the one person may be worth 1.5 units of demand ($1.50), and if the fit is poor, the person may be worth only 0.5 units of demand ($0.50). For example, I may have a pool store, and following some research I have done with my customers, I have concluded that my typical customers are: • high income people (because they can afford to have me do it) as they are ‘time poor’, • older people 50 plus. If I look at the demographics, then my best customer will come from a high income, older area, and my least ideal customers will come from the opposite, probably a low income, young family area. A person from an area like Toorak (in Melbourne) or Double Bay or Mosman (in Sydney) probably has twice the chance of using a pool cleaning service (from my store) than a person in ‘average Australia’. Therefore, in these areas our person is worth two points. By contrast, a low income, family area such as Sunshine, Caboolture, or Mt Druitt or many others probably only have half the chance of using my service than ‘average Australia’. In this scenario we can become more conscious of at least which areas to start looking in.

Can we quantify this demand? If I now want to estimate the demand for my service, it becomes the unit of demand for each area multiplied by the population of the area. In Mosman, I have decided each person is worth two units of demand, and if the population is 10,000, then I have 20,000 units of demand in that area. In Mt Druitt, where we have concluded each person is worth 0.5 units of demand, and there are 25,000 people, then I have 12,500 units of demand in that area. I can then see which areas are best for my product or service, so if I was going to open an up-market pool shop and specialise in servicing the local pools, Mosman would offer a better opportunity than Mt Druitt.

Available information for good decision making The 2011 Census of Population and Housing was released in June 2012, so when you read this book, you know the data you can use is fairly fresh. 106


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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 Data (left hand side) Go down to the green box called Quickstats Put in on the right hand side the area you want â&#x20AC;&#x201C; suburb, postcode etc You can now see 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 2011. For most business decisions, these are the most relevant data sources to describe the area you are looking in to.

Target Market Index The ratings of areas from above can be then shown on a map, so we can see which area has the best probability of a person using our service. This is done using mapping software (we use Pitney Bowes MapInfo software) and Census data, so you can combine two variables to create a value for each area and then show that on a map. On a smaller area this may be used for finding a specific area within a territory, or on a large scale, which suburbs across Melbourne or Sydney best suit our concept. See an example of a Target Market Index map on page 114. If we have undertaken a TMI map, we can then hot list the areas we feel that are most appropriate for our goods or services and begin the next step of looking for actual locations.

Mapping â&#x20AC;&#x201C; a developing science Mapping from the pastâ&#x20AC;Ś Most retail or service franchisors seek to have some mapping to understand their distribution network, be that their stores or territories. Over the years mapping has evolved from a printed wall map (originally from UBD or Melways) with texta markings or coloured pins to more sophisticated computerised mapping. 107


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The “Beer and Pizza” map has traditionally been done with a black texta on a large map, strongly influenced by some early entry, self-centered franchisees drinking beer (or red wine) and eating pizza at the franchisor’s expense. See an example of a Beer and Pizza map on page 114. But wait – it can be done far better…

1. Using Google Earth The first new way is using that fantastic free service called Google Earth. My view is why try and invent a new wheel when the one you have rolls very well anyway! Google Earth is a great way to visualise all sorts of things from the satellite level (including the photo-images) of viewing all of Melbourne, Sydney or even Australia at the same time, down to the very low level of a particular shopping strip or territory, or even their ‘street view’ to have a look at a particular shop front. There is some issue about the currency of the satellite photography, however even though this may be a few years old, roads and buildings do not change all that often. Google Earth, like Excel or Word, is a program or an ‘environment’ to run information files in. When you open Excel, you normally then open an Excel file, usually with the suffix .xls. In Google Earth, you can have your own specific files that open within the Google Earth program, with the suffix .kml. A .kml file may contain the location of all your stores, mapping layers of all your territories, or special layers you or an expert consultant may have created. These could be showing your customers, special demographic layers, or your competitors. One development allows you to click on any store in your network, and open a bubble that may contain all of the store’s relevant information. This could be the address, manager’s name and contact details, floor space, rent, any sales data you wish to have… Anything at all. The beauty of a .kml file is that it is YOUR file. While everyone may have free access to Google Earth, only you can open your files within it, similar to you having your own files to open in Excel. See example of Google Earth file on page 115.

2. Using layered pdf maps A pdf map is usually a fixed image showing all the features you wanted, similar to a photo. 108


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However, we now have the ability to create what we call a ‘layered pdf’ which is a map where you (the operator with Adobe on your computer), can use to look extremely professional. I best describe it like “the old days” where in a presentation someone would have an easel or flip chart, and then from behind they would flip over some transparencies that were aligned to appear as if they had added the next section they wanted to show you. Or using Powerpoint where you follow one slide by the next and it appears you have added just some specific points. A map you see may have 20 – 50 layers on it, and when you see a hard copy, or a normal pdf, these have all been locked together. The layered pdf allows the user to unlock these. A key (not unlike the folder control in Windows Explorer) sits on the side, and you can turn on and off the various layers as you choose. In creating layered pdf’s for clients, we find it is best to start the mapping with minimal details showing, and then let the client turn on and off the features they wish to see. A typical scenario may be the Network Development Manager presenting to the CEO, and she wants to look at a particular market and show: • Where potential sites are (shown as a number in the map below) • How major competitors are positioned • Where shopping centres are • Where shopping strips are • Show where the commercial or industrial areas are etc. Once set up, all this becomes a ‘piece of cake’, and can be learned in just a few minutes. Recently one of our clients had to do a presentation to Telstra Management, and used a layered pdf to show their deep and intrinsic knowledge of the Melbourne area. Being from Perth, this mapping assisted greatly! See example of layered pdf map on page 115.

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 way to go. Shopping centres definitely have higher attraction power for the customers as the volume of traffic is normally higher (as is the rent). In Australia we can gather the basic statistics on shopping centres from the Property Council 109


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of Australia, who produce books 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 Gross Leasable Area Retail (GLAR) and Moving Annual Turnover (MAT) of the centre. It also gives details on the major tenants and their area, number of car parks, who many of the specialty stores are, estimated pedestrian traffic 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 a product called Strip Locator which is a method of comparing one strip to another as an indication of the strength of the strip. The comparisons as we see it are: Shopping Centre

Strip Centre

Traffic

Normally higher and measurable

Lower and unpredictable

Product mix (competitors)

Some governance in 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

Greater chance of a lower rental

Long term renewals

Currently most will give only a five 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

Are we best near our competitors â&#x20AC;&#x201C; or as far away as possible? Have you noticed that many fast food restaurants appear to group together, or that in most cases the Telco stores are in a line or in very close proximity? Our research over the years has shown for most concepts that there is a definite advantage to be in a common locality. Our view is that if a cluster of fast food restaurants is built together, if the total business each could have expected was 110


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$20,000 per week, then four in a grouping will not generate a total of $80,000, but more like $100,000 per week. Our view is that given choices, more people will come to the area to buy than the total of the individual sites would attract. Have you ever wanted fast food, and the best way to solve the family’s needs was to go to a cluster so the kids could have McDonalds, and you could have KFC or Pizza Hut? Our view has been that in general, working in a cluster has been a ‘friend’ where as being one or two kilometres from a cluster of like goods acts as a ‘foe’, as the power of the cluster attracts more business away from you. A good deal of retail development at the moment is in building new ‘homemaker centres’, where similar stores congregate, and attract people to the area with common needs of purchasing for their house. Many new homemaker centres are exceeding what both we and our clients expected to sell in the initial opening period. The only exceptions (or where we have felt it diminishes) are where you are by far the strongest in the market, and you may be bringing competition to you, so that they are running off your coat tails. The case we have felt this occurring is Telstra stores where Optus, Vodafone, 3 etc. benefit from the power that Telstra has due to its market share and presence.

The reality of selecting a commercial site The first thing you learn is all real estate agents are optimists. 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). The 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 address the following types of issues: • Size – we were looking for mid blocks of around 80m long x 40m wide. If a corner block, then around 60m x 60m. • 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 111


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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 go to www.zenithtraffic.com.au to buy data relating to traffic estimates for any capital city area. • 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. Not much good if you could not come in off the main road. • Demographics – in Australia, probably the highest fuel users are medium income people, living in outer suburbs of the capital cities. • 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. Once this was all formed in the property guideline, it was willingly sent to all agents, developers and other interested parties we knew. If you are looking for a store in a shopping centre or a strip, you can make out your own list of what you are seeking, and then I suggest you be strong, and stick to it until you find the suitable site for your business.

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 that 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 about what your business is about and try to 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 112


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– 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. Good Luck Grasshopper! Appendix – Terms used GLAR – Gross Leasable Area Retail Shopping centre term for how large a Centre is based on the total area that is leased to retailers. MAT – Moving Annual Turnover Twelve month figure telling us the total dollars have been sold by all the retailers in a Centre. Both the figures above are available through the Property Council of Australia in books they print and sell. 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 9882 6488 peterb@spectrumanalysis.com.au www.spectrumanalysis.com.au

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Below is an example of a Target Market Index map

Below is an example of a Beer and Pizza map

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Below is an example of a Google Earth file

Google Earth file with a background of demographics, and information on a specific store. Note the transparency bar allows you to fade the background layer down to zero to see the roads underneath.

Below is an example of a Layered pdf map

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Chapter 12

GROWING the FRANCHISE By Vicki Prout, Chief Sherpa / Franchisor Sherpa Group / sKids Australia

About the Author The Trek about Chief Sherpa Vicki’s professionalism and drive has positioned her as an emerging icon in global franchising. At a young age, Vicki decided to join the Navy, reinforcing her determination for leadership and providing her with a strong mantra: Blame No-one, Do Something, Expect Nothing. After spending over a decade in the Navy, she entered the small business arena by buying a pet food delivery company. Her franchising journey took off when she became the International Development and Marketing Manager for Cartridge World, giving her invaluable franchising experience in over 40 countries. When Vicki left Cartridge World, the franchised business boasted over 1600 stores across 42 countries. Vicki’s extensive experience in franchising and business systems, and her in-depth understanding of franchise marketing, strategic development, legal frameworks, documentation and reconciling the expectations of entrepreneurs in widely differing cultures, has resulted in her continued success. Vicki has been a franchisor, franchisee, and consultant. Her wealth of knowledge and remarkable skill set only highlights the fact that she is well versed in the challenges faced in business expansion. Building from principles learnt in the defence force and over 15 years experience in the franchising sector, Vicki established ‘Sherpa Group’ in 2009. The company operates as an international consultancy, guiding businesses throughout their franchising and expansion journey, working in a leadership partnership role with clients. Vicki was voted SA Franchise Woman of the Year for a record four years in 2006, 2007, 2008 and 2010. 117


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Growing your franchise by following a sales process Effective, high performance selling is important to the success of almost every kind of business. Whether you are a salesperson working at the customer interface or a sales team manager, achieving the best possible results will be determined not only by your knowledge of your product, but also by your understanding of your customers and the communication skills you can bring to clinch a sale. This chapter covers many aspects of the growth of your franchise relating to a sales process, providing advice on preparation, understanding the sales process, understanding and working towards your customers’ needs and building long term skills such as presentation and negotiation. I have included several activities for you to practice and work towards throughout the chapter. They can be completed several times and are designed for your real-life action plans. Remember, selling is the basis of all business success. Let us remember the type of business we are in: Sales and Marketing - NOT food, services, retail, etc. Lay the foundations for successful selling by following long-term principles and practices and developing key personal skills. Utilise your customer data base to its fullest capacity. Then support this with exceptional capturing of data for reporting and benchmarking.

Sales Methodology Make your sales system simple to remember, easy to follow and aimed to deliver greater sales with your customers, and capture results. A key theme of Sales Methodology is to: • Create long term relationships with your customers • Increase the customer’s invoices – grow your value for service. The Sales Methodology is designed to help you build stronger relationships with your customers, identify their lifestyle needs, identify and offer solutions to suit their needs, and to be able to see them again on a regular basis. S – Step out and smile A – Ask questions and ascertain customer needs L – Listen E – Establish a relationship with your customer 118


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S – Solve their problem and see them again Your customers are the primary source of your income and it is crucially important to know and teach your staff the ways to improve the quality and productivity of interaction with your customers. Being in business is primarily aimed at assisting customers and just as important to interact with the customer. They need to enter or experience an environment that is welcoming. Following are some tips on how to improve your interaction with customers: • Engage with each party • Empathise with the customer • Be reassuring • Ask questions • Be humble • Be an effective problem solver • Educate the customer • Create a welcoming, friendly environment • Show patience • VIP treatment • Promise less, deliver more • Communicate

Sales Program Design a sales program for your network by conducting your own customer research, mystery shopping, stakeholder questionnaires and online surveys. The results of this research can be adapted to your sales program and to up skill in sales performances. The program could aim to: • Increase the face to face and telephone sales skills of franchisees. • Increase the franchisee’s motivation and confidence to sell. • Increase the sales performance of franchisees. • Differentiate your brand from your competitors through your newly enthusiastic sale and service focus. 119


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Key themes of the program could be: • Follow the Sales Methodology. • Understanding your customer’s needs is a key to selling success. • Create long term relationships with your customers. • Increase the value you give to your customer, and in doing so increase your sales. • Be confident and sell to be successful. • Motivated people attract customers and sales.

1. Step Out and Smile Q. Why Step Out and Smile? Did you know that the majority of people in the world will make a decision about you in the first 60 seconds of meeting you? Yes, that’s right you only have 60 seconds to make your first impression to your customer, on the telephone or when you visit their home or workplace. What can you do to make that first impression valuable to all of your customers? Answer is … Step Out and Smile – ‘Connect with your customer’ Do not wait for them, show them you want to be there; that you want to help them; that you love your job. Research has shown that people respond positively to other people’s enthusiasm and happy energy. Q. What do I need to learn to connect with my customer? People connection skills are: • Your communication; • Your body language; and • Your ability to build rapport. If you can increase or improve your skills in all these areas you will find that you can connect with lots of different people and the first key to success in sales is to connect with your customer.

Communication is Key The formula for success in sales is not just by sales figures – it is also by being recognised as being highly effective in developing and maintaining strong 120


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sales relationships through your communication.

The Communication Model Body Language Body language has the most influence on your connection with other people. Body language can even be more indicative of a person’s true state than the spoken word. There are several categories of nonverbal, unconscious, physiological responses that people exhibit and that you can look for. Usually these are actions outside of a person’s conscious awareness. The following are some of the most important and easily visible ones: • Sudden straightness of the spine; • Position of head, head straight and a direct open body posture; • Position of the feet on the floor; • Distribution of weight on hips and lower legs. Feet facing the customer and your weight evenly distributed; • Hand movements, gestures, eye movement and breathing; • Eyes forward and looking at your customer; • Your hand movements relaxed and directive; and • Breathing is deep and normal. You are happy, smiling and wanting to make business with your customer – a win-win relationship. Practice your body language style and see if you are displaying confidence, friendliness and good service in your style.

Building Rapport Q. Why is building rapport important in communication and in selling? If you want to gain trust and a sales relationship with your customer then your first step is to have rapport. Without rapport, communication is stifled and people are reluctant to continue the relationship. Without rapport, you do not have trust and therefore no sale. The phenomenon of rapport, it turns out, is universal. It is not just a sales thing, it occurs in all part of our lives. Q. What do I need to learn to build my rapport skills? Building rapport is using all three: 121


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• Body language; • Your tone; and • Your words to influence your customer. Firstly, have that assertive and confident body posture. Practise this body posture regularly so it becomes an unconscious habit. Second, smile and have a positive attitude towards your customer and your work as this will have an influence on your tone. Tone is your emotional voice – when you are angry or scared your tone is different than when you are happy and relaxed. So the best way to influence your tone is to think positive, smile and be happy. Third, choose words that are positive, friendly and that guide your customer to think about their needs. Consider these four building rapport principles: • Focus on the customer. • Keep your focus on the present. • Make their day, listen and solve their problem. • Have fun when working with customers.

Techniques for building rapport Here are some simple techniques to help you connect with your customer and start the sales process: • Match or mirror body language to gain the customer’s rapport. • Consider personal space – do not crowd your customer, give them room to think! • Be aware of your customer’s culture and customs. Be respectful of all people and they will respect you. • Ask non-business related questions to your customer, such as how has their day been so far?

2. Ask Questions and Ascertain Customer Needs Did you know that in most cases poor sales people tell the customer all the technical information about their product and service? Poor sales people assume. They think like this: • You think the customer is interested and can understand the technical detail 122


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or • You think that you know what is right for the customer and so tell them so, or • You think the customer is stupid and should know how to fix their problem. • You think the customer will be impressed by your knowledge and so buy from you. This type of thinking is negative and ruins the customer relationship and your chances of selling. We want you to ask questions and find out what the customer wants before talking about yourselves and your services. A good sales person aims to find out about their customer’s needs.

A Customer’s Needs Did you know that people buy for many reasons, the least being the technical operations of your product or service? Research has shown that people buy for the following reasons: Some people want security - They will look for a person who is reliable, dependable, and who they can trust. They want security in their home and lifestyle and they want security in the products and services they buy. Some people want recognition - Brand and image is important and so they want a company that is known and has products they have seen advertised. They want a brand that has a good reputation. People who want quality - Quality of products and services is most important to them; they want the best product and will be prepared to pay more to gain the quality. People who want service - The relationship we have with the customer is very important. In Australia service can be about ‘mateship’. For many people they will buy because they like you and the service you personally provide. A customer may consider all four reasons to choose you or they may be only have one reason to buy, like ‘great service’. The best strategy is to ask questions to ascertain what reasons your customer wants your products or services and then you can show them a range of great products or services to suit their needs. One great business and sales strategy is to deliver on all four reasons all the time: • Be reliable; 123


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• Use the best products; • Make sure your work is top quality at all times; • Develop a positive friendly business relationship with all your customers.

Ascertaining your customer’s needs Believe it or not there is a skill to asking questions. We can sometimes get lost in the whole identifying the customer’s needs process and before we know it, we are asking questions that lead nowhere. We can sometimes get caught in the ‘closed questions trap’. Remember: Build a list of questions that will help you ascertain your customer’s needs and practice answering them.

Matching needs to features While the customer is explaining their needs, you should be formulating in your mind, the relevant features of our service and products that will meet your customer’s stated needs. Remember: Practice open questions and ascertaining your customer’s needs.

3. Listen to your Customers “I listen fine. It is the others who have a problem.” - Famous Last Words. Did you know that in marriage counselling the most common issue raised is “He (or she) doesn’t listen to me”? Did you know that the more you listen to someone the more they trust you and respect you? Listening is a powerful skill to help develop respect and trust in a relationship. However, it is also one of the most common issues raised when people describe poor sales people. Poor sales people do not listen to their customers. Q. What is the best way to learn to listen? The best way to learn to listen is to practice listening. If you are talking 80 per cent of the time with a customer then you are not selling, you are telling. A good sales person spends a lot of time listening to their customer and only giving information that is relevant to their customer’s needs. Here are some skills to help you become a better listener: Concentration - Yes, it is important and it is driven by the desire to show care and a desire to gain agreement and buy-in. Practice by seeing how long you 124


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can listen to someone and not be distracted. Time yourself. The ability to read willingness (emotional reactions) of the customer - Good listeners can read their customer’s emotions by listening to the tone of their voice and reading their body language. This will tell you whether you have built rapport and are in connection with your customer. The ability to demonstrate you are listening - Who decides if you are listening? The customer decides. It is important that you demonstrate that you are listening. Having your head slightly bent and nodding your head and saying ‘aha aha’ are all messages to the talker that you are interested and listening. The more you demonstrate that you are listening the more the customer will open up to you. The more they open up to you the more you know how to meet their needs with your products and services. By listening you can gain a clear understanding of the customer’s problems, needs, wants and opportunities. This clarifies what people have now compared to what they’d rather have. Your business is what they would rather have and so it is up to you to gain a customer’s business. Listening to them can influence their decision.

4. Establish a Relationship with your Customer Q. Why do I need to build a relationship with my customer? “It finally occurred to me that I wasn’t selling so much as I was joining the customer in buying.” This is a quote from research on top sales people and how they sell. For years sales training has involved product knowledge and sales tactics designed to close more business. However, that is not enough. Not when you want the business relationship with your customer to continue for a long time. It is not just about the close of the sale, in fact you want the sale opportunity to remain open, not closed. You want to continually sell to your customer to meet their different needs at different times and get a referral. This is also what the top sales performers know. Research of top sales performers has found that: • Top sales performers OPEN by taking a very strong and confident stand about their ability to help the buyer reach a confident buying decision. • Top sales performers LISTEN to the customer and are extremely accurate at imagining how the customer is thinking and feeling at the moment. • Top sales performers CONNECT themselves and their thinking to fit in alignment with the customer’s current point of view. 125


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• Top sales performers RECOMMEND options only when they themselves believe a given idea is worth pursuing. • Top sales performers CLOSE only when they reach confidence along with the buyer. They must both reach confidence together. That’s the cement to the relationship - mutually achieved confidence. Q. How can I learn to establish a relationship with my customers? You will grow strong relationships and most likely earn the trust and respect of your customers if you recognise that your customer is the decision-maker and treat them accordingly. Practice the following steps to establish the relationship: 1. Remember to use all the first three skills of S.A.L.E.S – smile, ask questions, and listen and now you can establish a strong relationship with your customers. 2. If you and your customer see that making a decision is the goal of the sales interaction, then you are automatically working together toward the same objective. 3. Put aside your own agenda and seek to understand your customer’s needs, problems, and feelings about potential solutions. Then, you can confidently present ideas and solutions aligned to the customer’s goals and objectives. This leads to working relationships rather than an adversarial exchange. 4. Have a high degree of respect for your customer as the decision-maker and your own role as the decision-getter. You will see a significant rise in their “yes” decisions and solid partnership. One of the goals of building the relationship with your customer is establish value and to create a desire for the customer to use your services and products. Value is a personal choice; everyone is looking for something different. What is important to one person may not be necessary to the next.

Expressive words to enhance your relationship: There are certain words that can be very persuasive, when used effectively during a conversation and demonstration of your services and products. The 15 most persuasive words are: Easy

Free

Safety

Love

Money

Proven

Save

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Guarantee

You

Health Your

The 14 most emotive words are:

Results

Beautiful

Security

Peace of Mind

Investment

Pride

Happiness

Pleasure

Value Luxury Health

Fun Excitement Love

Joy

Strength

Long term business relationships are based on trust, communication, and demonstration that YOU are of value to them and worth keeping!!

5. Solve their problem and see them again Q. Why do I need to solve their problem and see them again? I know this may seem a stupid question but it is amazing how many sales people do not focus on solving a customer’s problems, they only focus on what they want to sell. Selling is about solving the customer’s problem and making life easy and enjoyable for them. The advantage of having a Sales Methodology is that if you have followed the first four steps exactly then this fifth step is a breeze. Because, by now you will know what the customer’s problem is, know what they like and need, and all you need to do now is close the deal. Closing the Sale: • Summarise and recap problems and needs; • Tell them three things you will do to fix their problem; • Decide together on when and how. Running a successful business is achieved when many things are done in the right way. Among all, I would like to highlight a few points: The line between failure and success is so fine that we scarcely know when we pass it: So fine that we are often on the line and do not know it. How many people have thrown up their hands at a time when a little more effort, a little more patience, would have achieved success? In business, sometimes prospects may seem darkest when really they are about to turn. A little more persistence, a little more effort, and what seemed like 127


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hopeless failure may turn to glorious success. There is no failure except in no longer trying. There is no defeat except from within; no really insurmountable barrier, save our own inherent weakness of purpose. Elbert Hubbard, writer, editor (1856-1915) Blame no-one, Do something, Expect nothingâ&#x20AC;Ś

Vicki Prout, Founder and Chief Sherpa Sherpa Group (AUS) 08 8354 4887 info@sherpagroup.com.au www.sherpagroup.com.au

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Chapter 13

INVESTING IN YOUR FUTURE By Tim Kilham, Director Lanyon Partners

About the Author Tim Kilham is a Director of the Accounting Division of Lanyon Partners and is in charge of its franchising section. Lanyon Partners is a professional services firm with three distinct Divisions â&#x20AC;&#x201C; Accounting, Financial Planning and Insurance Broking. It provides a unique blend of professional services that enables its clients to build, manage and protect their wealth and assets. Tim has been involved in franchising for over 20 years. In the course of his career in franchising he has acted for or advised on literally hundreds of franchise systems. He has on several occasions served on the Board of the Victorian Chapter of the Franchise Council of Australia. He has made many presentations on franchising to actual and potential franchisors and franchisees, banks, lawyers and the general public. Tim has published numerous articles on franchising in a wide range of publications and has been a speaker at State and National franchise conferences as a franchise industry accounting expert. He is particularly active in advising potential franchisors and franchisees on the purchase and set up of franchise businesses, assisting with preparation of forecasts and business plans, and then providing on-going compliance and taxation services.

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here are many reasons why people decide to buy their own business. These reasons include the desire to make more money, the desire to be their own boss, the desire to work shorter hours, and the desire to have control of their destiny. Of course, in some cases, purchasing or setting up a business can be forced on people, if they are unemployed, or are made redundant and are unable to find a job. If you are in a position where you are choosing to set up or buy a business, I do recommend that you begin by considering seriously whether running a business is the right thing for you to do. Not everybody is suited to running their own business. No matter what assistance you get (and with a franchise, the assistance you get is often considerable) much will depend on your ability, your personality and your work ethic. It is no slur on you as a person if you are one of those people – probably the majority of people – who is not suited to running their own business. So examine carefully your motives for wanting to run your own business, and consider carefully your suitability to run your own business. When necessary, seek advice from family, friends and mentors to help you evaluate your decision. Assuming you have made the decision to run your own business, what next?

Why buy a Franchise? There are many businesses that you could buy or set up. Many of these businesses are franchises, but many more will not be franchises. Which should you choose a franchised business over a non-franchised business? There are many good reasons to buy a franchise business. Some of these are: • The survival rate for franchised businesses is higher than for non-franchised businesses – but that is not to say franchised businesses do not fail. Some do. • In many cases, bank finance is easier to access when you are buying a franchise. This is particularly the case when a franchise is accredited with one or more of the lending institutions (accreditation is discussed later in this article). • The brand name and potential of the franchise should lead to a higher resale value. • The assistance provided by the franchisor in setting up and running a business can be invaluable, particularly if you are running your own business for the first time. Having said that, franchising is not for everybody. Franchise businesses might 130


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have a higher survival rate, but they do fail. When you a buy a franchise you are buying your own business, but it is subject to the rules and regulations of the franchise system as set out in the franchise agreement and operations manual. Often these rules and regulations include what product or services you may and may not sell, where you may sell, the maximum price at which you may sell etc. If you don’t wish to follow the rules, and if you are not a team player, then franchising may not be for you. People often talk about the franchising industry. This is technically incorrect as franchising is not so much an industry as a marketing method. A good franchise is a good quality system.

Franchise Legislation When is a business a franchise? Franchising is governed by specific legislation – the Franchising Code of Conduct. This Code applies to all businesses that fall within the definition of a franchise as set out in the Code. Some businesses call themselves licences, some call themselves agencies, but if they fall within the definition of a franchise as set out in the Franchise Code of Conduct, those businesses must adhere to the Code. The Australian Competition and Consumer Commission keeps a watchful eye out for businesses that are in truth franchises but try to pretend they are not, to avoid complying with the Franchise Code of Conduct.

Education It makes sense if you are going to buy a franchise business to first educate yourself about franchising, its rules and regulations and how it operates. There is a wealth of information available, at little or no cost. Sources of information include: • The Franchise Council of Australia • The ACCC • The Internet • TAFE’s and Councils of Adult Education • The Centre for Franchising Excellence at Griffith University • Service providers to the franchising industry, including lawyers, accountants and banks. It often amazes me how little education and research potential franchisees do before buying a business, despite the purchase of a franchise often being one of 131


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the biggest financial decisions many people will ever make. A glossy brochure or a well-established brand does not (necessarily) a good business make! Having educated yourself, the next step is to find out what franchises are available for purchase. There is no shortage of choice as there is in excess of 1,200 franchises in Australia, most of which are looking for franchisees. You may not realise it, but it is a buyers’ market.

Sources of Information There are many sources of information available to you to find out what is available for purchase: • Online franchise directories published by the Franchise Council of Australia and other organisations; • The Internet; • Business brokers. There is a handful that deal only with franchise businesses, and many others that deal with franchises as part of their service offering; • Specialist franchise magazines such as Business Franchise Australia and New Zealand; and • Daily newspapers.

Due Diligence When you do purchase your franchise you may find yourself purchasing an existing franchise from an existing franchisee, an existing business from the franchisor or a brand new (greenfield) franchise from the franchisor. Whichever option you choose, you will need to carry out appropriate due diligence to satisfy yourself that you are buying the right business at the right price. Due diligence is the process of evaluating a prospective business purchase by getting information about the financial, legal, operational and other important aspects of the business. I think it is fair to say that two things that most business owners want when they purchase a business is to enjoy working in the business and to make money – although there are some who say they are happy not to enjoy themselves provided they are making enough money! For most people it is vital that they have passion for the business – they must really want to run the business and enjoy doing so. If that passion is not there for you, then I would ask you to question whether you really want to or should buy a business. 132


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However, passion in itself is not enough. You also need to make sufficient profit while you are running the business and then hopefully make a gain when you sell the business. This is why due diligence is so important.

Professional Advisors Evaluating a prospective franchise business is not an easy process. You will almost certainly need professional help to carry out due diligence. These professional advisors usually include an accountant, a solicitor and a banker. I strongly advise in each case you use a professional advisor who is a specialist in the area of franchising. In the medical field, general practitioners do a great job but there are times when you need the services of a specialist. So it is with franchising. Most accountants, solicitors and bankers do a great job, but franchising occupies a special niche, with its own legislation and circumstances, and it requires the services of specialists to carry out proper due diligence. What are the roles of your professional advisors? • An accountant will help you evaluate the existing business and establish its true sustainable profitability (which may be, and very often is, very different to the profit shown in the financial statements). An accountant will help you prepare your business plan and your profit and loss and cash flow forecasts and help you work out a fair price to pay for the business. • A solicitor will help you understand all the legal documents – the disclosure document, the franchise agreement, the lease, the sale contract, etc., etc. – and provide advice on these documents. • A banker will advise whether the finance will be forthcoming and if so what types of finance are available and appropriate. Whilst a banker’s role is not generally that of providing advice about the potential purchase, a specialist franchise banker’s perspective is nonetheless often very useful. An important point to note is that whilst you will seek advice from your professional advisors and from other people, the ultimate decision to purchase or not purchase the business is always yours and yours alone. If you have chosen good advisors you will receive sound advice, but it is not your advisors’ roles to make the purchase decision. I have stressed how important it is to get professional advice to evaluate your proposed purchase. I also stress how important it is – and perhaps this selfevident - to get the opinions of existing and former franchisees of the franchise system into which you are thinking of buying. Contact details of existing and former franchisees will be available in the disclosure document. Ask the 133


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question “would you buy the franchise again knowing what you know now?” If a sufficient number of current and former franchisees would not buy the franchise then that should be a telling indicator, no matter what else your due diligence reveals.

Business Structure I want to touch on the choice of business structure, although a detailed analysis of this topic is beyond the scope of this article. Possible structures in Australia include sole proprietorships (also known as sole traders), partnerships, trusts (there are many and varied forms of trusts) and companies. There are reasons, why each of these structures might be the most appropriate for your business. However, in general terms, when choosing business structure the important issues to be addressed are: • Simplicity and ease of operation; • Minimisation of income tax on on-going profits; • Minimisation of tax on capital gain on sale of the business; • Flexibility in distributing profits; and • Asset protection (to ensure personal assets are protected if the business fails). I cannot overestimate the importance of choosing the correct structure for your franchise before you buy the franchise. Once you have chosen a structure, it is often difficult to change that structure and to change it might involve considerable cost. The wrong structure may lead to paying far more income tax than is necessary, to paying far more tax on capital gains than is necessary – generous tax concessions make it relatively simple to pay no tax on capital gains if the business is properly structured – and to putting your house and other personal assets unnecessarily at risk.

Finance There are two important questions to consider if you are borrowing to buy your franchise: • How much can you borrow? • How much do you want to borrow? The answers to the two questions may not be the same. 134


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How much can you borrow? The answer to the first question depends on two factors â&#x20AC;&#x201C; your assets, and whether or not the franchise system you are buying into is accredited. When you are buying a franchise, a bank will require security against tangible assets, usually a house. A bank will generally lend, in total, up to 80 per cent of the value of a property. So if you take 80 per cent of the value of your property and subtract any existing loans against the property, it will give you a fair indication of how much you can borrow. A bank might possibly lend against other assets such as shares, but not as much as 80 per cent of the value of those assets. If, however, the franchise is accredited with the bank from which you are borrowing, then your borrowing capacity is far greater. For accredited franchises, banks will lend against the security of the franchise itself, usually about 50 per cent of the cost of the franchise. In practice this means that with an accredited franchise your borrowing capacity is approximately double what it would be for a non-accredited franchise. Accreditation is therefore an important issue. I have referred above only to banks and not to other lending institutions. There are a limited number of institutions other than the banks that will lend money for the purchase of a franchise. The vast majority of the funding for franchise purchases is provided by banks. There are in some cases other sources available to help fund the purchase of a franchise (or at least minimise the initial cost). These include part ownership by the franchisor of the franchise (with the franchisee progressively acquiring a larger stake in the franchise), finance provided by the franchisor and in some cases paying lower up-front fees and higher on-going fees. What is possible will depend on the specific franchise you are buying.

How much do you want to borrow? The second question â&#x20AC;&#x201C; how much do you want to borrow? â&#x20AC;&#x201C; is also a vital question. Just because you are able to borrow $X does not mean to say that you should borrow $X. The larger the amount you borrow, the greater the risk you take (and, probably, the greater the return you will receive). But you should consider how much of your wealth you want to put at risk? When you are buying a business, even when it is structured to maximise asset protection, you are likely to have to give personal guarantees to the bank, the landlord (if applicable) and the franchisor. A personal guarantee means that you personally 135


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become liable for the debts of the business if the business is unable to pay its debts. Do you want to risk everything if the business fails? Or do you want to take less risk, so that if the business fails you still preserve some assets? Your attitude to risk will help you to answer the question of how much you want to borrow.

Types of Finance The types of finance that are available to you to finance your business are varied â&#x20AC;&#x201C; they include long term loans, overdrafts (short term loans), hire purchase finance, lease finance and others. As a general rule, the type of finance should match the type of asset â&#x20AC;&#x201C; so, for example, a long term asset requires long term finance. An experienced banker will help you chose the most appropriate forms of finance.

Exit Strategy You may wonder why you should be thinking about an exit strategy at the time of buying a business. This issue is particularly important if you are acquiring a business in conjunction with business partners. When two or more business partners are involved, there needs to be an agreement as to what is to happen if one partner wishes to exit the business at a different time to the other partners. This could happen for many reasons, including death or illness. Having an agreement how to deal with withdrawal of a partner (a buy/sell agreement), with the purchase price between partners and how to fund the withdrawal is particularly important. All business owners wish to maximise the price for which they sell their business. In the first place, this is achieved by maximising the on-going trading profits of the business. The greater the profits, the more somebody will pay for a business. This may seem self-evident, but I do come across business owners who are more concerned with minimising tax than maximising profits. As I say to these business owners, at the very worst, for every dollar of profit you make, the tax man takes 46.5 cents and you keep 53.5 cents. If you spend an unnecessary dollar, you might save some tax, but you are still out of pocket. So the best strategy for exiting the business with maximum return is to maximise profits. As I have already indicated, the business structure that is chosen can have a dramatic effect on the taxes paid on the profit on sale of the business. The tax can be between zero per cent and 46.5 per cent. Which would you prefer to pay? Another good reason to think of your exit strategy when you are buying the business! 136


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Timing of Sale The timing of the sale of the franchise business is very important and will have a big impact on the price you receive. Most franchise agreements endure for a finite period. At the end of that period, and depending on what the franchise agreement says, it may be that the franchise is not renewed or is renewed subject to conditions. Generally, when a franchisee sells a business the incoming franchisee is entitled to run the business for the remaining period of the original franchisee’s franchise agreement. The shorter the remaining franchise period – and particularly when there is uncertainty about renewal – the lower the price a potential purchaser will pay for the business. The timing of the sale of your franchise must therefore be carefully planned. This is doubly so when there is a lease of premises involved as well – even if the franchise agreement has a considerable period to run on sale of a business, the value of the business will be impacted if the remaining lease period is considerably shorter than the remaining franchise period. Most persons’ objectives when buying a franchise are to pay a fair (or low) price when they buy the franchise, to make as much money as possible while they are running the franchise, and then to sell it for as much as possible. Attention to the matters outlined above will help achieve these objectives.

Tim Kilham, Lanyon Partners (AUS) 03 9861 6140 timk@lanyonpartners.com.au www.lanyonpartners.com.au

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Chapter 14

FRANCHISING YOUR BUSINESS By Andrew Kelly, Corina Vucic and Gary Carter, FC Business Solutions

About the Author FC Business Solutions is the only integrated franchise consultancy focussing on executive recruitment, franchise health checks, public relations and marketing, franchise system development, franchise training, advisory and mentoring, franchise expansion and growth, and conference and event management, exclusively for the franchise community and other industry sectors. Corina Vucic, Director, has been involved in the franchising industry for more than 15 years. She is the Victorian committee member for Women in Franchising, and is a board member of the FCA. Andrew Kelly, Director of PR and Marketing, is a professional journalist and PR specialist with more than 15 yearsâ&#x20AC;&#x2122; experience in franchising corporate communications. Gary Carter, General Manager Franchising Operations, has more than 30 yearsâ&#x20AC;&#x2122; experience in leading and managing large multi-site franchise and retail networks. FC Business Solutions and its team of professionals has been providing professional services to the franchise sector for more than 75 years (combined), and has built a reputation based on relationships and results, assisting franchise businesses to reach their full potential.

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ranchising in Australia is big business. There are reportedly more than 1,100 franchise systems across the country, employing more than 400,000 people in more than 71,000 outlets nationally. From 2006 to 2008, franchise units grew by more than 15 per cent. There is a franchise available in almost every goods and service industry you can think of. So why franchise your business? Put simply, franchising is an exciting marketing method to grow your brand. Properly structured and well managed, franchising can provide benefits and satisfaction for all parties â&#x20AC;&#x201C; the franchisor and the franchisee. However, it is important to recognise that it is not a catagoric road to riches exercise for either party, nor is it a cure for a business that is suffering. Establishing a franchise needs to be undertaken with patience, investment, support, planning and experience. Remember, even McDonalds started as a single small business. It could take as long as three years to establish a franchise. It could be a further three years before the franchisor begins to see net profits and a cash flow. Before heading down the road of franchising, there are some important questions to be asked and answered.

STRATEGY - THE 12 KEY ELEMENTS The key elements of a successful franchise strategy include: Does your business have a point of difference? Your business must be able to offer something different to that of your competitors. Is your product or service offering the consumer an alternative to what is already in the market place? Is the concept profitable for both the franchisor and the franchisee? With conviction, are you able to look at your business and see a proven track record of growth and sustainability over a reasonable period of time through varied economic conditions? Then ask yourself, would it be sustainable in alternative markets and under a new model - franchising? You need to undertake some detailed financial analysis and forward modelling. This will include establishing and testing the proposed franchise financial model, to ensure it meets the current (start-up) and future needs of the business. 140


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In addition, to ensure that the model is equitable and it anticipates growth and is sustainable for the franchisor and franchisee. Finally, ask yourself whether an intelligent person with the right skillset, training and support from your franchise system, could reproduce what you are currently doing with the same level of success? Is there a proven track record in the business to be franchised and in the intended market? It is often the case that you will receive supplier and customer requests for your products and services to be offered in other locations / demographics. This is a great start but the ‘real demand’ must be tested. Are there already competitors in your intended market? Have they been successful? Have you conducted any market research? Above all, you need to be running a successful business now! What lessons have you learnt in establishing your business? And, why is it successful? You also need to understand those aspects of the current business model that must be replicated in each franchise to ensure they are competitive, have a point of difference and will also be successful. Is the concept saleable and attractive to potential franchisees? A big reason to buy a franchise is that it should reduce the purchaser risk profile. Purchasers will look for well-established and successful businesses / systems with a high-level recognition in their marketplace. They are buying into your brand name, trademark / logo and business system and initial training / launch support, etc that comes with franchising. So how much will you charge for your franchise? The franchise fee is an upfront payment that franchisees will make to you for access to, and use of your brand. This fee is influenced by the following factors: • The perceived value of the franchise opportunity, brand and profitability; • The franchisor’s cost of initial training, support and recruitment of the franchisee; and • Comparable franchise fees and offerings in the marketplace. Remember, competitors can come up with ‘me-too’ products or services, but no one can take away from you a powerful, unique and widely-recognised brand. It sets your business apart – and can give it a valuable lead. Is there a proven secure and committed supply chain or exclusivity in products or equipment? Do you already have supply agreements in place? If not, they can take time 141


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to negotiate. Do additional supply agreements need to be negotiated for additional stores? Importantly, do you need supplier approval to sell their products in other markets? Exclusive product supply will help your business have a point of difference from competitors. Supply agreements can sometimes be uncertain and have restrictive clauses? Have you reviewed yours lately? As your system grows you may be in a better position to negotiate supplier royalties / rebates. Can the knowledge of your business be adequately transferred? It is important to recognise the new challenges and opportunities that franchising presents, and to structure the business operations in the best possible way to achieve the objectives for the franchise business you have identified. To ensure the ongoing and successful development of your system, you need to establish the appropriate resource structures and support arrangements and this will likely include a blend of internal and external resources and expertise. Transferring that knowledge starts at the first interview of a prospective franchisee and continues through the induction phase and ongoing as the system grows. Comprehensive induction and ongoing training, supported by detailed operational manuals and procedures is critical to ensure your franchisees have every chance of success. It is also incumbent on you as the franchisor to provide ongoing â&#x20AC;&#x2DC;in-fieldâ&#x20AC;&#x2122; support, business development advice and coaching as required. Is there a pool of suitable franchisees (including the right skills and finance to invest)? Economic conditions, market trends and other competitive systems can influence the pool of available and suitable franchisees. How do you balance the needs of selling your system while being selective about whom you partner with? Your recruitment decisions will heavily influence the success of your system, so make sure you have robust recruitment procedures and policies which you must consistently apply. Purchasers may not be lining up to buy your franchise, so you should be prepared for the need to market your franchise. This may include a glossy brochure providing an overview and benefits of the franchise opportunity and answer some frequently asked questions. Other ways to market your franchise include your website, contacting industry and existing contacts you have, franchise websites such as the Franchise Council of Australia, industry and franchising magazines, expos and targeting newspaper advertisements. 142


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Are there suitable sites and territories available? Some franchise systems will offer territories with some level of exclusivity. It is important that you undertake â&#x20AC;&#x2DC;market potential analysisâ&#x20AC;&#x2122; including demographics, to assess the market opportunity for establishing your franchise outlets in areas with the highest potential. What external drivers / business generators or site characteristics do you need to ensure your franchises are successful? Your desire to grow the system can create tension with existing franchisees, so when developing your territories and related policies, it is important to consider if they will give your franchisees a sense of security whilst providing you with the opportunity to be adequately represented in the marketplace now and into the future. You need to develop clear territory and expansion policies which must be understood by all parties and referenced in your franchise documentation. Does the concept have longevity? (I.e. not a fad) There will be constant pressure to adapt to changing challenges and opportunities driven by new economic conditions, shifting market expectations and fashions, new technologies, legislation and so on. Your business must be flexible enough to keep pace with all of this â&#x20AC;&#x201C; or it will lose ground to more alert and opportunistic competitors. However, simply responding to such changes is not enough. Real growth comes to those proactive businesses that actually see and lead change. Is there a comprehensive franchise system with adequate resources to support growth expectations? The framework of a franchise system has many intrinsic elements (system planning, set-up, marketing, systems and policies, training and business support functions, etc). All of these elements are inter-dependent and the effective development and implementation with the necessary resources and skills to complete the task and bring it to life of these are critical to the systems success. Many systems start with a company owned site and then expand into franchising. The support structures for company owned sites may not be enough to support a growing franchise system. It is therefore important to firstly review your organisational structure and resources to ensure it will meet the current and future needs of the franchise business as it grows, both operationally and strategically. Have you identified the key business processes 143


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intrinsic to franchising (current and future)? You will also need to determine the franchisor and franchisee roles and responsibilities both at a functional and administrative level. Naturally, as the system grows, you will need to source and appoint new personnel with the necessary skills and experience. Can you create a realistic marketing plan? You have three marketing priorities: promoting the franchise brand; helping franchisees market their individual businesses and marketing your franchise offer to potential franchisees. Once again, it is important to remember that to achieve professional results, utilise experienced professionals to manage your marketing. Do you have access to specialist franchising expertise? Franchising is a very complex business, involving financial, legal, marketing, documentation, training, IT and many other issues. Fortunately, there are experienced specialists in the market place that can help you pull all this together and maximise the chances of making your idea a success. It is important to remember that promising franchising ideas have failed as a result of not obtaining expert advice, cutting corners and trying to manage it on their own. Utilising expert advice could be the single best investment you make as a new franchisor. Even if you decide not to create a franchise business, going through this exercise will give you the option to sell your model as a ‘business in a box’, ie, provide the systems, manuals, templates and marketing tools to someone looking for a proven, ‘turn key’ operation.

WHAT DO YOU WANT FROM YOUR FRANCHISOR? One of the keys to leading and driving a successful franchise is understanding the needs of your franchisees. There is a very simple answer as to why people choose franchising as their model to own their own business – ongoing support. The franchisor provides a franchisee with the processes, methods and opportunities to operate a business using the name and trademark of the company. In addition, they usually get access to product, storefronts, staff training, marketing strategies and more. 144


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However, the ‘support’ offering can change from franchisor to franchisor. There are at least 12 key performance indicators (KPIs) that a prospective franchisee is looking for from their franchisor. While support is high on the list of priorities, the large majority of prospective franchisees are looking for a proven franchise system. A proven system is the first KPI that attracts a new franchisee. Everything flows on from there – business support, training, leadership, financial management, marketing and PR and of course brand awareness. There are many franchisees who join a system despite the fact that they have never worked in that particular industry in the past. A tradesman with no retail experience may have a passion for cooking and restaurants and as a result chooses to purchase a La Porchetta franchise. In this instance, the franchisor runs a successful business model, provides all the training and support that the franchisee requires, assists with financial and business management, provides the local area marketing and public relations to support the franchisee and provides the leadership and mentoring to ensure he is provided with all the tools to succeed. If the franchisee is committed, works hard, follows the system that he/she has invested in, embraces the training and mentoring available to them and manages their back office (financials) in a professional manner, then they give themself every opportunity to succeed and grow. This could result in reinvesting in the brand and purchasing a second or third franchise.

THE 12 KPI’s 1. A proven system

2. Business and Personal Support 3. Training 4. Business Coaching 5. Brand Awareness 6. Leadership 7. Financial Management 8. Business Management 9. Mentoring 10. Marketing & Public Relations 11. Product Offer 12. Service Offer 145


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FRANCHISOR CHALLENGES With every franchise system comes challenges. It is important that every franchise system is equipped to manage those challenges head-on. A group of Australia’s top franchisors believe one of the biggest challenges currently facing the $128 billion franchising industry is the need for across the board improvements in the key area of franchisee training and induction. A shift in culture and improved training methods to adequately equip franchisees with the confidence and skills to grow the brand successfully was the main outcome at a business forum that FC Business Solutions held with 20 industry specialists. Whilst the ‘one size fits all’ training and induction for franchisees may be cost effective, it is probably not the best way to ensure each individual is adequately trained and has the confidence to run a business. Simon Heggen, FCA Education Manager, said that franchisors should not look at the cost of a successful learning and development program as an expense, but as an investment in their business. According to Julia Camm from industry research and advisory service, Corven, a simple first-step franchisors should take to change their approach, is a shift in terminology from ‘training’ to ‘learning’. Michael Vassallo, National Training Coordinator from Tyrepower agreed, saying “we are not just selling a franchise business, we are selling a particular product that involves the need to train people so they can run their business consistently and continuously.” Barry Markoff, Managing Director of ICMI Speakers, believes that franchisors should develop a positive learning culture within their system from the outset that centres on providing franchisees with confidence. “Ninety per cent of business life is confidence. You’ve got to start with confidence,” Markoff said. As a franchise system grows and evolves, so does its training requirements. Peter Fiasco, General Manager, Franchise Operations at Quest Serviced Apartments, said franchisors need to take a more holistic approach to the way their franchisee support and training divisions operate. The challenges faced by the franchising industry are all about leadership and it is up to the industry to take responsibility to drive the changes moving forward. 146


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FRANCHISE ADVANTAGES The advantages of franchising for a franchisor, according to the Franchise Council of Australia, are summarised as: • The growth of the network is achieved using the financial and manpower resources of the franchisee; • The franchisor is not concerned with the day to day operation of each outlet; • The franchisor’s organisation is compact and can earn profits without involvement of high capital risk; • The network has an ability to grow rapidly; • The franchisor has fewer staff and fewer staff challenges; • The management of each outlet is the owner who will tend to be well motivated to be successful; • It provides wider and secured outlets for products and services; • It enables the franchisor to service national customers using their network of outlets. Operating a franchise business is hard work for both the owner and the investor, and not every business – or every business owner – will find a comfortable fit. But the advantages of opening a franchise are often rewarding in reputation as well as in profit, and offer many incentives for the well established business owner. You just have to decide if that is, or can be, you.

FC BUSINESS SOLUTIONS (AUS) 03 9533 0028 andrew@fcbusinesssolutions.com.au corina@fcbusinesssolutions.com.au www.fcbusinesssolutions.com.au

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Chapter 15

The Franchise Council of Australia By Steve Wright, Executive Director Franchise Council of Australia (FCA)

About the Author Steve Wright is a media and communications professional with more than 15 years of experience in industry advocacy and stakeholder relations, including investor, media and government relations and regulatory affairs. Steve is currently the Executive Director of the Franchise Council of Australia, the primary governing body for the franchise industry. Prior to joining the FCA, Steve was Director of Communications with Gavin Anderson & Company, one of the nationâ&#x20AC;&#x2122;s leading public affairs, corporate and government relations consultancies. Steve was Director of Stakeholder Relations at Hutchison Telecoms, a network owner and licensed operator of the Orange and 3mobile phone services in Australia and overseas, before joining Gavin Anderson. Prior to that, he was Director of Public Affairs for Cable and Wireless Optus and SingTel Optus. Steve has also run his own small business and played a central role in the start-up of successful internet publishing business, Alan Kohlerâ&#x20AC;&#x2122;s Eureka Report, purchased by News Ltd in mid 2012.

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he Franchise Council of Australia Limited (FCA) is the peak body for the $128 billion franchise sector in Australia, representing franchisors, franchisees, service providers and advisors to the sector.

The FCA is a nationally incorporated not-for-profit association with a national head office based in Melbourne, Victoria. The FCA’s main aim is to help people get into franchising and ensure the sector they are joining is as good as it can be. This means promoting best practice in the sector and providing the education and other services necessary to ensure a healthy sector constantly striving to lift its own standards. The FCA was formed in 1983 as a not-for-profit trade association, with the following objectives:

• to establish standards of international best practice in business format franchising for Australian franchise systems • to provide information and education about franchising to existing and potential franchisees and franchisors • to educate State and Federal Governments on issues relevant to the sector. Since 1983, these objectives have been further expanded to include the following: • to develop a vital, strong and financially viable franchising sector • to advance the interests of members in Australia and in specific interest areas including franchisee interests, women in franchising and international market development • to continually foster among consumers, governments and the business community, a broad-based understanding of the economic importance of having a strong franchise sector in Australia • to design efficient, identified, value-added services to members and assist them to be more effective in franchising.

The FCA is available to assist all stakeholders in the Australian franchise sector in a variety of ways, to ensure the sector is a vibrant place to do business. Membership of the FCA is voluntary, and is open to any individual or organisation involved in the franchising sector, including; franchisees, franchisors, lawyers, accountants, banks, consultants, academics, publishers and many more.

Whether offering advice on best practice franchising, educating government on policies affecting the sector, promoting franchising in the media or providing professional development services to its members, the FCA does its part to 150


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make the sector a positive, sustainable place to earn a living.

The FCA is closely affiliated with franchising associations around the world, and is a founding member of the Asia Pacific Franchise Confederation (APFC). It is also a member of the World Franchise Council (WFC) and for 1999 and 2000 was its secretariat.

Membership of the FCA means credibility – maintained through the FCA member standards and the Franchising Code of Conduct; professional support – through education programs, networking opportunities and regular events; and representation – ensuring members’ voices are heard by governments, regulators and other important groups. Membership also means solidarity. FCA members belong to an association where their peers work together for the betterment of the sector. FCA members share a common method of doing business – not a common business. For this reason, franchisors, franchisees and suppliers can freely exchange ideas without fear of losing their competitive edge.

The FCA currently has more than 700 franchise systems and suppliers in its membership base – about two thirds of the total franchise systems currently operating in Australia. This strong commitment to belonging demonstrates the relevance and value brought to the sector by the FCA.

The FCA has a federated governance model. The national Board of Directors has representation from each State chapter as well as specific interest representatives, including those representing franchisees and women in franchising. The FCA Constitution allows a maximum of 15 directors. Each State chapter elects a president, who is then appointed to the national board. Up to ten additional directors may be included on the Board – five by direct member election plus up to five additional directors appointed by the Board.

Major services and initiatives The FCA recognises that its members have different needs, and that different types of members should co-exist harmoniously. The success of franchising depends on successful franchisors, and this, in turn, depends on profitable and happy franchisees. The FCA works constantly to ensure that all activities and services which benefit franchising will benefit the broader community – including franchisees, franchisors, employees and their local economies and communities. As well as commitment to the highest industry standards, the FCA facilitates a number of services and initiatives to assist in promoting and advancing the role of franchising in Australia, as well as supporting its members. These include:

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The FCA Franchise Academy The FCA Franchise Academy is the premier training provider for the sector committed to providing franchisors, franchisees, franchise consultants and suppliers with the best education programs available.

The FCA Franchise Academy aims to provide both franchise-specific and generic business skills training and education for pre-entry, in-market and succession (exit) to all organisational levels. The establishment of the FCA Franchise Academy coincided with the introduction of nationally recognised qualifications in franchising. In 2004 the FCA Franchise Academy developed the Diploma level course in Franchising and became the first educational institution to offer the Diploma of Business (Franchising).

Franchisee Success Club The Franchisee Success Club acknowledges the breadth and depth of achievement among franchisees in the Australian franchise sector.

Launched in 2011, this world-first initiative from the FCA highlights and celebrates the incredible untold stories of the best and brightest among the 70,000 strong franchise community in Australia. The Franchisee Success Club is a wonderful opportunity for franchisors from large and small systems alike to recognise the performance of their exceptional franchisees. To find out more visit the website at www.franchise.org.au/franchisee-successclub.html

Franchisee Forum In 2007, the FCA announced the first Franchisee Forum as a way for franchisees to meet and discuss issues, ideas and future goals for franchisees within the Australian franchise sector. The Franchisee Forum has an FCA nominated Chair and representatives from each state/territory. The Chair has full voting rights on the FCA Board. FCA is one of the worldâ&#x20AC;&#x2122;s few franchising organisations to ensure franchisee representation and to provide member benefits for franchisees without charge â&#x20AC;&#x201C; so long as their franchisor is a member.

Supplier Forum Established in 2008, the objective of the FCA Supplier Forum is for suppliers to the sector to advise the FCA on what products and services they expect and need from their industry representative body. 152


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The FCA recognises that a franchise cannot sustain success without the assistance of the many and varied consultants, services and business systems they provide.

Suppliers such as consultants, lawyers, finance, IR companies, software companies and many more, constitute the bridges that allow franchisors and franchisees to travel above the competitive landscape, on their way to a sustainable commercial advantage.

Women in Franchising Committee The number of women participating in small business and franchise ownership is increasing, with almost 28 per cent of franchised units predominately owned or operated by females (Franchising Australia survey). In 2007, the FCA announced the introduction of the Women in Franchising Committee (WIF), dedicated to promoting and advancing the achievements of women in franchising and small business.

The aim of the WIF Committee is to increase female participation in franchising. It aims to be a professional, organised group within the FCA that will provide women inside and outside the sector with information and encouragement, as well as genuine opportunities for contribution, networking and professional development.

The National Franchise Convention The FCA hosts the annual National Franchise Convention. The Convention brings together the Australian franchise community â&#x20AC;&#x201C; including successful business people, CEOs, government officials and industry advisors â&#x20AC;&#x201C; to enjoy education, networking and business development opportunities. Traditionally a three-day event, the National Franchise Convention also includes a trade exhibition where suppliers to the franchise sector can showcase their products and services. The convention is open not only to those in franchising circles but also to the small business sector generally and it is not necessary to be an FCA member to attend.

FCA Excellence in Franchising Awards The FCA Excellence in Franchising Awards recognise and reward companies and individuals within the Australian franchise sector and provide a platform for entrants to showcase their achievements on the national stage.

The Awards are open to FCA member companies only and are committed 153


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to ensuring that franchisors, franchisees and suppliers to the sector are appropriately represented.

Success at the Awards can increase brand recognition, customer enquiries and media coverage. It can boost company morale and help attract the best talent to companies.

The Excellence in Franchising Awards ceremony is held in conjunction with the National Franchise Convention and is the pinnacle of the franchising year. Past winners include 2011 Established Franchisor of the Year, Hairhouse Warehouse, 2011 Franchise Woman of the Year, Belinda Sugars (Mortgage Choice) and 2011 Multi-unit Franchisee of the Year, Carolyn and David McManus (The Coffee Club) and many more.

Hall of Fame The Australian Franchise Hall of Fame was established in 2003. During its creation, the selection panel searched back to the origins of franchising in Australia and, by a meticulous process of elimination, identified the groundbreakers, influencers, quiet achievers, selfless contributors and outstanding performers who endured the trials and laid the foundations of the sectorâ&#x20AC;&#x2122;s success. Now, it is members of the Hall of Fame itself who induct new entrants. The sole criterion is an outstanding contribution to franchising â&#x20AC;&#x201C; whether as a franchisor, franchisee, academic, lawyer, consultant, politician, financier â&#x20AC;&#x201C; whomever.

FCA Member Standards Members of the FCA receive many benefits which help businesses keep informed and connected with the franchise sector and facilitate education.

One of the hallmarks of a reputable sector is a commitment to high standards of personal and professional conduct. This enhances public perceptions of franchising, helps safeguard the investments of franchisors and the businesses of franchisees, protects franchise networks from unfair or unethical attack and provides guidance for those seeking to commence their franchising journey. The FCA encourages its members to maintain standards of conduct worthy of franchise sector professionals. The Member Standards are designed to provide members of the FCA with an authoritative guide on acceptable standards of conduct.

The FCA believes the Australian franchise sector to be well regulated with the Franchising Code of Conduct (the Code) allowing for affordable, efficient 154


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dispute resolution procedures and disclosure provisions to assist and guide the sector. It also considers that the relationship between the franchisor and the franchisee can be developed even further with best practice guidelines in the form of FCA Member Standards.

It is the FCA’s view that a member gains significant market benefit in identifying themselves with FCA membership and as such the business practice and activities of members should work towards franchise best practice.

Member obligations All FCA members are expected to conduct their franchising activities professionally and in accordance with Australian law. They are expected to comply with agreed minimum standards of conduct. The FCA considers the following standards to be relevant to members. • Members of the FCA shall abide by all relevant State and Federal laws including, in particular, the Franchising Code of Conduct and the Competition and Consumer Act. Within 14 days of a written request by the FCA, a member shall furnish to the FCA a copy of its current disclosure document, franchise agreement and any other documentation or advertising material used in connection with the appointment of a franchise. • No member shall imitate the trademark, trade name, corporate name, slogan, or other mark of identification of another member of business in any manner or form that would have the tendency or capacity to mislead or deceive. • Members will become familiar with the content of these Member Standards and draw them to the attention of clients as appropriate from time to time. • A member, be they a franchisor, vendor, franchisee, franchise broker, or representative of a franchise system should not sell a franchise if at the time the franchisor or vendor franchisee knew or ought to know that a reasonably competent franchisee would be unlikely to be able to successfully operate the franchise. • Members are expected to behave professionally and refrain from illegal, unethical or improper dealings or otherwise act contrary to the image of franchising or the FCA.

Relating to a franchisor and franchisee • A franchisor shall, as part of the franchisee recruitment process, make reasonable investigations to assess whether a prospective franchisee appears to possess the basic skills and resources to adequately perform the needs and requirements of the franchise. 155


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• The franchisor shall have training and support processes, as applicable, to the franchise system to help franchisees improve their abilities to conduct their franchises. Franchisees will endeavour to apply and adapt all learning to their operation. • A franchisor and franchisees should be reasonably accessible and responsive to communications, and provide a mechanism by which ideas may be exchanged and areas of concern discussed for the purpose of improving mutual understanding and reaffirming mutuality of interest. • Franchisors and franchisees shall endeavour to resolve complaints, grievances and disputes through direct communications and negotiation. Failing this, consideration should be given to mediation or arbitration. • Franchisors and franchisees should, in their dealings with one another, avoid the following conduct, where such conduct would cause significant detriment to either party’s business: a) substantial and unreasonable overvaluation of fees and prices; and b) unnecessary and unreasonable conduct beyond that desirable for the protection of the legitimate business interests of the franchisor, franchisee or franchise system.

Relating to a supplier member • A member who is a lawyer, accountant, consultant or other supplier or service provider (‘supplier member’) should behave in a manner consistent with these guidelines, respect the integrity of established franchise systems and not seek to inflame any dispute, incite litigation, generate media coverage or otherwise act in any way which is unprofessional or may create a misleading impression of the system. • Provide a client or prospective client on request with a written resume or profile of any relevant qualifications of the supplier together with true representations of the supplier’s franchising education and experience. • Respect the confidentiality of all information received concerning a client’s business which is not in the public domain and will not disclose or permit disclosure of any such information without the client’s prior permission in writing. • Not advise any franchisee or prospective franchisee in relation to any franchise opportunity offered by any franchisor for who the adviser has acted, without full disclosure of relevant circumstances. • Disclose to a client or prospective client any personal or financial interests 156


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or other material circumstances which may create a conflict of interest in respect of that client and in particular, without derogating from the generality of the foregoing: - any directorship or significant interest in any business which competes with the client.

- any financial interest in goods or services recommended by the adviser for use by the client. - any personal relationship with any individual in the clientâ&#x20AC;&#x2122;s employment.

â&#x20AC;˘ Not undertake work for which they are not appropriately licensed, qualified and experienced.

The FCA recognises that its members have different needs, and that different types of members should co-exist harmoniously. The success of franchising depends on successful franchisors, and this in turn, depends on profitable and happy franchisees. The FCA works constantly to ensure that all activities and services which benefit franchising will benefit the broader community including franchisees, franchisors, employees and their local economies and communities.

The Franchise Council of Australia (AUS) 1 300 669 030 info@franchise.org.au www.franchise.org.au

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Franchise Listings categories: Automotive Products & Services.................................................................................. 160 Beauty Products & Services............................................................................................... 162 Building & Construction........................................................................................................ 163 Business Services........................................................................................................................... 168 Childrens Services........................................................................................................................ 170 Cleaning Services........................................................................................................................... 172 Clothing Alterations. ................................................................................................................ 173 Convenience Retailing............................................................................................................... 174 Courier Services.............................................................................................................................. 175 Financial Services......................................................................................................................... 176 Food - Coffee & Cafes.................................................................................................................. 178 Food - Restaurants & Dining Rooms.......................................................................... 184 Food â&#x20AC;&#x201C; Retail......................................................................................................................................... 188 Food â&#x20AC;&#x201C; Takeaway.............................................................................................................................. 189 Health & Wellness. ....................................................................................................................... 191 Printing Services............................................................................................................................ 193 Real Estate / Property Inspection................................................................................ 194 Recreation & Sport....................................................................................................................... 196 Retail. ........................................................................................................................................................... 197 Vending....................................................................................................................................................... 203

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PEDDERS SUSPENSION 6 Bridge Road Keysborough VIC 3173 Telephone: (AUS) 03 9706 3500 Fax: (AUS) 03 9706 3355 Email: franchising@pedders.com.au Website: www.pedders.com.au Contact: David Fahey Position: National Franchise Manager

BUSINESS DESCRIPTION: Pedders is Australiaâ&#x20AC;&#x2122;s Number 1 Australian family owned franchise operation specialising in shock absorbers, steering, suspension, towbars and brakes. Pedders. Straight advice, specialists you understand and No Bull!

COMPANY DETAILS: Date of first franchise: 1974 Membership: FCA Training provided: Induction training and ongoing business development and onsite training. Secure Intranet training information and product fitment information. Territories available: Throughout Australia

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FRANCHISE OUTLETS AUSTRALIA/ INTERNATIONAL: Current: Over 120 outlets Australia wide plus hundreds of international distribution networks

FINANCIAL DETAILS: Initial franchise fee: $16,500 inc gst Minimum investment: $250,000 inc gst Royalty fee: NIL! Financial assistance: Upon application Advertising/marketing fee: 5% of sales


automotive products & services

SNAP-ON TOOLS PO Box 6077 Blacktown NSW 2148 Telephone: (AUS) 1800 762 766 Fax: (AUS) 02 9837 9199 Email: nicholas.hudson@snapon.com Website: www.snapontools.com.au Contact: Nicholas Hudson Position: National Franchise Manager

BUSINESS DESCRIPTION: Snap-on Tools are a status symbol with a designer pedigree and a heritage spanning nearly a century. And the Snap-on franchise is as good as its product, with incredible franchisor support, a business model thatâ&#x20AC;&#x2122;s been proven for decades, exclusive territories, extensive training and no messy commercial leases. Snap-on finance available.

FRANCHISE OUTLETS AUSTRALIA/ INTERNATIONAL: 2009: 158 2010: 160 2011: 166 Current: 168

FINANCIAL DETAILS: Initial franchise fee: $40,000 Minimum investment: From $37,000

COMPANY DETAILS:

Royalty fee: NIL

Date of first franchise: 1997 in Australia

Financial assistance: Accreditation with major banks + Franchisor Finance

Membership: FCA Training provided: 6 days at the Snap-on Training Centre, Dallas, Texas, USA. 2 days at Snap-on National Distribution Centre, Sydney, 3 weeks in territory followed by ongoing support.

Advertising/marketing fee: NIL

Territories available: Various around Australia and New Zealand

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Beauty Products & Services

HAIRHOUSE WAREHOUSE Level 1, 605 Doncaster Road Doncaster VIC 3108 Telephone: (AUS) 03 9234 2200 Fax: (AUS) 03 9234 2266 Email: franchising@hairhousewarehouse.com.au Website: www.hairhousewarehouse.com.au Contact: Dean Salomone Position: National Franchise Manager

BUSINESS DESCRIPTION: Over the past 20 years Hairhouse Warehouse has grown to over 140 stores Australia wide and has been listed for the last 7 years in BRW as one of the fastest growing hair & beauty franchises in Australia. The combination of the largest range of hair & beauty products along with professional salons and beauty services has proven highly successful. Hairhouse Warehouse is embarking on an aggressive expansion plan to lead the industry in product, store locations and services.

COMPANY DETAILS: Date of first franchise: 1998 Membership: FCA Training provided: Yes, intensive workshop and in store training Territories available: Selected sites across Australia 162

FRANCHISE OUTLETS AUSTRALIA/ INTERNATIONAL: 2009: 103 2010: 115 2011: 128 Current: 140 FINANCIAL DETAILS: Initial franchise fee: $66,000 plus gst Minimum investment: $350,000 plus SAV for Greenfield sites Royalty fee: 6% of gross sales Advertising/marketing fee: 3% of gross sales


Building & Construction

JIM’S FENCING PO Box 686 Mount Martha VIC 3934 Telephone: (AUS) 03 9708 2111 Fax: (AUS) 03 9708 2112 Email: administration@jimsfencing.net Website: www.jimsfencing.net Contact: Warren Smith Position: Divisional Manager

BUSINESS DESCRIPTION: “In business for yourself, not by yourself”….if that strikes a chord with you then Jims Fencing could be your perfect opportunity. With not only strong brand recognition and strength of business system’s, Jim’s Fencing is your perfect choice for those who love working outdoors and handy with the tools.

FRANCHISE OUTLETS AUSTRALIA/ INTERNATIONAL: Australia: 150 +

FINANCIAL DETAILS: Initial franchise fee: POA Minimum investment: POA Royalty fee: Nil Financial assistance: POA

COMPANY DETAILS:

Advertising/marketing fee: POA

Date of first franchise: 1997 Membership: FCA, MBA Training provided: 8 weeks – Paid for Training @ $1,000 inc per week Territories available: Australia Wide

163


Building & Construction

NARELLAN POOLS 201/2-8 Brookhollow Avenue Baulkham Hills NSW 2153 Telephone: (AUS) 02 9684 8000 Fax: (AUS) 02 9684 1867 Email: careers@narellanpools.com.au Website: www.narellanpools.com.au Contact: Chris Meyer Position: Managing Director BUSINESS DESCRIPTION: “We bring dreams to life by building the world’s best and most loved pools.” Fiberglass pools sales and building/ installing business with industry leading training and business coaching. Narellan Pools has been operating for over 40 years and are the leading composite pool manufacturer and installer in Australia.

COMPANY DETAILS: Date of first franchise: June 2002 Membership: FCA, SPASA NSW, SPASA QLD, SPASA VIC, SPASA SA, Master Builders, National Pool & Spa Institute, Family Business Australia, Housing Industry Association. Training provided: 6 weeks induction plus ongoing training Territories available: Metro and Regional across Australia

164

FRANCHISE OUTLETS AUSTRALIA/ INTERNATIONAL: 2009: 26 2010: 27 2011: 27 Current: 27

FINANCIAL DETAILS: Initial franchise fee: $35,000 plus GST Minimum investment: $100,000 Royalty fee: 6% plus gst Advertising/marketing fee: 6%


Building & Construction

RESIDENTIAL GARAGE DOORS PO Box 5145 Rockingham WA 6169 Telephone: (AUS) 1300 101 707 Fax: (AUS) 1300 101 708 Email: Nick@residentialgaragedoors.com.au Website: www.residentialgaragedoors.com.au Contact: Nick Sperryn-Jones Position: Director

BUSINESS DESCRIPTION: Residential Garage Doors offer a complete garage door solution to residential home owners. We service, maintain and install new garage doors whilst ensuring that the highest level of customer service is offered at all times. We are proud to work with one of the worldâ&#x20AC;&#x2122;s finest garage door manufacturers, and are looking for more like-minded, hands on franchisees to help develop our brand as it continues to grow.

COMPANY DETAILS:

FRANCHISE OUTLETS AUSTRALIA/ INTERNATIONAL: Current: 3 FINANCIAL DETAILS: Initial franchise fee: $80,000 - $132,000 inc GST Minimum investment: Varies on franchise opportunity Royalty fee: 10% Financial assistance: To approved applicants Advertising/marketing fee: 0%

Date of first franchise: May 2012 Membership: FCA Training provided: 4 weeks intensive Territories available: WA, VIC and selected regions across Australia

165


Building & Construction

Smith & Sons Renovations & Extensions 410/45 Brisbane Rd Mooloolaba QLD 4557 Telephone: (AUS) 07 5478 4014 Fax: (AUS) 07 5477 7133 Email: admin@smith-sons.com Website: www.smith-sons.com.au Contact: Leigh Wallis Position: Marketing BUSINESS DESCRIPTION: Smith & Sons are professional renovation builders who provide quality renovations from concept to completion, on time and to budget. We also give builders the tools and resources to own and manage a professional renovation business, which will grow into a valuable asset.

COMPANY DETAILS: Date of first franchise: March 2008 Training provided: Yes Territories available: Throughout Australia and NZ

166

FRANCHISE OUTLETS AUSTRALIA/ INTERNATIONAL: 2009: 16 2010: 23 2011: 51 Current: 65

FINANCIAL DETAILS: Initial franchise fee: From $20,000 - $50,000 Royalty fee: 6% Financial assistance: Money no barrier to the right people Advertising/marketing fee: 1%


Building & Construction

WET-SEAL PO Box 481 Coffs Harbour NSW 2450 Telephone: (AUS) 1800 025 081 (NZ) 0800 436 000 Fax: (AUS) 02 6650 8699 Email: franchise@wet-seal.ws Website: www.wet-seal.ws Contact: National Franchisee Manager

BUSINESS DESCRIPTION: Wet-seal is Australia & New Zealandâ&#x20AC;&#x2122;s leading waterproofing franchise, having provided the highest quality products to the building and renovation market for over a quarter of a century. Wet-seal also supply and install underfloor heating.

FRANCHISE OUTLETS AUSTRALIA/ INTERNATIONAL: 2009: 45 in Australia, 8 in New Zealand 2010: 48 in Australia, 8 in New Zealand 2011: 49 in Australia, 8 in New Zealand Current: 51 in Australia, 7 in New Zealand

FINANCIAL DETAILS: COMPANY DETAILS: Date of first franchise: 2001 Membership: FCA, FANZ, HIA, MBA Training provided: 5 weeks Territories available: QLD, NSW, VIC, SA, WA, NT as well as NZ

Initial franchise fee: $50,000 + GST Minimum investment: Varies Royalty fee: 20% Financial assistance: Available subject to conditions Advertising/marketing fee: 0%

167


Business Services

ACE BODY CORPORATE MANAGEMENT 106 Nepean Highway Mentone VIC 3194 Telephone: (AUS) 1300 792 509 Fax: (AUS) 03 9583 8911 Email: stephen.r@acebodycorp.com.au Website: www.acebodycorp.com.au Contact: Stephen Raff Position: CEO BUSINESS DESCRIPTION:

NT: Darwin, Alice Springs

We provide professional and personal management services to bodies corporate throughout Australia and Singapore.

WA: Perth CBD, North East Perth, North West Perth, South Perth, Rockingham

Ace manages commercial, industrial, mixed use, residential, estates, high rises, company share/stratum, hotels, student accommodation, serviced apartments and retirement villages.

FRANCHISE OUTLETS AUSTRALIA/ INTERNATIONAL: 2009: 62 2010: 72 2011: 77 Current: 85

COMPANY DETAILS: Date of first franchise: 1998 Membership: AIM, FCA, SCA, and RVA Training provided: Yes Territories available: VIC: Docklands, Langwarrin, Hamilton, Central Western Vic, Yarra Ranges QLD: Cairns, Townsville, Toowoomba, Mackay, Hervey Bay, Beenleigh NSW: Newcastle, Penrith, Parramatta, Cronulla, Maroubra, Ryde SA: Adelaide CBD, Adelaide North East 168

FINANCIAL DETAILS: Initial franchise fee: $35,000 + GST Minimum investment: $55,000 Royalty fee: 10% of management fee Financial assistance: Yes Advertising/marketing fee: Nil except NSW and QLD


Business Services

MAIL BOXES ETC (AUST) PTY LTD Level 1, 117 Willoughby Road Crows Nest NSW 2065 Telephone: (AUS) 1800 556 245 Fax: (AUS) 02 8088 0773 Email: agnes.beugnon@mbe.com.au Website: www.mbe.com.au Contact: Agnes Beugnon Position: Franchise Development Manager

BUSINESS DESCRIPTION: Established in 1980, Mail Boxes Etc. is a global network with more than 6,000 locations worldwide, serving more than 60 million customers a year in 32 countries. Mail Boxes Etc. has been consistently rated as the #1 Postal and Business Services franchise for 20 consecutive years. Mail Boxes Etc. stores offer print and finishing services, design and marketing services, mailbox rental and shipping services (domestic and international).

COMPANY DETAILS: Date of first franchise: Started in 1980 in San Diego, since 1992 in Australia

Territories Available: Various around Australia in all states.

FRANCHISE OUTLETS AUSTRALIA/ INTERNATIONAL: Current: 35 in Australia 6,000+ stores worldwide

FINANCIAL DETAILS: Initial franchise fee: $50,000 Minimum investment: $175,000 Royalty fee: 7% Advertising/marketing fee: 2%

Training provided: 2 modules of training. 2 weeks classroom style at our Sydney Support Office (nationally accredited dual qualification: Diploma of Business Management, Cert IV in Sales Management), plus 4 weeks in-store handson training. Ongoing support and training.

169


Childrens Services

LITTLE KICKERS AUSTRALIA Telephone: (AUS) 0423 312 550 Email: info@littlekickers.com.au Website: www.littlekickers.com.au Contact: Daniel Kelland Position: Director

BUSINESS DESCRIPTION:

Territories available: National

As part of the Little Franchising Group, Little Kickers is the world’s leading preschool activity class, providing approved soccerbased activity classes to children aged 18 months to 7 years.

FRANCHISE OUTLETS AUSTRALIA/ INTERNATIONAL:

A Little Kickers franchise can offer you a career with a fantastic ‘work/life’ balance, excellent flexibility and rewards, and the opportunity to really make a difference to young children’s lives using a proven franchising model.

COMPANY DETAILS: Date of first franchise: 2002 Membership: Franchise Council of Australia (FCA), British Franchise Association, Canadian Franchise Association, Preschool Learning Alliance. Training provided: Comprehensive initial desk-based and practical training provided, including business system training. Full ongoing support and mentoring from the Little Kickers Team 170

2009: 94 2010: 117 2011: 135 Current: 160

FINANCIAL DETAILS: Initial franchise fee: $15,000 - $20,000 + GST Minimum investment: Dependent on territory


Childrens Services

sKids AUSTRALIA PTY LTD 3 May Terrace Brooklyn Park SA 5032 Telephone: (AUS) 08 8354 4886 Fax: (AUS) 08 8121 1835 Email: vicki@skidsaustralia.com.au Website: www.skidsaustralia.com.au Contact: Vicki Prout Position: Managing Director BUSINESS DESCRIPTION: sKids, an award winning before, after and holiday program provider - OSHC. We offer continuous fun, learning and caring based programs tailored to meet school community and framework needs. If you enjoy working with children consider joining sKids. Award winning lifestyle business.

FRANCHISE OUTLETS AUSTRALIA/ INTERNATIONAL: 2011: 7 (Australia) over 60 in New Zealand Current: 7 Franchise / 1 Area Developer.

FINANCIAL DETAILS: Initial franchise fee: $30,000 Maximum investment: $50,000

COMPANY DETAILS:

Royalty fee: 11%

Date of first franchise: 2011 Australia (2000 NZ)

Advertising/marketing fee: 2%

Membership: FCA Training provided: Yes Territories available: Nationally

171


Cleaning Services

AMAZING CLEAN 5/13 Kerryl Street Kunda Park, QLD 4556 Telephone: Fax: Email: Website: Contact: Position:

(AUS) 1800 816 618 (AUS) 07 5456 2874 glenn@amazingclean.com.au www.amazingclean.com.au Glenn McMahon Franchisor

BUSINESS DESCRIPTION: Amazing Clean ultrasonically clean and repair Blinds and Curtains, Mattresses and Lounges. This Amazing business is unlike any other business in that every customer is satisfied and will tell their friends, guaranteed. We are also the only franchise in the world that do what we do.

COMPANY DETAILS: Date of first franchise: 1995 Membership: BMAA & FCA Training provided: 4 weeks paid training Territories available: Most areas

172

FRANCHISE OUTLETS AUSTRALIA/ INTERNATIONAL: Current: 70

FINANCIAL DETAILS: Initial franchise fee: City ($144,000); Regional ($122,000 + GST) Royalty fee: $180 weekly Advertising/marketing fee: $60, Phone $15


Clothing Alterations

LOOKSMART ALTERATIONS Level 3, 73-75 Dunmore Street Wentworthville NSW 2145 Telephone: (AUS) 02 9637 8222 Fax: (AUS) 02 9637 8200 Email: contact@looksmartgroup.com Website: www.looksmartgroup.com Contact: Ray Bryant Position: CEO BUSINESS DESCRIPTION:

COMPANY DETAILS:

LookSmart Alterations is The Stylist Tailor in the Australian and New Zealand marketplaces.

Date of first franchise: 2000

You donâ&#x20AC;&#x2122;t need to be a tailor to own a LookSmart Alterations franchise. A LookSmart franchise can be run under complete management. 74% of franchisees are non-tailors 60% of franchisees are multi-site owners 53% of LookSmart franchises are under complete management 27% overall annual growth 17% generic growth LookSmart Alterationsâ&#x20AC;&#x2122; loyal customers include one million consumers per annum, 2000 fashion brands, David Jones, Myer, ACS, Tarotcash, YD, Virgin Australia, Roger David, the corporate market and Australian Defence.

Membership: FCA Training provided: 2 to 4 weeks in-store training and ongoing support Territories available: All States in Australia and New Zealand

FRANCHISE OUTLETS AUSTRALIA/ INTERNATIONAL: Current: Over 100 stores in major shopping centres across Australia and New Zealand

FINANCIAL DETAILS: Initial franchise fee: $25,000 - $50,000 Minimum investment: $125,000 - $175,000 Royalty fee: 8% Financial assistance: Conditional Advertising/marketing fee: 4% 173


Convenience Retailing

NIGHTOWL CONVENIENCE Locked Bag 3020 Springwood QLD 4127 Telephone: (AUS) 0403 188 027 Fax: (AUS) 07 3387 8788 Email: franchises@nightowl.com.au Website: www.nightowl.com.au Contact: Dean Atkins Position: Development Sales Manager BUSINESS DESCRIPTION: NightOwl is Australiaâ&#x20AC;&#x2122;s longest standing retail convenience franchise offering highly motivated individuals the opportunity to join the successful system. NightOwl help guide and develop franchisees into profitable and sustainable retailers through our Coyote Information Technology system, NOEL online training and development platform, and heavily resourced national merchandising and marketing support teams.

COMPANY DETAILS: Date of first franchise: 1987 Membership: Australasian Association of Convenience Stores, Franchise Council of Australia. Training provided: Full training provided. Four week induction program and ongoing development assistance. Territories available: Brisbane, Gold Coast, Sunshine Coast, Mackay, Townsville, Cairns, Northern NSW and regional cities. 174

FRANCHISE OUTLETS AUSTRALIA/ INTERNATIONAL: Current: 65

FINANCIAL DETAILS: Initial franchise fee: $59,500 + GST Minimum investment: $250,000 - $650,000 + GST Royalty fee: 3.5% Financial assistance: Major banks and lending institutions Advertising/marketing fee: 1%


Courier Services

FASTWAY COURIERS Level 9, 491 Kent Street, Sydney, NSW, 2000 Australia Shed 5, Level 1, Lever Street, Ahuriri, Napier, NZ Telephone: Fax: Email: Website: Contact:

(AUS) 1300 FASTWAY or (NZ) 06 833 6333 (AUS) 02 9264 4966 or (NZ) 06 833 6344 (AUS) fso@fastway.com.au or (NZ) recruitment@fastway.co.nz www.fastway.com.au or www.fastway.co.nz (AUS) Fastway FSO or (NZ) Brad Bernie

BUSINESS DESCRIPTION: Established in 1983, Fastway Couriers is one of the world’s leading courier franchise organisations. Having enjoyed a 29 year growth story and winning over 40 franchise and industry awards, today we’re represented by over 1,600 franchisees delivering over 40 million parcels worldwide.

FRANCHISE OUTLETS AUSTRALIA/ INTERNATIONAL: 2009: AUS 552 and NZ 252 2010: AUS 554 and NZ 253 2011: AUS 600 and NZ 270 Current: AUS over 700 Courier Franchisees and NZ over 270 Courier Franchisees

FINANCIAL DETAILS: COMPANY DETAILS: Date of first franchise: 1984 Membership: FCA and Franchise Association of New Zealand Training provided: Ongoing training and support is provided to our franchise partners Territories available: Various territories are available throughout Australia and New Zealand

Initial franchise fee: From $25,000 + GST ($AU) and from $10,000 ($NZ) Minimum investment: From $25,000 + GST ($AU) and from $10,000 ($NZ) Royalty fee: N/A Financial assistance: N/A Advertising/marketing fee: N/A

175


Financial Services

THE INTERFACE FINANCIAL GROUP 180 Renfrew Drive, Suite 245 Markham, Ontario, L3R 9Z2 Canada Telephone: (AUS) 1300 940 908 Email: ifgau@interfacefinancial.com Website: www.interfacefinancial.com.au Contact: David T. Banfield Position: President BUSINESS DESCRIPTION: Interface franchisees provide short-term working capital for small, expanding businesses through a unique and proven invoice discounting programme.

COMPANY DETAILS:

FRANCHISE OUTLETS AUSTRALIA/ INTERNATIONAL: Current: Australia 7 New Zealand 14 Canada 14 U.S.A. 136 UK & Ireland 16 Singapore 4

Date of first franchise: 1990 (Canada) Training provided: Extensive initial training (5 days) covers both theoretical and practical aspects of the business. Ongoing regular training and coaching is also provided.

FINANCIAL DETAILS:

Territories available: Both single unit and master opportunities are available.

Financial assistance: N/A

176

Initial fee: $36,000 (exc. GST) Minimum investment: Franchise fee + working capital of $50,000+

Advertising/marketing fee: N/A


Financial Services

RAMS Level 7, 17 York Street Sydney NSW 2000 Telephone: Fax: Email: Website: Contact: Position:

(AUS) 1800 616 082 (AUS) 02 8218 7171 franchising@rams.com.au www.ramsfranchising.com.au Paul Maraia Franchise Development & Improvement Manager

BUSINESS DESCRIPTION: RAMS is one of Australiaâ&#x20AC;&#x2122;s most successful and well recognised home loan specialists. Since the launch of the RAMS brand in 1995, RAMS has developed a reputation for offering home buyers competitive rates, innovative products and great service. Building on its success as a home lending specialist, RAMS now also offers home loan customers a range of RAMS deposits that are available online, and insurance solutions through referral partners.

COMPANY DETAILS: Date of first franchise: 2003 Membership: FCA Training provided: RAMS has developed an extensive learning and development curriculum covering a wide range of topics such as lending, sales, products and running their business.

FRANCHISE OUTLETS AUSTRALIA/ INTERNATIONAL: Current: 58

FINANCIAL DETAILS: Initial franchise fee: Currently $35,000 + GST Minimum investment: The average initial working capital required is estimated at approx.$175,000 Royalty fee: The ongoing RAMS Royalty is currently 6% of gross revenue from relevant products Advertising/marketing fee: RAMS does not currently charge a marketing levy, however there is a minimum level of Local Area Marketing expenditure you must make in your marketing area. This is currently $8,000p.a.

Territories available: Australia wide

177


Food - Coffee & Cafes

CAFe 2U PO Box 290 Frenchs Forest NSW 1640 Telephone: Fax: Email: Website: Contact: Position:

(AUS) 1300 Cafe2U (1300 223 328) (NZ) 0508 004 388 +61 2 9451 2105 franchises@cafe2u.com www.cafe2u.com John Stanton Franchise Sales Manager

BUSINESS DESCRIPTION: Australian owned and founded Cafe2U is the world’s largest mobile cafe franchise, with over 200 franchises worldwide. Cafe2U provides opportunity for entrepreneurs who serve award winning great espresso coffee and food to customers in non-traditional locations. Cafe2U is Australia’s fastest growing coffee franchise (Fast Franchises 2011, 2012) and was named by Smart Investor Magazine as one of Australia’s best value franchises in December 2009.

COMPANY DETAILS: Date of first franchise: 2005 (Licenses from 2000) Membership: FCA, FANZ, BFA, IFA, HACCP Certified Training provided: Cafe2U’s unique Acceleration Package includes a 4 week training programme, a personal Franchise Coach and an income guarantee. This has proven success in fast tracking all new franchises. 178

Territories available: Australia and NZ

FRANCHISE OUTLETS AUSTRALIA/ INTERNATIONAL: 2008: 75 Australia / 40 UK 2009: 85 Australia / 45 UK 2010: 103 Australia / 50 UK / 2 Ireland 2011: 107 Australia / 55 UK & Ireland Current: 130 Aus / 65 UK & Ireland / 5 USA / 1 NZ / 1 Germany

FINANCIAL DETAILS: Initial franchise fee: Included in purchase price Minimum investment: (AUS) From $129,600 + GST (NZ) From $125,000 + GST Royalty fee: Zero Financial assistance: Cafe2U has a suite of financial partners to select from Advertising/marketing fee: (AUS) $26.71 + GST per week (NZ) $25.00 + GST per week


Food - Coffee & Cafes

FOODCO GROUP PTY LTD 424 New South Head Road Double Bay NSW 2028 Phone: Fax: Email: Website:

(AUS) 02 9302 2200 or 1800 622 338 (AUS) 02 9302 2212 franchising@foodco.com.au www.foodco.com.au

BUSINESS DESCRIPTION: Foodco Group comprises over 350 franchise outlets trading through Muffin Break bakery cafe and Jamaica Blue cafe. Muffin Break occupies a unique niche in the Australian retail food industry and for over twenty years has been dedicated to providing customers with an irresistible combination of freshly baked products, nutritional fresh lunch items and a distinctive blend of espresso coffee. With a strong passion for fine coffee and the belief that food should be prepared daily with the highest quality in fresh ingredients, Jamaica Blue’s offer comprises of a contemporary food menu with exclusive signature and seasonal dishes, a choice of exclusive coffee blends and an innovative cold beverages selection.

COMPANY DETAILS: Date of first franchise: 1989 Membership: Franchise Council of Australia

Training provided: A minimum of two weeks training at the Foodco Training Centre in Sydney for hospitality/retail skills and management training and a minimum of 3 days ‘hands on’ training in a certified training store. Territories available: Australia, New Zealand and United Kingdom

FRANCHISE OUTLETS AUSTRALIA/ INTERNATIONAL: Current: 350+ worldwide

FINANCIAL DETAILS: Initial franchise fee: $50K for up to 10 years Minimum investment: $150K in fixed net assets required Royalty fee: 6% (Jamaica Blue) & 7% (Muffin Break Financial assistance: Available to approved applicants Advertising/marketing fee: 3% 179


Food - Coffee & Cafes

HUDSONS COFFEE Emirates House, Level 6, 257 Collins Street Melbourne VIC Telephone: (AUS) 03 8631 7700 Fax: (AUS) 03 8631 7799 Email: franchise@hudsonscoffee.com.au Website: www.hudsonscoffee.com.au Contact: Carly Parkinson Position: Franchise Selection Coordinator BUSINESS DESCRIPTION: Hudsons Coffee is a young, dynamic, and growing franchise. From our first store on Elizabeth St in Melbourne, we now have over 65 stores across Australia. At Hudsons Coffee, we believe that behind every great coffee is a great person with real passion and we place great importance on matching the right franchisee to the right site.

FRANCHISE OUTLETS AUSTRALIA/ INTERNATIONAL: 2009: 30 2010: 31 2011: 37 Current: 40

FINANCIAL DETAILS: Initial franchise fee: $60,000 Minimum investment: $200,000

COMPANY DETAILS:

Royalty fee: 8%

Date of first franchise: 2003

Advertising/marketing fee: 1.5%

Membership: FCA Training provided: 6 weeks on site training, ongoing support, including field visits, training workshops and annual conference Territories available: Nationally

180


Food - Coffee & Cafes

SHINGLE INN CAFES PO Box 7067 East Brisbane QLD 4169 Telephone: Fax: Email: Website: Contact: Position:

(AUS) 07 3399 3000 (AUS) 07 3399 3077 patrick.mulcahy@shingleinn.com www.shingleinn.com Patrick Mulcahy Franchise Development Manager

BUSINESS DESCRIPTION: Amidst intricate store design, Shingle Inn Cafes serve exquisite treats, scrumptious cakes, mouth-watering meals and delicious coffee. Established in 1936, with an experienced support team, Shingle Innâ&#x20AC;&#x2122;s brand remains unrivalled.

FRANCHISE OUTLETS AUSTRALIA/ INTERNATIONAL: Current: 30

FINANCIAL DETAILS: Initial franchise fee: $45,000 Minimum investment: $360,000 Royalty fee: 6%

COMPANY DETAILS: Date of first franchise: 2009

Financial assistance: Available to approved applicants

Membership: FCA

Advertising/marketing fee: 3%

Training provided: 6 weeks Territories available: All Australian states

181


Food - Coffee & Cafes

THEOBROMA 38 Bellevue Cres Preston VIC 3072 Telephone: Fax: Email: Website: Contact: Position:

(AUS) 03 9480 1030 (AUS) 03 9480 1035 Wayne@Theobroma.com.au www.Theobroma.com.au Wayne Wright Franchise and Operations Manager

BUSINESS DESCRIPTION: Theobroma a ‘Total Chocolate, Food and Beverage Concept’ retail lounge offering consumers a wide variety of chocolates, hot & cold chocolate beverages, chocolate desserts. Breakfast, Lunch and Dinner with some stores offering a fully licensed menu. Theobroma is the natural choice.

COMPANY DETAILS: Date of first franchise: 2007 Training provided: 3 weeks Territories available: Australia and New Zealand Wide

FRANCHISE OUTLETS AUSTRALIA/ INTERNATIONAL: Current: Australia 17 New Zealand 7 Malaysia 5 United Kingdom 1 India 1 Singapore 1 (opening 2013)

FINANCIAL DETAILS: Initial franchise fee: $40,000 Minimum investment: $150,000 to $500,000 Royalty fee: 6% Financial assistance: referral available Marketing fee: 3%

182


Food - Coffee & Cafes FOOD â&#x20AC;&#x201C; COFFEE & CAFĂ&#x2030;S

ZARRAFFAâ&#x20AC;&#x2122;S ZARRAFFAâ&#x20AC;&#x2122;SCOFFEE COFFEE 1/54 1/54 Siganto SigantoDrive Drive Oxenford OxenfordQLD QLD4210 4210 Telephone: (AUS) 070800 5500 0800 Telephone: 07 5500 Fax: (AUS) 070900 5500 0900 Fax: 07 5500 Email: franchise@zarraffas.com &NBJM BENJO![BSSBGGBTDPN Website: www.zarraffas.com 8FCTJUF XXX[BSSBGGBTDPN Contact: Contact: Christine Christine Allsopp Allsopp Position: Franchise Position: Franchise Manager Manager

BUSINESS DESCRIPTION: BUSINESS DESCRIPTION: Ranked 20th in BRW Fast Franchises in Ranked 17th in the BRW Fastaward Franchises 2009, Zarraffaâ&#x20AC;&#x2122;s Coffee is an winning in 2011, Zarraffaâ&#x20AC;&#x2122;s Coffee award specialty retail coffee outlet.is Itanhas been winning outlet. providingspecialty premiumretail coffeecoffee products and It has been premium coffee freshlyproviding roasted coffee beans sinceproducts its and freshly roasted beansinsince establishment on thecoffee Gold Coast 1997.its establishment on the Gold Coast in 1997. Recently awarded Gold Coast Business of The evolution of and the business seenof the Year in 2007 2008 andhas winner the introduction of theBean driveCoffee thru store various Equal Golden Roaster model, awards.which has had a significant impact on business, delivering heightened Thethe business is founded on the mantra convenience and a superior coffee to create â&#x20AC;&#x2DC;An individually perfect cup menu of to time poor customers. coffee - every timeâ&#x20AC;&#x2122; which encapsulates the Companyâ&#x20AC;&#x2122;s mission and ourBusiness customersâ&#x20AC;&#x2122; Awarded the 2011 Australian Award for Enterprise, GoldisCoast Business expectation. Great service our practice of Yearquality in 2007 and 2008 winner of andthefresh, coffee is our and business. various Equal Golden Bean Coffee Roaster COMPANY DETAILS awards. Datebusiness of ďŹ rst is franchise: 2001 The founded on the mantra to create â&#x20AC;&#x2DC;an individually perfect cup of coffee Membership: FCA â&#x20AC;&#x201C; every timeâ&#x20AC;&#x2122; which encapsulates the companyâ&#x20AC;&#x2122;s mission and Training provided: Yes our customersâ&#x20AC;&#x2122;.

FRANCHISE OUTLETS AUSTRALIA/ COMPANY DETAILS: INTERNATIONAL Date of first franchise: 2001 2006: 3 Membership: FCA 2007: 3 Training provided: Yes 2008: 7 available: Territories QLD, NSW, VIC, WA Current: 35 stores as at 18/05/2009 with 5 stores due to open by 31/12/2009

FRANCHISE OUTLETS AUSTRALIA/ FINANCIAL DETAILS: INTERNATIONAL: Initial franchise fee: $50K Current: 51 stores as at 23/04/2012 Minimum investment: $300K Financial assistance: Westpac & NAB FINANCIAL DETAILS:

Initial franchise fee: Fee: From3% $50,000 Advertising/Marketing Minimum investment: From $400,000 Financial assistance: Westpac, NAB Advertising/marketing fee: 3%

Territories Available: QLD 175

183


Food - Restaurants & Dining Rooms

FASTA PASTA PTY LTD 38 Barnett Avenue Glynde SA 5070 AUSTRALIA Telephone: Fax: Email: Website:

(AUS) 08 8336 5855 (AUS) 08 8365 2524 reception@fastapasta.com.au www.fastapasta.com.au

BUSINESS DESCRIPTION:

COMPANY DETAILS:

With our authentic Italian background and 20+ years success story, Fasta Pasta is now Australia’s largest, independently owned group of ‘fresh pasta’ Italian restaurants. An innovative ever-changing menu, with more healthy options and commitment to outstanding service, have all contributed to Fasta Pasta being voted Roy Morgan’s ‘Quick Service Restaurant of the Year’.

Date of first franchise: 1990

Fasta Pasta is Australia’s largest, independently owned Italian fresh pasta restaurant chain, loved for our affordable fresh family meals in relaxed fully licensed surroundings. This is a great opportunity to be part of our winning national franchise team.

Training provided: 12 weeks training in one of our company stores which will cover areas such as, front of house, kitchen (all areas), necessary bookwork, Point of Sale, Management Skills. Territories available: Nationally

FRANCHISE OUTLETS AUSTRALIA: Current: 37

FINANCIAL DETAILS: Initial franchise fee: $ 50,000 + GST Minimum investment range: $650,000 - $950,000 Royalty fee: 6% of net sales Marketing fee: 3% of net sales

184


Food - Restaurants & Dining Rooms

HOG’S BREATH CAFE Level 1, 152 Shore Street Cleveland QLD 4163 Telephone: Fax: Email: Website: Contact: Position:

1800 HOGSTER (AUS) or 0800 HOGSTER (NZ) +61 7 3488 6900 +61 7 3488 6901 peterjosefski@hogsbreath.com.au www.hogsbreath.com.au or www.hogsbreath.co.nz Peter Josefski Franchise Development Manager

BUSINESS DESCRIPTION: Hoggies set out to be unlike any other restaurant. In a nutshell, it is about providing quality food and beverages in a casual environment with an over-riding friendly, party atmosphere. The diverse menu is centred around our famous Prime Rib, an unbelievably tender steak that melts in your mouth.

COMPANY DETAILS: Date of first franchise: Established in 1989 and opened its’ first franchise store in 1990 Training provided: The eight-week Franchisee Training Program at Hog’s University covers: Management procedures, Front of House procedures, Back of House procedures, Account management, Introduction to the Support Office Team and Theoretical and practical instruction. We also provide comprehensive Operations, Kitchen and Staff Training manuals.

Territories available: Nationally and throughout New Zealand

FRANCHISE OUTLETS AUSTRALIA/ INTERNATIONAL: 2009: 70 2010: 74 2011: 74 Current: 78

FINANCIAL DETAILS: Initial franchise fee: $50,000 AUD (excluding GST) Minimum investment: $750,000 $950,000 AUD Royalty fee: 5% of Net Sales* Financial assistance: Accredited with a number of banking institutions Advertising/marketing fee: 2% of Net Sales* *Net Sales is Gross Sales less promotions, discounts and merchandise sales

185


Food - Restaurants & Dining Rooms

LA PORCHETTA La Porchetta Support Office 192 Mahoneys Road Thomastown VIC 3074 Telephone: Fax: Email: Website:

(AUS) 03 9460 6700 (AUS) 03 9460 3099 franchising@laporchetta.com www.laporchetta.com

BUSINESS DESCRIPTION: La Porchetta is Australia and New Zealandâ&#x20AC;&#x2122;s largest, independently owned, family of Italian restaurants. La Porchetta restaurants create a casual dining experience with fully licensed venues offering a family friendly experience. La Porchetta Pronto is a takeaway concept with outlets located in high consumer traffic areas such as airports and shopping centres: Fast, Fresh, Pronto! Owning a La Porchetta franchise is a great way to be your own boss, while enjoying the support of a proven and highly regarded national brand with significant buying power.

COMPANY DETAILS: Date of first franchise: 1990 Membership: Franchise Council of Australia & Restaurant and Catering Victoria

186

Training provided: Full training provided. Induction program with ongoing support. Territories Available: Australia: QLD, NSW, VIC, WA, TAS & ACT New Zealand: North & South Island

FINANCIAL DETAILS: Initial franchise fee: From $40,000 inclusive of GST Minimum investment: Restaurants: between $460,000 - $520,000 Pronto: between $250,000 - $350,000 Royalty fee: Flat fee per month Financial assistance: Available Advertising/marketing fee: Monthly flat fee


Food - Restaurants & Dining Rooms

TACO BILL 375 Clarendon Street South Melbourne VIC 3205 Telephone: (AUS) 03 9690 2077 Fax: (AUS) 03 9696 0868 Email: amigo@tacobill.com.au Website: www.tacobill.com.au Contact: Stan Teschke / Tom Kartel Position: Directors

BUSINESS DESCRIPTION: Established in 1967, Taco Bill is the longest running Mexican family restaurant franchise in Australia with a very loyal following. Taco Bill’s Mexican food is fun, fresh and affordable, and presented in a casual, relaxed environment. The authentic Mexican cuisine includes Taco Bill’s special salsas, quesadillas, fajitas, burritos and tacos, in addition to the Pancho Villa Margarita.

FRANCHISE OUTLETS AUSTRALIA/ INTERNATIONAL: Current: 38

FINANCIAL DETAILS: Initial franchise fee: $50,000 Minimum investment: $450,000 Royalty fee: Flat fee Advertising/marketing fee: Flat fee

Taco Bill is spreading its Mexican flavour in all areas, and is looking for people with a passion for Mexican and customer service.

COMPANY DETAILS: Date of first franchise: 1967 Membership: Restaurant & Catering Victoria Training provided: Two month initial training period and ongoing as required Territories available: Expanding Australia wide 187


Food - Retail

TUTTI FRUTTI FROZEN YOGURT 120A Oxford Street Leederville WA 6007 Telephone: (AUS) 08 9368 4577 Fax: (AUS) 08 9368 4599 Email: info@tfyogurt.com.au Website: www.tfyogurt.com.au Contact: Kathy Metaxas Position: MASTER LICENSOR for Western Australia BUSINESS DESCRIPTION: Originating in California, USA, Tutti Frutti Frozen Yogurt is a hugely popular self-serve frozen yogurt store across the world. With over 50 flavours on offer, we provide a great variety for customers and franchisees alike. ALL generations love the product and concept. It is made FRESH daily â&#x20AC;&#x201C; it is LIGHT at 98% fat free and HEALTHY, full of the correct antioxidants yogurt provides; the perfect dessert or snack. Following an overwhelming response in Western Australia, franchises are now available in the location of your choice!

COMPANY DETAILS: Date of first franchise: April 2011 Training provided: In-house, machine and product training is all part of your Franchise Fee, as well as the recipes and fit out design of your store. Territories available: WA only 188

FRANCHISE OUTLETS AUSTRALIA/ INTERNATIONAL: Current: Western Australia 1 Melbourne 2 International 580+

FINANCIAL DETAILS: Initial franchise fee: $120,000 which includes the design of your store, project management, product discounts and our exclusive recipes Minimum investment: from $200,000 including the initial Franchise Fee Royalty fee: NONE- Tutti Frutti is a royaltyfree franchise Marketing fee: A 5% marketing fee calculated on your yogurt purchases only, paid quarterly


Food - Takeaway

RED ROOSTER Level 1, Unit 17, 202 Ferntree Gully Road Notting Hill VIC 3168 Telephone: Fax: Email: Website: Contact: Position:

(AUS) 03 9582 8716 (AUS) 03 9582 8744 gary.glen@red-rooster.com.au www.redrooster.com.au Gary Glen Brand Franchise Manager

BUSINESS DESCRIPTION: ‘Be in business for yourself…but not by yourself’ with one of Australia’s most recognised brand identities. Red Rooster offers ‘rippa’ business opportunities for the right candidates.

COMPANY DETAILS: Date of first franchise: 1986 Membership: FCA Training provided: Full structured training program Territories available: VIC, NSW, QLD, WA

FRANCHISE OUTLETS AUSTRALIA/ INTERNATIONAL: 2009: 111 2010: 200 2011: 269 Current: 275

FINANCIAL DETAILS: Initial franchise fee: $50,000 Minimum investment: $500,000 Royalty fee: 5% Financial assistance: Bank accreditation Advertising/marketing fee: Up to 6%

189


Food - Takeaway

SUMOSALAD Level 1, 1 Short Street Leichhardt NSW 2040 Telephone: Fax: Email: Website: Contact: Position:

(AUS) 02 9569 7866 (AUS) 02 9569 7811 graham@sumosalad.com www.sumosalad.com Graham Streeter General Manager, Business Development

BUSINESS DESCRIPTION: SumoSalad has enjoyed phenomenal success and growth since its inception in 2003 and has built a strong, trusted and recognised brand in the food retail industry with loyal customers following the brandâ&#x20AC;&#x2122;s continual expansion into key sites throughout Australia and abroad. Due to increased visibility, awareness and convenience, our brand has grown in strength and more importantly popularity. As a franchisee, you get the benefit of being in business for yourself but not by yourself! You have the opportunity to use your entrepreneurial skills and to be your own boss, whilst taking advantage of established business processes and procedures.

SumoSalad store and a further two weeks at your newly acquired store. Territories available: Stores available in Sydney, Regional NSW, ACT, Melbourne, Brisbane, Regional QLD, Adelaide and Perth.

FRANCHISE OUTLETS AUSTRALIA/ INTERNATIONAL: 2009: 80 2010: 83 2011: 93 Current: 96 across Australia, New Zealand, Singapore, Dubai and UK FINANCIAL DETAILS: Initial franchise fee: $45,000 plus GST

COMPANY DETAILS: Date of first franchise: February 2004 Membership: Franchise Council of Australia (FCA) Training provided: We provide an extensive 4 weeks training program which includes two weeks in an existing 190

Minimum investment: $280,000 to $350,000 plus GST Royalty fee: 6% Financial assistance: Accreditation available through major Banks Advertising/marketing fee: 2%


Health & Wellness

ENVIE FITNESS Suite 301, 19a Boundary Street Rushcutters Bay NSW 2011 Telephone: (AUS) 02 9332 2824 Fax: (AUS) 02 9326 0144 Email: holly@enviefitness.com.au Website: www.enviefranchise.com.au Contact: Holly Boal Position: Business Development Manager

BUSINESS DESCRIPTION: EnVie is the innovative approach to inspirational Womenâ&#x20AC;&#x2122;s Health and Fitness. With sites ready for opening we are seeking enthusiastic and passionate business owners NOW; with a determination to succeed and a passion for health and fitness. Incorporating the best elements from a range of franchise models an EnVie business is completely systemised. An innovative new franchise model means franchisee and franchisor have the mutual goal of your SUCCESS.

COMPANY DETAILS: Date of first franchise: 3rd September 2012 Membership: FCA and Fitness Australia Training provided: You are supported by extensive training and ongoing coaching from a team of fitness, business, franchise operations, marketing and sales experts with a combined 127 years of experience in the franchise and fitness industries.

Territories available: Australia Wide and International Opportunities

FRANCHISE OUTLETS AUSTRALIA/ INTERNATIONAL: Current: 2

FINANCIAL DETAILS: Initial franchise fee: $29,900 Minimum investment: From $120,000 Royalty fee: Your royalty fees are calculated at a fixed rated - per Member, per week. Financial assistance: We have partnered with national suppliers to secure monthly lease options for equipment and other high cost items. Advertising/marketing fee: Nil

191


Health & Wellness

PLUS FITNESS 24/7 Head Office â&#x20AC;&#x201C; Suite 10/1 Exchange Pde Narellan NSW 2567 Telephone: (AUS) 02 4648 2099 Fax: (AUS) 02 8569 1899 Email: nigelm@plusfitness.com.au Website: www.plusfitness247.com.au Contact: Nigel Miller Position: National Sales Director BUSINESS DESCRIPTION: Exercise your freedom with the only true Turn Key 24 hour Gym Franchise in Australia. Capitalising on strong supplier relationships developed over 15 years in the Australian Fitness Industry, Plus Fitness 24/7 provides the most comprehensive, supportive and competitively priced 24 hour Gym Franchise. Fast breakeven, incomparable ROI, low staffing and unrivalled franchisee support is just the beginning! COMPANY DETAILS: Date of first franchise: 2009 Membership: FCA, Fitness Australia, IHRSA Training provided: Marketing, enquiry handling, membership sales, administration, gym operations, systems & database management, Access control & CCTV systems and fitness programming. Initial training conducted at a Live Site prior to opening. A Plus Fitness Buddy will support you through your initial eight weeks of trading and be available ongoing. 192

Territories available: Various territories across Australia and New Zealand

FRANCHISE OUTLETS AUSTRALIA/ INTERNATIONAL: 2009: 6 2010: 7 2011: 17 Current: 48 with a further 22 territories sold

FINANCIAL DETAILS: Initial franchise fee: $40,000 Minimum investment: $229,000 Total investment includes all Gym Equipment* Royalty fee: $895 per month Financial assistance: NAB, GoGetta and Plus Fitness inhouse finance option Advertising/marketing fee: $1 per Active Member per quarter * Based on 200sqm facility


Printing Services

SNAP Ground Floor, Building D, 12-24 Talavera Road North Ryde NSW 2113 Telephone: (AUS) 02 8870 5100 Fax: (AUS) 02 9887 4252 Email: marketing@snap.com.au Website: www.snap.com.au Contact: Raeleen Hooper Position: General Manager, Sales & Marketing

BUSINESS DESCRIPTION: Snap is the most successful franchised print, design and website network for SMEs in the Southern Hemisphere, with over 150 Centres in Australia and 35 Centres in New Zealand, Ireland and China. This is an exciting opportunity to own a successful franchise business, with excellent financial and lifestyle rewards.

COMPANY DETAILS: Date of first franchise: 1979 Membership: FCA

FRANCHISE OUTLETS AUSTRALIA/ INTERNATIONAL: 2009: 150 2010: 147 2011: 150 Current: 157

FINANCIAL DETAILS: Initial franchise fee: New territory $50,000; existing territory $35,000 Minimum investment: >$100,000 Royalty fee: 8% Advertising/marketing fee: 2% national

Training provided: 3 weeks pre-training and 1 week face-to-face training, with ongoing training support Territories available: A variety of existing and greenfield territories are available

193


Real Estate / Property Inspection

GO PRIVATE Shop 5, Post Office Plaza 50 Durlacher Street Geraldton WA 6530 Telephone: (AUS) 08 9965-3636 Fax: (AUS) 08 9965-3637 Email: info@goprivate.com.au Website: www.goprivate.com.au Contact: Brian Taylor Position: CEO BUSINESS DESCRIPTION: Go Private has a vision to establish itself as the number one private home sales company in the real estate market enabling sellers and buyers alike to save thousands of dollars in the sale and purchase of their homes. Since its establishment in 2001, Go Private has saved vendors and buyers $100,000â&#x20AC;&#x2122;s in real estate fees.

FRANCHISE OUTLETS AUSTRALIA/ INTERNATIONAL: Current: 1 FINANCIAL DETAILS: Initial franchise fee: $42500 Minimum investment: $42500 Royalty fee: 8% Technology fee: 2%

COMPANY DETAILS: Date of first franchise: 2008 Training provided: Yes Territories available: Nationally

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Advertising/marketing fee: 3%


Real Estate / Property Inspection

RESICERT PROPERTY INSPECTIONS 13 Approach Road Boya WA Telephone: Fax: Email: Website: Contact: Position:

(AUS) 0414 448 506 (AUS) 08) 9200 5672 ggilroy@resicert.com www.resicert.com/lifestyle Greta Gilroy Personnel Manager

BUSINESS DESCRIPTION: Resicert is a rapidly expanding property inspection business (which will offer additional services as of 2013 e.g. Pest Inspections). We have Licensed Operators in WA, Vic, ACT, NSW, & SA. We are a truly paperless, work from home business that allows you to find a work/life balance. Some of the key benefits at Resicert are: Earning potential $120,000 to $250,000, Low overheads, No premises, No stock, No staff, No quoting or outstanding debtors.

FRANCHISE OUTLETS AUSTRALIA/ INTERNATIONAL: 2010: 2 2011: 10 Current: 20

FINANCIAL DETAILS: Initial franchise fee: $68,500 + GST (minimum)

COMPANY DETAILS: Date of first franchise: 2010 Training provided: We provide initial training, to give you the skill and knowledge base needed to start operating, then we continue your training “on-the-job” for up to 6 months, providing ongoing support in all aspects. Territories available: WA (Metro & Regional), NSW (Metro & Regional), ACT, Vic (Metro & Regional), SA & Tas 195


Recreation & Sport

JETTS FITNESS PO Box 1295 Mooloolaba QLD 4557 Telephone: (AUS) 07 5458 5300 Fax: (AUS) 07 5458 5399 Email: travis.barnes@jetts.com.au Website: www.jetts.com.au Contact: Travis Barnes Position: Franchise Manager

BUSINESS DESCRIPTION: Recently named Australiaâ&#x20AC;&#x2122;s #1 fastest growing franchise by BRW magazine, Jetts is one of the most successful franchise systems in Australia. Jetts is always on the lookout for great franchise partners who are passionate about giving customers in their area the freedom of choice to workout on their terms.

FRANCHISE OUTLETS AUSTRALIA/ INTERNATIONAL: Current: 170 clubs throughout Australia/ New Zealand as at July 2012

FINANCIAL DETAILS: Initial franchise fee: $40,000 + GST Minimum investment: Varies depending on location

COMPANY DETAILS:

Royalty fee: 5%

Date of first franchise: 2007

Financial assistance: Westpac accreditation available to approved franchisees

Training provided: Induction training, managerâ&#x20AC;&#x2122;s training, software training. Ongoing training and support available as required. Territories available: Refer to our website for a complete list of immediate opportunities.

196


Retail

7-ELEVEN STORES PTY LTD 357 Ferntree Gully Road Mount Waverley VIC 3149 Telephone: Website:

(AUS) 03 9550 0600 - VIC (AUS) 02 9798 1200 - NSW (AUS) 07 3291 9400 - QLD www.7elevenfranchise.com.au

BUSINESS DESCRIPTION: 7-Eleven is a global success story with more than 46,000 stores world wide.

Territories available: VIC, NSW, QLD, ACT

7-Eleven Australia is growing rapidly and you can be a part of the growth opportunities by becoming a 7-Eleven Franchisee.

FRANCHISE OUTLETS AUSTRALIA:

As a 7-Eleven Franchisee you will benefit from our position as of market leader in convenience retailing. You will be backed by our comprehensive support system. Our system gives you a complete turn-key set up including state of the art POS systems, product innovation and promotion as well as operational support.

FINANCIAL DETAILS:

Current: 600+

Initial franchise fee: Site specific Minimum investment: $300,000 - $800,000 Royalty fee: Gross profit split Advertising/marketing fee: N/A

COMPANY DETAILS: Date of first franchise: 1977 Membership: FCA Training provided: Our extensive training program includes two weeks in the classroom, three weeks in-store hands on training and also support in your store during your first four days trading. 197


Retail

AMBER GROUP AUSTRALIA pty LTD 1 Rowood Rd Prospect NSW 2148 Telephone: Fax: Email: Website: Contact: Position:

(AUS) 02 8848 7000 (AUS) 02 8848 7001 glynch@ambertiles.com.au www.ambertiles.com.au Greg Lynch Business Development Manager

BUSINESS DESCRIPTION: Established in 1973, Amber is Australia’s largest network of paving and tile retail franchises. Amber has almost 40 years’ experience in providing hard flooring advice, service and solutions to customers in the core business areas of pavers, retaining walls, floor tiles, wall tiles, natural stone and associated products. Strong brand and strap line – Amber has the answer...

COMPANY DETAILS: Date of first franchise: 1993 (Amber founded in 1973-trading 39 years) Membership: FCA Training provided: Initial and on-going training in business and product Territories available: NSW and QLD only

198

FRANCHISE OUTLETS AUSTRALIA/ INTERNATIONAL: 2009: 29 – Stores NSW & QLD 2010: 27 – Stores NSW & QLD 2011: 29 – Stores NSW & QLD Current: 27 – Stores NSW & QLD

FINANCIAL DETAILS: Initial franchise fee: NIL Minimum investment: Depends whether existing or new site. Range $150,000 - $450,000 Royalty fee: Average 3.8% (lower in some territories) Financial assistance: Nil Advertising/marketing fee: 3.25%


Retail

TeleChoice 74 Eastern Rad, South Melbourne, Victoria 3205 Telephone: (AUS) 03 6899 2555 Fax: (AUS) 03 8699 2550 Email: franchise@telechoice.com.au Web site: www.telechoice.com.au/franchise Contact: National Franchise Manager

BUSINESS DESCRIPTION: TeleChoice is Australia’s largest independent Mobile Phone Franchisor and is Optus’ largest Premium Dealer. All Australians, young and old are having a greater dependence on their mobile phone every day. As such, the industry is experiencing exciting and continual changes in technology, resulting in insatiable demand for the newest phones. TeleChoice offers investors the full protection afforded by the Franchising Code of Conduct, as opposed to other Telco retailers that merely provide unprotected “licensed dealerships”.

COMPANY DETAILS: Date of first franchise: 1995 Membership: FCA Training provided: Initial 4 weeks training. Then monthly group training covering updates on the latest product releases and new mobile phones. The training also continues with support visits

from the mobile phone manufacturers, and TeleChoice, Optus and Virgin support teams. Territories available: Nationally

FRANCHISE OUTLETS AUSTRALIA/ INTERNATIONAL: Current: 155

FINANCIAL DETAILS: Initial franchise fee: $100,000 to $200,000 (Exc.GST) Minimum investment: $200,000 (including franchise fee and working capital required) Royalty fee: approximately $1,100 per month includes advertising and marketing fees. (Flat fee exc. GST) Financial assistance: accredited with ANZ for up to 50% of the total investment.

199


Retail

TOTAL TOOLS 19 Grimes Court Derrimut VIC 3030 Telephone: (AUS) 03 9394 4300 Fax: (AUS) 03 9394 1699 Email: newstores@totaltools.com.au Website: www.totaltools.com.au Contact: Neville Bruns Position: Network Development Manager

BUSINESS DESCRIPTION: The Total Tools brand promise is to have the broadest range of superior tools available on the market. This, backed by the unrivalled retailing standards in the tool industry and experienced staff offering professional advice and service, has firmly established Total Tools as the market leader in professional tools for the people who use tools for a living.

FRANCHISE OUTLETS AUSTRALIA/ INTERNATIONAL: 2009: 8 2010: 18 2011: 27 Current: 33

FINANCIAL DETAILS: Initial franchise fee: TBA Minimum investment: TBA

COMPANY DETAILS:

Royalty fee: TBA

Date of first franchise: 2007

Financial assistance: TBA

Membership: FCA

Advertising/marketing fee: TBA

Training provided: Yes Territories available: Multiple Sites Nationally

200


Retail

UNITED PETROLEUM PTY LTD 200 Hoddle Street Abbotsford VIC 3067 Telephone: (AUS) 03 9413 1400 Fax: (AUS) 03 9413 1401 Email: franchiseinfo@unitedpetroleum.com.au Website: www.unitedpetroleum.com.au Contact: Russell Desa Position: National Franchise Manager

BUSINESS DESCRIPTION: Established in 1993, United Petroleum, a proudly Australian-owned company is one of the largest independent fuel companies in Australia with over 275 sites operating across every State. United invests heavily in its stores and systems which has earned the trust of the people and were proud winners of the 2011 Canstar Award â&#x20AC;&#x201C; Most Satisfied Customers (Service Stations).

Territories available: Opportunities exist across Australia

FRANCHISE OUTLETS AUSTRALIA/ INTERNATIONAL: 2009: 3 2010: 8 2011: 22 Current: 25 - 30

Franchise numbers at United have continued to climb on the back of a strong, competitive retail model.

FINANCIAL DETAILS:

COMPANY DETAILS:

Minimum investment: $400,000 upwards

Date of first franchise: 2008

Training fee: $6,000 + GST (for 2 people)

Membership: Franchise Council of Australia (FCA)

Royalty fee: 15.4%

Training provided: 5 â&#x20AC;&#x201C; 6 weeks comprehensive training which is flexible and tailored to meet the needs of the individual applicant

Advertising/marketing Fee: NIL

Initial franchise fee: $145,000 + GST

Financial assistance: Vendor finance applicable to approved applicants

201


Retail

VICTORY CURTAINS AND BLINDS 245 Browns Road Noble Park VIC 3174 Telephone: (AUS) 03 8793 5700 Fax: (AUS) 03 8793 5799 Email: franchise@victoryblinds.com.au Website: www.victoryblinds.com.au Contact: Tony Maddock Position: Franchise Development Manager

BUSINESS DESCRIPTION:

COMPANY DETAILS:

Victory Curtains and Blinds has been providing Australia with high quality indoor and outdoor blinds since 1988. Victory offer made to measure window coverings and are known for their high quality products, expert installations and competitive pricing.

Date of first franchise: 2011

The business model of franchise vans is unique to the industry. Victory are bringing the showroom to the customer giving them the ability to touch and feel the product, as well as seeing it in the context of their own home, helping their decision making and providing them an added sense of confidence in their purchase. As a Victory Curtains and Blinds business owner you will be constantly supported with their experience in marketing along with a recognised proven brand and national jingle. You will receive high levels of support both initially and on an ongoing basis, extensive training, reliable and proven operational systems and most importantly personal fulfilment, profits and lifestyle balance. 202

Training provided: 2 months and ongoing Territories available: Yes

FRANCHISE OUTLETS AUSTRALIA/ INTERNATIONAL: 2011: 5 Current: 5 FINANCIAL DETAILS: Initial franchise fee: From $47,000 Minimum investment: From $100,000 Royalty fee: % of sales Financial assistance: Referral available Advertising/marketing fee: % of sales


Vending

PROVENDER® AUSTRALIA PTY LTD Unit 3, 207 Young Street Waterloo NSW 2017 Telephone: Fax: Email: Website: Contact: Position:

(AUS) 02 9698 8744 OR 1800 121 111 (AUS) 02 9698 8544 Kellie.W@provendervending.com.au www.provendervending.com.au Kellie Werder Business Manager

BUSINESS DESCRIPTION: provender® is a vending business with local franchise owners providing businesses with snacks, small meals and drinks directly to them from their dedicated van’s on a regular basis ensuring customers Stay Revived!™.

FRANCHISE OUTLETS AUSTRALIA/ INTERNATIONAL: Current: 50+ (QLD, NSW, ACT, VIC, TAS, SA, WA, NT)

FINANCIAL DETAILS: Initial franchise fee: $23,000 + GST

COMPANY DETAILS: Date of first franchise: 1991 NZ / 2008 AUS

Minimum investment: Minimum of $80,000 dependent on franchise option. Royalty fee: 10 %

Membership: FCA

Financial assistance: No

Training provided: 1 week initial training programme (ITP), followed by the field training programme. Continued support provided.

Advertising/marketing fee: No

Territories available: Australia wide

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Professional Services categories: Accountants. ...................................................................................................................................... 206 Advertising & Marketing. ...................................................................................................... 209 Business Services........................................................................................................................... 210 Financial Institutions. ............................................................................................................. 211 Insurance Brokers....................................................................................................................... 214 Lawyers..................................................................................................................................................... 214 Point of Sale........................................................................................................................................ 218 Shopfitting............................................................................................................................................. 220 Support Services / Consultants.................................................................................... 221 Training..................................................................................................................................................... 224

205


accountants

BABO GROUP PTY LTD Level 1, 12 Cramer Street Preston VIC 3072 Telephone: (AUS) 03 9471 0092 Fax: (AUS) 03 9471 0102 Email: michael@babo.com.au Website: www.babo.com.au Contact: Michael Hymer FCPA (Taxation) Position: Director BUSINESS DESCRIPTION: Babo Group provides a complete accounting and business structuring service to aspiring business entrepreneurs and to those entering into franchising. Our in-house services and dedicated partner to your specific requirements will make sure that you are ready for business. Our service is independent and objective making sure your expectations can be achieved. Going into business is not always straight forward and entering into a franchise can be even more complex. We believe there may be a minimum of 92 points you need to consider when considering buying a franchise. With our assistance and guidance we will make the experience as smooth and friendly as possible. Babo Group is a proud member of the Franchise Council of Australia. A Quick Test â&#x20AC;&#x201C; ask yourself! 1. Why am I considering this particular business? 2. What are the short and long term rewards I hope to achieve? 3. How can I improve this business? 4. What personal sacrifices does my family have to make for this business? 5. What are my financial and personal risks? 6. Can I realistically achieve the expected business targets? 7. What will prohibit me selling from this business to at least recover my costs? 8. Do I agree with the operational and ethical aspects of this franchise? 9. Will I be happy, wealthy and healthy? Please call us to assist you with the proposal.

206


accountants

LISTON LANDERS CHARTERED ACCOUNTANTS 242 â&#x20AC;&#x201C; 246 Glenferrie Road Malvern VIC 3144 Telephone: (AUS) 03 9509 0366 Email: reception@listonlanders.com.au Website: www.listonlanders.com.au BUSINESS DESCRIPTION: For over 20 years Liston Landers, a chartered Accounting firm (CA) has been one of Australiaâ&#x20AC;&#x2122;s Leading Franchise Advisors. We are specialist valuers for over 40 different franchise systems. The firm is a member of the FCA and is represented as preferred franchise valuer on the panels of the ANZ Bank, National Australia Bank and Bankwest. As an experienced advisory business, Liston Landers provides independent appraisals for any franchise investment. For franchise advice of any nature, including establishing a system, buying a franchise, or a simple appraisal, contact us on the details listed above. In Business Since: 1976

207


accountants

LAWLER CHARTERED ACCOUNTANTS Level 9, 1 O’Connell Street, Sydney NSW 2000 Level 12, 440 Collins Street, Melbourne VIC 3000 763 Hunter Street, Newcastle West NSW 2302 Telephone: (AUS) 02 8346 6000 (Sydney) (AUS) 03 9679 2222 (Melbourne) (AUS) 02 4962 2688 (Newcastle) Email: asullivan@lawlerpartners.com.au (Sydney & Newcastle) ndraper@lawlerdd.com.au (Melbourne) Website: www.lawler.com.au Contact: Anthony Sullivan (Sydney & Newcastle) Norm Draper (Melbourne) BUSINESS DESCRIPTION: Are you a franchise with the ambition to succeed? Lawler Chartered Accountants offer accounting, audit and business advisory support to franchisee and franchisor operations in Sydney, Melbourne and Newcastle. Our combined franchise expertise, exceptional client care and increased coverage can also help you achieve: • Complete, timely, accurate and consistent financial reporting for your franchisees • Benchmarking • Cashflow and profit improvement • Business valuations • Business planning • Due diligence Looking for exceptional client care? We have been recognised a number of times by our clients for our outstanding service commitment in the national BRW Client Choice Awards, including being named in 2011 as the Best National and Best NSW Professional Service Firm. In 2012 we were also delighted to be acknowledged in the categories of: • Best Firm as rated by the C-suite - Winner

• Best Victorian Firm - Winner

• Best NSW Firm - Finalist

• Best Tax Provider - Finalist

In Business Since: Lawler Chartered Accountants are a group of like-minded independent firms located across Australia, focusing on providing quality service to decision makers in business. Lawler Chartered Accountants is the brand name for the Lawler National Alliance and for each of the independent member firms. For more information visit www.lawler.com.au 208


Advertising & Marketing

THE MARKETING AND BRANDING COMPANY 164 Bank St South Melbourne VIC 3205 Telephone: (AUS) 03 8696 9700 Fax: (AUS) 03 9699 1798 Email: info@marketingandbranding.com.au Website: www.marketingandbranding.com.au Contact: Michael Nelthorpe Position: Marketing Director BUSINESS DESCRIPTION: Specialises in the development and implementation of effective Marketing Strategies custom designed to suit your business. • Websites, Smart Phone and iPad/Tablet website versions • Google AdWord and Social Media campaigns • Brand Creation and Development • Brand Positioning • Advertising • Public Relations • Point of Sale material, Signage and Brochureware Marketing that works at prices you can afford. In Business Since: 1996

209


Business Services

THE TARTAN GROUP Level 27, 101 Collins Street Melbourne VIC 3000 Telephone: (AUS) 03 9653 9490 Fax: (AUS) 03 9653 9489 Website: www.thetartangroup.com.au Contact: Craig McIntosh, CEO & Founder Email: cmcintosh@thetartangroup.com.au BUSINESS DESCRIPTION: * Bookkeeping Services * Outsourced Finance Teams * Virtual CFO & Company Secretary The Tartan Group is an owner managed Chartered Accounting and Business Advisory practice with a contemporary approach to finance and accounting. We provide businesses with access to the highest quality of finance and administration resources in-house, via our outsourced ‘virtual’ model; enabling our clients to benefit from working with the very best people, without the financial burden of paying and managing full time employees. Our core services range from routine processing of transactional data and bookkeeping, through to end-to-end management of internal finance teams; complemented by virtual CFO and company secretarial services to help grow your wealth and mitigate risks. We offer the same full range of support as larger accounting firms, at a fraction of the price. Plus, as an owner managed practice with genuine commercial experience, we are able to offer a level of personalized service and advice that you wouldn’t get elsewhere. In Business Since: 2006

210


Financial Institutions

Cashflow It Finance PO Box 2119, Fortitude Valley BC QLD 4006 Telephone: Fax: Email: Website:

(AUS) 1300 659 676 (AUS) 1300 659 675 applications@cashflowit.com.au www.cashflowit.com.au

BUSINESS DESCRIPTION: Why spend your hard earned capital when you can simply... Cashflow It! Cashflow It Finance offers a fast and unique solution for franchisees to access the finance they need to buy equipment, fund fitouts and to acquire new or existing stores. With the Cashflow It Equipment Solution you simply agree to a 12 month term. At the end of this term you have the flexibility in choosing to: • Purchase the equipment and enjoy a 75% rental rebate • Return without penalty any equipment that is no longer suitable • Continue making weekly payments and the purchase price will continue to reduce • Own the assets over an additional 3 year term with significantly lower weekly payments Cashflow It Finance offer competitive rates with no personal security required and you can even enjoy 100% tax deductibility on Cashflow It’s weekly payments. Applying is easy... just go to www.cashflowit.com.au and apply online or call our friendly customer service team on 1300 659 676. In Business Since: 2011

211


Financial Institutions

COMMONWEALTH BANK Level 3 Tower B, Citadel Towers 799 Pacific Highway Chatswood NSW 2067 Telephone: (AUS) 1800 427 226 Fax: (AUS) 02 8815 1254 Email: FranchiseBanking@cba.com.au Website: www.commbank.com.au/franchise Contact: Anthony Windress Position: Executive Manager, Franchise Banking BUSINESS DESCRIPTION: Our Franchise Banking Specialists have expert understanding of the franchise business and the sectors they operate in. We place the customer at the centre of everything we do and assist clients to profitably grow their businesses. We offer a range of specialist services and market leading technology to meet your business and personal banking needs. In Business Since: 1912

212


Financial Institutions

SILVER CHEF LTD PO Box 1760 Milton BC QLD 4064 PO Box 91379 Victoria St West, Auckland 1142 Telephone: (AUS) 1800 049 743 (NZ) 0800 443 334 Fax: (AUS) 1800 884 431 (NZ) 0800 452 907 Email: jscurr@silverchef.com.au Website: www.silverchef.com.au www.silverchef.co.nz Contact: James Scurr Position: National Franchise Manager BUSINESS DESCRIPTION: Silver Chef has been helping businesses to fund their equipment needs for over two decades. Silver Chef’s Rent. Try. Buy.® Solution offers a simple 12 month term so that you have the flexibility to: • Buy equipment and enjoy generous rebates • Return equipment if you don’t need it anymore • Keep renting and the purchase price keeps reducing • Upgrade your equipment at any time • Easy OwnTM your equipment over an additional 36 month term If you are part of an accredited franchise, you will enjoy even greater benefits like access to pre – approved funding and reduced rental bonds. Silver Chef is an Australian publically listed company, a member of the Franchise Council of Australia and was the FCA Supplier of the Year for 2011. In Business Since: 1986

213


Insurance Brokers

NATIONAL FRANCHISE INSURANCE BROKERS (NFIB) Suites 5 & 6, 156 Oxford Street Leederville WA 6007 Telephone: (AUS) 1800 776 747 Fax: (AUS) 1800 194 525 Email: info@mynfib.com.au Website: mynfib.com.au Contact: Mr Darryl Morris Position: Director BUSINESS DESCRIPTION: NFIB meets the Australian demand for a dedicated online provider of insurance cover for franchisees, franchisors and franchised businesses. Our service is fully automated, compliant and provides you with full documentation. Put simply, NFIB is the fastest, most affordable way to get the most appropriate level of cover you need to protect your business. In Business Since: Established in 2010 Lawyers

IVAN POOLE LAWYERS Level 6, 64 Marine Parade Southport QLD 4215 Telephone: (AUS) 07 5591 2522 Fax: (AUS) 07 5591 2511 Email: pt@ivanpoolelawyers.com.au Website: www.ivanpoolelawyers.com.au Contact: Peter Thelwell Position: Associate

IVAN POOLE L A W Y E R S

BUSINESS DESCRIPTION: Ivan Poole Lawyers specialises in Franchising, Mediation and Intellectual Property, servicing clients around the Gold Coast, Queensland and Australia. We act for Franchisor and Franchisee clients when buying, selling and throughout disputes to maximise their success. We develop long-term partnerships with clients and take pride in contributing to their success. In Business for: 25 years

214


automotive products & Lawyers services

MADGWICKS LAWYERS Level 33, 140 William Street Melbourne, VIC 3000 Telephone: (AUS) 03 9242 4744 Fax: (AUS) 03 9242 4777 Email: franchising@madgwicks.com.au Website: www.madgwicks.com.au Contact: Ed Browne Position: Partner BUSINESS DESCRIPTION: Madgwicks Lawyers is a full service business law firm. Our team of experienced franchise lawyers provide the full range of legal services to franchisor and franchisee clients. The group is well connected in business circles and has strong links with franchising lawyers at Meritas member firms across Australia and globally. In Business Since: 1973

MASON SIER TURNBULL 315 Ferntree Gully Road Mount Waverley VIC 3145 Telephone: Fax: Email: Website: Contact: Position:

(AUS) 03 8540 0200 (AUS) 03 8540 0202 john.sier@mst.com.au www.mst.com.au John Sier Principal

BUSINESS DESCRIPTION: Mason Sier Turnbull is widely recognised as one of Australiaâ&#x20AC;&#x2122;s leading franchising law firms. We advise franchisors, franchisees and suppliers to the franchising sector on all aspects of franchising. We have solid relationships with reputable and professional franchise consulting and accounting firms which allows us to confidently refer our clients to specialists for advice and services that are traditionally outside what law firms can offer. MST: Great service, sensible solutions In Business Since: 1959

215


Lawyers

Stewart Germann Law Office Ground Floor, Princes Court, 2 Princes Street, Auckland PO Box 1542, Auckland 1140, New Zealand Telephone: (NZ) 09 308 9925 Fax: (NZ) 09 308 9922 Email: stewart@germann.co.nz Website: www.germann.co.nz Contact: Stewart Germann Position: Principal BUSINESS DESCRIPTION: Stewart Germann Law Office is New Zealand’s longest established franchise law firm. SGL is the winner of the Franchise Law Firm of the Year in New Zealand in the 2012 Global Law Experts Awards and also Franchise Law Firm of the Year 2011 for Australasia - Dealmakers Law Awards. Stewart Germann (B.Com, LLB, FCIS, MNZIM and Notary Public) is the principal partner and is a Barrister and Solicitor of the High Court of New Zealand. Stewart specialises in franchising, licensing, sale and purchase of businesses and commercial law and is also a qualified mediator and on the Panel of Mediators of the Franchise Association of New Zealand (FANZ). Clive Neifeld (B.Com, LLB) is a partner and is also a Barrister and Solicitor of the High Court of New Zealand. Clive specialises in sale and purchase of businesses, franchising and commercial law. Stewart Germann has over 30 years’ experience in franchising law and acts for many of New Zealand’s best known national and international franchise brands. Stewart is a past Chairman of the FANZ. He has spoken at franchising conferences in New Zealand, Australia and USA and is very active in international franchising. He has also written many published articles on franchising. In Business Since: 1993.

216


Lawyers

WISEWOULD MAHONY LAWYERS Level 8, 419-425 Collins Street Melbourne VIC 3000 Telephone: (AUS) 03 9629 8333 Fax: (AUS) 03 9629 4035 Email: robert.toth@wisemah.com.au Website: www.wisewouldmahony.com.au Contact: Robert Toth – Franchise Partner BUSINESS DESCRIPTION: Franchise specialists We are a leading and recognised firm of Franchise Lawyers in Australia and internationally. The Franchise Group incorporates lawyers with Accredited Specialisation in Business Law, Employment and Commercial Litigation. Our franchise lawyers have 30 years of industry knowledge in franchising, and real business experience. We are members of: • The Franchise Council of Australia (FCA); • The International Franchise Lawyers Association (IFLA) with affiliate Law Firms worldwide; • US Commercial Service; and • Franchise Association of New Zealand (FANZ). FIXED FEES: We provide fixed fee services to franchisees and franchisors based on scope of works (no hourly rate surprises) – clients can budget for their legal spend with certainty. We offer a broad range of services including: • quick turnaround franchisee assessments and reports • advice regarding rights and obligations under the Franchising Code of Conduct; • risk of franchising and solutions to reduce exposure • structuring legal, taxation and asset protection • access to specialised accountants with franchise expertise • dispute resolution strategies and solutions without litigation • advisors to franchisee advisory councils (FAC’s) and franchise representative groups • ACCC complaints and investigations • Master Franchise Agreement Contact us for a complimentary Guide to Franchising for Franchisors and Franchisees. Lawyers in love…with franchising In Business Since: 1853

217


Point of Sale

ORDERMATE POS 59 Fennell Street Port Melbourne VIC 3207 Telephone: (AUS) 1300 667 067 Fax: (AUS) 1300 667 101 Email: sales@ordermate.com.au Website: www.ordermate.com.au Contact: Clinton Capuzzi Position: Major Accounts Sales BUSINESS DESCRIPTION: OrderMate is the complete multisite franchise POS solution. OrderMate was established in 2001 to service the food and beverage POS market. Its success relies upon its uniqueness from the competition which is often generic and off the shelf. OrderMate gives you the tools to track and manage the KPIs of your franchise in real-time In Business Since: 2001

218


Point of Sale

REDCAT PTY LTD Level 2, 70 Park Street South Melbourne VIC 3205 Telephone: (AUS) 1300 4 REDCAT Fax: (AUS) 03 9696 1553 Email: spiro.vournazos@redcat.com.au Website: www.redcat.com.au Contact: Spiro Vournazos Position: National Sales Manager BUSINESS DESCRIPTION: RedCat supplies integrated Point of Sale and Accounting solutions that manage sales, staff, stock, payroll, accounts, GST and reporting solutions to provide the complete business management system for the needs of franchised groups. We have a flexible centralised management capability that permits multiple levels of control and reporting capabilities and web based consolidated reporting tools. We also offer an iPhone or Smartphone capable global loyalty and gift card and payment system which is also fully integrated into the point of sale and can provide a very effective part of your marketing strategy. From small single terminal sites through to large multi-location and franchise operations, RedCat adds value to a clientâ&#x20AC;&#x2122;s business through greater financial control and significant cost reductions. With a significant Research and Development operation in Australia, their commitment to ongoing product development enables RedCat to maintain its position at the forefront of Franchise Solutions in Australia and International markets. OUR CLIENTS RedCat serves some of the best hospitality venues in the country and over recent years has become a supplier of products and services in the leisure industry, clubs and an ever-expanding range of franchise and retail operations. In Business Since: Started in 1991, focusing on the franchising sector since 1998.

219


Brand Mark Mono Shopfitting

Shape Shopfitters brand mark in Mono and Reversed Mono formats.

Mono - with tagline

M

SHAPE SHOPFITTERS

4 Graeme Avenue \Ê œœÕÀÊÛiÀȜ˜ÊÀiÛiÀÃi`ʜÕÌʜvÊLÕiʈÃÊÌœÊ Montmorency VIC 3094 possible. be used whenever Telephone: (AUS) 03 9432 1044 Tagline version is to be used wherever Fax:possible. (AUS) 03 9432 5440 Email: info@shapeshopfitters.com.au Website: www.shapeshopfitters.com.au Contact: Wayne Billings Position: Director BUSINESS DESCRIPTION: Shape Shopfitters are recognised as industry leaders in supplying quality Shopfitting services Mono Reversed - withtotagline the retail food industry. They understand food brands and all aspects of the retail food franchise process and are experts in securing permit and understanding complex retail food regulations. Shape Shopfitters offer a one-stop Shopfitting solution, providing exceptional attention to detail in the production of their signage, joinery and cabinetry, including a Project management team and a network of qualified tradesmen to deliver quality fitouts against critical deadlines Australia wide. In Business Since: 1998.

220

M


Support Services/Consultants

FC BUSINESS SOLUTIONS Caulfield Corporate Centre, 3/875 Glenhuntly Road Caulfield VIC 3162 Telephone: (AUS) 03 9533 0028 Fax: (AUS) 03 8640 0413 Email: corina@fcbusinesssolutions.com.au andrew@fcbusinesssolutions.com.au Website: www.fcbusinesssolutions.com.au Contact: Corina Vucic & Andrew Kelly Position: Directors BUSINESS DESCRIPTION: FC Business Solutions is the only integrated franchise consultancy focusing on executive recruitment, franchise health checks, public relations & marketing, franchise system development, franchise training, advisory & mentoring, franchise expansion & growth and conference & event management, exclusively for the franchise community and other industry sectors. FC Business Solutions and its team of professionals have been providing professional services to the franchise sector for more than 75 years (combined). FC Business Solutions has built a reputation based on relationships and results, assisting franchise businesses to reach their full potential. Business System Development: Feasibility, Franchise Systems, Planning Business Disciplines Franchise Expansion & Growth: Network Planning, Strategic Health Checks, Operations, Compliance, Opportunities, Territory Analysis and Mapping Public Relations & Marketing: Internal and External Communication Strategies, Advertising Management, Public Relations Management, Local Area Marketing Franchise Training: Organisation and Structure Planning, People Planning, Culture Management, Personnel Development, Performance-Appraisals and KPI Development Advisory & Mentoring: Executive Boards, FAC, Leadership, Business Coaching and Mentoring Executive Recruitment: Behavioural Profiling, Career Planning, People Search and People Placement Conference & Event Management: Product Launches, Networking Events, Conference Organising, and Sponsorship Management. In Business Since: 1999 (formerly Franchise Careers) Advertising, Communications, Marketing and Public Relations | People Development & Learning Solutions | Business System Development | Expansion Growth Solutions | Advisory Support | Executive Recruitment 221


Support Services/Consultants

FRANCHISE SELECTION Level 8, 330 Collins Street Melbourne VIC 3000 Telephone: (AUS) 1300 FRANCHISE (372 624) Fax: (AUS) 03 8640 0688 Email: kevin@franchiseselection.com.au Website: www.franchiseselection.com.au Contact: Kevin Bugeja Position: Managing Director BUSINESS DESCRIPTION: We assist potential franchisees through the interview and selection process. Our approach is not to sell franchises but to educate and assist buyers in finding the right business opportunity for them and to assist franchisors in selecting the very best franchisees. We also offer training to franchisors that wish to improve their recruitment internally by using best practice standards and systems that are used in recruiting franchisees. In Business Since: 2006

222


Support Services/Consultants

SHERPA GROUP BASE CAMP 3 May Terrace Brooklyn Park, SA, 5023 Telephone: (AUS) 08 8354 4887 Fax: (AUS) 08 8121 1835 Mobile: (AUS) 0439 803 078 Email: info@sherpagroup.com.au Website: www.sherpagroup.com.au Contact: Vicki Prout Position: Chief Sherpa BUSINESS DESCRIPTION: CLIMB HIGHER Business Growth Specialists Sherpa’s are employed as trusted guides for mountaineering expeditions; they are highly regarded as elite mountaineers and experts in their local terrain. We liken this journey to franchising and licensing and pride ourselves on assisting entrepreneurs on their franchising and licensing journey by providing them with the same expertise, inspiration, support, and guidance that a Sherpa would give a Climber. As an award winning consultancy, we provide remarkable services that: • Assist businesses to make the right decision as to whether or not their business is right for franchising and/or licensing and develop the journey with them. • Work internally with existing Franchisors with international expansion strategies. • Sherpa Group understands that each journey in business is different and that a client’s dreams and aspirations are important to them and are often as unique as the business they have built. • Our leadership partnership approach supported with real time experience brings a unique blend to every project we undertake. • Sherpa Group will guide you every step of the way making the franchising road much easier to travel. • Our knowledge is readily available and we furnish sound practical solutions to your plans that will achieve results. • We will develop and deliver a tailor-made growth strategy that is best suited to your business and we will work with you to ensure you have the tools required to Climb Higher. In Business Since: 2009 and in franchising sector for over 15 years. Chief Sherpa, Vicki Prout, has real time experience franchising into over 40 countries and has won the FCA SA Franchise Woman of the Year award a record four times 2006, 2007, 2008, and 2010.

business development | recruitment | systemisation | international development | sales and marketing | operations

223


Training

POSITIVE TRAINING 2/1094 Doncaster Road Doncaster East VIC 3109 Telephone: (AUS) 1300 767 484 Fax: (AUS) 03 9844 5167 Email: info@positivetraining.com.au Website: www.positivetraining.com.au Contact: Leo Relva Position: Victorian State Manager BUSINESS DESCRIPTION: Positive Training is a Registered Training Organisation (RTO) that delivers cashflow-positive ‘Nationally Recognised’ retail traineeships and assessment programs to food retail businesses, Australia-wide. If you’re a food service business owner or franchisee, we can help you access $4,000 of Government training incentives per eligible employee to up-skill your staff – with a zero-risk, ‘no-funding, no-fee’ guarantee! As the only registered training organisation dedicated to the Australian retail food sector, Positive Training understands the challenges you face. We know how customer service can make or break your business. We work with your staff to ensure they are contributing to – not detracting from – your bottom line. We can assess your training needs for free, plus advise you what Government-sponsored training your business qualifies for – all in one no-obligation phone call. In Business Since: 2004

224


Training

TRAXION TRAINING Suite 2D, 91 Upton Street Bundall QLD 9726 Telephone: (AUS) 1300 286 694 Fax: (AUS) 07 5677 0106 Email: service@traxiontraining.com.au Website: www.traxiontraining.com.au Contact: Kate Baring Position: Operation BUSINESS DESCRIPTION: Setting up a training academy to meet the learning and development needs of your Franchisees or head office team may be easier and more cost effective than you think! Traxion Training is an FCA member and specialist Registered Training Organisation passionate about linking Franchise groups with government funding programs to enhance your workforce development programs. We offer a no-obligation service to review your organisationâ&#x20AC;&#x2122;s skill requirements and provide a complimentary report outlining how best to structure your training programs to tap into nationally accredited programs and financial support from the government. To arrange this service, call Kate Baring on 1300 286 694 In Business Since: Business consulting since 1998 | RTO since 2010

225


Publications BUSINESS FRANCHISE AUSTRALIA AND NEW ZEALAND PO Box 968 Mt Eliza VIC 3930 Phone: (AUS) 03 9787 8077 Fax: (AUS) 03 9787 8499 Email: cgb@cgbpublishing.com.au Website: www.businessfranchiseaustralia.com.au

BUSINESS FRANCHISOR PO Box 968 Mt Eliza VIC 3930 Phone: (AUS) 03 9787 8077 Fax: (AUS) 03 9787 8499 Email: cgb@cgbpublishing.com.au Website: www.businessfranchiseaustralia.com.au

AUSTRALIA & NEW ZEALAND BUSINESS FRANCHISE DIRECTORY PO Box 968 Mt Eliza VIC 3930 Phone: (AUS) 03 9787 8077 Fax: (AUS) 03 9787 8499 Email: cgb@cgbpublishing.com.au Website: www.businessfranchiseaustralia.com.au

THE FRANCHISE REVIEW The official journal of the Franchise Council of Australia PO Box 2195 Malvern East VIC 3145 Phone: (AUS) 1300 669 030 Phone: +61 3 9508 0888 Fax: (AUS) 03 9508 0899 Email: info@franchise.org.au Website: www.franchise.org.au

226


Helpful organisations FRANCHISE COUNCIL OF AUSTRALIA Suite 6, Level 1, 307-313 Wattletree Rd Malvern East VIC 3145 Phone: (AUS) 1300 669 030 Phone:+61 3 9508 0888 Fax:+61 3 9508 0899 Email: info@franchise.org.au Website: www.franchise.org.au

FRANCHISE ASSOCIATION OF NEW ZEALAND Unit 27, 2 Bishop Dunn Place Botany South, Auckland New Zealand Phone: +64 9 274 2901 Fax: +64 9 274 2903 Email: contact@franchise.org.nz Website: www.franchise.org.nz

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION GPO Box 3131 Canberra ACT 2601 Phone: +61 2 6243 1111 Fax: +61 2 6243 1199 Email: info.centre@accc.gov.au Website: www.accc.gov.au/franchisingcode

DIVERSIFIED EXHIBITIONS AUSTRALIA Level 3 424 St Kilda Road Melbourne VIC 3004 Phone: +61 3 9261 4500 Fax: + 61 3 9261 4545 Email: shows@divexhibitions.com.au Website: www.divexhibitions.com.au

AUSTRALIAN RETAILERS ASSOCIATION Level 10, 136 Exhibition Street Melbourne VIC 3000 Phone: (AUS) 1300 368 041 Fax: +61 3 8660 3399 Email: info@retail.org.au Website: www.retail.org.au

AUSTRALIAN TAXATION OFFICE GPO Box 9990 (In your relevant Capital City and State) Phone: 13 28 66 Website: www.ato.gov.au

227


Business FranchiSe Guide

Index of franchises & services NUMERICAL 7-Eleven Stores........................................................................................................................................ 197

A Ace Body Corporate Management............................................................................................. 168 Amazing Clean.......................................................................................................................................... 172 Amber Group.............................................................................................................................................. 198

B Babo Group. ................................................................................................................................................ 206

C Cafe 2U. ......................................................................................................................................................... 178 Cashflow IT Finance. ............................................................................................................................ 211 Commonwealth Bank........................................................................................................................... 212

E Envie Fitness.............................................................................................................................................. 191

F Fasta Pasta.................................................................................................................................................. 184 Fastway Couriers.................................................................................................................................... 175 FC Business Solutions......................................................................................................................... 221 Foodco Group............................................................................................................................................ 179 Franchise Selection............................................................................................................................... 222

G Go Private..................................................................................................................................................... 194

H Hairhouse Warehouse......................................................................................................................... 162 Hogâ&#x20AC;&#x2122;s Breath Cafe................................................................................................................................... 185 Hudsons Coffee........................................................................................................................................ 180

228


index

I Interface Financial Group. ................................................................................................................. 176 Ivan Poole Lawyers. .............................................................................................................................. 214

J Jetts Fitness............................................................................................................................................... 196 Jimâ&#x20AC;&#x2122;s Fencing. ........................................................................................................................................... 163

L La Porchetta................................................................................................................................................ 186 Lawler Chartered Accountants. .................................................................................................... 208 Liston Landers Chartered Accountants................................................................................... 207 Little Kickers............................................................................................................................................... 170 Looksmart Alterations......................................................................................................................... 173

M Madgwicks Lawyers............................................................................................................................ 215 Mail Boxes Etc.......................................................................................................................................... 169 Mason Sier Turnbull. ............................................................................................................................. 215

N Narellan Pools............................................................................................................................................ 164 National Franchise Insurance Brokers. .................................................................................... 214 Nightowl Convenience........................................................................................................................ 174

O OrderMate POS. ....................................................................................................................................... 218

P Pedders Suspension. ............................................................................................................................ 160 Plus Fitness 24/7. ................................................................................................................................... 192 Positive Training....................................................................................................................................... 224 Provender Australia............................................................................................................................... 203

R RAMS.............................................................................................................................................................. 177 Red Rooster. ............................................................................................................................................... 189 RedCat............................................................................................................................................................ 219 Resicert Property Inspections........................................................................................................ 195 Residential Garage Doors.................................................................................................................. 165

229


Business FranchiSe Guide

S Shape Shopfitters................................................................................................................................... 220 Sherpa Group............................................................................................................................................. 223 Shingle Inn Cafes.................................................................................................................................... 181 Silver Chef.................................................................................................................................................... 213 skids Australia. ......................................................................................................................................... 171 Smith & Sons............................................................................................................................................. 166 Snap................................................................................................................................................................. 193 Snap-on Tools............................................................................................................................................ 161 Stewart Germann Law Office......................................................................................................... 216 SumoSalad. ................................................................................................................................................. 190

T Taco Bill Mexican Restaurants...................................................................................................... 187 TeleChoice.................................................................................................................................................... 199 The Marketing & Branding Company........................................................................................ 209 The Tartan Group..................................................................................................................................... 210 Theobroma................................................................................................................................................... 182 Total Tools. ................................................................................................................................................... 200 Traxion Training........................................................................................................................................ 225 Tutti Frutti Frozen Yogurt.................................................................................................................... 188

U United Petroleum..................................................................................................................................... 201

V Victory Curtains and Blinds............................................................................................................. 202

W Wet-seal........................................................................................................................................................ 167 Wisewould Mahony Lawyers........................................................................................................ 217

Z Zarraffaâ&#x20AC;&#x2122;s Coffee....................................................................................................................................... 183

230


notes


notes


Tired of working for someone else? Ready to be your own boss? Worried about going it alone? Imagine buying a business with a proven system and business model and a brand that people already know! This guide utilises decades of experience from experts in the franchising industry to help you on your franchising path to success. A comprehensive guide that answers questions such as: • What is franchising and why is it so good? • How do I choose the right franchise system? • How do I obtain funding for my business purchase? • What type of financial structure is best for my new franchise business? • What can the Franchise Council of Australia and Franchise Association of New Zealand do for me? All this and much, much more. This guide is your key to financial independence through franchising.

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Business Franchise Guide Aus & NZ