Business Franchisor May -Oct 18

Australian & new zealand

Franchisor B u s i n e s s

cover when it counts creative ways to reward and recognise balancing act when family and business intertwine

VOL 06 ISSUE 02, 2018

HR Legal supports franchisors and their franchisees in creating safe and compliant workplaces.

We provide employment and safety law advice and support, including: • • • • • •

Franchisee workplace audits for employment and safety law compliance Contracting agreements and advising on sham contracting 7OVUL HUK LTHPS Z\WWVY[ MVY OLHK VMÄJL HUK MYHUJOPZLLZ VU (^HYK JVTWSPHUJL Tailored training for new and existing franchisees on employment law compliance -YHUJOPZL ZWLJPÄJ LTWSV`TLU[ JVU[YHJ[Z HUK ^VYRWSHJL WVSPJPLZ Deeds of Compliance with the Fair Work Ombudsman

Free Educational Webinar: Vulnerable Workers or Vulnerable Employers?

In this interactive webinar, our lawyers will: • • •

Provide insight into the Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017, its coverage, and its implications Discuss reasonable and practical steps companies should take to avoid contravening the legislation Discuss how to manage other employment law risks that may arise for companies operating a franchise.

Register Here: www.hrlegal.com.au/franchisor2018

Australian & new zealand BUSINESS FRANCHISOR VOLUME 6 ISSUE 2 CGB Publishing Pty Ltd TEL: 03 9787 8077 (AUS) FAX: 03 9787 8499 (AUS) publisher: Colin Bradbury colin@cgbpublishing.com EDITOR: Joanne Tuffy editor@cgbpublishing.com.au SALES DIRECTOR: Vikki Bradbury vikki@cgbpublishing.com SALES and marketing manager: Kathleen Lennox kathleen@cgbpublishing.com.au PUBLISHER’S ASSISTANT: Jorgia Rice PRODUCTION: production@cgbpublishing.com.au

Franchisor B u s i n e s s

from the

Editor Welcome to another issue of Business Franchisor packed with expert advice and the latest updates from across the franchising industry.

Featured on the cover this issue is ShopInsurance. Founder Fred Nadde explains on page 6 that almost 20 years of experience means that ShopInsurance can “push for additional limits that are not available to direct purchasers of business insurance”, and “tailor the package to individual requirements.

G. J. Gardner Homes CEO Darren Wallis shares his advice on page 10 on How to Build a Customer-Centric Franchise Culture, which he says is an ongoing developmental process. He also shares case studies to demonstrate the impact of customer experience.

ACCOUNTS:

On page 18 Alexander Millman, employment law specialist, acknowledges recent reputation

accounts@cgbpublishing.com.au

challenges faced by the franchising industry. Read his tips to combat these challenges in the article Prevention is Better Than Cure.

GRAPHIC DESIGN: Jejak Graphics (03) 5977 8804 jejak@bigpond.com ON THE COVER: shopinsurance.com.au

Read all about the success of the recent Franchising & Business Opportunities Expo at ICC Sydney on page 22, and start preparing for the upcoming shows in Perth, Brisbane, and Melbourne. Business Franchisor readers can attend for free, using the promo code BFM. With advice on branding and PR, international franchising, enabling profit, managing employees, avoiding business failure, coping with franchise logistics, and so much more all within these pages, Business Franchisor offers you the resources to make your business

TO SUBSCRIBE: PLEASE CONTACT CGB PUBLISHING PO BOX 968 MT ELIZA, VICTORIA 3930

thrive.

Enjoy the read.

Joanne Tuffy Editor

Email: cgb@cgbpublishing.com.au www.businessfranchiseaustralia.com.au

SUPPLIER FORUM

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. The publication is sold subject to the terms and conditions that it shall not be copied in whole or part, resold, hired out, without the express permission of the publisher.

Franchisor B u s i n e s s

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CONTENTS On the Cover 6

Cover Story: ShopInsurance.com.au Cover When It Counts

26

Creative Ways to Reward and Recognise

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Karen Gately, Ryan Gately

Balancing Act: When Family and Business Intertwine Doug Downer, The Alternative Board

volume 6, issue 2, 2018

12 ALSO IN THIS ISSUE IFC

Advertisement: HR Legal

4

News items: Announcements from the Industry

8 Update from the Franchise Council of Australia Bruce Billson, Executive Chairman

15

Advertisement: Benie Signage

15

Advertisement: Metaspace

22

Profile: Franchising Expo

37

Advertisement: National Franchise Insurance Brokers

50

A-Z Directory

IBC Advertisement: Jejak Graphics

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OBC Advertisement: Walker Wayland (WA)

18

18

32

34

Expert Advice 10

12

16

18

24

28

32

34

How to Build a Customer-Centric Franchise Culture Darren Wallis, G J. Gardner Homes

Ipso What? The impending ipso facto regime and what it means for Franchisors Allison McLeod, HWL Ebsworth

Six Questions to Ask Before Taking Your Franchise International Matt Goss, SAP Concur

38 38

42

Protecting Vulnerable Workers Act: What should you do to ensure compliance?

Natalie James, Fair Work Ombudsman

40 Your Brand and the New Generation of

Internet Exposure Darleen Barton, Dipac & Associates

42

48

Why Senior Business Managers Need More Security Education Alex Morkos, Aleron

International Mapping Made Easy Peter Buckingham CFE, Spectrum Analysis

Prevention is Better than Cure Alexander Millman, National Retail Association

Why Purpose Enables Profit Damien Guivarra, Silver Chef

Store Design: Efficient Ways to Roll Out a New Concept Amy Gray, Studio Grayscale

Why Franchisors Should Update Their Disclosure Document Jonathan Muncey, LegalVision

How to Protect Your Franchise from Bad Press Pete Burdon, Franchise Media Training

52 BUSINESSFRANCHISOR 3

business franchisor

NEWSitems

Helping Australian businesses win the war on waste Whether they’re a brickie or a barista, everyone wants to do the right thing, but for small business owners it can be hard to find the time and money. That’s why in 2018, to mark its annual Business Recycling campaign, Planet Ark is launching a free War on Waste Toolkit for Business.

The Kit contains ten tools such as the recycling no-brainer checklist, the set of questions to ask a prospective recycler and new brain science inspired signage. It also fills office managers and purchasers in on recycled options for products such as paper and stationery, enabling them to help close the loop and build a circular economy.

Planet Ark was inspired to put together the new Toolkit after 3.7 million Australians watched the War on Waste in 2017, prompting an unprecedented amount of inquiries on recycling and discussions of how businesses could do their part.

As a result, Planet Ark - along with its Foundation Partner the New South Wales Environment Protection Authority (NSW EPA) - has found financially beneficial and effective ways for staff and employers from businesses of all sizes to reduce waste and recycle more.

The Toolkit encourages co-workers to get in on the act of reducing waste by suggesting reusable alternatives to single-use items like coffee cups, water bottles and shopping bags. Another bonus for small businesses is that it’s easy to get started for free. Services like Cartridges 4 Planet Ark and MobileMuster recycle workplace printer cartridges, mobile phones and accessories at no cost, whilst the National TV and Computer Recycling Scheme are also ideal for small businesses on a budget.

For those businesses with high volume waste materials, there is the Small Scale Recycling Equipment Catalogue, which matches them up with suppliers of equipment including compactors and balers to reduce costs and save time and space.

For more information visit www.BusinessRecycling.com.au.

4 BUSINESSFRANCHISOR

Franchising industry out in full force The recent Sydney Franchising & Business Opportunities Expo recently showcased the strength of the franchising industry.

Exhibition Director Tim Collett says this first show for the year was a success, with dedicated visitors still eager to attend, despite challenges posed by the ASEAN Summit held at the Convention Centre next door.

“The quality of visitors was exceptionally high; we found there was great interest from people seeking to start or grow their small business,” he says.

The first in a series of four expos held annually around Australia, the next show is in Perth on 6 May, followed by Brisbane 21-22 July, and Melbourne 25-26 August.

Exhibition Manager Fiona Stacey says she is looking forward to the one-day boutique show at Crown Perth.

“It will feature a mix of local Western Australian franchisors and advisors, as well as new and well-known national brands,” she says. “Tickets for this show are free online now, and exhibitor space is selling out fast, so contact me right away to secure one of the few remaining stands” For information about exhibiting in any Franchising & Business Opportunities Expo, contact Fiona Stacey by email fiona@specialisedevents.com.au or by phone 03 9999 5464.

HAVE YOUR OWN BRANDED RADIO STATION

MYOB FCA 2018 Excellence in Franchising Awards national entries closing soon Don’t miss your chance to enter this year’s MYOB FCA Excellence in Franchising Awards. Entries for national categories are open until Friday May 11, with submissions due on Monday 4 June 2018.

The MYOB FCA Excellence in Franchising Awards recognise and reward FCA members for excellence and provide a platform for companies and individuals to showcase the amazing work they are doing in the franchising sector.

In 2017, G.J. Gardner Homes scooped the pool, being named the 2017 Australian Established Franchisor of the Year and winning the 2017 Excellence in International Franchising Award and 2017 Franchisor Social Responsibility Award.

“Winning a Franchise Council of Australia award is just great for business... it will mean that new franchisees will see us as a leading franchisor in the business,” said Lee Moore, General Manager of G.J. Gardner Homes.

In 2018, the Awards will celebrate success in the following categories: Australian Established Franchisor of the Year; Australian Emerging Franchisor of the Year; International Franchisor of the Year; Excellence in Marketing; Excellence in International Franchising; Franchise Innovation; Franchisor Social Responsibility; and Supplier of the Year.

To find out more how you can nominate your franchise for the 2018 MYOB FCA Excellence in Franchising Awards, visit www.franchise.org.au/awards-2018

Following the launch of Rightsify FM for Hotels, Rightsify has recently rolled out Rightsify FM for Restaurants globally.

Restaurants anywhere in the world can have their own fully branded music app and online radio station. From single-location restaurants to globally franchised chains, having a music app and online radio station opens up new marketing opportunities and creates a deeper connection between customers and brand.

With Rightsify FM, Rightsify curates and designs exclusive custom playlists for restaurants based on their brand, style and location. With the service, a restaurant’s customers can see what music is playing in the restaurant at any time by simply opening the mobile application and can continue listening to a restaurant’s music playlists when they’re on the go.

In addition to custom music curated and designed specifically for restaurants, restaurants can also insert marketing messages and announcements into their music playlists. For example, to promote new menu items or specials. This can also be done within the application via push-notifications.

Rightsify FM also has optional integrations and add-ons available for restaurants, from online and mobile food ordering, to reservations, live chat and loyalty rewards, thus creating additional revenue streams and timesaving benefits for restaurant managers.

The mobile music applications are built for both Android and iOS, thus covering 99 per cent of the global smartphone market.

The online radio stations can be used as a standalone website for a restaurant or embedded onto a restaurants main website where customers can listen anytime, anywhere in the world, on any device.

BUSINESSFRANCHISOR 5

COVER STORY

COVER WHEN IT COUNTS clients and eliminates any potential grey areas. With our buying power, we can push for additional limits that are not available to direct purchasers of business insurance.

“We get a deal for the franchise group as a whole, and once we have that, we’ll arrange the minimum level of cover across the network, ensuring that there are no loopholes. Then, we talk to each outlet individually and tailor the package to their individual requirements.”

FRANCHISEE INSURANCE Franchisees have four main areas of consideration when making their decision to buy insurance.

Vanessa Radoc and Nikki Shepard, Senior ShopInsurance Account Managers with Founder & Director Fred Nadde

Weighed down by the responsibilities of a franchisor or franchisee?

From diligently following the Franchising Code of Conduct to the recent Notifiable Data Breach Law, the consequences suffered when things go wrong can be catastrophic to your network.

When you need it most, don’t discover that you are under-insured or worse, not covered at all - let ShopInsurance ensure that you’re covered when it counts!

Part of Steadfast Eastern Insurance Brokers, ShopInsurance is part of the largest network of general insurance brokers in Australia and a leading network in New Zealand.

Established in 1996, Steadfast’s network comprises of 368 insurance brokerages across the metro and regional areas of Australia and New Zealand and generates more than $6 billion in insurance sales. This provides Steadfast with enormous buying power,

6 BUSINESSFRANCHISOR

flexibility and influence when negotiating with insurers and this strength and size gives ShopInsurance the ability to offer you a broad choice of insurance products, exclusively built policies and all at highly competitive prices.

TAILORED INSURANCE PRODUCTS In 1999, Founder of Shopinsurance.com.au, Fred Nadde recognised a growing market for this type of insurance, and saw an opportunity to use his expertise as both a broker and insurance representative to provide a broad range of insurances at ultra-competitive prices.

ShopInsurance are different from other insurance providers, and do not offer basic blanket coverage. Franchisors and franchisees can go online to obtain a fast 60 second business insurance quote. Several types of insurance are pre-populated at the minimum level to ensure that franchisors and franchisees are covered for the most common types of claim, but each policy is then tailored to the specific needs of the insured - at the most competitive rate available.

Fred says, “We’ve been around almost 20 years, and our experience within the industry allows us to give a broader coverage to our

Price Business owners constantly look to reduce their business costs. ShopInsurance understand the importance of this and have been successful in maintaining competitively priced insurance products for nearly 20 years, utilising their market share to ensure clients benefit both in terms of product and price.

Claims The message from franchisees is clear: “we need you most when we have a claim.”

ShopInsurance understand this and work hard to ensure you have the support required and the representation necessary for a smooth outcome.

Trust Trust is an important part of the equation.

Without trust there is no relationship.

ShopInsurance have built their business on this premise. Many franchisees choose ShopInsurance as their preferred partner for business insurance, having used their services for many years.

Product The product arranged for franchisees must be able to meet their needs. ShopInsurance apply themselves to ensure this is achieved via tailor made products. Where requirements cannot be met, a full explanation is given as to why, and options advised where possible.

We’ve been around almost 20 years, and our experience within the industry allows us to give a broader coverage to our clients and eliminates any potential grey areas.”

FRANCHISOR INSURANCE ShopInsurance offers a range of tailored services, as different franchisors have different requirements. Some franchisors wish to be heavily involved with the insurance and risk management programme for their franchisee network, and ShopInsurance manage this by offering customised insurance programmes, specific login portals and codes. Others wish to take a less proactive approach and want to just ensure that each franchisee has current insurance in place, which can be done within five minutes and the cover is instantaneous.

Working with retail franchisees including Boost Juice, AFL Stores, Subway, Lenard’s Poultry, Just Cuts, Michel’s Patisserie, and Gloria Jean’s Cafes amongst many others, ShopInsurance offer tailor made programmes specifically to cover the challenges of shopping centre retailers.

“Since the 2017 storms across Queensland, New South Wales and Victoria, we have seen a greater push by shopping centre managers and franchisors to ensure that store operators and franchisees in shopping centres purchase insurance cover for gross profit for a period of 24 months - not the previously accepted 12 months. This means that in the case of an unfortunate insurance incident, the gross profit income of the business operator is insured for up to two years. This is important for a franchisee as, in the event of an insurable incident in the shopping centre, the construction is completely outside of the control of the franchisee and it can take more than 12 months for the franchisee to get back into their store,” says Fred.

Shopinsurance also offers short term insurance policies for casual leasing, which means that premiums do not have to be taken for a minimum of 12 months. This assists retailers within shopping centres who may want

Dino Di Giacomo, Co-Director with Founder & Director Fred Nadde

to diversify or trial pop up outlets, with a certificate of currency available to the centre manager within five minutes.

ShopInsurance work with franchisors to ensure a holistic approach to their insurance program, covering their tangible and intangible assets such as Management Liability, Property, Corporate Travel, Motor, Product Recall, Motor Fleet, Work Cover and Cyber Risk Insurance.

FORWARD THINKING Alongside the traditional insurance products and coverage, ShopInsurance are innovative in their approach to the marketplace. Considering the new Data Breach Protection Law which imposed mandatory investigation and notification requirements from February 2018 on businesses as and when there is an ‘eligible data breach’, Cyber insurance is available to help assist franchise groups with this additional regulatory requirement. Many people think Cyber security is about the hacking of their web pages, but it is a far more serious issue.

Fred says, “A lot of businesses believe they have the best fire walls available but if it can happen to the winter Olympics, federal government departments and departmental stores who pay ‘top dollar’ for security, it can happen to you. We can assist franchise groups by ensuring their hardware is protected as well as their third-party liability (customer data).”

Whether you’re a small business retailer, a franchisee or a franchisor looking to provide a master policy to protect and meet the needs of your franchisees, think ShopInsurance.com.au.

With 100+ occupations covered, the premiums are competitive on pricing and with a 95 per cent retention rate, the clients are in agreement.

Ensure you’re covered when it counts.

For more information contact ShopInsurance.com.au now on: 1300 123 300 fred@steadfasteastern.com.au www.shopinsurance.com.au

BUSINESSFRANCHISOR 7

FCA

Ensuring the ongoing success of the franchise business model

Franchising, as a way of doing business, remains vitally important to Australia’s economy and to the hundreds of thousands of franchisors, franchisees and employees who rely on the sector for their livelihoods.

These messages are vitally important but have

As a business model it is unrivalled for enabling entrepreneurship and providing small business owners with a vastly improved likelihood of success when compared to the failure rates of independently owned small businesses.

competitive market.

8 BUSINESSFRANCHISOR

sadly been largely lost in negative reports about the strength of franchising in this country and incorrect associations of business-specific failures to the franchise model itself.

The Franchise Council of Australia (FCA) is as keen as any party to identify, understand and see addressed any specific shortcomings in individual business conduct that may have contributed to the failure of a franchise business beyond the challenges and rivalries of a highly No-one in the franchise community wants to see a franchise business fail.

The FCA is a member-based industry

association. We are not a regulator, commercial advisor, ‘umpire’ or ‘enforcer’ with investigative powers. We cannot ensure franchise business success. But what we can do is aim to ensure that any lack of success does not arise from: • Lack of awareness of the regulatory framework; • Poor knowledge about, or access to, available support; • Inadequate information about the nature of franchising and its diversity; or • Insufficient recognition of the need for due diligence, or some skill or knowhow deficiency that we are in position to address by way of sector-specific training,

The FCA encourages all stakeholders in the success of Australian franchising to contribute to the parliamentary inquiry.”

These well considered initiatives build from the undeniable premise and guiding belief that ‘successful franchisees are the foundation of a healthy franchise sector’ and will be introduced progressively over the coming months as the FCA continues its work to ensure an even brighter future for franchising.

Parliamentary inquiry into franchising As the peak representative organisation of Australia’s franchise community, the FCA will engage constructively and thoughtfully with the parliamentary inquiry into franchising called by the Australian Senate during March.

The parliamentary inquiry was called just weeks after the FCA asked the Australian Small Business and Family Enterprise Ombudsman, Ms Kate Carnell, to instigate an objective and evidence-based inquiry. In the FCA’s request to Ms Carnell, we urged a considered examination of the impact of challenging market conditions on small business and how the franchise model can support the success of small business owners and impact on competitiveness. professional development or networking opportunity We recognise that there are issues that have emerged recently that fall within the remit of the Franchising Code of Conduct that we can and will address. We also concur that many of these issues demand from the FCA, its members and the wider franchise community collective consideration of new and better ways of supporting franchising and improving franchise performance and success.

The FCA Board, in consultation with our members, partners, regulators, industry advisers and analysts, has been working on a package of action-based initiatives designed to do just that.

competitive market economy. Industry-led initiatives are supporting the best in franchising.

The FCA encourages all stakeholders in the success of Australian franchising to contribute to the parliamentary inquiry. This will assist the Committee to identify the causal factors, including third party conduct by parties outside the franchise relationship, and the role of the franchise business model and its contribution to business viability, when considering cases of poor commercial outcomes.

This kind of informed and thoughtful examination will help to identify any deficiencies or gaps in the current regulatory framework, unfair contract and fair trading protections and dispute resolution mechanisms, which the Senate has resolved to be the focus of the inquiry.

Ensuring that there is a full understanding of the current regulatory and competitive environment will mean that any recommendations for additional red-tape, policy change, adjustment to agency operations or new public education and awareness campaigns, have been thoroughly assessed for their likely impacts.

At the time of writing, it was unclear how the Senate inquiry will discern between the unavoidable challenges all small business owners face and the implications for enterprise success, and those particularly relevant for the small franchise business owner.

The identification of any gaps or deficiencies, and some scrutiny of regulatory enforcement action, would be helpful and beneficial at this time, and help establish whether the current comprehensively regulatory framework is ‘fit for purpose’, fully activated and enforced.

Despite being the recognised and respected representative body of the franchise community, the FCA was not consulted on the terms of reference or invited to contribute the valuable insights reflected in the submission to Ms Carnell calling for an inquiry.

An objective, balanced, informed and analytical inquiry can produce conclusions and recommendations that can help to ensure Australia maintains its reputation as a leading economy in which to develop and deploy the franchise model of entrepreneurship.

The all-important mutually supporting and beneficial franchisee-franchisor collaborative relationship is not formed or deployed in its own bubble, but functions as part of a dynamic,

Bruce Billson, Executive Chairman.

Franchise Council of Australia. www.franchise.org.au

BUSINESSFRANCHISOR 9

Darren Wallis

How to build a customer-centric franchise culture When it comes to good customer service, it is very easy to pay lip service to a vision of best practice customer service and a list of generic values designed to achieve this.

Exceptional customer service, however, is something that is developed over many years and requires an ongoing analysis of a franchise’s systems, procedures and culture.

First, identify the problem You see a lot of people in business answering a question that hasn’t been asked – by this I mean exciting customer service campaigns are launched and expensively promoted with little thought as to what it’s trying to achieve.

Someone at head office thought it was a good idea - but nobody thought to ask the customer.

You might assume your customers think you’re too slow, when in fact you’re just hard to get a hold of. You might assume you don’t keep in contact enough, when in fact you’re contacting your customers so much they’re starting to get annoyed. Never assume - always do your research.

Identifying where your customer service is lacking is your first and most important step.

Professionally run focus groups are a great way to get to the root of the matter in short time. Exit surveys provide extremely valuable information about the customer experience and analysis of online and social media behaviour can also be enlightening. There are many ways to research your market and identify areas for

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Darren Wallis commenced his career with G.J. Gardner Homes in 1994 as an Accountant and is now the CEO and Managing Director of the company.

improvement in your customer service, some might be right for you and others less valuable.

Engage the services of a reputable marketing research professional to help steer you through this so you can be sure that budget spent on new projects is directly targeting your biggest problem areas.

Case Study 1 (Part A) Distrust of builders.

Our early focus groups identified that consumers who had gone through the building process with other builders had found it to be a highly stressful experience. Consumers felt they had been provided with minimal information about how the building process would unfold and were often excluded from the building journey, resulting in unsatisfied and sceptical consumers. Through these focus groups we had identified a significant public relations challenge – our industry as a whole had a dubious reputation.

Second, develop the solution The solution to your customer service problem, is not about increasing sales. It’s about improving your customer’s experience with

your company. Sales will naturally, organically improve as customer service does, but don’t think of sales as your end-game. A positive customer experience should be your number one goal.

In my experience the solution to any customer service problem always involves improved communication. That may mean more communication, or it just might mean better quality communication that has more relevance and value to the customer.

Case Study 1 (Part B) Distrust of builders.

Our strategy was to turn our customer’s past negative experiences with builders around by providing extensive information that would help them make an informed decision about their new home build. This was not always about getting a sale over the line – we believed that it was our responsibility to provide the most detailed information we could to help consumers make the right decision – even if they ended up working with another builder.

We also made it our focus to involve the consumer from day one, right through the building process and to ensure we had the business systems in place to make the building

them that all is going according to the run sheet. You’ll be rewarded with more relaxed and much happier customers.

Case Study 4 Questions answered at a time convenient to you.

Our commitment to making the building process as stress free as possible for consumers led us to develop innovative 3D virtual house tours that are now available on our website and are being rolled out throughout our display villages nationally. These interactive tours not only make the design process informative and fun for consumers, they also help to streamline journey as stress free as possible – it was a lofty goal but our intention was to actually make the building process an enjoyable experience for our customers.

Explore new ways of solving old problems Gone are the days when a sophisticated customer service strategy comprised a follow up phone call and a free fridge magnet. In today’s connected, but time-poor world, customer service strategies must be wholly integrative; personalised but not intrusive; transparent, but easy to understand; comprehensive but at a time convenient to the customer.

Case Study 2 Questions answered at a time convenient to you.

We recently employed a team of professionals to analyse our website to determine how to better engage with consumers on that particular platform.

That process led to the implementation of live chat functionality to the website, with research showing this was a casual and non-threatening way for consumers to have their building questions answered, and the spin off was that it increased conversion lead rates by 57 per cent.

One of the biggest obstacles to creating a customer-centric culture is disorganisation.

While we’d like to think that each and every one of our customers is special, the reality is we deal with thousands of new contacts every year and keeping the details all in your head is impossible. Get organised – collect meaningful data on your customers and make it work for you.

Case Study 3

interactions between consumers and our franchisees.

Everything in its place.

Our website is also used as an information

In the 1990s, we developed our own centrally hosted POS, accounting and customer management tool called Greenhouse, simply because there was no building system that comprehensively captured all of the features that we required and wanted. The system is the blueprint for our franchisees for how they should build homes and interact with customers. It helps franchisees know when and how they should interact with customers at each stage of the building process, from the initial contact to post-handover. Franchisees and their staff can quickly access the system to see the status of each job and the system provides them with a ‘To Do List’ and reminders at critical points throughout the build.

sharing tool throughout the building process.

Take your customer along for the ride

also have to raise the bar.

The very best way to achieve good customer service and to generate repeat custom and referrals is to have your customers share the service journey with you. When you exclude customers from this process it creates dissatisfaction and scepticism.

we have constantly refined our sales and

Customers can login and see photos and progress updates about their new home. As well as being an informative tool, it also helps to make the process fun for customers, allowing them to share progress photos and updates with their family and friends.

Don’t rest on your laurels A customer-centric culture is not something you can set-and-forget. You’ll never see the end date on the development of customer service – there’ll always be something to refine, something to improve, something to innovate.

And your competitors will be perpetually lifting their game – you not only need to keep up, you Throughout our 30 plus years in the industry, customer service training for franchisees. In the past two years, we implemented a refined SalesStar sales training program, designed to improve sales team management procedures and processes for interacting with customers.

While they say you should never watch sausages being made, if you do, you have a much greater appreciation for the work and effort that goes into them. And you know exactly what you’re getting – no hidden surprises.

The central tenet of that sales training program

The same applies to customer service. When kept in the dark the human mind is capable of coming up will all sorts of shadowy conclusions.

You need to be transparent in all your dealings with customers to build trust. Give them a glimpse behind the ‘Staff Only’ door to reassure

G.J. Gardner Homes is Australia’s most

is about informing and assisting customers every step along the building journey in order to provide them with a good customer service experience.

experienced and trusted home builder, having built over 34,000 custom homes in Australia, New Zealand and the United States since its establishment in 1983. www.gjgardner.com.au

BUSINESSFRANCHISOR 11

Allison McLeod

Ipso what?

The impending ipso facto regime and what it means for franchisors On 1 July 2018, changes to the Corporations Act, that are being commonly referred to as the “ipso facto� regime, will come into effect. However, not surprisingly, many franchisors do not know what these changes are or how they will impact their franchise networks.

12 BUSINESSFRANCHISOR

What are the changes?

The stay will also apply to self-executing

One of the key changes provides for a stay

provisions of a contract which apply

on the enforcement of rights which arise in favour of a party due to the insolvency of its

automatically.

A) cannot enforce a right against a second

How long does the stay last for?

party (Party B) that arises because Party B

The period of the stay depends on the type of

becomes subject to Voluntary Administration

Insolvency Event and how the circumstances

(VA), liquidation following a VA, an all/

surrounding the Insolvency Event transpire.

substantially all asset receivership or a scheme

The stay will continue until:

counterparty. This means that a party (Party

of arrangement (Insolvency Event), if the right on which Party A is relying arises pursuant to an express provision of a contract, arrangement or understanding.

- the external administration ends; - the expiry of any Court orders extending the period;

Allison is a commercial lawyer who predominantly advises clients on trade and distribution law and competition and consumer law. Allison has a particular interest in franchising and has extensive experience advising franchisor clients on all aspects of franchising - from setting up franchise networks and day-today compliance, to dealing with disputes and sales.

Allison’s experience includes assisting clients with international expansion.

- if liquidation follows a VA (or scheme of arrangement), when the liquidation ends; or - the consent of the appointee is given, or relief from the Court is ordered.

The stay will also continue after the conclusion of the VA, all assets receivership or scheme of arrangement (ie a party cannot rely on the earlier VA, receivership or scheme circumstances relating to the counterparty in order to exercise its rights at a later date).

What contracts does the regime apply to?

The regime will apply to all contracts entered into on or after 1 July 2018 unless the regime is prescribed by regulation not to apply to that contract or a specific right contained in that contract. However, it is not clear if the regime will also apply to contracts entered into prior to, but varied or extended after, this date.

Why have these changes been made?

These changes are not specifically designed to target franchising but have been made as a more general review of Australia’s insolvency laws.

A number of reasons have been cited for these changes. However, one of the key reasons is to try and encourage companies that are in distress to have every chance of a successful restructure/workout.

Are there any exemptions?

There are certain circumstances where the regime will not apply - for instance where the initial appointment is of a liquidator.

The legislation also allows for the Minister to make regulations to exempt certain kinds of contracts, or rights, from the regime. However, as at the date of preparing this article, the regulations relating to this new legislation have

not been released (although we anticipate that they will be released within the next month following initial industry consultation).

It is therefore possible that franchise arrangements (or at least certain rights in franchise arrangements, such as the immediate right of termination contemplated by clause 29 of the Franchising Code of Conduct (Code), and the franchisee’s right to terminate the franchise agreement during the cooling offer period) will be exempted from the application of this regime.

It is also worth highlighting that the regime only applies to rights that arise due to an “express provision” of a contract, arrangement or understanding. If a right is, for example, a statutory right, then the stay will not apply to that right.

What rights are not affected?

Certain rights are not affected by this new regime. Relevantly (but without limitation), parties are still permitted to terminate for nonperformance (provided that this does not relate to the financial condition of the party during the stay) and there is no prohibition on enforcing a provision concerning consent to novation/ assignment.

The regulations may also set out other rights that are excluded from the application of the regime.

How does the regime impact on franchising?

The regime has the capacity to impact on various aspects of the franchise relationship.

The Code limits the ability of a franchisor to terminate a franchise agreement and sets out procedures it must follow before it exercises a contractual right to do so. Clause 29 of the Code specifically allows a franchisor to

terminate a franchise agreement immediately if a franchisee becomes “bankrupt, insolvent under administration or a Chapter 5 body corporate”.

However, this right is not a statutory right – rather, in order to rely on this procedure to terminate an agreement, there needs to be a contractual right to terminate included in the relevant franchise agreement that is consistent with that procedure and the franchisor then needs to rely on its contractual rights to terminate the franchise agreement pursuant to that express clause.

Noting the above, most franchisors will have incorporated the right into their franchise agreements and would therefore now have an express contractual right to terminate the franchise agreement if the franchisee entity becomes subject to an insolvency event.

However, under an agreement that is subject to the ipso facto regime a franchisor will not be permitted to enforce its right to terminate, on the basis of an Insolvency Event relating to the franchisee, immediately – as this right to terminate will be stayed for the duration of the relevant insolvency process. This means that the franchisor will, during the period of the stay, have to liaise and co-operate with the person overseeing the insolvency - someone who may have little or no experience of the brand.

The termination provisions in a franchise agreement are the most obvious rights that a franchisor has on the occurrence of an Insolvency Event, however may not be the only rights the franchisor has on a franchisee’s insolvency. For instance, franchisors may have rights to vary supply terms under supply agreements, rights to step into property documents and/or set-off rights under franchise agreements and/or supply agreements.

Likewise, franchisors may need to consider how the regime will impact their ability not to renew an agreement (eg when the franchisee is in insolvency).

Can I terminate a franchise agreement for another reason during the period of the stay?

The stay contemplated by the ipso facto regime only relates to the exercise of rights arising due to an Insolvency Event. If a franchisee becomes subject to an Insolvency Event a franchisor

BUSINESSFRANCHISOR 13

cannot terminate for this reason. However, if another event occurs, then the franchisor may still be permitted to terminate for that reason.

For instance, let’s assume you own a food franchise network and your franchise agreement allows for immediate termination in all of the special circumstances mentioned in clause 29 of the Code. If a franchisee is placed into external administration and the administrator subsequently operates the business in a way that endangers public health and safety, then you might still have grounds to terminate the franchise agreement immediately on this alternative basis.

Likewise, the stay does not specifically prohibit a franchisor from exercising its rights due to non-performance.

However, franchisors will need to tread carefully and consider whether, in substance, the reason for the termination is the Insolvency Event (or the financial condition of the counterparty during the Insolvency Event) or is legitimately another event.

What do I need to do?

There are a few things that franchisors should do now.

First, review your agreements and consider what rights arise (or might arise) as a consequence of an Insolvency Event.

As noted above, one of the key ones will be the right to terminate, however other rights might also arise – for instance, if a franchisor is also a supplier, the supply terms might provide

14 BUSINESSFRANCHISOR

that in the event of the franchisee becoming subject to an Insolvency Event, the franchisor/ supplier can vary the terms and conditions of supply (eg amending terms to COD). Under the new regime, the franchisor/supplier will not be permitted to rely on its right to change the supply terms at that point. Therefore, the franchisor/supplier might want to consider amending its terms of supply now, or at an earlier ‘trigger point’, so that it is comfortable with those terms applying if the franchisee does become subject to an Insolvency Event.

Other common rights that arise on insolvency include step-in rights (eg under leases, outlet licences and tripartite agreements) and rights to set off (under both franchise agreements and more broadly) [(although this right may be excluded under the regulations from the operation of the regime)]. It is also important to consider if there are any rights that the franchisor might not be directly prohibited from enforcing, but which might not be enforceable as a consequence of the stay - for instance, rights to acquire assets on termination. It may be beneficial to widen the circumstances in which such rights can be exercised.

Second, consider if there are any changes you want to make to your template contracts/ processes in preparation for the new regime.

For instance, you might want to consider taking more security or double checking that your performance management/KPI clauses are sufficiently robust.

Third, consider what you will do if an Insolvency

Event occurs to a franchisee and a third party (eg an administrator) is appointed to operate the franchised business. While ultimately, circumstances will vary from case to case, it might still be useful to prepare some internal guidelines so that you are not caught unawares and suddenly have an independent third party (with none of your usual training) running one of your locations. For instance, you might want to be in a position to offer to manage the location while the insolvency is addressed. If that is the case, check what your franchise agreement says about this (noting that if it allows you to do this as a right, you will not, under the new regime, be permitted to enforce the right) and consider preparing a template management agreement that you can readily provide if needed.

Finally, make sure to manage contracts (including renewals) and exercise termination rights as promptly as possible (giving clear reasons in writing for doing so). Alternatively, take care to properly reserve rights of termination for non-performance.

In summary The new regime provides for a significant shift in the way a franchisor will need to deal with an insolvent franchisee. As a consequence, franchisors need to consider their agreements and how they may be exposed. It is possible that the regulations will provide franchise agreements with some relief from the regime but, if not, franchisors should start reviewing their documents and processes now in preparation for the implementation of the regime.

HWL Ebsworth is a full service commercial law firm providing expert legal services at competitive rates, focusing on client outcomes. Through our combination of legal specialists and industry experience, HWL Ebsworth has established a reputation as a legal service provider of choice for organisations across Australia and internationally.

Contact Allison directly on: +61 3 8644 3478 | 0413 679 721 amcleod@hwle.com.au www.hwlebsworth.com.au

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Matt Goss

Six questions to ask before taking your franchise international Matt Goss became Managing Director, SMB for Australia in 2013. He joined Concur in 2002 where he has held a number senior management positions including Country Manager, Concur Philippines and Vice President, Client Services Asia Pacific.

Domino’s Pizza was one of the first to do it, followed

by McDonald’s, Subway, 7-Eleven, and plenty more.

Expanding your franchise overseas can be an ideal way to increase profits and reach, and grow your business exponentially.

Expanding globally gives you access to new markets and revenue streams, and it also reduces risk since you’re less dependent on demand in a single location. If your franchise is the first of its kind in the new market, you can benefit from the first-mover advantage and the novelty value. Furthermore, depending on the countries you decide to expand to, you may be subject to less-stringent regulations and compliance requirements than in your

A global brand can also make it easier to attract high-quality franchisees to your business, and this increased demand can also push up your prices and improve your bottom line as the franchisor.

However, for many business owners, expanding to overseas markets can seem daunting. Not speaking the language, understanding the local customs, or knowing the new marketplace in detail can seem like unsurmountable barriers. It takes a significant amount of capital and the right approach to expand successfully. And, if things like exchange rates don’t favour your business, expanding could end up being more expensive than you anticipated.

It’s therefore important to thoroughly research the opportunity before taking your franchise global. There are six key questions to ask that can inform your decision about whether to expand internationally.

and let you take advantage of increased profit

1. What’s the benefit of expanding?

opportunities.

If expanding just seems like a good idea, then it’s

home country, which could lower your costs

16 BUSINESSFRANCHISOR

possible you haven’t yet done enough research to understand whether going global really is the right decision. Before you can decide whether to expand internationally, you must be clear on the advantages that the new market presents that can’t be achieved elsewhere. This could include the ability to disrupt that market, attract new clients, reap cost efficiencies, or outshine the competition.

It’s important to thoroughly research the target market to build a clear picture of current and potential demand, the cost of setting up, and any changes that may need to be made to your product or service to suit the local culture.

It’s important to understand the risks as well as the benefits. Working with a local advisor can help overcome some of the challenges and confusion and there’s no substitute for doing due diligence. The cost of a failed expansion could be significant; you need to make sure there really is an opportunity before pursuing it.

2. What’s the red tape?

In some countries, the amount of red tape, fees, and taxes payable can make setting up a business there seem like more trouble than it’s worth. There are often hidden costs that don’t become apparent until you’re on the ground and it’s too late to back out, so understanding exactly what red tape you’ll face before starting is imperative.

This means thoroughly researching local laws and industry regulations as they can affect everything from taxes to working conditions.

a local expert can suggest ways to make the value proposition resonate better with local customers.”

If you can, speak with other franchisors operating in the country to get a sense of the challenges they faced. They may be able to recommend advisors and professionals that can help you navigate the complexities.

There may even be some surprises, like less regulation in the international market than at home. This can be an excellent reason to expand to that country, since it can lower your costs and help you maximise profits. However, it’s important to also consider your brand; cost savings achieved through paying workers low wages, for example, may be offset by consumer indignation in your home country. In such a case, your brand may be better served by paying workers higher wages, forgoing the cost savings but potentially building a rich vein of employee and customer loyalty.

3. What do the locals want?

Just because a product is wildly popular in one location doesn’t mean that success will translate around the world. Starbucks is a US-based chain of coffee shops that enjoys phenomenal popularity in its home country and in places like Japan. But when Starbucks came to Australia, it met a distinctly lukewarm response. This was mostly due to a lack of understanding about Australia’s coffee culture and local tastes.

It’s therefore useful to get a local expert to validate whether the product or service will resonate with the new market. A local expert can suggest ways to make the value proposition resonate better with local customers. They can also help with hiring, determining the client demographic, and product planning.

In the case of a giant operator like Starbucks, the franchise would have benefitted from investing more in research and focus groups to find out how the model may need to change to please Australian consumers.

4. What new skills/ certifications are required?

Employees may need to acquire new skills or certifications to be eligible to work in the new market. Knowledge of the local language will help in addition to knowing cultural sentiments and business etiquette.

at home, opening a new office in a new country means starting fresh. This can be beneficial, especially if the organisation is looking to rebrand. But you need to plan for and be aware of the costs in building the brand in a new environment.

This is where it could be useful to work with a foreign master franchise owner. This approach

For example, group-buying deals site Groupon, failed in its bid to expand to China because it employed foreign managers who didn’t understand how to effectively market to and communicate with Chinese consumers.

Through a lack of cultural understanding and communication skills, the company fell short of its ambitions in Asia.

puts the power of local franchises into the

5. Does the new market have everything the business needs?

the arrangement. Having a local person on the

Not all countries offer the same operating conditions and infrastructure. If, for example, the business model relies on always-on, superfast Internet speeds, it’s important to make sure those speeds will be available. Similarly, if the franchise outlets rely on a stable, robust infrastructure of roads and highways to move goods around, then it may struggle to succeed in a vast, sparsely-populated landscape with few roads.

Business leaders should fully assess all the requirements for success and then make sure the new market provides it, and, if not, research viable workarounds.

6. Can the business start over?

While the business may have a strong reputation

hands of one operator, who typically pays a large upfront fee for the rights to a designated geographical area. They can then issue subfranchises within this area.

This approach can be highly successful with the right people in place, supported by a strong, clear agreement that outlines the terms of ground, who understands the vagaries and idiosyncrasies of the local marketplace, can be invaluable for a franchise that’s just getting started in the country.

Before embarking on an expansion, you should put together a team whose job it is to answer each of these questions methodically, delving deep into the challenges and opportunities of the potential new market and engaging professional, local advice where necessary. Doing thorough due diligence will increase your business’s chance of a successful expansion.

SAP Concur is a leading provider of expense, travel and invoice management solutions. SAP Concur unlocks powerful insights that help businesses reduce complexity and see spending clearly, so they can manage it proactively. www.concur.com.au

BUSINESSFRANCHISOR 17

Alexander Millman

PREVENTION IS BETTER THAN CURE the entire franchise sector has been firmly in the spotlight over the past 18 months for all the wrong reasons.”

Franchising has been a firm part of the Australian retail landscape for almost fifty years, long after the first fast-food chains became part of our culture.

The numbers behind the industry are staggering - according to a Griffith University report, endorsed by the Franchise Council of Australia, as of 2016 there were 1,120 franchise brands

From the gross underpayment and systemic

Vulnerable Workers Bill

exploitation of workers uncovered across

Although admirable in its intended purpose, the Federal Government’s vulnerable workers legislation has left franchise brands potentially open for prosecution for unconscionable conduct committed by any one of their franchisees.

7-Eleven stores, to Fairfax Media’s expose on the underpayment of hundreds of Domino’s Pizza staff (including some of its franchisees who were caught offering Australian residency visas in exchange for cash) – you don’t have to look very far to see why the media, and the Government, has been up in arms.

Most recently, Caltex announced it would be transitioning all franchisee sites to company operations after Fair Work Ombudsman Natalie

operating in the marketplace, supporting 79,000

James called the Caltex franchise model

separate small businesses, that collectively

unsustainable. This followed an investigation by

employed around 472,000 direct employees,

the Ombudsman which found non-compliance

with a combined sales turnover of around $146

with Fair Work laws at a whopping 76 per cent

billion.

of audited franchisee stores.

Despite these decades of great success,

While the media reports are disturbing to say

overwhelmingly positive relationships between

the least, cases of serious non-compliance

franchisor and franchisee, and its immense

are the exception, and not the rule – for every

value to the Australia economy, the entire

bad headline, impossible-to-sustain business

franchise sector has been firmly in the spotlight

model, or genuinely unscrupulous operator,

over the past 18 months for all the wrong

there are thousands more exemplary franchise

reasons.

arrangements.

18 BUSINESSFRANCHISOR

Franchisors who have a significant degree of influence or control over their franchisees will be liable for contraventions of the Fair Work Act 2009 by their franchisees unless they can show that: (a) they were unaware of, and in all the circumstances could not reasonably be expected to be aware of, the contraventions; or (b) they had taken reasonable steps to prevent the contraventions from occurring.

Critically, it is no defence for the franchisor to argue that their control over the franchisee does not extend to employment practices. In the case of 7-Eleven, the franchisor’s control extended into every corner of the business except employment, and Parliament drafted the

legislation to get around this potential loophole.

The defences available to franchisors were also left deliberately vague so that they could be adapted to the circumstances of each case. The intention was that smaller, less sophisticated franchisors would be held to a lesser standard than larger, more sophisticated franchisors.

Because of this, there is relatively little guidance to be found as to what are ‘reasonable steps’ or circumstances where a franchisor could ‘reasonably be expected to have known’ about contraventions by franchisees. This lack of certainty means that a significant contingent liability, like a legislative Sword of Damocles, hangs over the head of franchise businesses.

In addition to changes to the legislation, the Federal Government granted a $20 million increase in the funding of the Fair Work Ombudsman with which the agency may increase its enforcement actions in this new paradigm. We expect to see a significant increase in regulator action against franchisors in the near future.

With penalties now potentially reaching $630,000 for a corporation, there are plenty of incentives for businesses to keep themselves out of the Ombudsman’s firing line.

Better vetting practices While tension between the interests of franchisor and franchisee is inevitable, and an essential component of a dynamic business, the easiest way for franchisors to ensure that they stay out of the courts is to first make sure that they only engage the right sort of franchisee.

Some franchises do this exceptionally well already – McDonald’s is renowned for its thorough vetting process of franchisees to ensure that a franchise restaurant doesn’t fall below standards (or worse, become a headline).

Other franchises are less careful and don’t look far beyond the payment of the franchise fee.

The adage that prevention is better than cure is true in franchising as it is in medicine. The right kind of franchisee will ensure that their business is compliant with all relevant laws as a matter of course. The wrong kind of franchisee will need a lot of extra attention (and expenditure) to bring them into compliance with the law.

Getting the right franchisee at the start will save a lot of time and money later.

Just because your franchise is a well-known name with dozens or even hundreds of

Specialising in employment law, Alexander Millman provides advice and representation to a collective network of more than 19,000 retail, fast food and quick service outlets nationwide. This includes representing members and providing expert guidance in the modern award review process (including appearances before the Full Bench of the Fair Work Commission) and individually in discreet cases before industrial tribunals.

Employers have enough to do, so utilising automated payroll and employee management software can free up a great deal of their time to focus on running a successful business.” franchises all over the country and a proven business model to back it up, doesn’t mean it’s right for every candidate.

For any franchisor about to enter into an agreement with a new franchisee, it’s crucial to undertake proper due diligence legally, economically and socially, on all potential candidates, to ensure each one can, and will, hold up their end of the bargain.

Employee arrangements One of the areas where industrial advisors see franchised businesses go wrong is right at the start, when taking over an existing business.

When a franchisee takes over an existing business, they not only get the use of the intellectual property, the premises, and the equipment – they often get the old owner’s employees too. If the old owner did not operate a compliant business, this also means that the new franchisee inherits the old owner’s mistakes.

An all-too-common occurrence is that the former franchisee engaged their staff under the wrong Modern Award, and the new franchisee simply carried on this practice on the assumption that it was correct. In this sort of situation, not only does the franchisor have a compliance issue with the old franchisee, but failing to have it rectified has put the new franchisee on the wrong path from day one.

Another common occurrence is the failure of

new franchisees to understand what employee entitlements transfer from the old franchisee to the new franchisee. Exacerbating this, we see new franchisees failing to understand that the legislation overrides any agreement they, in their ignorance, may have made.

In the current regulatory environment, with an increasingly empowered regulator and increasingly irritated courts, the excuse of ‘that’s the way it’s always been done’ or ‘that’s the way the last owner did it’ will do nothing to save anyone from harsh penalties. A culture of this nature begins to permeate the franchise chain, and soon other franchises are operating in the same, non-compliant fashion – as the 7-Eleven inquiry showed us.

A diligent franchisee will double-check every practice of the old franchisee, and will not be afraid to make sweeping changes if they think they are necessary. Keep these ones.

Adequate recording and reporting systems for time and wages Among the new changes to the Fair Work Act in late 2017 was the introduction of the reverse onus of proof in the absence of records.

Normally, an applicant to the court (typically an employee) must prove that what they are saying is true before the court can find in their favour. Under the reverse onus of proof, the situation is (amazingly!) reversed and instead

BUSINESSFRANCHISOR 19

A diligent franchisee will doublecheck every practice of the old franchisee, and will not be afraid to make sweeping changes if they think they are necessary. Keep these ones.”

it falls to the employer to prove that the assertions of the employee are false.

compliance, and manage the day-to-day operations.

This only applies where the employer is required to keep records under law but has failed to do so. For example, if an employee claims that they have been underpaid, and the employer has failed to keep compliant time and wages records, the employee is deemed to be the victor unless the employer can produce some other form of convincing evidence.

Introducing a specific software system sanctioned by the franchisor is a great way to ensure consistency, ease of access, and accountability among the entire franchisee network.

In this environment, it is not enough to be confident that your franchise network is paying their staff correctly – you need to be confident that they can prove it too. As such, franchisors need to turn their mind to measures to simplify and standardise accurate time and wages recording and monitoring systems.

All of these records must be kept for seven years and readily available for inspection if the Ombudsman ever calls.

There are myriad payroll software options out there for small business, however it’s generally much easier to produce things like compliant pay slips and records using automated cloud payroll software – many of which also include business tools to help operators maintain

20 BUSINESSFRANCHISOR

Employers have enough to do, so utilising automated payroll and employee management software can free up a great deal of their time to focus on running a successful business.

Staying up to date to avoid non-compliance It’s incredibly difficult for SMEs and franchisors to find the time (and inclination) to study and stay up to date with the ever-evolving industrial relations landscape.

Our industrial relations system is one of the most complex in the developed world, and as we’ve seen with last year’s amendments to the Fair Work Act, changes can be swift and have far-reaching consequences.

The largest areas of non-compliance uncovered in the Caltex inquiry were pay slips and employment records, followed by penalties,

overtime loadings and allowances.

While Caltex’s response to this was clearly an indication of a system that was easier to scrap than to repair, it’s fair to say the majority of Australian franchisees who find themselves on the wrong side of compliance issues don’t intend to do so. However, in the new landscape of joint liability, it’s now up to franchisors to protect their own franchise business.

The National Retail Association is here to help employers, business owners and companies navigate these and other HR and compliance issues, and keep you upto-date on any changes to the industrial landscape that might affect you.

We have a dedicated team of legal professionals who specialise in these areas and are on hand, every day, to provide expert guidance on these and other issues common to retail business.

If you’d like more information on franchise arrangements, please don’t hesitate to get in touch via: 1800 RETAIL (738 245) www.nra.net.au

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Franchising Expo

Sydney showcases strength of franchising industry

(L-R) Andrew Simpson, Steve Sebbes and Andrew Dunreath Cooper from Aussie.

The franchising industry was out in full force at the Sydney Franchising & Business Opportunities Expo at ICC Sydney Exhibition Centre in March.

Exhibition Director Tim Collett says this first show for the year was a success, with dedicated visitors still eager to attend, despite challenges posed by the ASEAN Summit held at the Convention Centre next door.

“The quality of visitors was exceptionally high; we found there was great interest from people seeking to start or grow their small business,” he says.

The Expo reflected the diversity of franchise business opportunities available, from recognised brands such as Clark Rubber, Signarama, Aussie Home Loans, Bakers Delight and Jim’s Group; to newer concepts like Lock & Roll, D-Sign Interiors, Stretch Studio and My Ride cycling stores.

International brands making their Australian debut at the show included Bodystreet, Nathan’s Famous, Jon Smith Subs, Dippin’ Dots Ice Cream, Rodan & Fields, Miniso and a wide range of brands from Taiwan.

The Sydney Franchising & Business Opportunities Expo is the first in a series of four

22 BUSINESSFRANCHISOR

(L-R) Nish Abeywickrama, Elise Cittadini and Adrian MacRaild from Bakers Delight

We had quite a few people say, ‘I didn’t expect Bakers Delight to be here’. Our response was that although we are an established brand with almost 600 bakeries across Australia and New Zealand, we’re always looking for new franchisees to join our business.”

- Xavier Barnsley, Group Franchise Development Manager, Bakers Delight.

expos held annually around Australia. The next show is in Perth on 6 May, followed by Brisbane 21-22 July, and Melbourne 25-26 August.

Exhibition Manager Fiona Stacey says she is looking forward to the one-day boutique show at Crown Perth. “It will feature a mix of local Western Australian franchisors and advisors, as well as new and well-known national brands,” she says. “Tickets for this show are free online now, and exhibitor space is selling out fast, so contact me right away to secure one of the few remaining stands” For information about exhibiting in any Franchising & Business Opportunities Expo, contact Fiona Stacey by email fiona@specialisedevents.com.au or by phone 03 9999 5464.

Special offer: readers may register to visit any show this year for FREE using the promo code BFM. www.franchisingexpo.com.au

Franchisee Bryan Tran from Nathan’s Famous

Franchising & Business Opportunities Expo 2018: Perth: 6 May at Crown Perth Brisbane: 21-22 July at Brisbane Convention & Exhibition Centre, South Bank Melbourne: 25-26 August at Melbourne Exhibition Centre, South Wharf

Grow your brand, build your business This is the place to find new recruits

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Sydney 17-18 March Perth 6 May Brisbane 21-22 July Melbourne 25-26 August 03 9999 5464

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Damien Guivarra

why purpose enables profit

B Corporations (B Corps) are a new type of company that uses the power of business to solve social and environmental problems.

Silver Chef is part of a growing community of more than 2,441 Certified B Corps from 50 countries and 130 industries working together toward one unifying goal: to redefine success in business.

The commitment to become a B Corp is a big one. It is a thorough assessment that analyses a company’s governance, transparency, environmental and social impact.

These new types of companies voluntarily hold themselves to higher levels of accountability.

Constant improvement and setting new stretch targets is part of the journey as Certified B Corps have to re-apply for their status every two years.

What society demands of businesses and

24 BUSINESSFRANCHISOR

people is constantly evolving. Expectations to create a significant impact and drive noticeable change are higher and society is looking to corporations to play their part in addressing social and environmental problems. B Corps stand for a new way to do business. Across the globe B Corps are using the power of business to contribute to the problems in the world and in order to do this, we need to lead by example.

We need to show our industry and beyond that this new way of doing business is not a trend or fad and it will become the norm.

It is important to note that being good for business is also good for the bottom line.

We’re not talking not-for-profits, B Corps are businesses, big and small, that have realigned their values and are taking the community, environment and their employees as seriously as they take turning a profit… it’s the new capitalism being led by a wave of social entrepreneurs and CEOs who actually care.

We are in good company - some of the world’s largest B Corps include Ben and Jerry’s, Patagonia, Etsy and Laureate (the world’s largest higher education organisation) and many more.

Since its inception in 1986, Silver Chef has provided hospitality funding to more than

30,000 customers, from start-up cafes to large restaurants and hotels. Silver Chef was first recognised as a B Corporation in 2015, and we have recently recertified at the end of 2017 with an almost 15 per cent increase on our original score. As one of only four publicly listed companies, this is an achievement we are all incredibly proud of.

Giving, community and using the power of business for good is at the core of everything we do.

By being unified in our beliefs and our vision, we have implemented a number of initiatives that have contributed to our recent B Corp recertification, including: 1. Work Welcome Program: This program provides meaningful work to disadvantaged and underrepresented individuals in the Australian community such as refugees. The Work Welcome program offers up to four paid intern or work experience roles each year for a 12-week period. The program is designed to reiterate Silver Chef’s commitment to diversity and inclusion. Since its introduction we have had two Work Welcome participants and have seen a significant impact on our team

Damien Guivarra has been the Chief Executive Officer, Silver Chef Australia and New Zealand since November 2016. Part of the Silver Chef family for more than 12 years, Damien has had a variety of roles within the organisation, from marketing and sales-focused positions to operational management and now leads his team in developing innovative, flexible and affordable funding solutions.

and leaders who have worked with them, building empathy, understanding and shared perspectives.

2. Reducing our environmental impact: Silver Chef has established a formal program for reducing our environmental impact in the community.

The program ensures we measure our carbon footprint, set goals and implement initiatives to minimise the impact. Examples of processes that have been implemented include reducing our waste and broadening our recycling effort.

3. Giving Policy: We have formalised our giving practices by committing to donating one per cent of net profit after tax to helping people out of poverty. By 2020, the organisation has a target of helping 1.5 million people out of poverty. According to our partner, Opportunity International, our contribution already has helped just over one million.

4. Good Buys: We have implemented a new process for aligning our purchases to our purpose by seeking to partner with fellow B Corporations and local and environmentally friendly suppliers. Like attracts like, so collaborating with a supply chain that supports what we do and vice versa, is fundamental to the success of our business and our partnerships collectively.

5. Adding Purpose to Job Roles: We are forever evaluating how our practices impact our employees and are always seeking new and unique ways to improve.

Our People and Culture team are the custodians of this program, which includes regular updating of job descriptions to ensure our team members live and breathe purpose.

As such, we have now added the business purpose to every employee’s job description and are working on aligning this with each team member’s development plans.

6. Parent Rooms: One of the core values we live by is true flexibility. An example of this is our dedicated room for parents

returning to work. The parents room is a meeting room that has been converted into lockable, private, quiet space with a feeding chair. It also has power and a refrigerator to allow nursing mums to express. Given the age of our workforce, this was an important addition for us.

7. Increasing Staff Volunteering: Together we can achieve more. Silver Chef has turned its attention to increasing staff volunteering because not only is this beneficial to personal and professional development, it promotes teamwork and external collaborations. Recent volunteering partnerships included The Salvation Army, Foster Hope NZ, The Animal Welfare League Queensland and the Cedar Science Indigenous Mentorship and Outreach program in Vancouver.

8. Staff Socially Responsible Super: Silver Chef recently added this as an option for team members along with an education program. It allows our staff to select a super option that meets responsible investment standards to ensure their money isn’t doing the planet and its people harm.

9. Virtual Working Environmental Guidelines: We promote work–life balance, health and happiness. We have developed an online training module for staff to provide tips on how to incorporate environmentally friendly practices within their own working environments.

10. Not-For-Profit Guidelines: Silver Chef has had a long history of supporting not-for-profits, social enterprises and community fundraising events. We have formalised our processes to enable these groups to access Silver Chef refurbished or new equipment at discounted rates.

11. Opportunity International Customer and partner Giving: To date, according to Opportunity International, Silver Chef has helped over one million people in developing countries.

Silver Chef aims to extend donations

externally and often communicate to our customers about how they too, can partner with our charity Opportunity International.

12. Diversity and Inclusion training: Silver Chef places emphasis on treating each other fairly and showing appreciation for individuals no matter what their background is. As such, Silver Chef has developed a training program to enhance diversity and inclusion culture at Silver Chef. As a result, we have found it has had a significant impact on team engagement and morale.

Five tips for companies big and small considering B Corp certification: • B Lab Australia has a great, free tool, the B Impact Assessment – jump online and use it to get a sense of where your business is at, so you can identify key areas of improvement.

• Becoming a successful B Corporation is about making sensible and considered decisions across the organisation, from procurement to internal processes – everything is up for review!

• Put together a team to help you undertake a meaningful audit of your organisation – we find this creates a great opportunity for people to collaborate around purpose and share what is important to them.

• Consider ways to utilise being ‘good’ in business as a competitive advantage.

For example, being a B Corp is a great recruitment tool for prospective employees; having certified ‘credibility’ or a trusted mark appeals to many consumers.

• Review your communication channels; implement and maintain an inclusive and collaborative culture and communicate this well. Sharing your purpose, vision and desire to make an impact is contagious and will permeate to your customers, the community and beyond.

Silver Chef - an ASX listed company - is Australia’s only dedicated hospitality funder. Committed to helping customers achieve their ambitions for more than 30 years, the team is entrenched in the world of hospitality and passionate about seeing businesses big and small thrive.

07 3335 3300 enquiries@silverchef.com.au www.silverchef.com.au

BUSINESSFRANCHISOR 25

Karen Gately

Creative ways to reward and recognise The bottom line is people are more likely to strive to achieve the standards required of them, and beyond, if they believe they are fairly recognised and rewarded.” ultimately performing. When leaders adopt a coaching approach, they are entirely more likely to communicate both constructive feedback and praise.

Reflect for a moment on the effectiveness or your organisations approach to rewarding and recognising people.

If you’re struggling to extract optimum value

How are culture, engagement and performance

key factors. A lack of effective coaching from

impacted? Do the leaders you support

managers and poor design or application of

successfully influence capability and behaviour

reward programs.

through the thanks they give and rewards they

The simple reality is, when leaders actively

provide? Do financial and non-financial rewards

coach their people they are more likely to be

inspire discretionary effort and impact upon the

‘tuned in’ to each individual on their team; that

standards achieved by individuals and teams?

is how they are thinking, feeling, learning and

26 BUSINESSFRANCHISOR

for your reward and recognition efforts, you’re far from alone. All too often organisations fail to leverage the full benefit of the investment they make in reward and recognition programs.

At the heart of the issue are typically two

Incentive schemes or recognition programs typically fail due to a lack of alignment between decisions made and the outcomes needed.

Take for example bonus programs that fail to reinforce cultural expectations or incentive schemes that discourage collaboration and team success. It doesn’t take long working in HR to come across for example, the highly paid ‘technical expert’ who continues to earn large bonuses despite their poor behaviour impacting the rest of the team.

Getting reward and recognition right matters for reasons beyond spending money wisely. Of course, success should be measured by the return on your investment in bonuses and other financial rewards. What matters more however is the impact reward and recognition done well, can have on the performance of your business.

The bottom line is people are more likely to strive to achieve the standards required of them, and beyond, if they believe they are fairly

recognised and rewarded. When people don’t feel fairly treated, however they’re entirely unlikely to invest the full strength of their potential in getting the job done.

Gallop research, spanning four million employees worldwide, presents compelling evidence of the link between reward and recognition, and organisational performance.

Benefits cited include improved individual productivity, increased engagement among colleagues and staff retention. Critically, higher loyalty and satisfaction scores from customers, better safety records and fewer accidents on the job were also reported benefits.

Karen Gately, a founder of HR Consultancy Ryan Gately, is a leadership and people-management specialist. Karen works with leaders and HR teams to drive business results through the talent and energy of people. She is the author of The People Manager’s Toolkit: A Practical guide to getting the best from people (Wiley) and The Corporate Dojo: Driving extraordinary results through spirited people.

It’s not all about money While financial rewards unquestionably play a role in inspiring a sense of personal value and commitment, far more important are the words of gratitude people need to hear, and acts of generosity they value.

McKinsey & Company research shows that non-financial incentives are more powerful influencers of behaviour than money. Research consistently shows in fact that when people are satisfied with their salaries, non-financial rewards are more effective than more money in building long-term employee engagement.

Get creative Making reward and recognition programs work takes a creative approach. While of course there are strategies or initiatives that will work in many instances, far more powerful however are those tailored to your workforce.

Look for opportunities to tailor rewards to each individual or team. Adding a personal touch can have a dramatic impact on the extent to which rewards are truly valued.

Keep in mind that the primary objective of rewarding and recognising people is to influence how they feel and in turn behave. To do that you need to know each person and adopt an approach that works for them. Armed with a little understanding of each individual, far more meaningful and therefore impactful rewards can be provided.

While many organisations provide standard rewards or forms of recognition, people often appreciate the effort invested and personal nature of the reward more than the value of the gift itself. Encourage leaders to think laterally about the benefits people on their

Tickets to a certain event for example, or a book about a topic the individual is interested in, are far more likely to be memorable than a standard reward everyone gets.” team may value and look for ways these can be accommodated.

may well be appreciated in some instances,

Think beyond traditional ways of rewarding and recognising people. While bonuses may form an essential part of your reward strategy, think also for example about ways in which leaders can provide ad hoc recognition of the behaviours and outcomes needed. Tickets to a certain event for example, or a book about a topic the individual is interested in, are far more likely to be memorable than a standard reward everyone gets.

effort are more likely to be valued. Opportunity

While a certificate of achievement or trophy

www.ryangately.com.au

rewards that demonstrate thoughtfulness or to attend a course or conference, time off to pursue personal interests, gift cards or vouchers for products or services the individual needs, support services that help people balance work and life are just some of the many ways in which a tailored approach can be taken.

For more information: info@ryangately.com.au

BUSINESSFRANCHISOR 27

Amy Gray

Store design: efficient ways to roll out a new concept

Whilst a new concept design for any brand is exciting and essential to remain fresh and current, there is another reality that needs to be considered as a part of the concept design development – the build cost for each store.

Whilst developing and designing a new concept, we can be mindful of budgets, but at this early stage, it can be more beneficial that budget is not the guiding factor, as you don’t want this to hinder the design process.

But once the concept is confirmed, and possibly constructed in one or two sites, it is worth considering a review of the fit-out and construction costs.

New concepts may be designed initially for flagship stores, which have higher budgets, but when rolling out your concept out across your network of stores – how do you ensure your build costs are as efficient as possible? This is particularly important for franchise business models, as it can in turn have a follow-on effect on how affordable and achievable your store purchase cost is for new franchisees.

Therefore, it is worthwhile gaining a thorough understanding on how much design details, material selection, and shopfitter selection, can impact on the final fit-out costs.

Having worked within an inhouse design team and externally as a design consultant for some large rollout food retail brands, operating under a franchise model – I can certainly share understanding and insight into the design and

28 BUSINESSFRANCHISOR

Amy Gray is a retail interior designer, and director of Studio Grayscale. She has worked with leading brands in the retail and hospitality design space for well over a decade.

early in the process. Ask your shopfitter what details or design elements within your new concept design are proving costly and have your designer and shopfitter discuss potential alternative solutions to reduce costs. With these different perspectives, you will be guaranteed to find some smarter methods to ensure a more efficient rollout. It’s the shared knowledge between shopfitters and designers that is key here – balancing cost efficiency in production, with the intended appearance and outcome.

Material selection:

construction side of the process. It could almost

Smart design:

be guaranteed that there are cost savings out

There are design details that look great but

there to be made and are available to apply to your store concept - which can be discovered through some thorough investigation.

are costly; and there are design details that look great but are designed in a cost-efficient way – these achieve a similar effect, but at a

Following are the key factors that I recommend

lesser cost. When rolling out a new concept

be investigated to ensure your fit-out costs are

across your network of stores, it is very much

kept as efficient as possible, and where cost

a worthwhile exercise to review the concept

savings could be made.

and details with your shopfitters and designers

how do you ensure your build costs are as efficient as possible? This is particularly important for franchise business models, as it can in turn have a follow-on effect in how affordable and achievable your store purchase cost is for new franchisees.”

Material selection is generally the designers first go-to for reducing costs, as design details, and manufacturing methods don’t need to be altered, it’s simply the change of a finish. As an example - if you are paying over $70- per sqm for tiles within your design, but your designer can source a similar tile (or alternative finish) for $35- per sqm, you will halve your material costs in this area of the fit-out (keeping in mind that durability vs. cost should also be considered). Floor finishes are key here - as they make up a large part of the fit-out / material supply in terms of square meterage.

Alternatively, instead of altering finishes – you could potentially contact your existing supplier and arrange an agreement, or reduced price for buying in bulk - a simple way to reduce cost without altering the specification. Or, if you have key finishes that can’t be substituted, but are costly, you can consider reducing the quantity of these within your fit-out and balancing out with a less costly alternative.

For large retailers, I would suggest once your concept is developed, you engage a designer, whether it be an inhouse or external designer to do some thorough research of your selected finishes. The cost saving on a single store may be small, but once multiplied across a network of stores, the cost saving could be quite significant.

Consider ordering in multiples: Are there elements or components within your fit-out, that will remain consistently the same across your network of stores?... or, can your design be streamlined, so that elements within

BUSINESSFRANCHISOR 29

Trusted relationships are valuable, however, do always ensure you continue to tender your fitouts to alternative shopfitters. In general, aim to get three construction quotes for every store.” your fit-out become more systemised? There will generally always be a cost saving if you are making a larger purchase and ordering in multiples - consider buying elements of your fit-out for multiple stores, rather than one store at a time. The cost saving could be negotiated with your shopfitter.

Lighting design: When your initial concept was designed, it is most likely that a lighting designer was engaged, and a lighting concept produced. An area of cost consideration, may be the light fittings that were initially selected, and whilst these may be great for key flagship stores, it is worth a discussion with your lighting designer to establish if there is a budget alternative for standard stores across the network.

Shopfitter selection and tendering: After working in store design for some time, you do develop trusted relationships with shopfitters. Trusted relationships are valuable, however, do always ensure you continue to

30 BUSINESSFRANCHISOR

tender your fit-outs to alternative shopfitters. In general, aim to get three construction quotes for every store - this will allow you to compare all prices and ensure you are getting the best deal. There can often be significant savings made by thoroughly reviewing your shopfitters prices, and questioning anything that does not align, or seems to be at odds with the other quotes.

Retain and work with existing finishes within the site: If you are going into a tenancy that has an existing fit-out, before presuming everything needs to be demolished, have your designer review the existing fit-out. This may even be before the lease is negotiated – so any elements to be retained, can be incorporated into the lease - this may well save significant costs. Areas that I have found that can be worthwhile retaining are lighting, flooring, shopfronts, ceilings, walls and occasionally cabinetry. If you are a food retailer, you should also ensure your designer is aware of where

existing drainage points are located within the tenancy – utilising existing drainage points is always far more cost effective that installing new ones, so, where possible – design your new fit-out layout to suit the existing drainage points onsite.

Whilst time is of the essence when rolling out a new concept, and there is generally a push to move quickly - consider a review early in the process, as it is a worthwhile investment - and a cost saving for the business which can potentially be passed on to franchisees. It may take more time for your designer and shopfitter to review your concept and establish cost efficiencies – but what this may save you in the long term should well outweigh the additional time invested to review.

Studio Grayscale are an interior design studio, based in Melbourne. Specialising in interior design for hospitality and retail spaces, they listen to your brief intently, then produce design solutions suitable for your brand and target customer. www.studiograyscale.com.au

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Jonathan Muncey

Why Franchisors Should Update Their Disclosure Document Jonathan Muncey is a franchise lawyer at LegalVision. He provides ongoing practical guidance and solutions for franchisors and franchisees so they can focus on achieving their business goals.

As a franchisor, your disclosure document details all of the necessary information that a potential franchisee needs to know before entering into a franchise agreement.

It is a document that will remain a materially relevant document throughout the entirety of your operations. However, when circumstances afford franchisors the ability to decide whether or not to update their disclosure document, the question remains: are there any benefits in updating the document without a specific requirement to do so? This article steps through the reasons as to why updating your disclosure document is beneficial for your franchise system.

Updating your Disclosure Document

3. information about any litigation that the franchise may be involved in; 4. information about the intellectual property that the franchise operates under; 5. costs related to establishing a franchise and ongoing costs when operating a franchise; and 6. any other costs, including a description of the cost, how the cost was calculated, who the payment of the cost is made to, whether it is refundable and whether the cost could potentially increase over time.

Your disclosure document should contain an updated version of your financial records, which may include your financial report or an auditors report confirming your financial position.

Compliance with the Franchising Code

When updating your disclosure document, you need to update any information that is no longer current. Therefore, depending on what changes occur annually, you will need to update:

As a franchisor, you should give yourself the best opportunity to comply with the Franchising Code of Conduct (the Code). The Code states that a franchisor must update the disclosure document after the end of each financial year unless the franchisor has:

1. your list of existing franchisees operating within Australia;

A. entered into only one franchise agreement in the year; and

2. any details of franchisees that were transferred, no longer operate, did not extend their franchise agreement or terminated;

B. does not intend to enter into another franchise agreement in the following financial year.

32 BUSINESSFRANCHISOR

Even when there is no requirement to update the disclosure document under this threshold, a franchisor must produce an updated disclosure document within two months of a request from a franchisee. Additionally, the Code requires franchisors to provide prospective franchisees with an updated disclosure document. The updated document must reflect the position of the franchise at the end of the most recent financial year.

While your circumstances over the last financial year may not require you to update your disclosure document, doing so may put you in the best position to ensure compliance with the Code. The position of the franchise may significantly change in terms of terminations and transfers, intellectual property holdings or if the franchise has been a party to litigation.

If the franchise’s position has changed, it may take time to update the disclosure document accurately. If you wait for a request from a franchisee to update your disclosure document and the updating process takes longer than anticipated, you may risk non-compliance with the Code. Failure to update your disclosure document as per the requirements outlined in the Code, means that you may face significant penalties or even legal action from your franchisees.

Good Faith with franchisees Even when compliance with the Code does not appear to be an issue, providing your franchisee base with an updated disclosure document at the end of each financial year can be beneficial.

It can be seen as an act of good faith and a gesture of genuine commitment to openness and transparency between franchisor and franchisee. Updating your disclosure document

If you wait for a request from a franchisee to update your disclosure document and the updating process takes longer than anticipated, you may risk noncompliance with the Code.�

demonstrates that you strive to set a positive and helpful tone within your franchise network.

Regular communication may also mean that your franchisees feel more comfortable to discuss any potential issues with you allowing the both of you to work together in mitigating and remedying the issue before it escalates.

Accuracy of figures As there is a requirement to include financial information in the disclosure document, annually updating your document also allows you to keep track of and check the accuracy of your financial figures, particularly in relation to the operational costs and supply rebates each year. Operational costs are subject to change as the market fluctuates, but regular checks allow you to monitor finances more closely, budget appropriately and if necessary alter the fees you charge your franchisees.

Franchisees operating in regulated areas can experience significant changes in operational costs. For example, operational costs may increase due to the establishment of new regulations that the franchisee must comply with or perhaps a new licensing practice or requirement is put in place that the franchisee must obtain. Further, establishment costs will naturally increase over time as the franchise system grows. As such, it is good practice

for you to review the figures set out in the disclosure documents on a regular basis.

A useful sales tool As per the Code, you must provide a prospective franchisee with an up-to-date disclosure document as at the end of the previous financial year. If you are already in the practice of regularly updating your disclosure document, doing so will be much easier.

Further, by providing an updated disclosure document without delay allows you to capitalise on the potential franchisee’s interest in the brand. If you delay in providing the documents, it may mean that you lose a strong candidate for a franchise and it may also cause compliance issues with the Code.

An updated disclosure document can also be a useful sales tool for prospective franchisees. It accurately reflects the current costs associated with the operation of a single unit franchise, providing them with the necessary information to decide on entering the franchise network.

It demonstrates to the prospective franchisee that you are attentive and responsive to market changes in your industry. It also indicates that you have an active franchise system, are on top of your franchise operations and have a head office who acts in compliance with the Code.

Key takeaways As a franchisor, you should consider the benefits in updating your disclosure documents.

Not only does an annual update make compliance with the Code easier, but it also benefits your franchisee base, prospective franchisees and acts as a useful tool for attracting new franchisees. If you have any questions about updating your disclosure document or need assistance doing so, get in touch with one of LegalVision’s franchise lawyers.

LegalVision is a market disruptor in the commercial legal services industry. Their innovative business model and custombuilt technology assist their lawyers to provide a faster, better quality and more cost-effective client experience.

LegalVision is a leader in delivering legal services in Australia and has assisted more than 50,000 businesses.

The firm was awarded NewLaw Firm of the Year at the 2017 Australian Law Awards and was named 2018 Fastest Growing Law Firm in APAC by the Financial Times.

For more information call: 1300 544 755

BUSINESSFRANCHISOR 33

Pete Burdon

How to protect your franchise from bad press Franchises should pay more attention to the news media than other businesses for two major reasons.

Firstly, a bad story or two can seriously damage the reputation and bottom line of every franchisee in a network, not just the one at the centre of the issue. Secondly, having franchisees scattered in different communities across an entire country gives them a huge

WHAT SHOULD FRANCHISORS DO?

Crisis Communication Plan

To protect against bad press and make the most

that prepares an entire franchise to deal with

of positive media opportunities, any franchise

crises or negative situations that can damage or

needs a three-pronged news media policy. The

cripple reputations and bottom lines.

first element of this is a Crisis Communication Plan, while the second is trained media spokespeople who know how to control media interviews and avoid the many landmines that

A crisis communication plan is a document

Lots of franchisors don’t have a crisis communication plan. There are usually one of two reasons for this. It’s common for them to

can derail a reputation within seconds. The third

think they won’t need one because nothing

element is a proactive publicity plan designed to

will happen that could require one. This is a

generate positive media coverage in the good

mistake. There are many things that could go

opportunity to attract masses of positive media

times and create goodwill in the community.

wrong that lead to sudden and damaging media

attention without paying a cent.

We’ll go through each of these in more detail.

and public scrutiny.

34 BUSINESSFRANCHISOR

Pete Burdon is founder and head trainer of Franchise Media Training. He is a former journalist and government press secretary. This gives him a thorough understanding of both sides of any media interaction. He presents both on and offline courses and workshops.

Let’s look at a few general franchise possibilities. A serious customer complaint against a staff member of a franchisee; a franchisee complaining about your support; or a completely bogus claim that you must still take seriously. This is the tip of the iceberg. There will also be others related to your niche. For example, food poisoning allegations, or death or serious injury involving your franchise in some way.

The other common reason for not having a plan is the belief that a public relations company could be called in to fix the situation. This may have been possible 10 years ago, but not today with the internet and social media. You still need a PR person on hand, but you also need a plan.

In the 21st Century, your success in dealing with bad news will be dependent on the speed of your response. Media will swoop on a franchisee within minutes, fling a microphone in his or her face, and that may end up on tonight’s television news. Do your franchisees know what to do in these situations and on social media? Do you have pre-prepared statements on possible issues ready to send media and other stakeholders within minutes of the event erupting? If you don’t, media stories will say that you refused to comment. Those stories will then be spread through social media like wildfire.

That’s why the first step in preparing your plan needs to be a brainstorm of what could go wrong. Then holding statements need to be written that can be sent to media at the outset of a crisis. These say very little, but they do say enough to get a positive comment from you into that first media story that appears on the news website and through social media. This is vital because it’s in the initial stages that people usually decide if you are a victim or a villain.

There are other parts to a crisis communication

A crisis communication plan is a document that prepares an entire franchise to deal with crises or negative situations that can damage or cripple reputations and bottom lines. ”

plan. You can make it as detailed as you want, but without one you will find it difficult to come out of a crisis or negative event with your reputation intact. It’s like an insurance policy on your reputation, just like an emergency management plan is an insurance policy on personal safety.

Trained media spokespeople The ability of your media spokespeople to handle media interviews when the stakes are high is absolutely crucial. Lots of people think that because they are good presenters, they will be good media spokespeople. The problem is that a media interview is like no other conversation or presentation you will ever give and must be handled completely differently.

That’s because only snippets of what you say will ever make it into the story the reporter or producer puts together. Here’s an example.

Let’s say a minor food contamination occurs at one of your stores. The reporter asks you, “Can you guarantee this won’t happen again?”

Of course you can’t guarantee that, but you can’t say so. If you do, the headline could read, “Franchisor admits another contamination possible.” That could be the entire focus of the story and the positive comments you made during the rest of the interview could be totally overlooked. This happens.

My recommendation in a situation like this is to answer the question by saying what you can guarantee. For example, “What I can guarantee is that we have a rigorous food preparation process and our franchisees and their staff all undergo extensive training.” There are also ways of dealing with this if you get the same question again.

However, the key with these interviews is having your own message to get across and finding exciting ways of making it. Then you continually transfer back to your message in different ways. It’s important that your

message is of interest to the media outlet’s audience and you do find these exciting ways of making it.

For example, a point you want to make could be, “Franchisors are struggling under the new fair worker legislation.” That’s a good point, but not overly exciting. What if you said it this way?

“How many more franchise systems need to go under before the government gives us a break?”

How much more exciting is that! By dressing points up like this, you satisfy the reporter and make it highly likely that it will be that statement that makes it into the story. This shows how much power you have with training and preparation.

One thing I must point out is that there are two parts to mastering media interview skills.

There is knowing what to do and doing it. It’s important to know how to control interviews.

But the only way to master the art is through practice. That’s by sitting in front of a camera with someone asking you the questions on these scenarios before watching them back.

Just like your crisis communication plan needs to be in place well before you need it, so do the media skills of your spokespeople. The horse has already bolted when something happens.

BUSINESSFRANCHISOR 35

it’s important for your brand to be seen through the media for positive reasons.”

Generate positive media attention There are two reasons why franchises should get proactive with media and start getting themselves featured in the news media for positive reasons. Firstly, there are the obvious reputation and profile-building benefits. But secondly, it’s important for your brand to be seen through the media for positive reasons.

Not just for the reasons already outlined, but also as a defense if you do ever receive negative media attention. If the only time anyone sees your franchise in the media is when something bad happens, that’s what they will think of your brand. But if the majority of coverage is positive, a crisis or negative event won’t damage your reputation and bottom line anywhere near as much.

Its almost as if franchises were designed to attract good media attention. They have so many advantages over other businesses. Firstly, because a business has been franchised, media know it’s credible. Media can be dubious about this when they get contacted by a business wanting publicity for something or wanting to

36 BUSINESSFRANCHISOR

share their expertise on some topical issue.

That’s not a problem for a franchise, either nationally through the franchisor, or locally through a franchisee. I can vouch for that as a former daily newspaper reporter.

Secondly, because franchisees are scattered throughout a region, country or countries, there are huge opportunities for them all to approach local media in their patch with the same information.

For example, a press release could be distributed to all franchisees about a simple national fundraising campaign the franchise is holding. They add their name to the release and send it to local media. This can lead to hundreds of thousands of dollars worth of free media exposure in local media across a country or countries. That can’t be done by other businesses. The same thing can be done with advice articles.

Also remember that we’re talking about news stories and guest articles here, not advertising.

So it’s absolutely free and the reputationbuilding benefits of this can’t be matched anywhere. Generating this publicity can be

done without having to pay an expensive public relations company. It’s just a matter of learning a few basic skills and dedicating a few hours a month to it. The payback can be enormous.

SUMMING UP The news media has the power to either make or break the reputation and bottom line of your franchise. If you are prepared for negative attention and get proactive in attracting good publicity, the news media becomes a huge opportunity for you to grow. But if you are not prepared and are never seen in the news for the right reasons, the media will remain a serious threat.

Franchise Media Training prepares franchisors to protect their bottom lines against future media attacks and how to grow those profits by becoming proactive with media. For more information and to get the free report, go to: www.franchisemediatraining.com.

Contact Pete directly: office@FranchiseMediaTraining.com

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Natalie James

make it clear to your franchisees that you expect them to comply with workplace laws. Best practice would be to state this in your franchise agreement and to set out consequences if franchisees fail to comply.�

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Protecting Vulnerable Workers Act: What should you do to ensure compliance?

The Protecting Vulnerable Workers Act extends the liability of franchisors for employee entitlements by holding certain franchisors and holding companies responsible for underpayments to workers by businesses within their network.

This can occur, for example, where a franchisor has a significant degree of influence or control over the franchisee’s affairs and the franchisor (or one of its officers) knew, or could reasonably be expected to have known, that underpayment of wages by a franchisee would occur or was likely to occur.

This responsibility can be discharged by the franchisor taking reasonable steps to prevent the underpayment of wages arising within their network.

At the time of writing, it’s been over three months since the new laws came into force, so here’s a refresher on what franchisors should consider doing to help protect workers and ensure compliance within their networks:

Set clear expectations The first step you should take is to make it clear to your franchisees that you expect them to comply with workplace laws. Best practice would be to state this in your franchise agreement and to set out consequences if franchisees fail to comply.

If this isn’t possible, or cannot be achieved in the short term, then you need to communicate your expectations to them in another manner that is clear and unambiguous. We recommend you do this right away.

Support compliance The second step you should take is to support

Natalie James has a 20 year career working for the Australian Government in a range of roles and was appointed to the position of Fair Work Ombudsman by the Governor-General in July 2013. Under the Fair Work Act 2009 Natalie is responsible for promoting harmonious, productive and cooperative workplace relations and ensuring compliance with Commonwealth workplace laws.

your franchisees to comply by providing information and support suitable for both their capability and that of the workforce.

get to the bottom of any issues quickly and can also provide valuable intelligence about where problems may be forming.

Vulnerable workers, such as young workers or migrant workers, are less likely to be aware of their rights, or raise concerns in the workplace – a prudent business would provide more support to franchisees if this is the nature of their workforce. Similarly, more support may be required for franchisees with limited business experience.

Another way to stay on top of what is happening within your network is to regularly audit employee records. Effective audit programs involve both paper-based audits and dicussions with employees to confirm records are accurate.

A practical and easy way to assist franchisees is to direct them to the Fair Work Ombudsman’s free resources including pay and conditions calculators, online training and employment templates at www.fairwork.gov.au.

Ask them to sign up to the FWO’s MyAccount, where they can interact with our advisers and save information relevant to their operations.

Another option is arranging corporate memberships with an industry association or engaging a professional adviser. This will provide franchisees with access to reliable advice. Importantly, we find members of employer organisations are more likely to comply with laws.

Check!

Finally, you should check your expectations are being met.

One easy and cost effective way to do this is to set up an employee hotline or email address where workers can raise any concerns directly with you. This enables you to hear about and

The diversity in the nature of franchise systems means the steps you choose to take might be different to those taken by another franchisor.

You need to determine what works for your business. Following these three steps adapted to the nature of your business, your franchisees and the workforce, will help to ensure a compliant network.

The Fair Work Ombudsman (FWO) is an independent statutory office responsible for promoting harmonious, productive and cooperative workplace relations and for ensuring compliance with Australia’s workplace laws. The FWO’s free services provide employers and employees with information about fair work practices, rights and obligations. A cornerstone of the FWO’s approach is work with key stakeholders to build strong, effective, long term relationships promoting compliant workplaces.

For further guidance see: www.fairwork.gov.au/find-help-for/ franchises/franchisors

BUSINESSFRANCHISOR 39

Darleen Barton

Your brand and the new generation of internet exposure Darleen is also a best-selling author and highly respected business coach, performance mentor and corporate therapist. As an active, innovative, energetic and accomplished Performance activist with a history of achievement and exceptional results, Darleen’s talents are numerous and her skills extensive.

The rising popularity of employee review sites needs to be addressed by all employers. It is crucial that SMEs understand that as their business grows, so too does their exposure.

In recent years there has been a fundamental shift in positions of power within the workplace.

Gone are the days where employees were subject to their superiors and that was the end of it. The rise of the internet and social media has created a kind of forced-transparency amongst organisations, and employees are increasingly able to hold management accountable. The arrival of sites such as Seek.com.au and glassdoor.com.au give employees and ex-employees the opportunity to deliver frank and open assessment and feedback about their employers. This causes great concern for businesses as, in the way of the internet, feedback is anonymous and cannot be reviewed or removed by employers.

According to research; seventy-five per cent of job-seekers consider an employer’s brand before applying for a job, with a further sixty two per cent using social media to investigate an employer’s brand.

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Recently I was engaged by a business in Sydney to assist the executives in improving their workplace culture, whilst reducing their turnover rate. In Australia the average staff turnover rate for businesses is around fifteen per cent, while the rate of staff within twelve months is much higher at around twenty-three per cent. This company in particular was experiencing a turnover rate at thirty-plus per cent. This was a key issue for them, however it was not the only issue they had. They were also struggling to attract quality employees to their business, a key factor in their struggling business model.

I knew that there had to be something that was connecting all the factors that were giving the executives such a hard time. The first thing I did was undertake a ‘brand’ scan online in order to get a feel for the type of feedback employees were posting about the company on employee review sites. The management team was not aware of the significant amount negative feedback on Glassdoor.com. Employees as well as ex-employees had been posting negative reviews for months about the management team as well as the workplace culture that surrounded them. This information took me minutes to find yet they, like so many other executive teams, were not aware of it or the impact it was having on their business.

Too many businesses, particularly SMEs are not aware of these feedback sites and the power they hold. Serious damage is being caused to their brand without their awareness and it’s affecting their ability to attract good quality candidates for roles within their company. This causes a cycle that negatively impacts the brand and breeds more negative reviews.

Not only do SMEs need to lift their game in the management, support, reward, training and development as well as retention of staff, they need to look at their organisation’s reputation as an employer of choice or bad choice. Money will not buy you happiness, “you cannot retain employee’s long term by increasing salaries”. Businesses are built to be profitable, high salaries can create a “more syndrome” culture, promoting low productivity. Companies need to develop and implement strategies to ensure their staff are communicating positive messages about their business in a genuine way in order to reduce the potential of their staff or ex staff to post negative feedback on online platforms.

Employers need to be extremely cautious when dealing with online criticism, as doing so poorly can cause even greater harm to the brand. To begin with, the criticism should be responded to, but this response must be in a manner that displays the organisation’s genuine commitment to improving themselves and their workplace culture.

Secondly, it is important to have an in-house platform such as an intranet or workplace App. This provides a safe environment for employees to voice their concerns internally before turning to external platforms. By creating a space in which employees can interact directly with executives you are humanising your management team and showing you

The rise of the internet and social media has created a kind of forcedtransparency amongst organisations, and employees are increasingly able to hold management accountable. ” care about your employee’s welfare. Intranet sites are a great way to create a workplace culture which engages, seeks feedback and responds to employee concerns, issues and ideas. Online feedback forms and surveys are ideal for this. Workplace Apps, such as those powered by hubEngage, are also a great way to create a connected employee community, and to optimise communication. These Apps are an avenue for businesses to push content to their employees and receive instant feedback and insights from employees. They also create connections between employees, leading to greater collaboration and engagement.

Establishing workplace committees to focus on issues can be an effective way to entrust employees with the responsibility of addressing and resolving workplace issues. Employees are less likely to criticise themselves on external sites if they are charged with the responsibility to manage and solve these issues themselves.

Thirdly, it is important to ask current employees, including those recently hired, to comment about their application process and work experiences on review sites. This is a great trust building exercise that shows you entrust your employees with representing your brand and it is also great for improving relationships within the workplace. Businesses might want to ask potential employees about their perception of their brand, and how this view was formed. Did they read reviews online?

Check social media, such as Facebook? What did they gain from their research, and what was it about the business’s online presence that made them want to apply? These questions mean businesses gain a comprehensive picture

of their online reputation and how it affects potential employees. It also allows employees to voice any initial concerns raised by online reviews, and means the workplace culture is understood very early on, so there are no nasty surprises for employees or management.

It’s also a good idea for businesses to offer exit interviews when employees leave their business. Exit interviews provide a way for former employees to voice their opinions in a meaningful way. Often, when employees feel dissatisfied with the running of a business, they feel there are no real avenues to express their concerns to management, leading to negative reviwes on sites such as glassdoor and Seek.

Exit interviews can provide a kind of closure, and employees feel their concerns and issues have been heard and understood. Businesses may wish to employ an independent contractor to conduct exit interviews, as employees may not feel comfortable voicing complaints or issues to their superiors within the business.

Businesses need to focus not only on communication with customers, but also on effective communication with their employees.

Communication within the workplace, when done well, creates employees who are engaged, consistent, and supportive of initiatives and projects. In-house programs for employee communciation and engagemnt, consistent ‘checking in’ with employees, and exit surveys are all excellent ways for businesses to create a positive workplace culture. With a positive culture in place, former employees will feel heard, and businesses won’t have to worry about negative feedback online.

Finally, it’s important to ensure that someone is responsible for mining these review sites for information. Ignoring these sites and the reviews on them, as I’ve said before, can be extremely detrimental to your business.

Executives should always be combing these sites for ways in which they can help the business improve and make their employees feel more valued.

It’s important that you do not ask employees to respond to negative reviews because nine times out of ten these will seem superficial and potential employees will see right through them. It is best to do things such as apologise that the employee had a negative experience and do what you can to ensure it doesn’t happen in the future.

Too many businesses are focused on customer review sites only and need to add employee review sites to the mix.

Darleen Barton is renowned for ‘being there’ when it matters most and finding innovative ways out of the quagmire. If you want to talk over a universe of social issues in business and life, Darleen Barton is your women! You have a problem ask Darleen… People are looking for coping strategies, Darleen provides the keys to unlocking the shackles that holds one back. Despite all of her achievements, Darleen remains attuned to the needs of others, listening to their concerns with a focus on solutions. www.dipac.com.au

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Alex Morkos

Why senior business managers need more security education Alex is the co-founder and director of cyber security consulting firm Aleron. He has 20 years’ experience in IT security consulting and management. Alex has managed and implemented IT security projects at several leading financial institutions, including Westpac, Commonwealth Bank, Suncorp Group and Macquarie Bank.

Businesses are becoming more aware of the need for strong cybersecurity at all levels.

Data breaches can affect a brand’s image, leading customers to wonder if they can trust the brand. Even if just one franchisee is struck by a significant data breach, the reputational damage can extend to all businesses in the franchise.

Franchisors have, in some US cases, even been held responsible for franchisees’ data breaches. This creates a worrying precedent for franchisors who need to do what they can to help franchisees keep systems secure.

With new legislation such as the mandatory Notifiable Data Breach (NDB) scheme in place, the stakes are getting higher all the time. NDB legislation means businesses have to report a data breach if it’s likely to result in serious harm to individuals. The business must notify both the affected individual(s) and the Office of the Australian Information Commissioner. Failing

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to comply can result in fines and penalties. It can also make it difficult for businesses to build trust relationships with their customers.

The definition of serious harm includes financial losses such as those that would occur if your database was breached and your customers’ credit card details were stolen, for example. However, serious harm doesn’t have to be financial; it can be emotional or psychological. So, if you have information about your customers that, if exposed, would cause embarrassment or discomfort, that could fall under the definition of serious harm.

To avoid this, franchisors and franchisees need to take cybersecurity extremely seriously. This includes seeking education to ensure you’re not missing any potential gaps that could leave your business vulnerable.

Franchise businesses can be vulnerable to attack because they believe they’re a lowpriority target for cybercriminals, so they invest less time and funds in securing the organisation compared to larger organisations.

However, even smaller businesses can be highly

attractive to cybercriminals, often because cybercriminals know that their mistaken belief in safety or immunity will translate to inadequate security.

Franchise businesses have two options when it comes to security. The franchisor can mandate a uniform approach and solutions throughout the franchise network. Or, alternatively, the franchisor can let the franchisees determine their own security posture. Both approaches have pros and cons.

For example, if a franchisor has strong security measures in place with very few gaps, then passing this same approach to its franchisees means they will all have equally strong security. However, if a franchisor’s security has a vulnerability, cybercriminals can then use that vulnerability to attack all the franchisees, netting them a bigger target and causing a bigger problem for the organisation.

Letting each franchisee determine their own security approach can also be risky. Many franchisees aren’t security-savvy enough to know whether their security measures are really strong enough to keep cybercriminals out.

This means vulnerabilities can be overlooked and a cybercriminal can gain access to the franchisee’s systems. Then, it could be possible for the attacker to use that opening to gain access to the franchisor’s own systems and spread the attack throughout the entire franchise network, just because of a vulnerability in a single franchisee’s systems.

Complexity is added when you consider how

A business can have the most advanced security technology in place but if its employees don’t abide by security policies and processes, it will be easy for malicious hackers to get around the technology barriers.” many third parties work with franchises. For example, if your franchise outsources its Point of Sale (POS) system to a third party, then your business depends on the security of that system. If the third-party provider has vulnerabilities, then cyberattackers can use those to access not just your franchise network but the networks of all the businesses working with that third-party provider. In the case of POS systems, that means cybercriminals can access customer payment information, which would potentially fit the ‘serious harm’ definition under the NDB scheme.

To overcome these challenges, franchisors and franchisees need to seek education to ensure you’re aware of the security risks and vulnerabilities your organisation could face, and you need to take all possible steps to put cybersecurity at the top of your agenda.

According to recent research by Kaspersky Lab, only 12 per cent of employees know or understand their information security policy.

When 88 per cent of an organisation doesn’t even know what’s required of them to help keep the business secure, this indicates a

significant problem. Even more worrisome, around a quarter of employees surveyed for the same report said they believe their organisation doesn’t even have any established security policies. This means either these organisations are trusting their continued ability to operate to luck, or their employees are simply unaware of what the organisations are doing to stay safe from cyberattacks.

Employees have always been the top security risk factor in organisations. A business can have the most advanced security technology in place but if its employees don’t abide by security policies and processes, it will be easy for malicious hackers to get around the technology barriers. All it takes is for an employee to click on a suspicious link, provide their password to a third-party, or insert an infected USB stick into their laptop and the entire organisation could be compromised.

Since human error is such a huge contributor to successful cyberattacks, this low level of security awareness should prompt all franchisors and franchisees to revisit their approach to the awareness of their security

policies and communicate clearly to employees regarding what is expected of them.

Security attitudes in an organisation come from the top down, so it’s important for franchisors to set the tone in terms of the amount of focus given to security. It needs to be made clear that security is everyone’s responsibility, and no one is immune from attacks.

In fact, executives at the top of an organisation have proven to be lucrative hunting grounds for phishing attacks. These social engineering schemes work by sending an email to an executive. The email looks like it’s from a reputable source and it contains a link for the executive to click on. Often, the email will contain a message along the lines that the executive needs to re-enter their password to a crucial system. The link in the email doesn’t connect to that system, but to a dummy website created by the cyberattackers and designed purely to collect the executive’s credentials.

Once the executive has entered their credentials, the phishing attack has been successful. Now the cybercriminal can easily

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It needs to be made clear that security is everyone’s responsibility, and no one is immune from attacks.” access all of the organisation’s systems simply by entering the executive’s username and password. By nature, executives have full access to all a company’s systems, so from here it’s easy for the cybercriminal to do real damage. They can deploy malware that sabotages the system, or they can simply view and steal information ranging from customer details to commercially-sensitive data.

Even though high-ranking executives are hot targets for this sort of attack, many of them resist the calls for training and education, either because they’re so busy with operational concerns that they feel they don’t have time for training, or because they don’t believe they would fall victim to such an obvious attack.

The problem is, the attacks aren’t always so obvious, and many executives fall for these attacks every day. Individual intelligence alone is no protection against sophisticated phishing attacks. Instead, executives need to be educated regarding what a phishing attack

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looks like and what to do if they receive a suspicious email.

Executives also need to be educated about the importance of keeping their own systems secure. A lost or stolen smartphone could potentially give cybercriminals full access to the company’s network if the executive hasn’t password-protected it. Everyone in the organisation needs to maintain constant vigilance, and that is especially true for highvalue targets like C-level executives.

Regardless of whether you’re an executive at a franchisor or you’re the franchisee, you should insist on receiving appropriate training to avoid the nightmare scenario of accidentally compromising the entire business. With the consequences of attacks being far-reaching and, potentially, expensive, security is no longer an IT-only concern. Rather, it’s now a boardroom issue that demands attention at the highest levels. This issue has never been more urgent as the threat landscape continues to

expand and worsen. You must act now to keep your business safe.

Aleron was established in 2010 to provide skilled and experienced information security consultants and engineers.

Aleron provide IT security consulting, technical implementation and staff augmentation to deliver a variety of specialised security skills and functions.

Aleron provides cyber security services across multiple industries including financial services, retail, construction and education. Some key clients are CBA, Westpac, McDonald’s, Woolworths, Coles FS, Superannuation, and Insurance companies.

Contact Alex on: 0400 090 074 amorkos@aleron.com.au www.aleron.com.au

Resources at your fingertips!

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

www.businessfranchiseaustralia.com.au

Doug Downer

Balancing Act: When Family and Business Intertwine

There are over two million businesses in Australia and over 70 per cent of these businesses are family owned and operated. Less than five per cent of all businesses are franchised business.

Worldwide, some of the most successful companies are family-owned and operated – many of them household names. Yet while the family business sector is indeed flourishing, many people in the business community are unaware of the unique challenges that family businesses face. When properly addressed, these hurdles can be successfully navigated.

Left to chance, they often spell doom for the hard-working family.

Family businesses encompass traditional

Franchised businesses tend to be smaller employers and because of the structured nature of the business models they are less dependent on the support of family, not to say that this doesn’t exist but in larger and non-franchise businesses there is a greater incidence of family involvement.

If you work or have worked in a family business, you know the many advantages. These include flexible working hours, dedicated employees, open communication and procedures and working closely with those you treasure most.

The irony of family business, however, is that the same elements which contribute to strong family ties – such as leadership roles, varying personalities and spending time together – often become disabling burdens. Emotions Versus Objectives – The Operational Tug of War, the key issues of family businesses are similar to those of any closely tied organisation.

However, these particular issues become more sensitive and difficult to deal with in a familyowned business environment because of how they are integrated with the family system as a whole.

would naturally be more concerned about the

There are significant benefits and some potential downfalls associated with family business operations.

For most families, spending time together is both enjoyable and fulfilling. Closely tied families share the rewards of loyalty, love, affection, acceptance, and understand – often in unspoken terms – a sense of commitment to one another. Thus, the family business concept has long appeared an attractive proposition.

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business objectives and intricate affairs of family relationships. When family members work together, emotions may interfere with business decisions. Issues may arise as relatives see the business from different perspectives. Those engaged in daily operations are more likely to be concerned about production and output, as opposed to those family members acting as “silent” partners who bottom line.

Challenges also arise when non-family employees enter the picture. Competition among family members such as adequate compensation and job titles can also be ongoing issues. Family businesses are constantly forced to confront the difference between decisions that are made in the best interest of the family versus the best interest of the business.

Conflict In a recent survey conducted by KPMG It was reported that up to 80 per cent of family businesses had some form of conflict in the past 12 months. The main sources of this conflict were:

1. Vision, Goals and Strategy – being misaligned between key family members;

Doug Downer is an experienced Business Developer with an impressive 15+ year senior management history in developing and leading businesses within the Retail, Hospitality and Franchising sectors.

2. Balancing the needs of the family members against the needs of the business; and 3. Communication between family members particularly when conflict or disagreement arises.

This is not the only potential issue of conflict that can occur in a family run business, it’s true that in some family businesses nepotism is in play and this can equally destroy the harmony and culture of a business. In order to deal with these potential issues, there are steps that should be taken to minimise the risk and ensure a workable and productive business environment and culture.

Creating and Sharing Personal Vision Statements Personal Vision Statements will become the foundation for the personal plans that FamilyMember Employees (FME) use to synergistically work together and lead the business forward.

Have individuals complete a personal vision and share this amongst the family to see who is aligned and what is important to each party.

Hiring and Firing FamilyMember Employees It’s very hard to leave the family relationship at the door when you come to the business in the morning. You need to establish ground rules for acceptable behaviour and performance management and measurement.

Compensating FamilyMember Employees FME compensation tends to follow a different set of rules than non-FME compensation. This can cause issues with family members and nonfamily members, so ensure that you have a fair and market range that is commensurate with the broader business community.

Selecting the Family Member Successor Use the same criteria that you would in any organisation for promoting the leader of an organisation. If you want it to be a family member, ensure they have the training to do the job well.

Addressing Spousal Partner Challenges There are some real dangers for spouses in this area. It can be very difficult to maintain a healthy marriage and relationship. You need

A franchising expert, Doug has been responsible for the establishment of three start-up franchise systems and has operated at CEO and General Manager level in eight franchise systems. to implement rules for both your marriage and business.

Recruiting, Retaining, and Inspiring Non-Family Member Employees in a Family Business Clearly, family matters have a significant impact on non-family member employees and must stay out of the business. Ensure you run the business the way non-family member businesses would, or if you have differences, explain this to incoming team members so they understand the culture of your business.

Transitioning Ownership to Family Members Preparing your business for transition in ownership is a long process. You need to take time to ensure proper communication, planning and timing.

Support The success of any family business is to leverage the successful principles employed by non-family businesses whilst still delivering the vision that the business owner and family has for their personal lives, after all business is just the vehicle to deliver the life that we all want to live.

Three critical tactics that a family owned business should consider are: 1. Have an internal Board structure. In Australia only 52 per cent of family businesses have the rigour and discipline of a formal board structure.

2. The alternative is an advisory board, currently only 28 per cent of family businesses have an advisory board.

3. Only 43 per cent have a shareholder’s agreement. You need this in place in the event that things don’t go well.

Family owned businesses face many challenges. The demands of a successful business often affect family life and family concerns frequently have an impact on the life

of the business. Whether your family business will be successful for generations to come or one of the many that fail to survive will likely fall upon what you do to balance family emotions with business objectives and how effectively you manage the conflict that comes with both.

Accept that there may be rocky times in a complex family business relationship and take the necessary steps to ensure conflicts are warded off before becoming detrimental.

Family businesses are powerful, yet delicate operating units that can realise long-term benefits from outside assistance to reduce the effects of operating in an environment of emotions vs. objectives. The use of business owner advisory groups and family business coaching can provide the tools to help understand, accept, resolve sticky family business issues, and continue moving the family business forward to meet individual and business goals. Although using these elements in managing the family/business interface will not guarantee business, family, or individual success, they will aid in developing effective management techniques and reduce the risks and stresses associated with operating a family business.

The Alternative Board helps forward thinking business owners grow their businesses, increase profitability and improve business owner’s lives by leveraging local business advisory boards, private business coaching and proprietary strategic services. Assisting with strategy, planning and business development, The Alternative Board is helping businesses grow through franchising. Are you ready to take your business to an entirely different level? Or looking to invest in your own franchise business?

Contact The Alternative Board for more information via: 02 9037 2849 doug@thealternativeboard.com.au www.thealternativeboard.com.au

BUSINESSFRANCHISOR 47

Peter Buckingham CFE

International mapping made easy Peter Buckingham CFE is the Managing Director of Spectrum Analysis Australia Pty Ltd, a demographic, mapping, franchise network planning and statistical analysis consultancy. Peter is the ‘go-to’ person regarding how and where to establish sites and territories in Australia and now worldwide.

Many Australian franchisors are expanding internationally with their already well-established systems and require upto-date and relevant information to base their decisions on.

For their Australian network, they have invested heavily in the criteria for their site selection and mapping their territories properly, but may have been ‘led’ into a different approach overseas.

This should not and does not need to happen!

International coverage All countries which I shall broadly describe as “first world” and “second world” countries, inevitably have mapping and demographic

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information that can be used to understand the markets you are leaping into. Many countries such as the USA, Canada and the main countries in the EU have mapping and information on par (if not better) than what we have in Australia. Also, basically all Commonwealth countries have good data and mapping (including India), as the British historically placed a high level of importance on Census data, and this has continued across these countries.

There are companies in Australia who can set up the mapping so you can have a clear picture of what is going on. This allows you to then establish rules for things like distance between sites, where are the major competitors, formation of territories (different sizes in different markets), and having a very good understanding of how many people live or work in any specific area.

The process We recommend using a GIS (Geographic Information System) such as Pitney Bowes MapInfo to organise the relevant data for the country in question, and combining the rules that have been established with the mapping and the data to map the sites or the territories required.

Your competitors can also be mapped. A job we had recently was to map for a client 7,400 competitors across the USA. They wanted to see where their two main competitor’s sites are compared to theirs, and use that in the process of territory formation.

Once the mapping has been set up, you can then use a simple, commercial web based system to upload the maps and files into. This allows you to then view the data / territories or sites anywhere across the world via the web.

The ongoing licence for an intermediate version of this type of worldwide interface is around $300 per month to make your data visible in ways that best suit your business operations, including giving various levels of access to different people and potential franchisees.

Other companies may have different solutions; however this has worked in cutting thousands of territories across the USA, to creating just three territories in Botswana recently.

The advantages Jade Winter, the CEO of Studio Pilates International says, “Having our studios and territories available worldwide has given us huge impetus in offering our services into the US, England and China. I now feel confident I can give a territory based on realistic size and population in all the countries I want to take our franchise to.”

If you are undertaking international expansion, being able to map your sites and competitors, and build territories so you can say they offer similar potential, can now be done internationally. If you use this as a sales tool to secure Australian franchisees, would you not want to be seen as offering a similar level of security or understanding in the territories you offer internationally?

We have been using a combination of a GIS system and Mango Maps for our global expansion, and find this to be a cost effective system we can use, as we now operate in over 40 different countries world wide with 1,100+ franchises.

We can grant a territory we know meets our criteria, and can keep an up to date record and mapping as the new sites are opened. Highly recommended if you want to keep control of your world-wide expansion.”

Luke Armstrong, Global Sales Director, F45 Training.

Everyone will tell you it is “different” in their country, but having a standard approach to information, site selection and territory planning should give your system an advantage over the less informed competition.

Summary If you are heading out internationally, do not be misled to think you cannot find or afford to have a reliable system to show mapping, information and territories, so you have control over the international expansion of your brand.

To contact Peter directly: peterb@spectrumanalysis.com.au www.spectrumanalysis.com.au

If you are undertaking international expansion, being able to map your sites and competitors, and build territories so you can say they offer similar potential, can now be done internationally.”

BUSINESSFRANCHISOR 49

A-z directory

AUSTRALIAN & NEW ZEALAND

Franchisor B U S I N E S S

Australian & new zealand business franchisor A-Z Listings are a great way to promote your business!

An A-Z listing provides consistent exposure over a 12 month period, is available in all our magazine format publications and includes a 150 word description of your business, plus your logo in full colour. It is also

start & end based on known customer trends.

Benie Software is developed, managed & owned directly out of Melbourne, Australia.

Franchising & Business Opportunities Expo

Council of Australia and has been delivering great results since 1987.

The show runs annually in Sydney (March), Perth (May), Brisbane (July) and Melbourne (August).

For further information please contact Fiona Stacey on tel 03 9999 5464, email fiona@specialisedevents.com.au or visit our website www.franchisingexpo.com.au.

HR LEGAL We are leaders in workplace relations and safety law for franchise networks nationally. The HR Legal team works with franchisors to support them and their franchisees in creating safe and compliant workplaces.

We can provide advice and support, including: • Conducting franchisee workplace audits for employment and safety law compliance • Developing contracting agreements and advising on sham contracting • Providing phone and email support for head office and

jejak graphics

a lasting impression

JEJAK GRAPHICS is a freelance graphic design business based in Melbourne, Australia working with clients worldwide. With over 20 years experience in the design and print industry specialising in magazine layout and advert design as well as offering a number of other graphic design services including: • Advert design • Corporate stationery • Brochures and flyers • Poster and banner design • Educational manuals

50 BUSINESSFRANCHISOR

www.businessfranchiseaustralia.com.au or www.businessfranchisenz.co.nz

Turn any screen into a dynamic digital sign with benie, an easy to use, cloud based, digital signage solution. benie ensures brand consistency across all digital touch points. Centrally control and manage content from any remote location from a browser-based dashboard, whilst still having content published locally as desired. Garner key customer insights through analytics and schedule your digital sign to

It is the only exhibition endorsed by the Franchise

GRAPHICS

For more information call 03 9787 8077 (or +61 3 9787 8077 from outside of Australia) and speak to one of our Sales Executives or go to

BENIE

The Franchising & Business Opportunities Expo is an exciting event that brings together the best franchise and business systems with potential franchisees and investors.

JEJAK

replicated on our website for the full 12 months.

Join Customers such as; Keno & TAB, UFC Gyms, Enterprise (RedSpot) Car Rentals, Listen to Your Body Studios, Queen Victoria Market and more.

For more information or a demonstration, please contact us via email contact@benie.com.au or call Dennis on 0411 143 678.

franchisees on Award compliance • Conducting tailored training for new and existing franchisees on employment law compliance • Developing franchise specific employment contracts and workplace policies • Assisting with Deeds of Compliance with the Fair Work Ombudsman For more information contact: 03 9948 2450 dfeldman@hrlegal.com.au www.hrlegal.com.au

• Sports programs • Monthly newsletters • Website, email and social media banners Artwork is tailored to your brand and focused on your message and target audience.

No job is too big or small.

Contact me today to discuss how Jejak Graphics can make your company or organisation leave ‘a lasting impression’.

Ph: 0422 267 639 | E: jejak@bigpond.com Example: www.issuu.com/jejakgraphics

METASPACE Metaspace is a specialist interior design consultancy that helps franchise brands grow a strong retail network. Our aim is to set you apart from competitors by delivering engaging and memorable interiors and in-store experiences that cultivate brand awareness and long term customer loyalty.

Whether you are a new franchise or an established brand, we can develop your store design and help you efficiently implement roll-out. We streamline the store design and documentation process to ensure that the end result is economical, delivers brand consistency and drives sales.

STRATEGY Brand Positioning & Values

National Franchise Insurance Brokers 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

Shopinsurance.com.au

BRANDING & COMMUNICATION Brand Identity & guidelines, In-store communication & signage DESIGN Retail, Hospitality & Showroom Interior Design Pop-Up Shops, 3D Visualisation & Walkthroughs IMPLEMENTATION Site procurement, Design Detailing, Documentation & BIM, Proto-typing, Project Co-ordination, Tendering, Joinery Procurement & Quality Control Contact Us: Stuart Ph: 0412 603 893 Douglas Ph: 0402 309 535 E: mail@metaspace.com.au

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.

For more information call 1800 776 747, email info@mynfib.com.au or visit www.mynfib.com.au.

Shopinsurance.com.au has been providing insurance and risk management services to Franchisor ‘s and Franchise operators since 1999.

ensure a dedicated account manager who understands your business and your requirements, provide a genuine level of service, ensure a broad range of coverage whilst ensuring premiums remain extremely competitive.

From a franchisor perspective, we tailor insurance programs to ensure the brand is protected together with the assets. We ensure a common minimum level of business insurance cover across the group, broad coverage, specific policy amendments to reflect the special need of the group, claims management and group reporting.

Our customers have a history of staying with us because we treat them with the respect and honesty they deserve.

Give our franchise director - Fred Nadde a call directly on 1300 500 700, no matter how big or small your business.

Alternatively, send an email to fred@steadfasteastern. com.au.

From a franchisee perspective, we work one on one to

Find out more at: shopinsurance.com.au

Walker Wayland WA

• Growth strategies

Walker Wayland WA is an independent firm of Perth based Chartered Accountants and Business Advisors who provides a friendly, efficient and professional service for both developing and established franchises.

• Marketing fund audits

We can assist you with: • Fixed priced service packages - including all bookkeeping, tax and accounting needs • Due diligence services when you are thinking about buying - or selling

Australian & new zealand business franchisor A-Z Listings are a great way to promote your business!

An A-Z listing provides consistent exposure over a 12 month period, is available in all our magazine format publications and includes a 150 word description of your business, plus your logo in full colour. It is also

• Business planning and structuring Walker Wayland has offices based in every Australian mainland State and in New Zealand.

Please call 08 9364 9988 to find your nearest Walker Wayland franchise-qualified accountant, email johnd@ww-wa.com.au or visit www.ww-wa.com.au

replicated on our website for the full 12 months.

For more information call 03 9787 8077 (or +61 3 9787 8077 from outside of Australia) and speak to one of our Sales Executives or go to www.businessfranchiseaustralia.com.au or www.businessfranchisenz.co.nz

AUSTRALIAN & NEW ZEALAND

Franchisor B U S I N E S S

BUSINESSFRANCHISOR 51

TO THE

2018 FRANCHISING & BUSINESS OPPORTUNITIES EXPO’S FOR BUSINESS FRANCHISOR READERS!

Don’t pay at the door, entry is free for readers by entering the code BFM when purchasing tickets online.

Franchising & Business Opportunities Expo’S 2018: Perth | 6 May | Crown Perth, Burswood Brisbane | 1-22 July | Brisbane Convention & Exhibition Centre, South Bank Melbourne | 25-26 August | Melbourne Exhibition Centre, South Wharf

to exhibit, contact fiona stacey by email at: fiona@specialisedevents.com.au For more information go to: www.franchisingexpo.com.au

Adverts

Stationery

Logos

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Posters

Manuals

JEJAK GRAPHICS

a lasting impression

03 5977 8804 | 04222 676 39 jejak@bigpond.com EXAMPLES: www.issuu.com/jejakgraphics

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