Under section 6 of the Code, franchisors must update their whole Disclosure Document within 4 months of the end of the financial year, which for most franchise systems is 31 October 2011.

Key points to remember are:

Any franchisee entering into an agreement after 31 October 2011, whether it be as a result of the grant of a new franchise, a resale, a renewal or just as a result of parties entering into an agreement that varies a prior franchise agreement; must have been given the current franchise documentation i.e. updated to at least 1 July 2011, at least 14 days prior to the signing of such documents.

Existing franchisees have the right to request, once every 12 months, that a current Disclosure Document be provided to them. This demand must be met within 14 days of their demand.

The ACCC can as part of their audit powers require a copy of the past and current Disclosure Document and related franchise materials at any time, and franchisors must generally comply within 21 days.

Disclosure Document review

It is recommended that the whole disclosure document should be reviewed with relevant sections updated as required, but pay particular attention to:

• updated your current list of franchisees and any franchisee that has been transferred, terminated or ceased to operate in the last 3 years. 
• Any changes to franchise recruitment and suppliers arrangements;
• finalised and updated disclosure regarding the Marketing Fund’s expenses for the last financial year;
• updated disclosure regarding any unilateral variations to your franchise agreement in the last year (new requirement from the Code 2010 amendments which now has to be completed);
• updated disclosure regarding whether you have taken into consideration any significant capital expenditure by franchisees when determining renewal or expiry arrangements in the last year; (new requirement from the Code 2010 amendments which now has to be completed);
• updated all Item 13 costs, including recurring or isolated franchisor and third party expenses within the knowledge of the franchisor or reasonably foreseeable by the franchisor. Thus, this includes payments made to the Franchisor or any other third party when initially entering into and during the term of the Franchise
• ensured that Franchisor’s end of Term arrangements are clearly defined.

 Financial information:

• Financial reports for the Franchisor for the last two financial years should be readily available
• OR a copy of an independent audit by a registered company auditor, confirming that as at end of last financial year, i.e. 30 June 2011, the Franchisor company will be able to meet its debts when due.  

 Marketing Fund update:

Prepare an annual financial statement for the marketing fund, and have the financial statement audited by a registered company auditor within 4 months of the end of the financial year.

 © franchisingplus

Author ; Carolyn Dufton Dip.Bus(franchising)

Carolyn is the principal of franchisingplus. franchisingplus is a franchising consultancy advising and mentoring on all aspects of franchising on a national and international basis.

The content displayed is franchisingplus copyright and can only be reproduced or re-published with the acknowledgement of the author Carolyn Dufton. www.franchisingplus.com.au/contact/

Recently I had a very unsatisfactory customer service experience with a local franchised business. The manager wasn’t on the premises so I asked the young assistant to ask the manager to call me. He didn’t, so I rang the shop to be told that the manager was too busy to talk to me about their customer service.

I decided to see if The Franchisor was more customer service focused and aware, by posting on both Facebook and Twitter. It went something like this “Had a truly awful experience at ‘company name’s’ local store today, and the manager doesn’t care”. I waited to see whether the company would pick up the comment. They didn’t.

So to give them a second chance – I posted again. I had lots of comments from other people who saw the post but none from the company.

Google alert is a tool that allows businesses or individuals to monitor for free, what is being said about their company in the online world. It is a free service.

You can’t stop people talking about you online, but being aware of what they’re saying allows you the opportunity to respond quickly to diffuse a situation.

You do not have to be engaged in social media to use this tool. Google will send you an email of whatever message they find online. Twitter will also pick up any “mention” of you if you subscribe – again for free.

In my opinion all businesses and Franchisors in particular, need to be informed about what is being said about their businesses online, and Google Alert provides an easy and free method of achieving this.

Go to www.google.com/alerts to set up your alert today. No excuses now!

 © franchisingplus

Author ; Carolyn Dufton Dip.Bus(franchising)

Carolyn is the principal of franchisingplus. franchisingplus is a franchising consultancy advising and mentoring on all aspects of franchising on a national and international basis.

The content displayed is franchisingplus copyright and can only be reproduced or re-published with the acknowledgement of the author Carolyn Dufton. www.franchisingplus.com.au/contact/

Listen to Carolyn speaking with Scott Levi on 92.5 ABC Central Coast.

Visit ABC radio website

Learn more about The F World Book

Why I wrote The F World book

The book has been “in me” for a long long time. Every client I met and every franchising story I heard provided material for the The F World book.

I had reached a point where I was bursting with stories and information to share, and knew that writing a book was the outlet I needed. I had already completed a 3 part CD series for clients (Discover Your Franchising Potential) considering franchising, and this has been really well received.

This time, I wanted to write a book for everyone.

The F World book is a generic franchising commentary and will appeal to anyone wanting to know more about franchising. The book is not a hard sell for franchising. It is a ‘warts and all’ objective commentary on the franchising world and its common practices. As I say in the book, not everyone is suited to franchising.

As a franchising consultant /coach, I work with Franchisees and Franchisors alike, so I have no bias to any particular sector of the franchising industry. Some of the things I see in franchising I love, whilst other situations I encounter I detest.

Much coverage of franchising is biased. The media can sensationalise a “hard done franchisee story’ and a franchisor can spend a large sum of money to obtain great editorial about the wonders of his franchise.

I wanted to write a book that told the truth about franchising.

The F World book has been written in plain everyday language for those looking to learn more about the reality of small business franchising. In particular it will provide insight for potential and existing Franchisees or Franchisors in small to medium franchise networks.

Franchisees and franchisors are asked to review their franchising performance and the book then gives examples of how to be ‘the best’.

I sincerely hope that readers will learn from the experiences and mistakes of others as described in this book, particularly in the ‘scary’ chapter.

You can buy a copy of The F World book here: http://franchisingplus.com.au/fworld/

Or for US and UK residents visit: www.amazon.com

© franchisingplus

Author ; Carolyn Dufton Dip.Bus(franchising)

Carolyn is the principal of franchisingplus. franchisingplus is a franchising consultancy advising and mentoring on all aspects of franchising on a national and international basis.

The content displayed is franchisingplus copyright and can only be reproduced or re-published with the acknowledgement of the author Carolyn Dufton. www.franchisingplus.com.au/contact/

• Franchising profits are up according to the latest survey from PricewaterhouseCoopers.
• Franchisor profits rose an exceptional 19 percent, while franchisees showed growth about twice the rate of the Consumer Price Index.
• The current franchise profit levels of about six percent are set for a huge jump to just under 46 percent over the next three years, the report indicates.

The bad news

• The sector does face challenges, not least the funding of franchisees who are unable to get the appropriate finance from banks, an issue 73 percent of franchisors cite as a major hurdle.

The really awful news!

Have you been reading about the chaos surrounding the demise of Allied Brands? Franchisingplus believes that this debacle is a blight on the franchising sector.
The company’s shares remain suspended from trade on the Australian Securities Exchange, its Cookie Man chain is in the hands of liquidators and reports from disgruntled creditors are growing.
The company is also locked in a dispute with the global owner of the Baskin Robbins brand, US company Dunkin Brands.
To add to the chaos The Department of Immigration & Citizenship has accused Allied Brands of breaching immigration laws by running an elaborate immigration rort where it sponsored a group of Korean nationals to work in administrative roles under 457 visas, put them to work in Baskin Robbins stores and in some cases sold Baskin Robbins stores and in some cases sold Baskin Robbins franchises to their family members.

To add to the bad press, the CEO admitted last week that the company has fallen behind on some employee’s superannuation payments with employees acknowledging they have little hope of being recouped for their losses.

Any prominent negative media story like this affects all franchising personnel:
               
             Franchisors selling franchises
             Franchisees trying to onsell a franchise
             Franchise advisers who establish new systems
             Any franchise professional who does not want the
             reputation of franchising to be further tarnished.
             Financiers who are nervous about putting all their
             financial eggs in one basket. If a Franchisor goes down and
             they have funded many of the Franchisees in that system, the
             impact for a lender can be severe.

These bad news stories only reinforce why creating and then maintaining responsible, sustainable  franchise systems is so vital for the benefit of the reputation of franchising and all  involved in the franchising sector.

© franchisingplus

Author ; Carolyn Dufton Dip.Bus(franchising)

Carolyn is the principal of franchisingplus. franchisingplus is a franchising consultancy advising and mentoring on all aspects of franchising on a national and international basis.

The content displayed is franchisingplus copyright and can only be reproduced or re-published with the acknowledgement of the author Carolyn Dufton. www.franchisingplus.com.au/contact/

So let’s explore the concept of expanding overseas.

Firstly, before even considering overseas, a Franchisor needs to be confident that the franchise business model is working efficiently, effectively and profitably. A business that is not performing well in its own country is highly unlikely to perform any better internationally!

Why would you consider expanding internationally?

It’s essential to have identified and thoroughly examined the objective and anticipated outcome for expanding the business overseas.

Some reasons for expanding overseas may include;

• Demonstrated interest from a party overseas
• International distribution of an existing product under a franchised system.
• The desire to do business in a specific country due to family/friend ties.
• The sheer challenge of it!
• Limited home market
• Research identifies that your product/service would perform well in specific overseas markets.

What to do next?  

Just as you should develop any new business idea with a written business plan, expanding overseas deserves the same attention.

A proven concept in one country does not guarantee success in another.

• Prepare a thorough business plan on the concept of overseas franchising.
• The business plan should incorporate a well thought out SWOT analysis.
• Spend time and research developing a budget. Overseas franchising does not come cheap!
• Identify the countries that you would target for expansion in order of appeal.
• This should be done with assistance from local professionals in the countries of your choice who have “local knowledge”. Be prepared to spend money on researching local markets.
• Consider opening a flagship company operation in the country of your choice. This could be a lot cheaper than starting a franchise operation from scratch. This is a great way of learning about business trends in your “new country”.

This is no different to having piloted a business prior to franchising.

• Register a trademark in the country of choice.  See below for more on overseas trademarking 

What not to do

• Rush in without due consideration.
• Underestimate the cost.
• “Do it on your own.” Consult with experts.
• Expand overseas for the “sake of it” or the “kudos”.
• Underestimate the ongoing involvement in an overseas business
• Abdicate from the overseas operation because of distance
• Operate overseas without involving the local people.

Overseas trademarking

• The Madrid System for the International Registration of Marks (“Madrid Protocol”) and the Paris Convention for the Protection of Industrial Property (“Paris Convention”) are two very important international treaties regarding the registration of trade marks.
•  The Madrid Protocol provides a one-stop filing system so that the franchisor can file for trade mark protection in their own country as well as  targeted countries at the same time. It does not give you an international trade mark that is recognised by all its member states or all countries across the globe, but does provide the convenience of filing in different countries at one go and also reduces the costs of filing.

 http://www.ipaustralia.gov.au/trademarks/international_index.shtml

•  The Paris Convention provides a very useful mechanism allowing the franchisor to file the trade mark in their home country first at an earlier date and subsequently, within a given time frame, when they decide to file the trade mark in the targeted country, they are able to claim priority or use the first and earlier filing date in their own country as the date of filing in the targeted country. The Paris Convention gives the franchisor time to source for funds before filing for trade mark protection in the targeted countries and the peace of mind that comes with knowing that they can be protected by filing first in their home country.

   http://www.ipaustralia.gov.au/resources/international_agreements.shtml#paris

© franchisingplus

Author ; Carolyn Dufton Dip.Bus(franchising)

Carolyn is the principal of franchisingplus. franchisingplus is a franchising consultancy advising and mentoring on all aspects of franchising on a national and international basis.

The content displayed is franchisingplus copyright and can only be reproduced or re-published with the acknowledgement of the author Carolyn Dufton. www.franchisingplus.com.au/contact/

I don’t know about you, but I find that at this time of the year I get a bit of spring fever!

So I use this extra burst of energy for spring cleaning my business.

Maybe you could do the same? So what could that entail?

• Throwing out those D grade clients – the ones who don’t pay and who don’t appreciate your time and effort.
• Reviewing a strategy for “improving or removing” underperforming and negative franchisees.
• Getting a new business image! Take an objective look at your branding. Is the font tired and outdated? Are the colours uninspiring? Is the brand professional? Would potential franchisees be impressed with your brand?
• Update your recruitment strategy and bring it in line with 2010 technology.
• Declutter the work space. It’s amazing how much junk we all accumulate in our offices. Get rid of it… you’ll feel great.
• Clean and detail working vehicles and environments.
• Rid yourself of staff who are a negative drain on the business but be sure to consult an HR/IR expert before you do.
• Put flowers into the office – it’s incredible how uplifting flowers can be in an environment.
• Have the air-conditioning serviced – it won’t be long before you’re turning that knob from hot air to cool!
• Run a spring themed group meeting with franchisees and share these tips with them. Allow them to rid their winter cobwebs and vent a bit to encourage a new start.
• Many businesses experience a surge in business prior to Christmas, so use this time to prepare for the onslaught. Plan ahead.
• Buy yourself some new summer clothes (well I am a female so of course I think that way) but all you men out there will look fresh and spring like in some new season outfit too!

So then, when you’ve had your spring clean you’ll be ready for a new bout of new business and A grade franchisees and clients.

© franchisingplus

Author ; Carolyn Dufton Dip.Bus(franchising)

Carolyn is the principal of franchisingplus. franchisingplus is a franchising consultancy advising and mentoring on all aspects of franchising on a national and international basis.

The content displayed is franchisingplus copyright and can only be reproduced or re-published with the acknowledgement of the author Carolyn Dufton. www.franchisingplus.com.au/contact/

In todays ultra competitive franchise market, it pays to have
The Wow factor in your recruitment material.

I remember speaking to a franchising prospect a few years ago and he told me that he had turned down 3 cleaning franchises purely on the low standard of their information pack.

Gone are the days when you can send out a photocopied, drab information document. This information pack is often the first impression that a franchise prospect has of your company.

This document then travels to the prospect’s franchise adviser, lawyer and accountant, who in turn would probably comment on the low standard of presentation.

A low standard of information material suggests a “can’t be bothered” approach to the franchising process.

So, be honest and take a long hard look at what you’re currently sending out to your potential franchisees.

• Firstly, do you know who your target franchisee is? If not find out.
• Does your marketing material speak to your target franchisee?
• If it doesn’t…. change it until it does.
• Are there spelling mistakes or rambling sentences that make no sense?
• When did you last have an objective professional critique your marketing material? This is essential.

Don’t just think leaflets and brochures with franchise marketing material.

Think video DVD’s and powerpoints with powerful music that stirs the emotions and creates an instant emotional attachment to your business.

There are many specialist companies that can help you with the production of these recruitment tools and it will pay to have an expert’s help. Professionalism is paramount with any type of recruitment material.

The cost may be less than you think, and let’s face it, the sale of only one franchise will well and truly cover the cost of producing a “wow factor” product.

So don’t sit and wonder why you’re not converting franchisee enquiries to prospects, pick up the phone and speak to an expert now.

© franchisingplus

Author ; Carolyn Dufton Dip.Bus(franchising)

Carolyn is the principal of franchisingplus. franchisingplus is a franchising consultancy advising and mentoring on all aspects of franchising on a national and international basis.

The content displayed is franchisingplus copyright and can only be reproduced or re-published with the acknowledgement of the author Carolyn Dufton. www.franchisingplus.com.au/contact/

I spoke to a client recently who contacted me because of having challenges growing his franchise network.

The first question I always ask is, how much is your franchise fee?

A correctly structured franchise fee is paramount to the acquisition of new franchisees and the growth of the network.

Many Franchisors I speak to have literally plucked the franchise fee out of nowhere!

Now this method may or may not have worked for you. If it’s worked so far then that’s great.

Don’t try and fix something if it’s not broken.

If however…you are having troubles selling franchises, and even getting that initial enquiry, then it may be time to reassess.           

 There are various considerations for arriving at the franchise fee.

• If you have an existing franchise business it is most unwise to reduce the fee lower than the fee that other franchisees have paid despite current financial conditions.
• It is prudent to offer reasonable entry levels for the new or small franchise network.
• Don’t “give away” franchises to clinch a sale.
• Don’t restrict the network growth by being stubborn and proud with maintaining a high and maybe unrealistic franchise fee. A slow growing network is not healthy.
• Remember that the initial franchise fee is only part of “the franchising story”. Ongoing income through royalties and/or product distribution should be the focus of your income.
• If you don’t get franchisees on board in the first place, you won’t have any ongoing income! Don’t let an unrealistic upfront fee be a deterrent.
• You may consider offering franchisee finance as an incentive. Speak to your accountant regarding this and decide if you really want to be acting as a banker to your franchisees.
• If you are unsure as to whether your franchise fee is appropriately positioned in the marketplace, seek professional advice from a franchising consultant who understands franchising regarding your franchise fee structure.
• Understand that franchising like other any other industry is currently being affected by lending policies from the banks. Obtaining finance is tough at the moment.
• Find a financier who is able to offer finance at reasonable rates to your potential franchisees to avoid losing sales through finance.
• Ensure that the rest of your fee structures are in line with enabling a franchisee to run a profitable business long term.

 It’s never too late to review your franchise fees.

Franchise network growth should be consistent. Existing franchisees need to feel satisfied that they have bought into a healthy expanding brand. This adds value to their business.

A franchise network with only 2 to 4 franchises after say 2 full years or more of operation is not a healthy network.

Often the one factor holding expansion back is the initial start up fee.

Do not self sabotage your franchise expansion by charging an inappropriate start up fee, it’s just not worth it.

 © franchisingplus

Author ; Carolyn Dufton Dip.Bus(franchising)

Carolyn is the principal of franchisingplus. franchisingplus is a franchising consultancy advising and mentoring on all aspects of franchising on a national and international basis.

The content displayed is franchisingplus copyright and can only be reproduced or re-published with the acknowledgement of the author Carolyn Dufton. www.franchisingplus.com.au/contact/

What is a Franchise Advisory Council?

These organisations can operate under many titles and you may choose to call yours a;

•  Business development group         
• Filter group
• Advisory committee
• Network council

and really anything else that appeals to you!  I would suggest that you don’t get too hung up on the name and that you keep it simple.

So the name aside, why and how would you form a franchise council within your franchise network? or if you have already one, how could you improve what you’re doing now?

Some franchise councils are formed specifically to address a particular niche of the business. This could be ;

• Marketing
• Product R and D
• Conflict
• Service

In general terms the group should be formed to aid consultation on matters of deemed priority by The Franchisor and The Franchisees.

Most franchise councils do not cover specific topics and are broad based discussion groups.

Many Franchisors are apprehensive about forming franchise councils as they fear that will become group “whingeing” opportunities.

Q. Have any of your current or former franchisees used any of the following methods to communicate negative messages about your system?

Response

Notes: 1) A total of 59 franchisors provided a response from an expected  286.

             2) Multiple responses were recorded for some respondents.

2008 survey carried out by the Asia-Pacific Centre for Franchising Excellence.

Interestingly, this perception could be fairly accurate as according to the 2008 survey carried out by the Asia-Pacific Centre for Franchising Excellence, 44 negative approaches were made by franchisees at group meetings. This is certainly not an ideal situation and can affect the morale of the franchisees and the Franchisor. Nor would a Franchisor feel happy about franchisees stirring the pot by chain emails yet there were 36 cases of this reported with no doubt many more not being reported.

So why would you establish a Franchise Council? Are there pros and cons?

Like any committee, yes there are advantages and challenges to setting up an effective council.

Effective is the key word here. A franchise council should only meet when there are matters to discuss.

Some of the benefits of creating a Franchise Council are;

Communication

• Councils provide an excellent opportunity for The Franchisor or its representative to engage in meaningful dialogue with a selection of franchisees. This openness creates a feeling of inclusion and respect for the franchisees opinions.
• The Franchisees feel that The Franchisor is more accountable as they have an opportunity to express dissatisfaction.
• The Franchisor can gain feedback on proposed new initiatives and products before launching.
• The Franchisees are able to present their ideas to The Franchisor in a non threatening environment.

Increased Commitment

• Franchisees who are part of The Council are taking on the responsibility of representing the whole group. This can result in these franchisees having an increased sense of loyalty and commitment to the franchised company.

 Increased Trust

• Suspected “Hidden agendas” become obsolete. The Franchisor can speak openly and honestly at council meetings.
• The Franchisees can broach The Franchisor on sensitive subjects in a proactive manner. Potential problems can be discussed with all parties seeking resolution rather than conflict.

 Increased efficiency and sales

• Yes, franchise councils actually aid in improving the performance of the network.

 Disadvantages of a Franchise Council

• Historically, franchise councils necessitated franchisees travelling to meet together. Travelling incurs costs.

Who should pay for the cost? It would be a very benevolent franchisee who chose to take time out of their business and incur expenses for the “good of the group”.

• A poorly structured and managed council can create more problems than it solves. It should not be allowed to be an opportunity for negative franchisees to influence the rest of the group.

How do we form our own Franchise Council?

There are many guidelines to be used when starting a Franchise Council as it is imperative that is structured and run effectively.

Research other councils that work well for their Franchise network and that have achieved positive results. Find out what works and what doesn’t for others and assess how you can apply these guidelines in your own Council.

© franchisingplus

Author ; Carolyn Dufton Dip.Bus(franchising)

Carolyn is the principal of franchisingplus. franchisingplus is a franchising consultancy advising and mentoring on all aspects of franchising on a national and international basis.

The content displayed is franchisingplus copyright and can only be reproduced or re-published with the acknowledgement of the author Carolyn Dufton. www.franchisingplus.com.au/contact/