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/

To watch the video use the link below.

http://www.businessinsider.net.au/up-close/carolyn-dufton

In this short video, Business Insider interviews Carolyn Dufton about her franchising career, how she got started as a Franchisor and where she is today as a franchising consultant.

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/

All my friends and business associates know my interest in “all things franchising” and often share their experiences with me. One of my business friends told me an astonishing tale which as a Franchisor you really need to hear and heed.

A large franchise, offering a consumer service, that advertises on an ongoing basis on TV, radio and in magazines is the subject of this story.

Let’s call the customer Mary. Mary had rung the local Franchisee on 3 occasions to arrange a quotation for, let’s call the service cleaning. Mary was keen to get the cleaning organised  a.s.a.p. and was really disappointed that she was greeted with a voicemail message on those 3 occasions she called. She left a clear message with a return phone number and asked the Franchisee to call her back urgently.

After a week of no returned call, Mary in sheer exasperation called in to the shop front. The Franchisee Jack was busy shuffling mountains of paperwork and muttering to himself, meanwhile ignoring Mary completely.

Mary, now losing patience with this complete lack of customer service introduced herself to Jack and asked why her 3 calls had not been returned.
“Listen lady, if you had as many people ringing as I do, you’d have to turn your phone off too. I’d never get anything done. Listen to this …….” Jack put his mobile on loudspeaker “you have 62 new messages.” “THAT’s why I didn’t return your calls” Jack shouted. The b…… Franchisor keeps spending all our marketing levy on b……. TV advertising and the phone never stops. I’m having a breakdown. How they think I can cope with all this business I don’t know, but they just don’t listen. Anyway now you’re here, what do you want?”

Needless to say Mary walked out at this point and has shared her tale and complaint with many.

Is your jaw on your chest? Yes of course. It’s an unbelievable but true story.

But could this happen in your franchise? What checks and measures do you have in place to ensure it’s not your business losing its reputation?

Here are some strategies that can assist you.

• Is there a defined level of sales where you advise Franchisees that they will need to employ an extra staff member?
• Are your franchisees capable of running a business? or have they just bought themselves a job?
• Engaging mystery shoppers on a regular basis with the Franchisee’s knowledge ensures that the Franchisees know any major misdemeanor would be identified.
• Are your Franchisees trained and confident in handling busy periods such as pre Christmas trading?
• Do you communicate regularly with your Franchisees regarding national advertising campaigns?
• Are you and the Franchisees testing and measuring the results of your advertising? This is crucial.
• An overload of business spasmodically is not good business practice and is extremely difficult to service. If you know what advertising makes the phone ring, share this knowledge with the franchisees and help them be prepared for the extra business.
• Guidelines and directives regarding new business enquiries are imperative. Every operations manual should detail customer service standards.
• Has your franchise system addressed whether a Franchisee has the choice to turn new business away? This is a very important consideration in any franchise and The Franchisor should ensure that the Franchisees clearly understand their obligations.

It is most businesses’ dream to run an advertising campaign that results in the phone running hot. Before you invest in such a campaign ensure you have the service systems in place to stop the dream turning into a nightmare.

© 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/

Terminating a franchise mid- agreement is a process that should not be undertaken lightly.

The disclosure document states that all terminated franchisees should be listed for the three previous financial years.

No reason for termination needs to be provided in the disclosure document, but terminations do not present well to franchise prospects.

Franchise network morale needs to be considered. Is the franchisee to be terminated known by other franchisees to be unco-operative and a negative influence? or is the franchisee generally popular with franchisees but challenging and non compliant with the Franchisor? Tread carefully here.

So why would you consider terminating?

• The franchisee is not performing.

This can be a tricky one. “Not performing” can be subjective. Do you have a clause in your franchise agreement specifically addressing non or under performance? If you don’t, it would be unadviseable to pursue this line of termination.

• The franchisee is not paying royalties.

This is a much easier situation to prove. Even the worst franchise agreements I see (and there are some shockers out there…) contain a clause relating to termination in the case of non payment of monies due to The Franchisor.

The question should be why aren’t they paying their royalties?

•  The franchisee is in breach of the system and procedures and is non compliant.

Franchisors have varying approaches to non compliance. Some look the other way and allow non compliance to continue as “it’s all too hard”. Non compliance can be extremely damaging to a franchise system and impact upon other franchisees. Check the Franchisor obligations in your franchise agreement to remind yourself what your obligations are in respect to protecting the brand and the other franchisees’ reputation by association.

Mediation can work well to resolve disputes and should not be overlooked. Either the Franchisor or the Franchisee can request mediation and the Franchising Code states that the other must agree to attend and share the costs equally.In Australia the Office of the Mediation Adviser can assist Franchisors on 1800 150 667.

Termination should always be a last resort.

So how do I terminate the franchisee? 

Check your franchise agreement for the specific clauses relating to termination and follow the process point by point. The franchising code of conduct states that in the case of a breach of agreement by the franchisee;

The franchisor must give reasonable notice of the breach to the franchisee

Tell the franchisee what needs to be done to fix the breach

Allow a reasonable time for the breach to be fixed (not more than 30 days)

If the breach is fixed then the Franchisor has no grounds to terminate on this basis.

If the Franchisor wishes to terminate the agreement on other grounds, reasonable written notice must be provided with the reasons for the proposed termination.

The franchisor does not have to comply with these termination conditions if the franchisee:

• no longer hold a licence needed to carry on your business
• become bankrupt or insolvent
• abandon the franchise
• are convicted of a serious offence
• operate the business so that it endangers public health or safety
• agree to terminate the franchise agreement

The franchise agreement must be clear on this termination process. If you feel your agreement does not contain a comprehensive termination clause contact a lawyer who understands franchising or franchisingplus for assistance with upgrading the agreement.

© 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/

A Blame Game

The chances are that you’re reading this article with a preconception about Franchising.

The very word Franchising can inflict pain upon failed ex-franchisees who are still harbouring grudges against a Franchisor…. and for some Franchisors, blaming franchisees for the network’s failure is standard conduct. Whilst for some entrepreneurs, franchising conjures up a cash cow concept. Franchising is the goose that will lay golden eggs.

The truth is, that for franchising to work effectively, each party, that is The Franchisee and The Franchisor must firstly understand and secondly follow through with their obligations.

Best franchise practice provides a transparent and clearly documented system. Obligations are stated in the franchise agreement and are legally binding.

In my experience many “injured” ex franchisees were, to varying degrees, responsible for their own demise despite the fact that Franchisors are often blamed for their failure.

 As for Franchisors who consider franchising to be a cash cow, I would suggest that a responsible Franchisor would be investing substantial time, money and effort into growing and supporting their Franchisees. There’s no such thing as a free ride.

For all parties involved in franchising there are some common rules for success.

• Seek professional advice – gain clarity

Most of the Franchisees I see with problems in their franchise did not have specialist pre purchase franchise advice at the outset.

 Franchisors should develop a system and legal documentation with specialist assistance.

• Understand the nature of franchising

Research the franchise industry extensively before getting involved as a Franchisee or Franchisor. Make informed decisions.

• There must be acknowledgement that a Franchisee is a self employed person who is responsible for their own business success.
• Address potential issues in the franchise pro-actively using honest communication and dialogue before they become unmanageable.

Mediation is an attractive and cost effective practice to resolve Franchisor – Franchisee differences. The franchising code of conduct states that if one party requests mediation the other party must agree and that mediation costs are shared.

When blaming is replaced by acknowledged responsibility, Franchising really can provide a win –win situation for both Franchisor and Franchisee.

© 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 was recently invited to write a chapter in a book regarding how to keep motivated in business.                                                                              

It was interesting to reflect and consider this. I came to the conclusion that motivating myself when I was a Franchisor was a very different matter to self- motivation as a franchise consultant.

In franchising it is a more complex matter of not just motivating yourself The Franchisor, but also motivating the franchisees.

Technically, Franchisees should be self motivated business owners.

In an ideal world franchisees take absolute responsibility for their own personal and business development.

However there are always some business owners who need a helping hand.

A Franchisor has much to gain from creating motivated franchisees;

• Increased income
• A happy network of franchisees
• Happy franchises = happy clients
• Happy franchisees + happy clients = one very happy Franchisor!

So how would you go about motivating franchisees?

Here are some ideas for you to consider;

Money!!

Nothing motivates a business owner like money. It sounds so simple doesn’t it? Yet when I review Franchise systems which I do on a regular basis, I am astonished at the fact that many franchise systems do not allow a franchisee the opportunity to make money.

If you are not 100% confident that your franchisees can make money, or if your franchisees are telling you exactly that and you’re ignoring their plight; seek advice now.

Motivate by example

Everyone loves hearing success stories.

Encourage your “star” leading performing franchisees to speak at your group meetings and to share their tips on what works for them.

Be passionate and get excited!

When speaking at conferences and seminars I often get feedback about how passionate I am  about franchising and that I actually trigger excitement in the audience through the infection of my passion.

As a Franchisor you should be passionate about your business.  It should be easy for you to share the passion for your success in the business which will in turn motivate your franchisees.

Franchisees need to believe to achieve.

Accountability and follow through

Why are business coaches so successful in increasing business performance? Because they keep the business accountable.

Have you ever been to a conference where an amazing motivational speaker has made a really big impression on you?

You feel upbeat.

You start making big plans…… in your head.

………..for at least 24 hours, or less.

Help your franchisees to remain motivated by encouraging them to follow through on the plans they make whilst in a motivated state.

Specifically to write down their thoughts and ideas as they occur and to share them with The Franchisor.  Those thoughts can then be turned into shared goals which you can both work on to make it possible.

Motivate yourself and be consistently positive

Nothing is less motivational than a whingeing Franchisor.

Your franchisees have chosen to adopt your business system and brand and to pay you money for doing so. Don’t disappoint them.

Read motivational material every day.

Mix with high achieving business people by networking or master mind groups

Write down clear goals and review them regularly.

Achievement is motivating in itself

Nothing motivates more than success itself. It’s an upward spiral. Work at achieving your best and the best for others and reap the rewards. This is truer than ever in a franchise situation.

© 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/