Franchising magazine September / October 2012 Issue

www.franchise.net.auFranchisingSep/Oct 2012 VOL.25/No.5Your essential guide to buying a franchise

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SEP/OCT 2012 FRANCHISING | 3WWW.FRANCHISE.NET.AU

ContentsSEPTEMBER/OCTOBER 2012 |YOUR ESSENTIAL GUIDE TO BUYING A FRANCHISE

22

144REGULARS5 Editorial

6 News

10 Interview

161 Legal

162 Sketch

165 People

166 Glossary

168 Checklist

186 Company listings

Inspire14 Its in the blood Superfinish Express

16 Silver baked Bakers Delight franchisee

18 Maturity rules OK Aussie Pooch Mobile

22 In the swim Paul Sadler Swimland

26 Mums the word Ziggetty Snipits

30 Still going strong Brands with longevity

36 Family fortune 7-Eleven franchisee

Opportunities42 Profit to go Fast food focus

50 Senior service The aged care market

56 Leading the way Business franchises

64 Help, they need somebody! Working in IT

72 Home advantage The challenge of retail

78 Budding businesses New concepts to consider

Anniversary86 25 years Flashback

92 Then & now Pictorial review

94 Going global Aussie brands overseas

102 They came but did they conquer?Foreign franchises here

108 Looking forward Wheres the potential?

Issues119 Renewing your agreement Whats involved?

124 Lease likely Looking at retail leasing

How to...130 In tough times, talk! All about mediation

138 Logged on Social media issues

144 Retail checklist What you need to know

151 A firm foundation How to shape a business

94

42


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SEP/OCT 2012 FRANCHISING | 5WWW.FRANCHISE.NET.AU

SARAH STOWEEditor

Welcome

Happy birthday to Franchising magazine! Yes, weve notched up 25 years of publishing the best informa-tion, news, views and inspirational stories from the franchise sector and spreading the message that franchising is a great way to build a business.

In the 25 years since the magazine started, under the expert guidance of publisher Peter Trevilyan, a forest of franchise brands has taken root in Australia some from overseas, many of them homegrown.

The sector has matured into a $128bn market, risen to the challenge of performing in a highly regulated business space that has in turn driven the professionalism of the industry to new heights, and continued to innovate and inspire.

We thought it appropriate to celebrate our silver anniversary with some re ections on how times have changed, highlight some of the brands that have seen the potential of the Australian market, share with you some franchise names that are taking their business around the world, and to look to where business growth lies in the years ahead.

And as the sector has had to innovate, so has Franchising magazine. In an evolving consumer marketplace where the de-

mands for knowledge and shared opinion increase every day, the role of the internet is paramount in publishing today. Franchisings rst class editorial content has now expanded across www.fran-chise.net.au, Facebook, YouTube and Twitter, and our must-read magazines are also available digitally.

Of course we wouldnt be marking this anniversary if it

wasnt for the support and enthusiasm of both our readership and the committed franchisors and service providers within the franchising sector. So thank you...

We hope you enjoy the read

Sarah StoweEditor

Special anniversary edition

This year we are thrilled to be celebrating the 25th anniversary of Franchising magazine.

PublisherMartin [email protected]

EditorSarah [email protected]: 02 9422 8900

JournalistDanielle [email protected]: 02 9422 2667

Sub EditorRichie [email protected]: 02 9422 8851

National Sales and Marketing ManagerDavid [email protected]: 02 9422 2905

Contributing JournalistDomini Stuart

ColumnistsGreg NathanAndrew Terry Raynia Theodore

Production Co-ordinatorEryk [email protected]: 02 9422 2379

Creative Art Director Julie [email protected]

DesignerLouis [email protected]

Managing DirectorJeremy [email protected]

Editorial InquiriesTel: 02 9422 8900

Advertising InquiriesTel: 02 9422 2905 Fax: 02 9422 2722

Subscription InquiriesTel: 1300 360 126Fax: 02 9422 2633

Franchising is a publication ofReed Business InformationABN 132 719 861

SYDNEY OFFICETower 2, 475 Victoria AveChatswood NSW 2067Tel: (+612) 9422 2999 Fax: (+612) 9422 2722www.reedbusiness.com.au

Franchising

Average Net DistributionPeriod ending Mar 126,841

All Franchising material is copyright. Reproduction in whole or in part is not allowed without written permission from the Editor. 2011. Opinions expressed in Franchising are not necessarily those of Franchising or Reed Business Information.

Were celebrating our silver anniversary with re ections on how times have changed and some of the brands that have seen the potential of the Australian market


6| FRANCHISING Sep/oCt 2012 www.FRANCHISe.Net.Au

NewsONLINE NEWS | www.FRANCHISe.Net.Au

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At Franchise Legal, we do. For an obligation-free chat with one of our principal solicitors in Brisbane, Sydney or Melbourne, call 1300 798 501 today or e-mail: [email protected]

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RFG swallows up Crust PizzaThe Retail Food Group has announced its plans to acquire the Crust Gourmet Pizza Bars business, which has expanded to New Zealand, Singapore and the US.

The 11 year old chain of 119 outlets will join another gourmet pizza brand in the group, Pizza Capers Gourmet Kitchen, RFGs most recent acquisition which has its stronghold in Queensland.

RFG will pay $24 million upfront (in-cluding RFG shares valued at $3 million), with a second payment 12 months from settlement - the difference between seven times Crust FY13 adjusted EBIT less the initial payment.

RFG CEO Tony Alford said the Crust transaction will help with some strategic initiatives: the immediate scale provided by ownership of both pizza systems; fur-ther investment within the QSR category; and reduced reliance on shopping centres for outlet growth.

Whilst it remains RFGs intent to

develop each brand as distinct systems, the acquisition will generate unsurpassed opportunity for the exploitation of supply side economies, collaborative market-ing, research and development activities, cross pollination of products and services and a growing expertise in the gourmet takeaway pizza market that will benefit all stakeholders in each system, Alford said.

Crust CEO Michael Logos will remain with the business, and with co-founder and managing director, Costa Anastasiadis, will continue to drive the brand under the RFG umbrella.

The transaction is the culmination of a six month engagement during which we have had the opportunity to famil-iarise ourselves with RFG management, culture and strategic objectives, said Logos.

The opportunity to partner with a growing public company with proven expertise in the retail food franchising

industry offers our franchisees and other stakeholders early access to the benefits of a larger organisation whilst retaining the core attributes that have generated the Crust Gourmet Pizza Bar success story to date, he said.

The transaction is anticipated to be completed by the end of September 2012, subject to due diligence.

Costa Anastasiadis and Michael Logos


Sep/oCt 2012 FRANCHISING | 7www.FRANCHISe.Net.Au

ONLINE NEWS | www.FRANCHISe.Net.Au

NewsNEWS BRIEFS

Jamaica Blue opens fi rst Singapore storeThe Foodco Group has announced its coffee brand, Jamaica Blue, has opened its fi rst outlet in Singapore, with another opening scheduled for mid-September.

Jamaica Blue is this year celebrating its 20th anniversary in Australia, where it has 73 cafes, but the brand also has a presence in New Zealand, China and the UAE.

The new Singapore store is located at One Raffl es Place in the heart of the fi nancial business district, and the second store will be located at Star Vista, the nations prime shopping and entertainment venue in the western central region.

The Jamaica Blue Singaporean breakfast, lunch and dinner menu will resemble that of Jamaica Blues current markets, however, due to humid local weather conditions, Jamaica Blue Singapore will feature an extended cold beverages range with market-tailored fruit fl avours such as Lychee Iced

Tea, Chocolate Banana Cream Frappe and Passionfruit Smoothies.

Hermant Karjadi, director at Foodcos regional licence partner, Universal F&B, said the Singaporean market is ready for Jamaica Blues premium coffee offering.

The FoodCo Group also operates the Muffi n Break and Dreamy Donuts brands.

The Puckles Family Bakehouse in Queensland has sped up its search for franchisees after strong sales have outperformed the business targets

Iconic Australian franchise retailer Clark Rubber has relaunched its retro Better than a beach jingle with a brand new TV, radio and POS campaign

Drive through coffee franchise, Muzz Buzz, has launched in New Zealand, with one outlet opening in Auckland and another in Manukau

Franchise vehicle service company Ultra Tune Australia has been fi ned $8,580 for underpaying a Filipino employee based in Perth

Retail food franchise Trampoline Gelato is taking to the road and offering its brightly coloured concept as a new mobile business

Dominos Pizza has launched a new tile logo and cut the word pizza from the design, as part of the franchises new direction and fresh corporate image

Jims Removals and Storage is the latest division to emerge in the Jims Group franchise phenomenon

Quest Serviced Apartments has unveiled its fi rst dedicated Quest Studios apartments in Melbourne and Sydney. The initial fi ve properties offer a hotel style room with a kitchenette, work area and complimentary WiFi

Australias Big4 Holiday Parks chain has welcomed a new addition to its 180-strong network, BIG4 Eden Gateway, located on Sapphire Coast, NSW

CHoICe ADDS Hotel mANAGemeNt to FRANCHISe oFFeRFranchisees in the Choice Hotels Australasia network are now able to outsource the management of their hotels to a professional company after the hotel chain joined forces with the Australian owned Lancemore Group, the largest boutique hotel and conference venue operator in Victoria.

Trent Fraser, CHAs chief executive offi cer, said the move will cement the hotel franchise group as pre-eminent in the region.

We see our new relationship as a great opportunity for independent or institutional property owners or investors to leverage off the established network of over 270 Choice Hotels

properties in this region and the long established, service oriented, family owned and operated management company which Lancemore Group brings to the table.

The agreement is expected to help build the franchise portfolio not just in Australia but in New Zealand and Singapore.

We believe there is strong demand for existing owners of hotel assets to consider a more personalised approach to the management of their properties and with the Lancemore Group we can now certainly provide that, said Fraser.

The Lancemore Groups CEO Julian Clark said We recently decided to expand our hotel management offering into management

in conjunction with a franchise agreement as it is a globally proven model that is rarely employed in Australia.

This is a separate business from our current boutique hotel and conference hotel offerings and we see signifi cant growth in this model. The power of this relationship is that it is a win for all stakeholders, said Clark.

Trent Fraser



NewsONLINE NEWS | www.FRANCHISe.Net.Au

The general outlook from franchisors and service providers is that the franchise sector in New Zealand is slowly improving, though conditions remain challenging.

According to the Franchize Consultants July 2012 Franchising Confidence Index, there are mixed results recorded across the industry.

Those surveyed reported a decrease in optimism in regard to general business conditions, access to financing and to suitable franchisees, franchisee sales and profitability levels.

However there is improved sentiment for

availability of suitable locations and staff, and franchisor growth prospects.

But service providers proved more optimistic than franchisors when it came to future franchisee operating costs.

This latest report included a special focus on bank funding for franchisees and concluded that solid franchisee propositions could still be funded. However there was a slight decrease in confidence from franchisor respondents in relation to ease of access.

Concluding remarks to the report included: Despite some of the positivity in response and

comments it is clear that substantial challenges to profitability remain, as indeed they do for other forms of organisation.

Many are experiencing

pricing pressure, many sec-tors remain competitive, and many input costs continued to rise. Combined, these and other factors pressure profit-ability at all levels.

FRANCHISING IN NZ: CHAlleNGING but ImpRovING

Franchisor victory highlights importance of due diligenceAnother court case serves to highlight the need for due diligence before purchasing a franchise, with an Australian master franchisee in the David Reid Homes business being ordered to pay franchisors David and Suzanne Reid $2.85 million.

The home building franchisor took Russell Stephens and his company to court for failing to pay the total $3.75 million agreed for his share in the master business.

Stephens bought a share in Reids Australian master franchise (DRH Australia), which until then was owned by David and his wife. Stephens then became an equal shareholder with David Reid and was contracted to pay the total fee in instalments.

The business subsequently failed and Stephens lost almost all his money.

The first two instalments had been paid according to the contract, but only half of the third payment was made on time, although the remainder of that payment

was paid later. The final two payments have never been made.

Stephens argued that there had been misrepresentation about the business and he therefore should not have to pay the remainder of the fees.

In the Queensland Supreme Court Justice Dalton said there was no evidence to suggest that Stephens had taken any action after receiving information about four impecunious franchises who had relied on David Reid for funding to purchase their businesses, and that he had been given unrestricted access to the business and accounts of DRH Australia.

Justice Dalton said that he had sympathy for Stephens but described his approach to the share purchase as naive.

Justice Dalton also suggested there was no evidence shown for the cause of the business failure or that the business model was unviable.

The Australian and New Zealand Online Shopping report found that in 2012 online shopping in Australia will increase 17.9 percent to $16 billion, and is predicted to grow to $26.9 billion by 2016 at a compound annual growth rate of 14.1 percent


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Inspire|Interview

How do you replicate something that works well? Thats the challenge of franchising, and getting it right at retail is a goal for Franchised Food Companys Stan Gordon

There are two mottos that South African-born entrepreneur Stan Gordon lives by: the harder I work the luckier I get, and make money and have fun. For every 10 things I do only seven succeed. I never forget that my customers are the franchisees and the franchisees customers are consumers themselves.

Gordon is the owner of the Franchised Food Company which comprises Cold Rock Ice Cream, Pretzel World, Nutshack and Mr Whippy.

In South Africa Gordon had started out in marketing and advertising. He then successfully built a retail empire called The Pie Works Group, though this got off to a rocky start when the queue at the shops grand opening was 200 strong but he had forgotten to arrange staff to manage the till.

And it was pies that first brought him to the franchising concept. He first saw the effect of empowering individuals through small business in South Africa when the Mandela family asked for his assistance setting

up Pies for Africa, a support network for impoverished people to start their own small business.

It was also the pie concept that brought him to Australia. In 1997 Gordon thought he saw a golden opportunity to replicate the success of his pie business in Australia and set up three Pie Factory outlets. But he hadnt taken into account the iconic Four n Twenty brand, and was soon facing bankruptcy.

At the same time a tragedy at his Johannesburg house caused him to assess the future, when his familys security guard was attacked and murdered. The Gordon family decided to adopt Australia as home.

The franchise food modelGordon needed a business opportunity to establish the family in their new country and it came in the guise of Mr Whippy, which had seen its last official ice cream van drive off into the sunset in the 1970s. Then there was the acquisition of Pretzel World in 2005 which started his franchising journey.

As he sees it, franchising is trying to create

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jobs for people without the massive infrastructure needed for small business. And investing in a franchise is a pertinent career option for the more mature individuals, he adds.

If youre over 40 to 45, employers are looking for young, enthusiastic people. In the corporate world, there are not many jobs for older people. But there are in smaller systems.

Stan talks of franchisees able to buy themselves a business with appropriate rewards and demands. If you reach 50 or 60, Im not sure how much you want to develop a new system. Its all basic business economics, you pay for what you get. Im not sure how many people have millions to invest.

We work on a payback of three years, after that its profi t, and you have an asset to sell. Franchisee expectations are important. Franchising takes the risk out, but theres a cost, and in

our case, the cost is six percent of your sales.

Mr Whippy was the fi rst brand Gordon took on and he admits he hasnt got it right yet.

I tried to reposition this but it will always be an ice cream van to Australians. So were going back to basics and were looking at a mobile option. The trouble with mobiles is stringent council controls.

Gordon is considering co-branding the soft serve ice cream, which he believes has a strong standing here. Whats wrong with walking into a convenience store and getting a soft serve? he asks.

Its an approach already tried and tested in the group. Cold

Rock Ice Cream has thrown its net wider than stand-alone stores: the mix-in treats are available through Video Ezy and Blockbuster video outlets, and as a dessert offer at Souvlakihut.

Cold Rock Express is a down-sized option with 15 fl avours and a one metre cold slab to mix in ingredients rather than the full sized store. Add in the retailing of salty, savoury pretzels and theres

Franchised Food Co growth2000 Stan Gordon acquired Mr Whippy2005 Pretzel World bought2009 Cold Rock ice-creamery joins group2010 Nutshack acquired

Franchisee expectations are important. Franchising takes the risk out, but theres a cost, and in our case, the cost is six percent of your sales



Inspire|Interview

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another opportunity to co-brand with a coffee and pretzel offer.

Retail will change, landlord expecta-tions on tenants are ridiculous, so a dual offer on the same tenure makes sense, says Gordon. We think, if a consumer comes in, what can we sell them?

Nutshack is the latest addition to the group, and is undergoing a facelift. A distinctive mark of the franchise models is the opportunity to create a sense of drama and so engage the customer in the purchasing process. Cold Rock has its mix-in cold slab, Pretzel World the pretzel twisting, now Nutshack is about to undergo the Gordon treatment.

We are re-positioning, rebranding, making it more theatrical, more interactive. Well be roasting nuts on the premises so customers can watch.

There will be a number of new stores too that will open up the retail experience to include self-serve, so customers can walk through and choose a product rather than just order from a counter.

Were in fun treats, we dont pretend to be healthy, were naughty and indulgent. Were selling small ticket items. I never want to be anything else.

Acquisition modeThe business has grown through acquisitions and Gordon has three possible businesses in his sights right now. All are established companies with more than 20 stores his benchmark. At 20 stores a franchisor cant make money, the infrastructure costs are too high to provide the correct service to franchisees.

But they are established enough to have potential for the FFCo.

There will be at lease one acquisition in 2013, says Gordon. We know retail is down here, were marginally down on same store sales, and I challenge anyone who says their sales are up. But the brands will expand. When times are tough, an astute business person will pick up business opportunities.

Although there could be expansion overseas down the track, right now the focus remains on these shores, providing a franchise option that works.

Franchisees need to make money, Gordon says. F

But they are established enough to

Were in fun treats, we dont pretend to be healthy, were naughty and indulgent. Were selling small ticket items. I never want to be anything else

More acquisitions ahead for FFCo, says Gordon


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Inspire|Franchisee

Superfinish Express (formerly Kwik Fix) has been in franchising since 1995. Looking back at the old photos, among the bad hairstyles, are some of the same enthusiastic guys who continue to love what they do and over the years have enjoyed a great income, lifestyle and job satisfaction. Some have now brought their sons into the business with a succession plan in mind. In fact, the owner/founder David Bruckshaws son Dean now operates a territory of his own in Redcliffe.

My fondest memories are coming into the business on school holidays and being able to help out, so from an early age Ive always felt part of it, says Dean. Another great memory is of Dad picking me up from school, getting into the van and being surrounded by the familiar smell of paint. Times have changed though, and we now work with more environmentally friendly paints which dont give off the same odour.

If you ever considered doing something else for a job, what was it?There have been a few starting with wanting to be the next MC Hammeror maybe a DJthen joining the armybut the lure of working with cars won over in the end.

How do you handle the franchisee/franchisor relationship with your father?With a great deal of patience on both sides. But seriously, we have a mutual interest and enthusiasm about finding new technologies and keeping our processes at the cutting edge of the industry.

What are the challenges for you in business?There is a high expectation placed on me. I need to be twice as good to be considered half as good. I feel like Im always under the spotlight and while fellow franchisees assume I get it easy, this couldnt be any further from the truth.

What accounts for your success?Im always pushing the boundaries to constantly evolve my business and achieve outstanding results. In this business its about producing a factory finish in a mobile environment while balancing the output within EPA Guidelines. And thats not always as easy as it looks. Anyone can obtain a mediocre finish but I am truly dedicated to upholding Superfinishs brand values. I also love what I do! F

Taking care of business Micronets business soft ware soluti ons remove the everyday

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its in the bloodDean Bruckshaw now, and at a conference with his father in 1999


AD_FRANYMAR_12.pdf Page 1 3/02/12, 10:26 AM

16| FRANCHISING SEP/OCT 2012 WWW.FRANCHISE.NET.AU

Inspire|Franchisee

Multi-unit franchisee Debbie Blacker has been involved with Bakers Delight for 25 years

After starting out as a Geelong bakery sales assistant at the age of 14, Debbie went on to open several Bakers Delight bakeries across Australia and 25 years later now owns three franchises.

Debbie started working at Bakers Delights Corio store and

realised then she wanted to own her own business one day.

She was one of only three young women completing a baking apprenticeship at TAFE and became the rst ever female baker at Bakers Delight. Her advice to anyone who thinks

only men become franchisees is to get real.

Bakers Delight believes in developing people. There is no distinction between men and women, and that culture has helped foster the successful careers of many female franchisees, including myself, says Debbie.

Debbie and her partner moved to South Australia, NSW and the ACT where they opened several new bakeries and helped to train new franchisees. And as if this was not enough of a challenge in itself, Debbie not only had her rst child, she also helped

pioneer the rst ever Bakers Delight recipe book.

Debbie never inched at the idea of acquiring multiple bakeries and credits her success to being organised and highly motivated and to having great staff around her. Looking back on her career so far, Debbie reveals she would not be at the point she is now without the support, training and programs offered by Bakers Delight. Her key advice for other baking apprentices and staff is to remember that a career path to owning a bakery is achievable and that if they want to run their own business there are opportunities out there.

Bakers Delight has been a major part of my life. Ive spent more time doing this than anything else. After all I started when I was 14 and Ive just turned 40. F

The very rst Bakers Delight bakery opened its doors in 1980 in the Mel-bourne suburb of Hawthorn and it is still going strong today.

The name comes from the belief that every baker should be delighted by the product they bake and that every customer should be delighted by the service they receive and this philosophy remains the driver behind current prac-tices and culture.

By 1988 the business had expanded to 15 bakeries and, quietly con dent about

the proven formula, the founders, Roger and Lesley Gillespie, began to franchise these bakeries. In 1991 the business had grown to 43 outlets and, showing swift growth, two years later had expanded to 200 outlets.

Three decades on and the company has more than 700 bakeries across three countries and enjoys a 13.6 percent share (Roy Morgan single source data March 2012) of the Australian bread market.

Lesley Gillespie explains Our prod-uct is a staple that continues to stack

up despite retail pressures. In the 2011 nancial year we took on 50 percent more franchisees than in previous years - in the 2012 nancial year weve already exceeded expectations.

Our intent is to be around for another 31 years. I am con dent that our proven business model and continued expansion will enable us to achieve just that.

How it grew and grew

SILVER BAKED

Bakers Delight has been a major part of my life. Ive spent more time doing this than anything else. After all, I started when I was 14 and Ive just turned 40

Roger and Lesley Gillespie


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Inspire|Franchise story

Ten years ago you could realistically think about retiring when you turned 55. Youd pack up the Winnebago and travel around Australia, living the dream.

But now the boom is over for the grey nomads.

A 2011 study of retirement intentions by the Australian

Bureau of Statistics found the average age of retirement for those who left work in the previous five years was 61.4. And 13 percent of those surveyed aged 45-plus said they thought theyd never retire.

According to the 2011 RaboDirect National Savings and Debt Barometer (NSDB), 25

percent of baby boomers have little or no savings, and simply are not financially prepared for retirement.

So what happens if you want, or need, to do more with your life? While it can be hard to find employment as a mature worker, there are opportunities to start over, and the answer could be

maturityrules ok aussie Pooch mobile is revelling in the experience of mature-age franchisees

FR.SEPOCT12.PG018.pdf Page 18 27/08/12, 9:33 AM


Franchise story|Inspire

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running your own business.

Many of us have always dreamed of being our own boss, and with hard work and careful planning, self-employment can bring financial and lifestyle rewards along with enormous personal satisfaction, says Chris Taylor, Aussie Pooch Mobile founder.

The older generation can embrace the opportunity of becoming self-employed now that their kids have grown and they are back to considering what they want, not what the family needs.

Aussie Pooch Mobile is a company that embraces older workers. At least one third of its franchisees are over 55.

As well as the obvious benefits older people bring to the working environment, such as reliability, commitment, dedication and flexibility, their people skills and ability to deal with change can make them excellent coaches to younger members of staff, says Taylor.

They have stood the test of time and know what is needed to achieve their goals and aspirations. They usually have a lot of knowledge about life in general that they can bring to the table and should be respected and learnt from.

Take 65-year-old John Fyfe who purchased his franchise in 2011 after a 46-year career in high-

maturity

The income is, of course, very handy, when you consider the current economic environment for investments. The return on my investment is at least 10 times better than a bank term deposit




level management. He retired at 63, but decided he needed, and wanted, to continue working.

In my working career I enjoyed a senior position for over 38 years with Westpac, was general manager Queensland and Northern Territory for the Australian Institute of Management, worked as executive manager for the Surf Lifesaving Foundation before retiring at 63. However, I was then talked out of retirement and worked for a private financial services firm.

I knew I wanted to continue working for several reasons, but was unsure what I wanted to do. I wanted to try something different so I decided on a complete change of direction and in 2011 joined the Aussie Pooch Mobile team, washing dogs.

I am thoroughly enjoying what Im doing. Im my own boss, running my own business.

My office is my trailer, which is outdoors, where I love being. I really enjoy the relationships I have developed with my clients and especially the dogs.

The income is, of course, very handy, when you

consider the current economic environment for investments. The return on my investment is at least 10 times better than a bank term deposit.

I intend to keep working while I am still physically able, and this role has me the fittest I have been for years. I would wholeheartedly recommend a franchising role with Aussie Pooch Mobile for us baby boomers. I feel a lot of clients are comfortable with a mature, stable operator.

Carol Garrety, 64, is another baby boomer who owns a franchise.

I started with Aussie Pooch Mobile as a representative in 2009 and I purchased the franchise in April 2010.

Before starting with Aussie Pooch Mobile I worked for a 4WD company as their cook on Tagalong Tours and before and after the tourist seasons I worked in their admin office. All my working life had been in admin. I left this job as the work was slowing down and they closed the business.

At 61 I was then faced with a dilemma. I did not want to work in admin any longer, but had no idea what I could do differently. Id always loved dogs and at the right time in my life, I came across Aussie Pooch Mobile and decided I would give it a go.

It was scary at first as it was completely different. But the support I received was terrific. I loved the job from the minute I started. Not only am I now financially independent, and my own boss, working with the dogs gives me such a boost.

I would definitely recommend working for Aussie Pooch Mobile, especially if you are older or returning to the workforce and want a complete and rewarding change in your life.

One day Id like to get an RV and travel around Australia, but I dont know if I could leave my dogs. They are like family to me now. F

I loved the job from the minute I started. Not only am I now financially independent, and my own boss, working with the dogs gives me such a boost

Carol Garrety


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Paul Sadler loves to teach children to swim and hes on a mission to expand his methodology and keep kids safe in water

The Victorian-based business Paul Sadler Swimland is about to embark on 15 sites and the key to expansion is keeping a familiar feel. Our business feels like family and its very hard to retain that in a bigger business, says Sadler.

Canada and Townsville are the two outposts for the brand Canada because a previous employee relocated and wanted to take the business there. When it started earlier this year there were 67 children enrolled; now the figure is 800.

Sadler says 86 percent of clients come through recommendation. And getting referrals is all about making kids feel special, and offering good customer service.

Sadler says We want franchisees with the right

motivation. Its a very good business decision but its not about money, if you get the feel good factor the money comes in.

For example, celebrating the journey of small successes is a joint affair with the mum, teacher and child. We give little goodies to the kids.

Kids love to be validated so passion and praise is at the heart of the teaching process, he says.

The essential elements to the business are the structure and methodology. Sadler says The secret to our success is that kids love predictability. We can swap two teachers 13 minutes into lessons and they could carry on the classes.

The only commonality in teaching kids of six months and those of 14 years old is its done in water. In most swim

schools someone only has to have Australian certification and they can teach. We have very defined sets of goals, all the way through and its pretty scripted.

Wayne Pollock CEO says You

in the Swim

Paul Sadler


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have to win the hearts and minds for your staff and franchisees. Selecting staff and engaging them in the product and having fun is important.

Sadler has focused on creating an environment that values feedback, whether thats franchisee to staff, or the reverse. Both Sadler and Pollock teach from time to time, and also expect to get feedback from whoever is standing deckside.

Feedback is usually received in a positive way, and were able to modify our behaviour and improve the integrity of the product. Everyone is required to act on feedback and can take it from anybody. It means you can give feedback without risk and theres a culture of respect.

Another foundation to the business is the use of flotation aids.

This gives us the ability to get kids comfortable in water. The skill is then how to remove the flotation device and keep the movement. We use the security of a lesser aid.

The business began in 1974 when Sadler saw someone teaching one-on-one to tread water. In Australia at the time there had been a number of drownings, and Sadler saw how important it was to teach children to survive in deep water.

A 10 minute survival unit where the children learn to tread water and other mobility skills is core to each swim

course. Repeat business comes as children complete each stage of learning and can move on to the next level of skills.

There used to be a 15 percent drop in winter business in the home base of Victoria, now the intake of new clients outstrips those students who might be more seasonal in their swimming habits.

There are plans for the business to grow nationally and within two or three years Sadler would like to have 20 sites. An international brand is in his sights too.

However expansion is not just dependent on finding the right franchisees its location too. We need access to pools that work for us, and were employing some better strategies now for this.

One approach is a shared school facility, where the swim school helps to build the pool and then has access after school hours and at weekends. F

Everyone is required to act on feedback and can take it from anybody. It means you can give feedback without risk and theres a culture of respect



Inspire|Franchisor

Three years ago, mother of five Kristen Semmens discovered as many mothers do the tedious task of dealing with head lice. A short time after, she realised a business opportunity had presented itself

After two of Semmens girls suffered a nasty reaction to an over-the-counter chemist product, landing them in hospital, she and her husband went about researching and developing their own head lice treatment solution.

At the end of 2009, Ziggetty Snipits and Nitpro were born. The former is a childrens hairdressing salon, where the little clients are kept distracted with DVDs, video games, novelty pedal car cutting chairs and a bright, entertaining environment. Nitpro, located either at the back of the Ziggetty Snipits premises or next door, is a head lice treatment salon.

Today, with two stores open in Queenslands Robina and Tweed Heads, and

four more on the way across Queensland and NSW, Semmens is thrilled with the franchises growth and is even more excited to have been nominated in the National AusMumpreneur Awards. The awards recognise hard working, entrepreneurial mothers, with Semmens a finalist in the Service Business of the Year award and the Peoples Choice Best Customer Service award.

The awards will be announced in Sydney on 8 September [after Franchising publication], and regardless of the result, Semmens says shes most excited about the exposure her business will receive, and is honoured to have been nominated for the Peoples Choice award.

Weve got a huge network. We dont

mumS The word...

Novelty pedal cars and DVDs make haircuts easy at Ziggetty Snipits


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Inspire|Franchisor

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just have a local network. Ive got families that travel from Darwin, the furthest weve ever had is a family thats come from Hong Kong. Weve got families that come from Sydney to visit us. It just seems like everyone is supporting us, which is great, she told Franchising.

With hopes to open another 12 sites in the next 12 months, Semmens is keen to recruit other like-minded mothers - after all, these are most of the people that are inquiring about buying into the franchise.

Half the time the inquiries are from people who have seen it, experienced it and come in. They go hang on, Ive dealt with this for three years and you helped me. I want one.

Ninety percent of the time theyre mums. Theyre the ones who need the service ... All our staff, they only employ mums. We dont have

any junior staff or anything like that, she says.

Franchisees can either buy into both the Ziggetty Snipits and the Nitpro brands or they can operate a Nitpro on its own. Ziggetty Snipits, however, can not be run as a standalone business.

Regardless of their level of investment, franchisees dont need to be qualified hairdressers, Semmens insists.

The reason being is that when it comes down to the statistics of the business, most of the income comes through Nitpro. We say would you

like a haircut with that? - its like would you like fries with that? - thats why we only have them at $16.50. We work on a mass principal rather than a boutique principal. We dont go for the upper five percent of the crust, we want to service the masses. So all the stores are very busy because were a cheaper option and the kids also get

novelty cars and DVDs.We tell the franchisees

they need one staff in each side [of the business], minimum, at all times. You dont need to be qualified as a hairdresser to act in Nitpro. Theres no hairdressing qualifications, so any owner can own it and not feel like a third wheel, because theyll be bringing in more income than a hairdresser out the front. They will need a hairdresser on staff but its only about 50 cents more an hour to have a hairdresser there than someone thats not qualified.

While franchisees dont have to be qualified hairdressers, they are encouraged to have an active, hands-on role in the business.

I think that every business runs better with an owner who has hands

on the business. We dont tell them they have to, but I think everything runs better when its loved rather than managed. My personal preference is owners that work in the store, she says.

And with an entry price in the ball park of $60,000, which includes fit-out costs, plus working capital, Semmens is expecting Ziggetty Snipits and Nitpro to really take off once word gets around.

The value in this is that its a new industry in Australia. You know that when you open one, youre not opening with three outlets around you. Youre not trying to take someone elses market to be successful. The number of people that ring me and say Id better get onto this quickly because if someone else hears about it Ill lose my opportunity. F

I think everything runs better when its loved rather than managed. My personal preference is owners that work in the store


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still goingstrong

Inspire|Franchise stories

theres no hard and fast rule about how long a business should have been successfully franchising before it can call itself established. But there is no doubt that the companies featured here have proved the longevity of their systems. get inspired, were going back to the 80s!

Denis McFadden, founder, Just Cuts Just Cuts filled a gap in the market between the high end hairdresser and the barber back in 1983. I had five Just Cuts salons in Sydney and one day one of our hairdressers wanted to open her own salon using my systems. I didnt realise I had developed a turn key franchise proto-type.

She was 21 years old and on the day she was to open our first franchise she had a baby. I needed that drama, because it made me realise you didnt need to be there nor be a hairdresser to run a Just Cuts salon. Most of our

franchisees are not hairdressers they are investors and own 2.4 Just Cuts on average.

Im proud to say Leanne, our first franchisee, is still with us today, 21 years later.

Today we have 175 salons in Australia and New Zealand and one in India: finding the right partner can take a few goes to get it right and that has been our challenge there.

We close a Just Cuts every 40 weeks and open one every 10 weeks. While vacancy rates for shops are the lowest in Australia compared to the rest of the world, rents will remain high despite the current shopping centre climate.

At Just Cuts we have embraced a new free and fun phone app, we have outsourced our IT and support, developed on-line learning, we measure and drive a web, Facebook and Twitter presence.

Just Cuts has a new kiosk modular concept. This gives a lower entry level in the market for new franchisees or for existing owners to grow and have secondary satellite sites in shopping centres.

Amber Tiles Amber Tiles started in 1973 in Sydneys upper North Shore. In 1987, there were six Amber stores trading throughout NSW and, by the following year, its first store opened in the ACT.

The company had a management buyout in 1996, with the formation of Amber Group Australia Ltd - at that time, the 12 existing stores in NSW and the ACT became franchised. In 1997, a private equity company purchased the majority shareholding.

There are now 27 Amber

Denis McFadden


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Inspire|Franchise stories

franchise stores throughout QLD, NSW and the ACT.

Early on, the brand became well known for using Fred Flintstone as its marketing mascot, and the slogan Only Amber Tilesll do.

Originally Amber sold pine bark to nurseries [this provided the origin of the name because amber comes from the resin of prehistoric pine trees] but quickly moved into retailing pavers and quarry tiles. The product range in 1987 was a fraction

of what is available today: floor tiles, wall and feature tiles, pavers, retaining walls and artificial grass. Instead of Italian tiles, much of the merchandise is now Asian-manufactured; there is a completely new product group in natural stone tiles and pavers.

Forty WinksFounded in 1984, The Forty Winks brand has grown from a handful of stores operating as a Melbourne co-operative

to an Australian franchise brand with more than 90 stores. Over this time the franchising landscape has changed significantly.

Jim Stait, who has been with Forty Winks for more than a decade, says there are four key areas where the business has experienced the most change: position, people, product and promotion.

Stait says, In the mid 1980s, the stores were located in street strip shops and were between 500 to 600sq m. Today, the average size of a Forty Winks store is 1,000sq m, the biggest in the group being 2,000sq m. These days, stores are also typically located in Homemaker Centres.

In terms of our people, it is the gender of the team that has changed the most. Retail staff a quarter of a decade ago were predominantly male; however, there is an even blend of male and female team members in our 92 stores today, says Stait.

The basic mattress and water bed of 25 years ago has transformed with luxury bedding, including minimum partner disturbance, latex, gel and pillow-top mattresses ranging from firm, medium and plush support comfort. Bedroom furniture has progressed with the demands and changes of fashion.

Twenty-five years ago, the majority of furniture was Australian-made; sadly, most bedroom suites are now sourced overseas. Store layouts have gone from busy and product packed to a professionally designed, spacious layout with carefully planned store traffic flow, he says.

In terms of marketing and promotion radio, television and press were really the only three key marketing areas 25 years ago. Today, we have social media, online, including web and online shopping, direct marketing, magazines and pay television.

Wet-SealWet-Seal began in Toormina, NSW in the 1980s, and expanded from a company with licensees to a franchise company in 2001.

The company has custom designed and built a multi-mil-lion dollar corporate office and manufacturing facility in Coffs Harbour, has a technical office in Melbourne and a marketing office on the Gold Coast.

Highlights have been achieving rankings in the BRW Top 50 Fastest Growing Franchises for four years running; seeing a small company change into an internationally recognised

>> continues on page 35

Alan Strange, Forty Winks first franchisee


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Franchise stories|Inspire

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franchise business and being able to hold our bi-annual conferences in offshore locations such as Fiji and Hawaii.

Wet-Seal has now waterproofed over two million bathrooms with a negligible failure rate, testament to getting it right. F

Check out our anniversary section starting on page 86. And if you want to find out where the potential lies for franchise businesses over the next few years, turn to page 108 for a glimpse into the future.

Michael Ellis, director and founder of Wet-Seal Q: How long have you been in the franchise?A: Twenty-eight years. I have been on board since day one of the business as I am one of the original founders and was the original licensee before we switched over to being a franchised company in 2001. I wanted to see where the business could go as far as franchise expansion, product development, etc was concerned.Q: What has been the biggest challenge over the years?A: There have been a few, initial start-up of the business, convincing licensees/franchisees that Wet-Seal was worth being involved in and developing systems and products to meet the changing demands of the consumers.Q: What has been the biggest change in the system?A: Developing from solvent-based systems to water-based systems, changing over to manufacturing in-house our most environmentally-friendly products to date.Q: What have you learned from the business?A: To feel confident, be passionate and follow your ideas even when set-backs occur, know that you can make a vision happen, and to be persistent.

Roger Brown Brisbane franchiseeRoger started as a licensee in 1987 and says steady flow of work has kept him in the business.Q: What has been the biggest challenge?A: Getting clients and keeping them, having employees treat clients the same as the franchisee does.Q: What has been the biggest change in the system?A: The introduction of computers, with the speeding up of invoicing and money turnaround.Q: What have you learned from the business?A: The importance of customer service plus good record keeping.

>> continued from page 32

Wet-Seals Toormina office



Erdal Ismail is celebrating 25 years as a franchisee with 7-Eleven

I bought my first store in 1986 and opened the doors on January 3, 1987. You never forget the first day.

I had found out about 7-Eleven through a couple of friends in the franchise network; we had all worked together in Coles management - I started with the supermarket straight out

of school at 15. I went to visit them in the store and thought, I could do this. As I wasnt satisfied with my work at Coles, I did some research on 7-Eleven. I wanted to know how much money there was in the business.

I was happy with what I heard, so I opened a store in Newport, Melbourne. It was an existing store and so I paid

goodwill for the business. It wasnt the best or the worst decision I ever made but I learned a lot. Initially it didnt make the money I was expecting but I saw potential and I kept the store for 15 years.

In 2000 I had another opportunity to purchase a 7-Eleven store, a petrol-station

famIlyfortunEs

Inspire|Franchisee

>> continues on page 39


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Franchisee|Inspire

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outlet in Williamstown. I kept that four about four years and then sold it to buy a former Mobil store in Melton in the western suburbs - and had that outlet for six years.

My son had dropped out of uni and I didnt want him working with me -or roaming the streets. I realised he had potential and bought a 7-Eleven store for him to manage. He did the full franchisee training course with 7-Eleven and I help him with shortcuts in the business.

I have two stores now, East Keilor, which my son manages, and Taylors Lake, and thats close to home.

Franchising is about fi nancials which gives me the lifestyle and freedom to do what I want. I spend two to three months overseas each year. Once Im on the plane and Im gone, I know its out

of my hands. Even from the beginning I trained my staff so I could take time out to travel, and of course its better now my son is involved. But I dont switch off completely, its my business so I still get the store fi gures emailed every day.

I started at 23 and it was hard to get the fi nance. I had

super and savings of a few thousand dollars. Put together it was about $15,000. My parents loaned me $30,000, my sister lent me $30,000 and my brother, who became my business partner, put in $10,000.

By 1988 I was able to borrow from the bank and

>> continued from page 36

thousand dollars. Put together

and my brother, who became



Inspire|Franchisee

V7225

13 26 13vipfranchisesales.com.au

I love the free time I now have. I get to choose the hours that suitme and I love being the boss.

I havent looked back since I madethe decision to own my own V.I.P.franchise. I love what I do and

am so glad I decided to go for it. Annette, V.I.P. Home Cleaning franchisee

225

Lawns & Garden MaintenanceHome Cleaning

Commercial Cleaning

Declared V.I.P.Best Value FranchiseSystem under$50K in 2009 & 2010

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paid off my parents. When that loan was fi nished I borrowed more to pay off my sister. We had discussed this as a long term plan beforehand.

In 1991 in the recession my brother decided to get out of the

business, and I paid him about $40,000.

I found I was able to make decisions more quickly after that. It was good to have a partner to share the pressures of business, but there are other pressures that come with a partnership. I found it quite diffi cult. It gives you pressure you dont need and you have to be more fl exible with family involved. Now its my wife, my daughter and my son.

Of course with family involved you can control costs in the payroll and pilferage. I can always put in extra effort to make more money, if I work the till I can increase my income. In franchising you get back what you put in.

Now we have about 25 staff, and its hard to fi nd staff who share the same get up and go attitude. Its hard to inject the passion because its a job for them. But you cant expect staff to do everything at 100 percent, and when they do its a bonus.

Now my role is like a fi re fi ghter, solving problems.

My advice for a potential franchisee is to do your research. Dont be lazy, dont take one persons word. Find long term franchisees and speak to them about the good and the bad aspects of the business.

You have to be in tune with your business. I have always enjoyed retail. Even at an early age, before I was 10, I used to sell chewing gum to my friends and siblings in Cyprus.

My plan is to retire at 50; Im 49 now, and Im going to buy a boat and go fi shing. But if another opportunity comes up, well, Ill have to take it. F

My advice for a potential franchisee, do your research. Dont be lazy, dont take one persons word. Find long term franchisees and speak about the good and the bad things


Lollypotz is an online and retail business specialising in hand made chocolate gift bouquets. One of Australias fastest growing franchise operations, Lollypotz currently has over 42 franchises in Australia, 3 in New Zealand and has further plans to expand internationally in the near future. We have franchises available for sale throughout Australiaand we are looking for hardworking and motivated people to join our team by becoming a Lollypotz franchise owner. We have a well developed system, website and National Support Ofce to support you and all Lollypotz franchise owners receive excellent training, induction and ongoing support. We are very proud of our growth and achievements at Lollypotz and were thrilled to have these achievements recognised at the recent FCA 2011 Excellence in Franchising Awards where Rosemary Harmata, Chatswood and Sydney CBD Franchise Owner was awarded the Runner-up in the Franchisee of the Year (less than 2 staff) Award and Louise Curtis, Lollypotz Franchisor was awarded Runner-Up in the Franchise Woman of the Year Award. For further information about this very exciting opportunity contact:Holly Beck1300 565 [email protected]

BE A PART OF THIS AWARD WINNING BUSINESS!

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Australians love their fast food and with most of the top brands franchising their outlets across the country, there are opportunities to cash in on the taste for food-on-the-go. Flipping a burger has traditionally been a great way for youngsters to start work because the systems in many franchised fast food chains are rigorous and provide good learning environments for keen entrepreneurs. And it is the rigour of the business model that helps

keep franchisees on track when it comes to making money.

There are a number of elements that contribute to the profi t and loss of a fast food business, with rent and franchise fees sitting at the top of the list as fi xed costs.

Bert Cotte, national franchise manager for McDonalds Australia explains the franchise agreement for the McDonalds business is 20 years. This allows the franchisee to plan the growth of their business with a clear

understanding of what the rental or leasing cost will be over this period, he says.

Operating costs include the costs of goods (COGs), wastage, wages, and sales revenue and these elements offer franchisees fl exibility in managing the costs.

Cotte says Costs are creeping up and they are unlikely to fall, communications and energy costs are rising, youll get business insurance costs rising. So how do you stay ahead of the game?

At McDonalds having access to data is a huge advantage as it allows franchisees to compare their business performance, whether thats year on year sales in their own store, other local store performance or fi gures from across the state.

What do you do then to

TO GO PROFITSA fast food outlet is a licence to print money, right? Well, no. As Sarah Stowe discovers, keeping tight controls on the costs is essential to achieve a profit-making business

Opportunities|Fast food

Costs are creeping up and they are unlikely to fall, communications and energy costs are rising, youll get business insurance costs rising. So how do you stay ahead of the game?



Fast food|Opportunities

put a plan of action into place? Weve got a best practices book, gathered from really good units around the country, explains Cotte. We look at census data, the product mix, analyse and share best practice.

He advises franchisees to have a regularly updated business plan as a living document that shows profi t goals and customer service plans.

Its a trigger, and the franchisor should be the person to keep people honest to their business plan, he says.

CoSt oF GoodSA clear benefi t of being in a franchise network is the ability of the franchisor to conduct deals on the supply of goods.

Fred Pose is the franchise development manager at the fast food chicken chain Oporto. We control all of the negotiations with suppliers, so we get a really good price, he says. So its up to the franchisee and how they translate it to use in store. We know what the gross profi t should be and franchisees are not allowed to buy from other suppliers.

Phil Colburn, the Red Rock Noodle Bar franchisor, says while franchisees dont have much control of food costs they get the best price. We work to have a good rapport with suppliers and dont get caught up with the big boys, he says.

As an example, he explains that Red Rock Noodle Bar has secured a stable price for two

years on key products noodles, meat, seafood and packaging. Vegetables are subject to more seasonal prices.

What is normally a $20 box of broccoli, this week is $60. So weve added more vegetables to our menu to expand the choice for the franchisor from 10 to 14 to allow for seasonal costings.

The focus is on maximising the franchisees profi t so a franchisee orders direct and pays the same price as a company owned store manager.

But making money out of serving quick meals is more than benefi ting from negotiated supply costs. Getting the

Hamburgers still account for a quarter of the market, but salads and sushi are proving the next most popular food segment with a 19 percent market share, followed by pizza with 16 percent and sandwiches, rolls, baguettes and wraps close at 15 percent of the market.

Source: IbisWorld Fast Food in Australia 2012

wHAt ARe we eAtING?

This is a very high cashfl ow business, you need to be looking after the costs. You need to be diligent because one percent difference in food costs is taking money off the bottom line. If franchisees are not managing food wastage and labour costs, its two percent off the bottom line




CleanUPaJani-KingCommercial CleaningFranchise!www.janiking.com.au

with

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purchase orders right, and monitoring delivery and wastage are essentials to keep finances in check. Its particularly important with fresh food, as Pose suggests. Were dealing in fresh produce so if you over-order it goes off and you have to throw it away. You need to ensure staff are

checking deliveries, you dont want to lose a box of chicken fillets.

This is a very high cashflow business, you need to be looking after the costs. You need to be diligent because one percent difference in food costs is taking money off the bottom line. If

franchisees are not managing food wastage and labour costs, its two percent off the bottom line.

Theres also a big opportunity around portion control, suggests Cotte. For instance, adding more lettuce to a burger isnt necessarily better for the customer, the lettuce falls off the meat. He insists its important to engage staff in understanding portion control. Each menu

Working on profit and loss is all part of the initial training. Our target is to upsell products and weve tried to make it simple for staff and franchisees with our point of sale

The total fast food industry Revenue $15.8 bn Annual growth 08-13 3.7% Annual growth 13-18 2.5% Profit $758.5m Wages $2.7bn Businesses 24,734

Market share McDonalds 19.6% Yum! Restaurants 16.4% Competitive Foods 8% Dominos Pizza 5.5%

TechnologySmartphone applications are set to revolutionise the industry and spur sales growth.

Source: IbisWorld Fast Food in Australia 2012

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item and raw product has sales and yield data so keeping an inventory and accurate measurement of wastage is important.

Every month at Oporto we expect profit and loss statements and the business development

managers will meet with franchisees and benchmark

them against the

group, says Pose. There are systems that help them do this but some of this has to come from them. When you talk to existing franchisees, they are managing food costs, wages and turnover. Those are the three things they concentrate on.

wAGeSIbisWorld predicts an annual wage rise of 1.9 percent through to 2017. Its a labour intensive

industry so wage costs are a significant share of revenue and operational costs including rents have remained high.

The Fast Food report says The low level of capital intensity experienced by the industry is best exhibited in its ratio whereby every $1 spent on capital will be balanced by $8.40 in wage costs in 2012-13.

While the franchisor can give guidance on the appropriate levels of staffing to meet the demands of the outlets busy times and slow periods, its the

franchisee who will be balancing the books and the staff roster. That can be a challenge if they want to keep staff levels to a minimum for cost purposes, suggests Colburn, whose company owned stores will frequently roster on more staff than do franchised owned outlets. Its all about getting the right team and customer service, rather than cutting costs, he says.

Bert Cotte echoes the need to be constantly vigilant in staff roster-ing. Investing in the staffing of your business is a key area where you can invest to grow your sales. Its important to forecast accurate-ly, then be nimble with reaction to fluctuations from your forecast. Quick reaction to increases and decreases in sales will optimise customer experience.

For instance, have an accurate forecast for different weather patterns, weekend days and holidays.

FASt Food IN AuStRAlIA: RepoRtThe IbisWorld report Fast Food in Australia, published July 2012, predicts a number of constraints on the future market: intense competition within the industry, a deteriorating economic climate, the age of the population, competition from convenience stores and the growth in easy-to-prepare meals.

However, the authors write, Consumer demand for value, convenience and nutritious food is expected to drive industry performance over the five years through 2017 to 18.

The number of secondary school students is an important external driver for the sector, as fast food taps into both the age groups food preferences and the convenience factor for working parents.

Consumers aged 14 to 17 account for almost a quarter of sales 22 percent, with 18 to 24 year olds the biggest customer

group at 30 percent of the market.Australias fast food sector is a mature

industry which has brought product innovation but constrained profit margins and slow technological development. As some of the companies in the industry move into the next phase there is likely to be a resurgence, continued demand for niche products, and an overall increase in businesses up to 2018 as new players enter the market.

The shift towards healthier fast food will benefit franchisees, the report predicts. Due to this shift, franchise operators will increasingly dominate the industry and competition will be fierce, with each operator seeking to maintain market share.

In contrast consumers will be looking for value for money and may treat fast food as a treat.

For new franchisees we encourage them to do due diligence, we ask them to consider what numbers they need to get to make money



Fast food|Opportunities

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At McDonalds the three essentials are: Growing top line sales beyond annual cost pressures Managing food costs McDonalds is a business that

makes a small amount of money on a lot of transactions. This means that there is only a small margin to play with, thus a certain level of precision is required to manage portion sizes of each ingredient

Achieving good levels of productivity from your staff, whilst delivering on customer expectations

wHAtS tHe key to pRoFItAbIlIty?

Cotte also highlights capacity issues; for instance, if five cars are stacked up in a drive through, the impact is that other customers may keep driving.

Franchisees should find something for staff to do if theyre not busy, to generate extra sales, like taking samples out into food court areas, suggests Cotte.

tuRNoveRRed Rock Noodle Bar aims for an improvement in the top line rather than letting franchisees focus on cutting the bottom line. Working on profit and loss is all part of the initial training, explains Colburn. As an owner theres more investment in the business so you can put in more hours.

Our target is to upsell products and weve tried to make it simple for staff and franchisees with our point of sale. We have company stores and use these as a test market. We walk the talk.

One way to increase turnover is through promotions and a successful marketing strategy will boost awareness of tried and tested core products, while new menu items can bring in new customers, says Cotte.

Promotional activity can include harnessing the power of a local network as at Oporto. Oporto is different from other systems, says Pose. We try and get franchisees together in one region for their marketing strategy thats up to 20 stores work-ing together. They get more bang for their buck this way. The marketing programs can be checked for impact and returns on investment, if franchisees provide the right information, there are analysis systems, says Pose.

Franchisees need to have information to best manage their costs and having access to financial data from across the network is an advantage of the franchise model. At Oporto the sharing of financial information starts before franchisees are signed up. We share our benchmarks with potential franchisees. For new franchisees we encourage them to do due diligence, we ask them to consider what numbers they need to get to make money, says Pose.

E

Franchising magazine September / October 2012 Issue

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Transcript of Franchising magazine September / October 2012 Issue