Modern Franchise Magazine May - 2012 · advertising campaigns, whereas the smaller ones tend to...

®

What is the OneCharacteristic of

Successful Franchises?

M A G A Z I N E

Due Diligence isChecking MoreThan FinancialPerformance

May 2012

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What’s in this month’s Magazine?

Regular Features

Page 4: Welcome

Page 8: Franchise Focus

Page 22 Franchise Experts

Page 34: Modern Franchise

New Features

Page 58: Franchise Directory

Page 62: Franchise Jobs & Appointments

Special Features

Page 14: B2B Franchises-5 CompellingReasons to Own One

Page 18: The Future of Business ServicesFranchises

Page 20: Is Your Neck in the OH&S Noose?

Page 38: What is a Franchise? - The Basics

Page 52: What’s Your Number?

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Profiles

Page 8: Salty Rooster - Why the World NeverTasted so Good!

Page 22: Your Franchise Experts - BDA

Page 34: Lava Carts - Coffee with Substance

Articles

Page 6: Due Diligence You Must do BeforeEntering into a Franchise Agreement

Page 12: Why People Buy Franchises

Page 16: Franchisees in the Local Community

Page 24: Healthy Fast Food Franchise Option

Page 32 3 Steps to Create an Efficient LocalMarketing Strategy

Page 44: The Disadvantages of a Franchise

Page 48: The Online Dilemma

Page 56: Finding the Most Profitable Franchise

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M A G A Z I N E

Modern Franchise Magazine | 3

Sales & Marketing

Creating an effective local marketingstrategy is vital to franchiseeprosperity. Entrepreneur ChrisAnderson discusses just howimportant this is and provides aninsight into developing andimplementing an effective strategy.

The online dilemma is one facingmany franchises. Getting this right isalso essential for franchisee’sprosperity.

Looking for a franchise?

In today’s business environmentfranchising can be a great way toleverage the power of numbers tomaximise your ROI. But the key tobecoming a successful franchiseeis undertaking careful due diligencebefore committing to any franchisesystem.

We look at the benefits of owning abusiness to business franchise and“how to find the most profitablefranchises”.

One of the most common questionswe receive from readers that arelooking at franchise opportunities is“what is a franchise and how does itdiffer from a regular business?”

So we have included an overview offranchising including the basics.

Business services franchises areproviding opportunities thatindependent operators have failed tomatch in recent years.

We also look at the future of thissector and what is behind its recentsuccess.

We also look into why people buyfranchises and how the franchiseebenefits from becoming moreinvolved in their local community.

Franchise Management

With all the confusion over OH&Simplementation since theintroduction of harmonisedregulation that has been adopted bysome states and not others, LionelHedt from Australia & NewZealand’s leading OH&S franchiseSafetyQuip answers the questionsthat most business owners want toknow when their head is in theOH&S noose.

Mark Fernandez from BusinessDevelopment Alliance talks aboutunderstanding the numbers andKPI’s set by franchises and whythese are so important to franchiseesuccess.

Features

In “franchise focus” we talk toJimmy Sagiotis from Salty Roosterabout their exciting new franchiseand “why the world has never tastedso good!”

Simon O’Brien from Lava Cartsalso talks about his innovativecoffee franchise and his long termplans for this emerging franchisesystem in “Modern Franchise”.

We also interview Mark Fernandezfrom Business DevelopmentAlliance about what makes a greatfranchise consultant in “YourFranchise Experts”.

New Features

We also introduce some newfeatures into this months’magazine, including a directory offranchises and suppliersfeatured in this edition plus there isan exciting selection of franchisesector job opportunities courtesyof the Maxiom Jobs web site.

There are also a number a reallygreat franchise opportunitiesadvertised!

Enjoy the magazine. All feedback isappreciated. Visit our website at:

www.maxiom.com.au

Welcome to the May 2012 Issue of Modern Franchise Magazine.

The franchise sector is still positive about its’ prospects for 2012 despite thechallenges that face some industries. In this edition we look at some of thevarious issues that are affecting the franchise sector and how franchises arecoming out on top compared to their stand-alone rivals.

The Modern Franchise with Mark Matthews

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As part of your due diligence it’simportant you speak to thefranchisor, existing franchiseesand former franchisees.

The franchisor is required toprovide you with a DisclosureDocument which must include thecontact details for existing andformer franchisees.

You should contact a variety offranchisees both current andformer, particularly those innearby territories.

One question which is alwaysgood to ask franchisees is, if theyhad their time over whether theywould still buy the franchise?

There are multiple websites andbooks that outline the steps thatought to be taken in the interestsof due diligence. You should takea minute to review any negativecomments or franchise warningsites, though it is also worthnoting some of these sites mayhave been set up by disgruntledformer franchises with an axe togrind.

Business consultants Goodes &Co have prepared acomprehensive list of questionsfor franchisees and the franchisor

which you can access by clickingthe link below.

Due Diligence Questions

As you investigate franchiseopportunities you’re likely to haveadditional questions of your ownthat you’d like answered.

Asking questions around therelationship between thefranchisor and the franchises issomething you shouldn’toverlook.

How the business relationshipworks is important and you needto assess whether the likely styleof relationship will suit you andyour needs.

There are also a number ofwarning signs you should look outfor when investigating thefranchise.

If the salesperson's explanationsnot match up with what's in theDisclosure Document, then youshould consider is thesalesperson making promisesand/or commitments above andbeyond what's written in theDisclosure Document?

If so, you should have the contractamended to include thosepromises. Remember - alwaysget it in writing.

Sometimes franchisors leadprospective franchisees througha bunch of hoops so they canbetter predict how theprospective franchisee willrespond once they become afranchisee. Just make sure thatthe franchisor keeps his wordduring this "courtship" period - ifhe doesn't, you'd be wise to notjump into marriage!

There's no better way to find outwhether a franchisor has lived upto its promises and providedleadership to its franchisenetwork than by conversing withcurrent and former franchisees.

Keep in mind that, while there arealways those disgruntledfranchisees that had unrealisticexpectations to begin with, alarge number of complaintsamong a set of franchiseessignals a definite red flag.

If there is a history of litigationthen find out why. Litigation is not,by definition, a bad thing - forinstance, a good franchisor iswilling to litigate in order to

Conducting due diligence is the most important aspect of any franchisedecision.

DUE DILIGENCE YOU MUST DOBEFORE ENTERING INTO ANYFRANCHISE AGREEMENT

maxiom6 | Modern Franchise Magazine


protect the brand in question.

However, excessive litigation iscertainly a sign of trouble; if thisis the case, dig deeper.

Consider the length andcomposition of the program (alllecture or some hands-onexperience?), the subjects to becovered, and the qualifications ofthe training instructors.

If you're not sure whether or notyou'll learn what you need toknow to operate the business,look into the issue.

Current franchisees are a goodsource of information:

Did they learn enough viatraining to operateeffectively?

Did they get needed helpon an on-going basis froma qualified support staff?

Are you confident that thesupport outlined in theagreement can effectivelyassist you in managingyour business?

You should have a franchisor'sDisclosure Document reviewedby a professional. Confirm thefranchisor is financially capableof providing the supportpromised.

While most franchisors have thebest of intentions when theypromise support, what matters isthat they are able to ultimatelyprovide the support you need.

Many franchisors also control allthe marketing for the franchisegroup. When you investigate thefranchise opportunity, ask forsome examples of thefranchisor’s marketing and getthem to show you the return onthis investment.

Ask some existing and formerfranchisees how successful thefranchisor’s marketing is and if ittargets the right customers.

If the franchisor can’t or won’tshow you what ROI you canexpect, and/or the feedback fromexisting franchisees isn’t greatthen think again about thisfranchise opportunity.

Some of the larger, moreestablished chains have nationaladvertising campaigns, whereasthe smaller ones tend toadvertise on a local level.

Depending on what kind/size ofbusiness you choose, you mayhave to do most of the legwork -i.e., solicit your own clients. If yourconcept requires sales skills thatyou don't have, reconsiderchoosing that concept - it may notbe the right one for you!

Without a strong targeted andmeasurable marketing plan afranchise opportunity is unlikely tobe successful.

Also on the subject of marketing,does the franchisor “get it” inrelation to online. What strategieshave they embraced and whatreturn is there to the franchisee?Does this strategy work for thecustomer or is it just designed toappease existing franchisees?

Is there likely to be updating orrefreshing of the brand and whatwill be the cost to the franchisee?You don’t want to sign a franchiseagreement only to find out shortlyafterwards that you are up fortens or even hundreds ofthousands of dollars more for acomplete refit or refurbishment.

To assist with your businessplanning you should also ask thefranchisor what financial datathey can provide you to assistyou with putting together adetailed and relevant businessplan. After all they are the expertsin the franchise so they shouldmore than happy to answer anyquestions you may have.

Remember FranchiseAgreements are legally bindingdocuments, so it’s important youget all your questions answeredbefore you sign on the dottedline.


Talking to Jimmy Sagiotis it iseasy to see where the passionfor this business comes fromand how it has become infusedthroughout the entire the SaltyRooster brand.

We spoke to Jimmy about howthis passion drives the business,why it is reflected in both theemployees attitude andcustomer loyalty and how thishad enabled Salty Rooster tostand out in a crowded andcompetitive market.

1. So Jimmy, what is soinspiring about yourbusiness idea?

Fresh healthy chicken burgersthat taste great – who wouldn’twant to have one!

Just seeing the looks on ourcustomers faces when they taketheir first bite of a Salty Roosterburger makes all the effort wehave gone to get this rightworthwhile.

2. How did you knowfranchising was right for youand what ultimatelyinfluenced your decision?

Local feedback – the businessdeveloped strong positioningwith the local community. Newcustomers became repeatcustomers and people travelleda fair distance to both sampleand buy our products.Franchising was the next logicalstep.

3.What previous experiencedo your franchisees havebefore taking on a SaltyRooster franchise?

There are a number of things welook at when assessing the nextSalty Rooster franchisee.

Some of the key characteristicsinclude;

a willingness to learn;enthusiasm for the foodservice industry;

and the ability to interact wellwith the existing andpotential customer base;

In addition, some of the previousexperience we seek from aprobable franchisee includeshaving worked in a food setting,previous small business ownerand/or experience in roles thathad a community emphasis.

4. What are the main reasonsthat someone would take ona Salty Rooster business?

The following five points bestexplain why someone wouldtake on a Salty Roosterbusiness.

ProfitableFunSuccessful business modelEasy to operateProfessional

Our primary ingredient ispassion. Passion for the tasteswe bring to our consumers, and

THE WORLD HAS NEVERTASTED SO GOOD!An exciting newcomer to the food franchise sector is gaining an impressivelist of accolades for great healthy fast food, fun atmosphere and amazingservice. “This is all just a small part of the dynamic Salty Rooster culture”says founder Jimmy Sagiotis.

franchise focus

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passionate about the successavailable to our franchisees. Ourculture is down to earth and wehave an open & honestapproach to everything we do.We have a great team spirit, andallow access to all levelsof management.

5. What was the driving forcebehind your decision tofranchise?

The demand of our product in thelocal community and theopportunity to grow at a stateand national level.

6. What process and supportdo your franchisees receive?

Investing in a franchise meansyou’re in business ‘for yourself’but not ‘by yourself’. This is aphrase commonly used, weknow. It rings true though. Buyinga Salty Rooster franchisedoesn’t mean you have to do italone. You become part of theSalty Rooster Team, walking thesame path we have walked,sharing in our success. Beingpart of a support network, allsharing a common vision andgoal has many advantages. Wealso provide support during thedecision making process.

Salty Rooster wants to help youmake a fully informed decisionon your future. We will discussevery aspect of the business withyou, from staff training to lifestylechanges, as well as introduceyou to other franchisees who cangive you first-hand informationand advice on being afranchisee.

Salty Rooster has a low initialFranchise Fee and low ‘start-up’costs compared to others in theindustry. We keep costs downand pass on savings tofranchisees to help you start-upat the lowest possible cost.

We will help you decide on thebest store location, design, fit outand layout for your needs. Wewill also visit the site at everycritical stage to ensure yourinterests are being protected.

A complete training program isprofessionally coordinated andstructured to suit your specifictraining needs. Our trainingprogram is structured so that ourteam will be right beside you inall of the initial stages of openingyour business and as yourbusiness develops and grows.Ongoing support is availablewhen you need it.

Salty Rooster - The World Never Tasted So Good!


Our National Office Team will bethere to coach you to improveyour sales, profitability andgeneral management along withimproving communications andstandards.

7. What challenges did youface in setting up yourfranchise?

Challenges encountered arehighlighted through the followingkey points.

Finding the right people/team to help you grow.Time away from yourexisting business.Red Tape.CostsLegalities

8. Tell us about some of theexpectations that you had.Have they been met?

As a business, we have definedobjectives and clearexpectations. In short, theseinclude assembling the rightteam, brand recognition withinthe community and continuedproduct development. Thus far,we have experienced successon all fronts.

9. Who is the target marketfor your franchise?

The great thing about SaltyRooster is that its target marketis not concentrated on aparticular demographic, socio-economic or psychographic.

Essentially, these chickenburgers are formulated tooptimize health benefits whilst atthe same time indulging yourself.

The target market for SaltyRooster is spread amongstseveral categories, including butnot limited to males/females,children, athletes, healthconscious consumers andfamilies.

10. How many units of yourfranchise do you plan toestablish in Australia?

We have successful companyowned outlets already operatingso we are in no hurry to “sell”franchises.

We intend to grant franchises tothe best applicants that meet allof our criteria, not just anyonewith the money.

Ideally we would like to see atleast 50 Salty Rooster storesopen in the next 10 years.Whatever the case, we believethat the success of every SaltyRooster franchise is moreimportant than the number offranchises.

11. Do you have any plans foroverseas expansion?

Yes. We have had considerableinterest due to our profile gainedfrom our association with theManly Sea Eagles.

12. What would you say tosomeone wanting to take ona Salty Rooster franchise?

This is a great business. All ourstaff are passionate about thebusiness - we love it! There isplenty of hard work required andsometimes long hours, but if youadhere to the guidelines then therewards are definitely there.

For more information aboutSalty Rooster franchiseopportunities contact JimmySagiotis on 0437 972 728.

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Extensive brand marketingLow Start-Up CostA global network that proactivelyshares businessFirst class global brandingProven training and support fromindustry leaders in recruitmentPersonalized PR and social mediacampaignBusiness planning assistanceFinance training and support

Brand | Culture | People

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It's because you're appealing tothe wrong motivators. Or notenough motivators.

Buying motivators are the samewhether you're a franchisoradvertising for franchisees, oryou're a franchisee advertisingfor customers. Appeal to thewrong motivators and you'readvertising will be less effective.

Emotion is the first buyingmotivatorPeople buy emotionally first;logically second. Here's how thatworks. They're attracted to aluxury automobile for all theemotional reasons: Pride.Status. Differentiation. But whenthey're asked, "Why did you buythat (name a luxury automobile)"they'll answer logically: "Got agreat deal," "It's the bestperformance," "ConsumersReports says it's the safest," etc.That's how they justify thepurchase.

It's just human natureCome on now, you know it's true.We all do it. It's human nature!We buy because we want it.

Then we justify why we need it.Often times, franchisors andfranchisees are hitting the wrongmotivators with their advertising.They're selling the need (logic),

but the prospects are buying thewant (emotion).

How many ads motivateaction?As an example, visit any one ofthe portals that promotefranchise opportunities. Read theadvertising messages. Here areseveral:

Recession ProofBusinessLow Overhead, Large ROINo royaltiesNo experience necessaryThe ultimate franchiseopportunityThe franchise profit leaderRated #1Hot"

There's a mixture of emotion andlogic in those messages, butafter a while, they all look alike,don't they? Nothing stands out.You can pretty much use all ofthem to describe most franchiseopportunities. Furthermore,some of the messages don'tappeal to emotion or logic!Consequently, they don'tpromote the reader to takeaction. How many people do youthink are fooled today by "noroyalties"? Are buyers reallyinterested in "the franchise profitleader"? Do buyers care that thebusiness is "rated #1"?

There's nothing wrong with any ofthese messages, except theymay not produce the resultsdesired.

Greatest franchise campaign,maybe everOne of the best franchiseadvertising campaigns ever ranin the early 1990s. It said:"Golden Parachutes Land Here!"It's a great message because itcombines both emotion andlogic! You can see the parachutelanding while also justifying thatit's landing in the right spot!

Most ad campaigns byfranchisors and franchisees (andbusinesses in general)emphasize emotion or logic; it'sthe rare campaign that hits bothmotivators simultaneously. Andfor the best results, you need tohit both if you want youradvertising to produce the bestresults.

John P. Hayes, Ph.D., authorand speaker, advisesfranchisees, franchisors andthose who want to franchise theirbusiness. You'll find more ofJohn's articles atFranchiseMastermind.comJohn is a 30-year franchiseveteran who has ownedfranchises and was the CEO ofa major franchise company.

Want to know why your advertising isn't producing the way you want it to?By John P. Hayes Ph.D

WHY PEOPLE BUYFRANCHISES

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Those who possess good peopleskills, enjoy building meaningfuland productive relationships, andthe challenge of interacting withfellow business owners andmanagers, will find some excellentopportunities worth investigating inthe Business To Business (B2B)franchise category.

There are B2B franchisebusinesses out there that cover awide spectrum of industries andsectors, such as propertymaintenance and restoration,business cleaning and janitorialservices, printing, managementand training, consulting,Occupational Health & Safety,marketing, employment &personnel services, accounting &finance, just to name a few.

So, you're open to several differentoptions, whether you havebackground in a white collar or ablue collar industry. B2B franchisesoffer several advantages and nicebenefits, compared to otherfranchise options.

Develop Stronger BusinessRelationships.

Those who pride themselves inpossessing excellent "people" skillsare at a major advantage whendealing with like-minded businessclients. Your success rateescalates by utilising your naturalability to see your customers as

real people, instead of treatingthem as just a profit source.

If you come from the corporateworld, you will transition nicely intoa B2B operation because of yourstrong background and experiencein dealing with entrepreneurs,business owners, managers andprofessionals.

A Variety of Models and Scale

If you enjoy the idea of conductingbusiness from a home basedoffice, rather than a traditional brickand mortar outlet, this isideal. Some B2B franchises areoperated from a home office, someare mobile (such as IT) callingpotential clients to set up meetingsat their place of business. Othershave various options starting froma small scale to multi-siteoperations, as you grow andbecome more successful andfamiliar with the business,

Limited And ControlledBusiness Hours.

You're doing the majority of yourbusiness during family friendly,"normal", business hours. Youenjoy a nice balance of work andfamily life. Compare that to atypical retail operation, like aconvenience store ,or some fastfood outlets which could be open24 hours a day, 7 days a week or arestaurant or retail store, which

does the majority of its business onweekends and has to remain openlonger hours to compete with otherbusinesses and the Internet.

No Industry ExperienceRequired.

All of the product or service trainingyou need is provided by thefranchisor. The major assets youneed to provide are the strongbelief in the overall concept, and, ofcourse, the intense desire tosucceed.

Business to business franchisesare becoming increasingly popular,not only as a result of the abovebenefits, but also because morebusinesses today are choosing tofocus their energies on their corestrengths.

They are willing to outsource forthe expertise of the serviceprovider, making a B2B franchise avery lucrative option.

Some other advantages of a B2Bfranchise include:

Often greater potential forgrowth and higher incomes

Lower buy in costs

Usually no cash or casuallabour to manage

5 days per week - businesshours only operation.

Business to Business (B2B) franchises provide opportunities many otherfranchises can’t. By Joanne Porter

BUSINESS TO BUSINESSFRANCHISES - 5 COMPELLINGREASONS TO OWN ONE


http://www.safetyquip.com.au/franchise6/safetyquip-snapshot/


It can even mean the differencebetween success and failure forthe franchise.

Therefore, it is important forfranchise owners to work towardbuilding a strong relationship withthe community, rather than fallinginto the error of relying solely onthe franchisor's large scalemarketing campaigns.Combating "Outsider"Resentment

It is common, especially insmaller communities, forresidents to view any brandfranchise as "outsiders". Theprevailing view is that thefranchise, representing bigbusiness, has come to takebusiness from local merchants.

Obviously, this viewpoint is atleast moderately erroneous,since most franchise ownersestablish their businesses in thecommunities in which they live.Thus franchises are locallyowned and operated and don'trepresent an external interloperinto local business.

Even if a franchise owner haslived within the community for hisor her whole life, they may still beconfronted with this mindset.

Therefore, it is crucial to reaffirmthat the franchise is a positiveparticipant in the community, nota hostile entity. The more thecommunity sees the franchisename associated with positivecontributions to the community,the better the image of thefranchise.

Combating Negative MarketingWhen franchisors put togetherlarge scale marketingcampaigns, they do so targetingdemographic groups that willbenefit the most franchises (andthus the brand). However, what isgood for most may notnecessarily be good for all. Thisis especially true as franchisorsbegin to push the envelope with"edgy" ads aimed at youngconsumers.

These sometimes risquéadvertisements play well withyounger generation, but may playpoorly among older consumers,especially in more conservativeregions. The perception ofimmorality in the brand cancreate a negative image of theindividual franchises in theseareas. Once again, therelationship between thefranchise and communitybecomes a deciding factor inhow the franchise is received bythe public.

Creating a Positive RelationshipThe only way to build the type ofsolid relationship with thecommunity that is necessary forfranchise success is throughactive participation. Communityaffinity is short lived. Since publicopinion is easily swayed, it isessential that participation in thecommunity not only be highlyvisible, but also be fairly constant.

There are numerous ways that afranchise owner can becomevisibly active in the communityand build a positive image for thefranchise. The most obvious isinvolvement with local charitywork. This involvement shouldextend beyond simple directdonations and should includecontributions of product/servicesfor charity raffles, contributionmatching, etc. - anything that getsthe franchise name associatedwith positive community action.

Supporting education andextracurricular events for youngpeople is also an excellent way topromote a positive image. Yourfranchise should be sponsoringlittle league teams, getting thefranchise name on bandcalendars, be involved with fundraiser events, and any othermeans of visibly supporting theactivities of the community atlarge.

The relationship between a franchise owner in the community plays acritical role in the growth of the individual franchise.

THE FRANCHISEE AND THELOCAL COMMUNITY

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THE FUTURE OFBUSINESS SERVICESFRANCHISES

So why not outsource all yourown business support functionsto a franchisor. The truth is thefranchisor is actually outsourcingtheir operations to you, for a fee,but in return they provide the HR,marketing and operational bestpractices that have made them asuccess in your industry.

By joining a franchise you alsoimmediately have the elusive“trust” aspect that manybusinesses spend years andmuch effort to earn, and maybenever do.

A franchisor has alredy investeda lot of money, time and effortinto building it’s brand andreputation so that all franchiseescan benefit. Franchisors continueto do this knowing that this givesthem the competitive edge.

So maybe you should be askingyourself, is there a franchise inmy profession and do they havea existing unit in my area. If not,then find the best franchise andapproach them about joining thesystem. Generally, you will findexisitng businesses will pay

less to join the franchise. Somefranchises may even waive thefranchise fee altogether, knowingthat they will earn more inrecurring fees over time from aestablished business.

It is then up to you to make itwork for you, to get the best valuein marketing and other supportservices from the franchisor.

As a general rule, you should findyour operating costs of afranchisee are lower than as astand alone business, even to thepoint that the when recurring feesare factored in you are stillahead.

This is at least the case in thebest franchises. You should alsofind you now have a greatlyexpanded network of expertise todraw from to better service yourclients and gain a larger share ofwallet.

The franchise sector is in a stateof limbo at the moment, withconsolidations amongst mid tierand emerging franchises likely tocreate more dynamic and

formidable businesses into thefuture.

I know I’d rather be a part of thisnetwork then competing with it.

There is still a lot of room forgrowth in franchising, partcularlyin the professional servicesarena. Having specialist coachesat your disposal in all the otherareas of business yourprofession doesn’t cover makesa lot of sense too.

The other thing to consider is thaton average professional servicesfranchises earn 18% greaterrevenue and 23% greater profitthan their non-franchisedcounterparts (source PwC SectorIndicator 2011).

This alone might raise a feweyebrows amongst thoseconsidering starting your ownprofessional services firm,working from home orfreelancing. Anotherconsideration is resale. There isready built market for yourbusiness within the franchisenetwork, that understands thebusiness and the value in it.

A really interesting yet vital factor that few professionals consider whenstarting or during the operation of their business, is how are they going tomarket their services, build trust in their community and therefore succeed inand grow their business?

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While Occupation Health andSafety applies to all companiesand across all industries inAustralia the implementation ofvarious OH&S legislation canvary by state.

The recent National WorkplaceHealth and Safety Act containsprovisions whereby companyofficers may be held personallyliable for workplace hazards.

But what exactly constitutesan adequate safe system ofwork?

First of all your company’s safetypolicies and procedures need tobe written. Why?

A written procedure can bringstructure and consistency into afirm's accident prevention efforts.

Imagine a construction crewtrying to build a house without ablueprint.

Workers need to know what isspecifically required of them todo their job safely. Supervisorsneed written safety guidelines tohelp them manage a safeproduction process.

Business owners and managershave a duty of care to protecttheir most valuable asset – theworkforce.

Key Components of a SafeWork System

Just because you have a writtensafety procedures manualdoesn’t mean everyone’s goingto follow it.

To be effective everyone frommanagement team downwardsmust understand their role in theimplementation of safe workprocedures and actively promotea safe workplace corporateculture.

To that end certain componentsneed to be stated in the safetyprocedures document:

1. Management's SafetyPolicy

A simple but important statementoutlining the management’scommitment to the safety andwell-being of employees.

2. Responsibilities ofManagement, Supervisors,and Employees

Safety responsibilities at everylevel of the organization must beclearly defined in writing and intraining, so everyone has a fairand equal chance to live up towhat is expected of them.

3. Safety Rules

A list of specific Safe WorkPractices must be establishedfor the safety of each employee.

4. Disciplinary Policy

The disciplinary policy defineshow safety rules will be enforcedfairly and consistently.

5. Specific Written Programs

Legislation requires that criticaljobsite hazards must becontrolled through specific writtenprograms and extra employeetraining.

If you’re an employer duty of care requires you to have systems in place toprovide employees with a safe working environment – and employees have aduty of care to follow the systems you’ve put in place.By Lionel Hedt

IS YOUR OHS NECK IN THENOOSE?


These include programs inConfined Space Entry, Lock out/Tag out, Fall Protection,Scaffolding Safety, HazardousMaterials, etc.

Strict procedures are necessaryto prevent exposures, fatalitiesor serious injuries, and must befollowed to the letter.

6. Safety Meetings

Responsibilities and safetyprocedures are rarely followedby everyone without anoccasional reminder.

Safety meetings provide theopportunity for everyone todiscuss safety issues in theworkplace and are now requiredby the new legislation.

Getting the Right Advice

The implementation of acompliant safe work system maybe less burdensome for largeorganisations, but small tomedium sized businesses rarelyhave in-house expertise orresources to do the job.

If the services of an OHSconsultant are required makesure you’re getting qualifiedadvice.

Ask your OHS advisor if theyhave…

relevant knowledge,qualifications and anunderstanding of currentlegislation,

industry experience,

technical expertise,

up-to-date knowledge ofrisk managementprincipals,

and a list of referees who canattest to their expertise.

With stinging fines now in placeyour business can’t afford not tobe compliant.

Lionel Hedt is Technical &Training Manager at SafetyQuip.For more information aboutsafety products, services andconsulting contact Lionel byemail at

[email protected]

Or visit the website atwww.safetyquip.com.au


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Your Franchise Experts

1. What inspired you to startBDA? What are your goalsand values?

BDA has been servicing theFranchise and Business sectorssince 2002 and we have growninto one of Australia’s PremierManagement Consultancy. Ourvalues enable us to expresswhat we do and what we believein, which, in turn enables us toput into practice what we arecommitted to, which is –excellence in everything we do.

Our goals revolve aroundproviding the best advice,service and education toFranchise Networks whilstassisting and educatingprospective franchises tobecome more profitable.

2. What was the driving forcebehind your decision tospecialise in the franchisesector?

Its all about passion!!! Thissector demands a high level of

passion and determination. Withour never ending search forexcellence coupled with ourexperience we believe that wehave a lot to offer anyone eitherentering or already immersed inthe sector.

3. What experience do youhave helping franchise sectorclients?

We have been involved in theFranchising sector for over 40years and have experienceacross all facets of franchising.With this vast experience webelieve our clients can onlybenefit from what we havelearned along the way and thatbrings expertise to the tablewhen making those criticalbusiness decisions.

Our Director is a CommitteeMember of the FranchiseCouncil of Australia WA Chapterand is intimately involved in anumber of well recognisedbrands within the sector.

4. Do you service othersectors as well?

Yes, we have worked in manysectors assisting business growincluding; manufacturing, retail,hospitality, shipping andwholesale. We have thecapabilities and experiences toassist any small business find itsgrowth path.

5. What are the main reasonsthat someone would chooseBDA to assist withdeveloping their business?

Businesses choose BDA as weassist in finding the right growthpath. We will determine wetherLicensing, Agency Agreements,Dealerships, Co-Operatives orFranchising is the best wayforward. Most businessunderstand the need for controlwhen expanding however, maynot be aware of the boundariesin which that control can beexercised.

We discovered that successful franchises have one common characteristicwhen interviewing the franchise founders for this months edition of modernFranchise Magazine, and that characteristic is extraordinary “passion”.This is a key asset for any franchisor - as is getting really great advice - asMark Fernandez from Business Development Alliance explains

Strategise Systemise Commercialise

24 | Modern Franchise Magazine Modern Franchise Magazine | 23maxiom

We have had many clients overthe years that just need good,sound business advice andthat’s where we come in. A’sounding board’ for seniormanagement and for thosefranchises that need assistancealong the journey.

6. What process, servicesand support do your clientsreceive?

We provide a ‘one stop shop’ forfranchising your business. Weundertake all activities in settingup a franchise; everything from

completing the Viability Study,Financial Modelling, ScriptingOperation Manuals to Trainingand Recruitment. The real workstarts after the launch of afranchise, we then take a‘coaching ‘ role in theorganisation just to keep thingson track and to enable thepractical application of thesystem is actually in play.

7. Who is the target marketfor your business?

Typically we find that businesslooking to grow and have heardabout franchising but not reallysure what It’s all about. Yes theyknow of the major brands but arelooking for a guiding hand totake their business to a newlevel.

Business that have beenoperating successfully for atleast 12 months and areprofitable are now looking toexpand. With this in mind,setting the structures and puttingthe infrastructure in place forgrowth can be a costly exerciseand without sound advice canleave you exposed and put yourbusiness at risk, hence we arefinding more and moreentrepreneurs seekingprofessional advice.

8. Do you provide servicesnationally?

Yes we do, we have worked inall states and territories in andacross our beautiful country.


We are looking to forminternational affiliates withcompanies that have the samevalues and principals as us.

12. What would you say tosomeone looking tofranchise their business?

The key here is to get goodquality advice. If you want to besuccessful in an industry thatemployees around 650,000Australians and contributesmore that $140b to theAustralian Economy, then youneed to have a relentless searchfor excellence.

Surround yourself with the bestadvisors that you can afford andget out and chat to people in theindustry – these are my top tipsfor business that are looking togrow through franchising.

Mark Fernandez - brings over 20years of senior managementexperience in business developmentand franchising to your business.

maxiom24 | Modern Franchise Magazine maxiom

The simple fact is that there arehealthy alternatives to the traditionalfast food franchises.

In my former life as a chef, welearnt the value of good food, tasteand nutrition.

Today, in my opinion, many fastfood franchises still only pay lipservice to good eating habits asthey prefer to put profits ahead ofcustomer’s health.

That’s why I was pleasantlysurprised when I saw the SaltyRooster Menu. With 3 youngchildren the temptation to give intothe demands for the bigger fastfood franchise options issometimes strong, but when youlook at the alternative, taking yourchildren to those places is teachingthem bad habits and poor nutritionpractices. But maybe that’s thechef coming out in me!

Unique Food Products

Jimmy Sagiotis from Salty Roostersays “we make an exclusive rangeof gourmet burgers andaccompanying foods like oursalads and fries. These productsare exclusive to Salty Roosterstores, and feature internationalflavours from selected signaturefoods of different world cultures.Our products are the result of along-term investment of time,research and funds by the creatorof the business.”

“The product range has beendeveloped to accommodate healthconscious customers in theinterests of promoting a healthylifestyle”, adds Jimmy.

Well that’s one tick from me.

Three Options

Jimmy says that “Salty Roosteroffers impeccably presented foodcreations with distinctive,international flavours. Ourcustomers can purchase theseproducts in three main ways: Theycan opt to Eat In, Take Out, or takeadvantage of our Home or Workplace delivery alternative.

As a busy working mum, homedelivery is a great convenienceEven my husband can managearranging that!

That’s two ticks from me!

“By meeting consumer demandsfor convenience, Salty RoosterFranchisees can expect to reapconsistently strong profits, followingthe Salty Rooster system”, SaysJimmy

Naturally Good

“The Salty Rooster menu followsthe popular modern theme ofnatural-style foods, that arehealthy, light and superbly tasty.

Our burgers are big on flavour, andimpressively original” Jimmy adds

Again, I hate the same old, sameold of the bigger franchises. Reallyfresh new flavours and some actualthought into the food creation - getsthem another tick.

Food Production

Food production and assemblytakes place in the custom-designedSalty Rooster kitchen.Fresh salads, meat and dairyproducts are used to create eachburger fresh and on demand.“Strict sanitation standards andclever grease proof packagingallow us to deliver fresh, hotand crisp burgers which never failto delight”, says Jimmy.

As a chef I know this can be thedifference between a great mealand a bout of food poisoning. I alsohave worked with major fast foodbrands and they could learn a lotfrom Salty Rooster!

As a business model, anytime youamaze or delight your customersyou have a greater chance ofrunning a successful profitablebusiness.

“Salty Rooster is all about delightingour customers” says JimmySagiotis.

Another tick from me!

“The argument over nutrition and fast food will continue so long as there arefast food options” says Jimmy Sagiotis founder of healthy fast food chainSalty Rooster. By Naomi Walshe

A HEALTHIER LIFESTYLE CANSTILL INCLUDE FAST FOOD

maxiom Modern Franchise Magazine | 25maxiom

Welcome to the Salty RoosterSalty Rooster has been producing and selling the finest burgers in Sydney since 2005.

The Salty Rooster concept is simply brilliant. We’ve taken the best representative flavoursand textures from selected international cultures and created custom designed burgers youjust can’t get anywhere else.

Our Unique ProductsSalty Rooster makes an exclusive range of gourmet burgers and accompanying foods likeour salads and fries. These products are exclusive to Salty Rooster stores, and featureinternational flavours from selected signature foods of different world cultures.Our products are the result of a long-term investment of time, research and funds by thecreator of the business. The product range has been developed to accommodate healthconscious customers in the interests of promoting a healthy lifestyle.

Naturally GoodThe Salty Rooster menu follows the popular modern theme of natural-style foods, that arehealthy, light and superbly tasty. Our burgers are big on flavour, and impressively original.

http://www.saltyrooster.com.au


Buying a franchise may take a lot ofthe guesswork out of starting abusiness, but the decision makingprocess leading up to choosing afranchisor can, and should be, justas lengthy and thorough asresearch necessary to start andrun a successful independentbusiness.

Not all franchisors are createdequal and not all franchises aresuitable for all regions or locations.

If you don't take the time tothoroughly research potentialfranchisors as well as theirproducts, services and market,including competition and potentialthreats, then you run a real risk ofcontractually binding yourself to anunsuccessful operation.

Understanding the Franchisor

Failing to thoroughly research thefranchising company is an all toocommon mistake amongfranchisees.

It can often lead to discontent andconflict when the franchisor fails tolive up to expectations or requiresyou to do something you weren’taware of or expecting.

However, it takes a lot more thanjust a recognizable name for afranchise to succeed.

If a franchisee finds issues with thefranchisor after the fact, there islittle that can be done.

That is why detailed research todevelop an long-term view of thefranchisor before committingyourself is imperative.

Research should not be limited tohow much Return on Investmentcould be possible under idealcircumstances.

A thorough investigation of thefranchisor should include looking atthe company's track record, bothwith existing and past franchiseoperators and in the market. Whatis their reputation with staff andsuppliers? Do they have aFranchise Code ComplianceProgram in place?

Take a look at how the brand hasgrown over its history. If the brandstill offers the same products andservices almost exactly as it did atinception, then it may not be able tostay competitive in themarketplace.

Understanding the Market

Any potential franchisee shouldalso have a very deepunderstanding of the market inwhich their business will becompeting. It does not matter howstrong a brand is, if the community

you intend to do business in will notsupport the business. There are anumber of factors that come intoplay.

Look at the size of the community,the traffic through the centre orpast the location as well as thedegree of competition that the newfranchise will be up against. It isimportant to understand that anyarea is comprised of a finitenumber of customers providing afinite revenue. Ask the franchisorwhat is the minimum traffic orpopulation required for a franchiseto make the profit you expect orneed. Franchisors are experts inthier field so they should be able togive you this information.

The degree of competition limitsthe percentage of that revenue thata business owner can reasonablyexpect to see. Add to this the factthat the new kid on the block neverdoes quite as well at first. It cantake 2 or 3 years before you start tosee reasonable returns.

One should also understand thecommunity in terms of demand.

Thorough research helps create abroader view. Having a clearer viewof the big picture helps to projectlikely outcomes and trends in thefuture. These projections are thebasis for making an intelligentdecision about investing in afranchise.

BEING SMART ABOUTCHOOSING THE “RIGHT”FRANCHISEThe choices are almost boundless when looking at buying a franchise, sowhat is the best way to choose the “right: franchise? By Richard Wozniak


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Before you sign any franchiseagreement it is always a goodidea to check if the franchise youare considering has a goodreputation for looking after its’franchisees.

Most franchises are pretty goodin this regard and some aregreat. But unfortunately somehave a lesser regard for theirfranchisees.

There are several places you cancheck. First contact the NationalFranchise Coalition of Australia(NFC) or the FranchiseesAssociation.

Next you can Google thefranchise you are considering tosee if there are any negativecomments about it. Generallythough, you might not find muchnegative information asfranchisees are prohibited fromdisparaging the franchisor or thefranchise business in any wayunder their franchise agreementand there can be penalties anddamages awarded if they do.

So where can you find anynegative information about afranchisor? There are a fewspecialty websites set up for thispurpose, though you do have totake into consideration that someof the comments will be listed bydisgruntled franchisees that mayhave had their franchiseterminated due to the misconductor poor managment of thefranchisee and not due to anyunconsionable conduct of thefranchisor.

Franchise Websites such as BlueMau Mau can provide somevaluable insights into thefranchise industry and the recordand behaviour of certainfranchisors, when taken inconjunction with all the otherinformation available.

It is always prudent to talk to arange of existing franchisees.Sometimes franchisors mightgive you the details of it’s bestperformers to call as references,but check with others assometimes those best

franchisees might be owners ofseveral units and as such receivepreferential treatment by thefranchisor because theycontrubute more the franchisorscoffers...this might be to smallerfranchisees detriment.

Then wherever possible talk toprevious franchisees that haveleft the system voluntarily. Youmight not get too many directanswers due to the non-disparagement clausescontained in franchiseagreements, but if you ask them ifthey would do it all again, theiranswer should give you a goodidea of their overall satisfactionwith the franchisor.

Like any research, all thisinformation has to be weighed upand taken in context. But if youare serious about making a gooddecision regarding your futurethan failing to properly investigatethe franchise could be fatal.

When looking at particular franchise, how can you tell if the franchisor has agood reputation in its’ dealings with franchisees?

HOW DO YOU FIND OUT IFTHE FRANCHISOR YOU ARELOOKING AT HAS A GOODREPUTATION

http://www.bluemaumau.org/australianews


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3 STEPS TO CREATE ANEFFECTIVE LOCAL FRANCHISEMARKETING STRATEGYBy Chris Anderson

Savvy franchisors nowadays lookto leverage the web and socialmedia to strengthen marketing andbranding efforts, and in turn boostlead generation and sales at thelocal level.

However, it’s next to impossible todo this well without a certain levelof franchisee participation. Not tomention that franchisees arealready seeking out ways tomarket their locations online, moreand more by the day.

Since franchisors also have toensure brand and regulatorycompliance, it’s critical toapproach local onlinemarketing very carefully tostrategically include franchiseesand get the best results whileavoiding costly problems.

You don’t want to give franchiseestoo much control over their onlinepresence, or else you’ll run intocompliance issues right and left,and franchisee guesswork canyield poor results more often thannot.

At the same time, you can’t be toorestrictive, or franchisees willsimply break the rules until youtrack them down and enforcecompliance. You need to have aclear strategy that strikes the rightbalance.

Here are 3 key tips and bestpractices to help you succeedin franchise marketing online whiledodging common pitfalls:

1. Plan a Strategy: What are yourend goals?

First and foremost, understandwhat you’re trying to accomplish,and plan your strategy for howyou’ll get there. This doesn’t needto be an elaborate processinvolving outside consultants, butyou should at least have a planwhich you can update as you go.

You should ask yourself questionslike, “What are my end goals?What types of content are localcustomers interested in? Wheredo our customers ‘live’ online?What metrics and analytics canwe use to track successes andidentify areas to improve?”

2. Start With the Basics: LocalWebsites With Lead Generation

Most franchisees need qualifiedleads more than anything, and thebest way to generate leads isthrough a local website for eachlocation.

Don’t panic - there are toolsspecifically designed for franchisesto set up and manage brandcompliant local websites. The keyis to make sure the sites have asmuch locally relevant uniquecontent as possible and have clearand compelling calls-to-action, or

else it will be an uphill battle toattract traffic and convert leads.

3. Rethink Policies &Procedures: Adapt to theChanging Trends

The policies and procedures inyour operations manual related toInternet marketing are probablyoutdated, and chances are,several franchisees are in breach.Do you address local websites andsocial media adequately? Do youoffer guidelines, best practices,and “how-to” examples? Considerrethinking what you cancomfortably allow franchisees todo online, and instead of restrictingcontrol, think of how you canprovide guidelines and strategies,and put monitoring tools in place toenforce compliance. Whenfranchisees are given a clearstrategy with actionable guidelinesthat produce real results, theamount of compliance issues willdwindle.

Once these initial steps are taken,the next action item is to drivetraffic to the local sites, optimiseconversion rates, and continuallyanalyse results so you can furthertweak your strategy. It’s a definitelya time investment, and success inlocal online marketing won’thappen overnight. But with thetechnology tools that are availableto franchises, it can be greatlysimplified, and the resultingincrease in lead generation andsales over time will make the effortwell worth it.


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Choosing the right design agency- one who will clearly understandyour vision - can be a timeconsuming and tedious exercise.You want a designer who cantake the visualisation you have ofyour company name ortrademark, what your businessrepresents and the message youwant to send to your audienceand replicate it. Here are somethings to look for in a graphicdesign professional.

Open communicationchannels - A professionalcreative design agency shouldhave an open communicationchannel with you at all times. Thiswill keep you in the loopthroughout the design process. Itwill also give you a chance togauge how much time and effortthey are putting into your project.

Furthermore, graphic designerswho are looking to keep younotified on your design, imply thatthey are giving due attention tothe work at hand.

Prior research - To get acomplete understanding of yourcreative design needs, anagency should be willing and ableto conduct a thorough research.

This will give them insight intoyour company, as well as yourbusiness focus. With suchinformation, creation of a designthat embodies the company'squalities is possible.

Personable - The graphicdesigner you work with should beapproachable. They shouldcarefully listen to your instructionsso that they do not miss out onany details. In addition, theyshould ask questions wherenecessary, so that as muchinformation as possible can beavailed for the project.

Price quotations - Dealing withdesign agencies can get a bittricky when it comes down topricing. As such, be cautiousabout the agency you pick, andensure all the costs are given,prior to carrying out the project. Ifthe work is on a contract basis,be sure to read all documentsbefore signing. This eliminatesany future misunderstandings orhidden costs.

Passionate - Good websitedesign and graphic designersare genuinely passionate abouttheir work.

Creativity is part of the job, andthat aspect should be evident asthey carry out the project.

Skills Required - The designagency you decided to useshould be capable of designingwith the most up to date software.It's essential that the company isable to offer you visual designproofs before you decide toagree to the design project.

But it shouldn’t end there. Toomany designers and agenciesare just proficient at using thesoftware but lack real knowledgeand understanding of modernbusiness requirements,marketing and branddevelopment as well as specificindustry knowledge relative toyour business.

The best agencies have industryspecialists, who have workedwith many companies like yourand understand the audience youare trying to reach.

The agency should also havevision and be proficient in thetechnology available to ensureyour message is consistentacross all channels.

The benefits of hiring a good graphic design agency are many and there arean oversupply of designers out there, so why are the great ones so hard tofind? By Trevor Cooke

WHAT TO LOOK FOR WHENHIRING A PROFESSIONALGRAPHIC DESIGN AGENCY

MWA Design can help you get your marketing message to yourtarget clients in the most effective way to boost your sales andyour profit. We are not just interested in great design and thelatest technologies we’re interested in your business, yourcustomers and your commercial success too.

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1. What is inspiring aboutyour business idea?

We give people who arepassionate about coffee thechance to enter the excitingarena of retail.

2. How did you knowfranchising was right for youand what ultimatelyinfluenced your decision?

People would continually ask forfranchise information.

They wanted one! Because Ihad systems in place and I couldrely on staff to run my business Ijust had to make it accessible tobusiness partners/franchisee's

3. What previous experiencedo you need to run a LavaCarts franchise?

None, franchisees come from allwalks of life. Sometimes it iseasier to start with a clean slate,someone who has no coffeeexperience.

4. What are the main reasonsthat someone would take ona Lava Carts business?

To escape their day job and findfreedoms in life that comethrough being their own bosswhilst making people reallyhappy with good coffee.

Fashioned with perfectpositioning of innovative andattractive carts and kiosks, LavaCarts is emerging as an excitingnew niche business backed by a

sterling team of world classindustry experts.

5. What was the driving forcebehind your decision tofranchise?

My driving force behind mydecision to franchise was basedon how little good coffee is outthere.

I still see huge potential for goodoperators in all areas throughoutAustralia & New Zealand.

Lava Carts introduces a brand new concept in retail coffeewith innovative cart and kiosk retail systems. By dominatingstrategic locations with the fresh aroma of its premiumblend….well, things begin to heat up… as Simon O’Brien fromLava Carts explains.

modern franchiseinnovation… freedom… success!


http://lavacarts.com.au/


6. What processes andsupport do your franchiseesreceive?

All franchisees receive pre-startand start-up training. CorrectBarista training made easy!

We also implement weeklycoaching calls and provideongoing support.

6. What challenges did youface in setting up yourfranchise?

Finding suppliers and partnerswith the same vision

I was challenged early on to findhigh profile retail sites such asmajor shopping centres whichhas been a great move.

We also work in unconventionallocations like Hospital foyers.

7. There are now many coffeefranchises in Australia, sowhat makes a Lava Cartsfranchise the best choice?

Lava Carts offers a 3 tierbusiness model of:1. Cart2. Kiosk3. Shop

We also offer people anaffordable chance to enter theretail coffee trade.

All our products are sourcedfrom premium suppliers. Ourphilosophy of socially andenvironmentally responsible andsustainable practices sets usapart form the others.

Fresh from Best coffee - in a biocup!

That’s why our customers comeback again and again, which isof course the hallmark of a greatfranchise!

8. Who is the target marketfor your franchise?

Our target market is any onewho Loves coffee, works hardand wants to do well for thethemselves and the Lava Carts’ - “Coffee with Substance” -brand.

We are looking for people to joinour team who are passionateabout amazing and delightingcustomers. So, more importantthan experience, is a can doattitude.

9. How many units of yourfranchise do you plan toestablish in Australia?

I see well over 100 outletsnationally and we already havereceived international interestand enquiries.


At this stage we intend to makesure that our franchise system issuccesful in Australia and thatwe meet all our targets forgrowth and customersatisfaction before we look atother markets, but it is certainlyin our longer term plans.

For more information about aLava Carts franchise contactSimon “O’Brien, ManagingDirector of Lava Carts on 0458202 649

W. www.lavacarts.com.auE. [email protected]

Lava Carts has grown into an exciting new nichebusiness backed by a sterling team of world classindustry experts


http://www.lavacarts.com.au



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Simply put - franchising is thepractice of using another firm'ssuccessful business model.

For the franchisor, the franchiseis an alternative to building a'chain of stores' or a largecorporate operation to distributegoods and/or provide servicesand avoid the need forinvestments and liability for thechain or large corporation.

The franchisor's successdepends on the success of thefranchisees. The franchisee issaid to have a greater incentivethan a direct employee becausehe or she has a direct stake inthe business, often referred to as“skin in the game”.

Franchising in Australia isregulated under the “franchisingcode of conduct” which allfranchisors must comply with infull.

Thirty three countries, includingAustralia, the United States andChina have laws that explicitlyregulate franchising, with themajority of all other countrieshaving laws which have a director indirect impact on franchising.

Businesses for which franchisingwork best have one or several ofthe following characteristics:

A good track record ofprofitability

Ease of duplication

Detailed systems,processes and procedures

A unique or unusual concept

Broad geographic appeal

Relative ease of operation

Relatively inexpensiveoperation.

As practiced in retailing,franchising offers franchisees theadvantage of starting upbusiness quickly based on aproven trademark, andimmediate access to the toolingand infrastructure, as opposed tohaving to develop them.

Two important payments aremade to a franchisor: (a) aroyalty for the trademark and (b)reimbursement for the trainingand advisory services given tothe franchisee.

These two fees may becombined in a single'management' fee.

Often franchisors will require afee for "disclosure" which isseparate and is always a "front-end fee".This is usually referredto as a”bona fide” deposit and isnormally refundable.

A franchise usually lasts for afixed time period (broken downinto shorter periods, which eachrequire renewal), and serves aspecific territory or geographicalarea surrounding its location.

One franchisee may manageseveral such locations.Agreements typically last fromfive to thirty years, with prematurecancellations or terminations ofmost contracts bearing seriousconsequences for franchisees.

A franchise is merely atemporary business investmentinvolving renting or leasing anopportunity, not the purchase of abusiness for the purpose ofownership. A franchise can beexclusive, non-exclusive or 'soleand exclusive'.

No laws require an estimate offranchisee profitability, whichdepends on how intensively thefranchisee 'works' the franchise.

The most common questions we receive from subscribers is “what is afranchise, and “how does a franchise differ from a regular business?” Thereare many different franchises across a wide spectrum of industries andsectors. In this article we try to answer your questions as best as possibleby looking at what is a franchise as well as how it works with the informationrelevant to most franchise systems. By Kristin McNicol

WHAT IS A FRANCHISE? - THEBASICS


Therefore, franchisor fees aretypically based on 'grossrevenue from sales' or aperiodic (usually weekly) fee andnot on profits realised.

Various tangibles andintangibles such as national orinternational advertising, trainingand other support services arecommonly made available by thefranchisor. Franchisees areusually required to contribute apercentage of their turnover tothe overall marketing fund.

Franchise brokers andconsultants help franchisors findappropriate franchisees. Thereare also “master franchisors”who obtain the rights to sub-franchise in a territory, or“territory developmentfranchisees” who have the rightto open multiple outlets in agiven region.

In Australia, sales turnover infranchising is estimated to beworth over $130 billion annually.According to the InternationalFranchise Associationapproximately 4% of allbusinesses in the United Statesare franchisee-worked.

It should be recognized thatfranchising is one of the onlymeans available to accessventure investment capitalwithout the need to give upcontrol of the operation of thechain and build a distributionsystem for servicing it. After thebrand and formula are carefullydesigned and properlyexecuted, franchisors are able tosell franchises and expandrapidly across countries andcontinents using the capital andresources of their franchiseeswhile reducing their own risk.

Besides the trademark, thereare proprietary service markswhich may be copyrighted, andcorresponding regulations,along with other intellectualproperty rights which at all timesremain the property of thefranchisor.

Each party to a franchise hasseveral interests to protect. Thefranchisor is involved in securingprotection for the trademark,controlling the business conceptand securing know-how. Thefranchisee is obligated to carryout the services for which thetrademark has been madeprominent or famous.

There is a great deal ofstandardisation required. Theplace of service has to bear thefranchisor's signs, logos andtrademark in a prominent place.The uniforms worn by the staff ofthe franchisee have to be of aparticular design and colour. Theservice has to be in accordancewith the pattern followed by thefranchisor in the successfulfranchise operations. Thus,franchisees are not in full controlof the business, as they wouldbe in an independent business.

A franchise can be successful ifequipment and supplies arepurchased at a fair price fromthe franchisor or sourcesrecommended by the franchisor.

A coffee brew, for example, canbe readily identified by thetrademark if its raw materialscome from a particular supplier.The franchisor may requirefranchisees purchase stock andother items such as equipment,uniforms, signs and stationeryfrom it’s stores or it’s nominatedsuppliers. The franchisee mustcomply accordingly. Additionallythe franchise sites are oftenowned or controlled by thefranchisor.


The franchisee must carefullynegotiate the franchiseagreement and any leasesrequired for premises andequipment. He and the franchisormust develop a marketing orbusiness plan. The fees must befully disclosed and there shouldnot be any hidden fees. The start-up costs and working capitalmust be known before thefranchise is granted.

There must be assurance thatadditional franchisees will notcrowd the "territory" and takebusiness away from the franchiseif the franchise is workedaccording to plan.

The franchisee must be seen asan independent merchant. Hemust be protected by thefranchisor from any trademarkinfringement by third parties. Afranchise attorney is required toassist the franchisee duringnegotiations.

Often the training period - thecosts of which are in great partcovered by the initial fee - is tooshort in cases where it isnecessary to operatecomplicated equipment, and the

franchisee has to learn on hisown from instruction manuals.The training period must beadequate, but in some low-costfranchises it may be consideredexpensive. Some franchisorshave set up “corporateuniversities” to train staff online.This is in addition to providingliterature, sales documents andemail access. Any trainingshould be structured to ensurethe franchisee gains thecommercial knowledge to start,operate and succeed in thefranchise.

In recent years, the idea offranchising has been picked upby the social enterprise sector,which hopes to simplify andexpedite the process of settingup new businesses. A number ofbusiness ideas, from soapmaking, to food distribution,home services, wholefoodretailing, and hotel operationhave been identified as suitablefor adoption by socialenterprises employing disabledand disadvantaged people. Themost successful example isprobably the CAP Markets, asteadily growing chain of some87 neighbourhood supermarkets

in Germany. In Australia suchexamples include Streat (coffee& light lunches/snacks) andFasset (lawn & garden care,commercial & residentialcleaning and maintenance).

Also, franchise agreements carryno guarantees or warranties andthe franchisee has little or norecourse to legal intervention inthe event of a dispute.

Franchise contracts tend to beunilateral contracts in favour ofthe franchisor, who is generallyprotected from lawsuits from theirfranchisees because of the non-negotiable contracts that requirefranchisees to acknowledge, ineffect, that they are buying thefranchise knowing that there isrisk, and that they have not beenpromised success or profits bythe franchisor.

Contracts are renewable at thesole option of the franchisor.Most franchisors requirefranchisees to sign agreementsthat mandate where and underwhat law any dispute would belitigated.


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ARE YOU A BUILDERLOOKING TO GET OFFTHE TOOLS?When you stop and think about it, as a builder you will use manytypes of coatings during the construction of even the most basichome.

Whether its the interior or exterior paints, renders, texture coatings, timber stains,decking oils, waterproofing membranes, sealants, primers, bonding agents, impactcoats, concrete sealers, patterned concrete toppings and many more, you willmost likely be dealing with multiple suppliers, different trades, different productsand all the while diluting your buying power and costing valuable time schedulingand managing all these different companies and trades on site.

How would it be if you could deal with one company that took care of all thesecoating procedures for you with one phone call!

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THE DISADVANTAGES OFFRANCHISES

You might think it's less risky tobuy a franchise business. But ifyou look at most successfulbusinesses and how mostfranchisors started, they took bigrisks just so they can do well.

There are also more and morenew entries into the franchisesector as business look to newways to fund growth. With bankfinance harder to come by,smaller aspirational enterprisesare looking to franchising as amethod to fund their expansion.But with suitable franchisesharder and harder to come by, isit time to rethink the franchisingmodel?

Why rely on a proven formulawhen you can create a businessmodel of your own? There aresome great franchises andsome franchises will continue toperform well. There are manyreasons, however, why thefranchise business model is indanger of becoming a thing ofthe past.

Starting a franchise businesscan be costly. Buying afranchise, especially one that'sbeen successful, can be very

costly, because franchisors arebanking on the idea that if youbuy their businesses, you mayeven have the opportunity toearn a lot of money. Thefranchisor provides you witheverything you need fromsupplies and training.

Not all business models soldas franchises are soldbecause they're successful.Some companies sell franchisesnot because their businessesare successful. They sell to earnmoney out of people who want toearn cash fast. Others usefranchising as an exit strategy.Even more use franchising as amethod of increasing saleswithout employing a sales team.

Remember, statistically, 80% offranchisors fail or give up onfranchising. Most franchisesnever reach “critical mass”. InAustralia, the largest 10% offranchisors dominate the sectorwith around 80% of franchises.The rest pick up the scraps.

Your franchisor has controlover your franchise. Youroperations have to follow thepattern given by your franchisor.

You cannot adjust your franchisebusiness to your local market'sneeds

After the cost of buying afranchise, you still have topay for other fees to yourfranchisor. You have to pay amonthly fee for royalties. Apartfrom royalties, a fraction of yourrevenue also has to go to yourfranchisor.

The reputation of onefranchise can make or breakthe reputation of the others. Ifa franchise from a town nearbyprovides faulty services, yourreputation will also get affected.If a disgruntled franchisee startsa campaign against yourfranchisor it WILL effect yourbusiness, it’s value and it’ssaleability.

Franchisor companies don'talways take care of theirfranchises. Some franchisorcompanies leave you to run yourfranchise on your own after theyhelp you with starting up yourfranchise business. Their onlyconnection to you will be the feesthey'll get from you.

Structural change in our economy and the business world is having somepermanent effects on many areas of the franchise sector. Some industriesare doing particularly well as are some franchises, while other are strugglingand some have fallen by the wayside in recent times. Is franchising introuble? By David Marks


Just because a franchise'smodel is believed to be aproven formula, it will work inyour area. It might not be suitedto the tastes of the potentialmarket in your franchise location.It might have worked in a nearbylocation but it isn't guaranteed towork in your area. There mightbe more competition in yourarea or less traffic past yourlocation. A new competitor maymove in or your franchisor mighteven open up in a nearbylocation that effects yourfranchise. You are limited only toyour area or your location.

Your franchise's growth islimited by your franchisor.You cannot add anything to yourline of products just toaccommodate suggestionsgiven by your customers. Youcannot grow on your own. Yourfranchisor is the only one whocan change your product lineand business model. If yourfranchisor is feeling the pinch itmay not be able to promote thefranchise nor provide the supportyou need to grow your business.

Creativity is in. Most start-upbusinesses, especially Internetbusinesses, have beendeveloped by entrepreneurs whoallowed themselves to be limitedonly by their imagination.

People these days like toexperiment with new things, and

the creativity of new businessesattract a lot of customers.Franchises generally do notallow for this.

Change is happening a afaster pace. Technology ischanging the way we dobusiness faster. Structuralchange is happening all aroundour economy. What is yourfranchisor hasn’t doesn’t or can’tadapt. The best businesses areat the forefront of change. If yourfranchisor is just adapting to it,then they run the risk of doing dotoo late or becoming just another“me too” business.

Only the market leaders win. Ifyour franchisor isn’t driving thechange in their industry then theyare not the market leaders. Thenit comes down to competing onprice. Your franchise profitssuffer as does the value of yourbusiness.

More people are going forniche products. A franchisebusiness offers products thathave become run-of-the-mill,ordinary. More people are goingout of their way to look forbusinesses that offer productsthat are unique, that cater toparticular niches, to theirinterests and individual needsand wants. People don't give toomuch attention on brandsanymore. Instead, they arefocusing on getting products that

are specialized for theirparticular needs.

Mass Marketing turns peopleoff. Back in the good old daysmarketers could tell people whatthey should have and they wouldlisten. Not any more. Thefragmentation of marketingchannels has changed the waywe interact with companiesforever. We can compare pricesfrom companies all around theworld in a few minutes on theInternet. Social Media requirescompanies to amaze and delightus or bare the consequences.How well every franchiseeserves their customers will effectyour reputation and yourbusiness.

People are not willing to paymore - they don’t have to.Franchise business models tendto be less flexible and lesscompetitive in many sectors andindustries due to the fees andmandatory purchasingrequirements of franchises.

Structural Change. Bricks andmortar stores are struggling.“Bricks and Clicks” is a shortterm interim solution while theretail sector gears up for the nextwave of change. How yourfranchisor’s business modelstacks up in a changingenvironment and their vision ofwhat the future will look like willdetermine your future too. Youhave no say in it!


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FRANCHISES STILLSTRUGGLING WITH ONLINE

We are hearing more and moreabout franchises and retailersneeding to get online to competeand entice customers into theirstores. But frankly most arestruggling with the concept andthe implementation of thisstrategy.

One of the main reasons is thatin general, retailers andfranchises just don’t “get it”. Therecent news stories about GerryHarvey and his comments in themedia have been used as anexample of this.

“Getting it” is just the first step inimplementing a successful onlinemarketing strategy.

Understanding the technologyand having the vision to seewhere this is heading is alsovital. Marketers that aren’t techsavvy and visionary will quicklyfall by the wayside…as will theirfranchise.

Having the knowledge of whatyour customers want and thevision to look towards the nextstep in the online technologyrevolution will become the key tothe long term success of almostevery business.

Franchises are now faced withthe dilemma of being agile andflexible while maintaining rigidsystems compliance to keepstandards high.

Franchisees will also beexpected to have greaterparticipation in the newmarketing environment,particularly around the areas oflocal marketing. Franchisors willneed to empower franchisees toimplement more locally relevantmarketing while staying withinthe confines of the franchisemarketing strategy. Maintainingconsistency across multiplechannels will become a keychallenge on top of the alreadymounting challenges of modernfranchise marketing.Franchisees will also needspecialised training, but ofcourse, without a clear strategydeveloped by the franchisor, howcan they be trained?

Allowing franchisees to run amokcan be very confusing for thecustomer.

We hear the term “bricks andclicks” now being bandiedaround as though it’s the latesttrend that franchises shouldadopt. The sad part about this isthey this strategy should have

been implemented 5 years agoor more, not after the horse hasbolted. We are already seeingnew technologies such as virtualstores, malls, even virtual fittingrooms utilised by leadingretailers and shopping centres(such as Westfield).

The last 12 months has seensome consolidation in terms oftechnologies, but we are on thebrink of a new wave of innovationthat will render many of thestrategies being touted todayoutdated and irrelevant.

As technology rapidly develops,franchise business models willneed to adapt.

Franchisees are increasinglybecoming frustrated at a lack ofaction and understanding bytheir franchisors.

Though this is not to beunexpected, and due to the rapidnature of technologydevelopment franchisors aretaking the time to assess thebest course of action,franchisees expect that a clearonline business strategy, for noother reason so they can supporttheir customers who are alsobeing frustrated at poor serviceand confused strategies.

Many Franchises are still struggling with online strategies. Getting this rightis essential for franchisees.


It also seems that manyfranchisors are in a form ofdenial over the extent to whichthis will affect the viability of theirbusiness models.

The 2011 PwC sector reporthighlighted the need forfranchisors to implement a multi-channel business model.

Many franchisors have tried toappease franchisees by havingproducts ordered online anddispatched by a localfranchisee, or enabling acustomer to collect it from thefranchisee, but this often endsup a debacle which frustratesthe customer and damages thebrand. It is inevitable that centralwarehousing, employingeffective logistics strategies, islikely to become the mosteffective method for mostfranchises.

Of course, franchisees will stillexpect to see some benefit fromthis and how franchisorsimplement these multi-channelstrategies will determine whatimpact franchisees will feel ontheir business. It has thepotential to become anexplosive issue of not handledcorrectly.

Some commentators aresuggesting that the structural

changes in our economy andthose following the developmentof this new wave of technology,may render the franchisebusiness model irrelevant,particularly in retailing andprofessional services, thoughthere is probably a bit ofoverreaction in thesestatements. But they should getour attention and focus it on thechanges that almost allfranchises must make tomaintain a competitive businessmodel.

Streamlined ordering and fasterdelivery, better in-store serviceand attention to customersneeds are paramount.

Customers now demand that thecompanies they buy from havetheir best interests at heart andprovide great value. Failure todemonstrate this to the customerwill be the death knell forbusinesses.

Just being part of a bigger brandmeans little if the customerdoesn’t perceive value in yourbusiness, it’s products andservices. Value isn’t just price.

And this is another area thatmany businesses don’t “get it”.For decades marketers havebeen able to “tell” people whatthey should have. Not any more.

Customers are empowered andoften know as much about yourbusiness and your competitorsas you do…sometimes more.

With innovations such as IPTVcoming to most Australianhouseholds in the next few yearsfranchises will face morecompetition, more technologychallenges and innovation andeven more diluted marketingchannels meaning that customerengagement, value and qualitywill become even more essentialto ongoing success.

The one size fits all model thatmany franchises are based uponis no longer viable.Demographics is becomingmore useless as a tool forsegmenting customers andmarkets.

Staying open longer isn’t theanswer either. Every day we nowspend in excess of $1 billiononline - after midnight!

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WHAT’S YOU NUMBER?Potential Franchisees and KPI’s

In the franchise environment thisissue can have two sides to it.

First - what are the KPI’s set bythe Franchisor and what dothese mean to Franchisees?

Second - potential Franchiseeand their advisors should setsome KPI’s that they will look forwhich should reveal whether theFranchisor is a good Franchisorand whether the system isworking well and suits them asan individual.

The KPI’s of a franchise systemare usually subjectively set bythe Franchisor based on theirexperience, the industry theyoperate in and their franchisesystem, therefore it is notpossible to provide a definitivelist of what they should be.

In theory, they are the essentialelements of the Franchisee’sbusiness which they mustperform, to the set standard, ifthe Franchisee, Franchisor andthe system as a whole are tosucceed.

Franchisor’s must be careful notto create a “representation” asto performance, turnover,income, etc, if setting minimumperformance KPI’s.

Traditionally KPI’s were itemsyou could measure and graph,and mostly financial criteria, butin a more tech savvy world inwhich we now live, need to covermore critical parts of thebusiness and not just turnover.

With data readily available, thereis a need to keep pushing theenvelope in customer service tostand out from the pack andKPIs have also become moresubjective. This means trainingthose who check KPI’s to do so,to the same subjective standardas those who created them arenow become more and morecritical.

In franchising the dividing linebetween KPI’s and otherelements of compliancesometimes gets blurred as towhat is a key element of thefranchise outlet and what is arequirement to follow in themanuals and agreements.

Potential Franchisees have tounderstand that what they mayregard as non essential to asuccessful franchise outlet is infact essential to the system orperhaps more significantly, theBrand, which is all important toall franchise systems.

Franchisors KPI’s forFranchisees are oftenoverlooked by potentialfranchisees when they areconsidering buying a franchise.This can be a fatal flaw in thedecision making process.Potential Franchisees are oftencaught up in “having my ownbusiness”, “how much money willI make” or simply being part ofwhat they believe is a “failsafesystem”.

All potential Franchisees mustascertain what the KPI’s theymust achieve are. These, andthe way they are dealt with, areperhaps the clearest vision ofthe culture of the Franchisor andthe system. If a franchisee haspicked a system with a culturethey don’t, or can’t, fit in with, thesituation can become financiallyand emotionally disastrous.

Just a few examples of the typesof Franchisor KPI’s are:

the percentage the cost ofgoods represent toturnover,

the percentage wagesrepresent to turnover,

Key performance indicators (KPI’s) are simply the predetermined elementsof a business which are regarded as the indicators of whether the businessis performing satisfactorily or not.By Mark Fernandez


the minimum number ofcustomers or calls eachweek,

the minimum amounts ofgoods to be purchased,

the minimumexpectations for localarea marketing methods,

promotions in the localarea,

staff requirements

and many more………….

There may be requirementsrelating to signage, uniforms,cleanliness, telephone scripts,weekly cleaning of the car orvan.

The KPI’s will, quite rightly, be anon-negotiable aspect of thesystem and potentialFranchisees must not only askthemselves “can I live with theserequirements” but also “howdoes the Franchisor help meachieve these and how does hemanage them?”

The relationships involved infranchising are probably themost important part of asuccessful, long term, franchise

operation both as a Franchiseeand Franchisor.

This relationship is governed bythe culture and the culture isreflected in the Franchisorsexpectations and how they aresupported and managed.

Leaving aside the issue ofrecruitment, the first step on thisjourney is comprehensive initialtraining in all aspects of thesystem including the operationsmanual.

The second is support given atopening or commencementtime, the third should be ongoingsupport by a franchise businessmanger and finally managementthrough compliance.

Potential Franchisees shouldgain a full understanding of howthe Franchisor deals with eachof these elements.

Be clear on both yours and theFranchisors KPI’s.

Take appropriate advice beforeyou commit and keepcommunicating with theFranchisor throughout what canbe a wonderful journey if youboth get it right.

About Mark Fernandez:

Mark brings over 20 years ofsenior managementexperience in businessdevelopment and franchising toyour business.

Mark has been influentialacross a number of key industrysectors, including, Retail,Shipping and Hospitality.

For further information on ‘Howdo you go about selling yourFranchise’ please contact MarkFernandez [email protected]

Web: www.bda-online.com.au


http://www.bda-online.com.au



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FINDING THE MOSTPROFITABLE FRANCHISES

The most profitable franchises arethe ones that are least affected bychanges in consumer buyinghabits, economic circumstancesor technology.

Winning over franchise buyerssimply comes down to money.Many franchises have shrunk orachieved only minimal growth overthe past few years, yet others arethriving and experiencing rapidgrowth despite the challengingconditions and lack of adequateaccess to finance that exist.

These companies are usually theones that have powerful brandnames, such as McDonalds,Dominos, and 7-Eleven. We allknow them, and a person buyinginto them can have reasonableconfidence and security that theywill succeed. Without a famousbrand name to rely on, however, afranchise looking for rapid growthwill need to have the numbers ontheir side.

To look for the most profitablefranchises, you should be awareof three factors that lesser knownbut rapidly growing franchiseshave in common.

1. Low Investment: Obtainingfinance for a new business startupis extremely hard nowadays - evenfor successful proven franchisesystems.

Therefore, buyers in today'smarket need to find lowerinvestment levels. The averagefranchise investment may havebeen about $250,000 four yearsago, with perhaps 60%-70% ofthat amount financed, but todaymany rapid growth franchiseshave total investments of $125,000or less.

2. Rapid Break even:Traditionally a business wasconsidered successful if it wasprofitable by the second or thirdyear. In the modern businessworld, franchise buyers are lookingfor a much quicker road to profit.You do not want to keep feedingadditional money into a newbusiness to cover operatingdeficits for a long period.

Many of the fastest growingfranchises will accomplish a breakeven point within the first year ofoperation and, in some cases,within a few months.

3. High Margins: It is important tobe able to achieve high profitmargins. That way, a businesscan quickly increase its total profitto a significant level once it startsmaking money.

A traditional stand alone businessmight normally put five or tencents of every sales dollar towardthe bottom line after reachingbreak even but today's franchisebuyer wants a business with salesmargins at least three to five timesthat level.

The most profitable franchisesshould score well on thesemonetary factors, but still need toconvince potential franchisees thatthere exists strong consumerdemand for their products orservices with plenty of payingcustomers.

Service based franchises seem tobe the best in terms of satisfyingboth the financial requirementsand the need for reliable demand.Lower overheads and ingoingcosts make these franchisesmore desirable.

Finding the most profitablefranchises requires you to do duediligence on any business you areinterested in. You should look forthe three factors discussed above,get to know the staff at thefranchise company, and carefullyread their disclosure documents.

This is a good start to finding afranchise business that interestsand excites you, and you can seethe long-term potential forsuccess.

There are many franchises to choose from, but some are more profitablethan others. Some locations are also more profitable than others. So how toyou find the most profitable franchise? By Aiden Williams

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Maxiom partners with associations, businesses and Not-For-Profits to deliveressential industry relevant content and insights straight to your readers’ e-mailinboxes. Educate and engage members, clients and other importantstakeholders with your own branded, Maxiom custom publications. Choose theformat that works best for your audience - from digital magazines, newsletters,reports, whitepapers, manuals and ebooks.

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About Modern Franchise Magazine

Publisher

Maxiom Group Pty Ltd

2/710 Collins Street

Docklands Vic 3008 Australia

www.maxiom.com.au

Editor

Mark Matthews

Digital Magazine Created By

Modern Franchise Magazine Online

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PRIVACY POLICY:Modern Franchise Magazine is published as a service to subscribers. Weadhere to strict Privacy Policy concerning all subscribers on our databaseand will not disclose your details to any third parties without your priorwritten permission.

If you have any queries about our privacy policy or this magazine, pleasecontact our office on (03) 8199 3486 or email [email protected]. Afull copy of our Privacy Policy is available on our website atwww.maxiom.com.au/subscribers/privacypolicy.

In the meantime, thank you and we trust you enjoyed this issue of ModernFranchise Magazine!

DISCLAIMERInformation published in this online magazine has been compiledwith due care and attention, but it does not clam to be exhaustive.Maxiom Group and/or Modern Franchise Magazine cannot beheld responsible for the content of external sites reached via ahyperlink from this site. We accept submissions from outsidecontributors, and whilst great care is taken, the author of thesubmitted article is responsible for what they write, and ModernFranchise Magazine will not be liable for any loss or inaccurateinformation or any other omission or error by outside contributors.

This online magazine is provided for information only. It is notintended to replace a consultation with a qualified industryprofessional. Modern Franchise Magazine does not acceptresponsibility for any loss, damage or injury that arises from theuse of this online publication.

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