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The dangers of owning a 7-Eleven franchise.

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The dangers of owning a 7-Eleven franchise.

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YouTube

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The Dangers about owning a 7-11 franchise (7-Eleven)

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YouTube

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7-11's Franchise Nightmare - Why They're Hated | A Simple Overview

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ABC

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Suicides, bankruptcies, marriage breakdowns: Could this be a watershed moment for Australia’s scandal-prone franchising industry?

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The franchising industry has been besieged by numerous scandals and many reviews in recent years, but little has changed. Now a new government review could be a watershed moment — so long as it gets it right, writes Adele Ferguson.

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Franchise Business

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Industry:

Convenience franchises

Business established:

1977

Total business units:

700+

7-Eleven Stores Pty Ltd, Australia's first choice in convenience, is a private company owned by the Withers and Barlow family. The company has a license to operate and franchise 7-Eleven stores in Australia from the US based 7-Eleven Inc.

The first Australian store was opened in August 1977. Today, 7-Eleven Stores Pty Ltd. operates more than 650 stores in Queensland, New South Wales, Victoria, the Australian Capital Territory, and Western Australia.

The business is the largest convenience retailer in Australia, with approximately 33.5 per cent market share. We are also the largest independent fuel retailer on the Eastern Seaboard, with approximately 470 fuel stores selling Mobil branded fuels.

Through its store network, 7-Eleven Stores Pty Ltd. conducts more than 214 million transactions a year, serving an average of seven customers per second.

Our customer offer

Critical to our business' success is ensuring our offer is differentiated and gives our customers what they need, when they need it.

7-Eleven is proud of its growing range of exclusive products, brands and services. Our iconic Slurpee is the original and the best frozen carbonated beverage. Our famous $1 Coffee is fantastic value. Our customers can choose their favourite coffee, from a latte to a long black, and it is made in our quality machines from freshly ground beans on the spot.

Our fuel stores give customers a range of premium Mobil fuels, which include various performance and engine care additives, to choose from.

In addition to our proprietary brands, we have a market leading supply chain, which allows us to have fresh food delivered 7 days a week to every store in our network.

This means our customers can enjoy the 7-Eleven Food on the Go range which includes top quality sandwiches, hot pastries and sweet treats, and know they will always have a great value, fresh product.

We are always looking for new and innovative categories, products and services to make our stores even more convenient for our customers. These include ATMs in every store, Moneygram money transfer services, public transport tickets and top ups; and car wash services and parcel lockers in selected stores.

We then make our stores even more convenient to shop with well planned layouts, fast point of sale systems with a range of payment choices, well chosen locations, easy parking, and stores that are open 24 hours, 7 days a week, 365 days a year.

All of these elements make life easier for our customers, and ensure that we remain their first choice in convenience.

Our network

7-Eleven's network is comprised of a mix of franchised and corporate stores.

While Corporate stores are an important part of our business, the majority of 7-Eleven stores are franchised - that is, independently owned and operated.

We are passionate about franchising, and work hard to ensure all 7-Eleven Franchises achieve their goals, delivering outstanding convenience offer to customers and provide a great place to work for their store team members.

Our Franchisee selection process is designed to ensure every Franchisee who joins the 7-Eleven network has:

a real focus on customers;

good leadership and communication skills;

a strong work ethic;

attention to detail;

a willingness to learn and adapt and

a commitment to following 7-Eleven systems, processes and policies.

Our Franchisees are our business partners. Their success is ours too. That's why we'd like the people we work with to be as passionate about delivering as great a customer experience as we are. After all, we're going to be spending a lot of time together.

Our franchise offer

An initial investment of between $400,000 and $1,000,000 plus is what is required to become a 7-Eleven Franchisee, so it is certainly a big decision to make.

7-Eleven's offer is a compelling one for many potential Franchisees. We are confident our full service offer is strongly competitive, delivering outstanding brand strength, exclusive products, a turnkey solution and full training.

In addition, 7-Eleven offers a gross profit split with a minimum profit guarantee and 24/7 support.

We provide a range of support to Franchisees funded from its share of gross profits. This includes the payment of the following costs:

Building rent and outgoings

Equipment purchase and maintenance

Utilities (heating, cooling, lights and water)

A state of the art biometric time clock and payroll system

Advertising and point of sale materials

Specified property maintenance

POS systems and IT services

Some accounts services and financial reporting

Stocktaking

Merchandising

Public liability and property insurance

Bank and credit card fees

Smart Safe fees

7-Eleven Franchisees are responsible for the following costs out of their profit share:

Payroll

Worker's compensation and superannuation

Variation in inventory and costs

Cleaning services

Landscaping

Telephone

Business license, permit and taxes

Miscellaneous store expenses and store supplies

We'd encourage you to read more about whether we could be the right fit for you, and to view the stores currently available for sale, on our franchising website.

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Find 7-Eleven franchises for sale on Franchise Business. See Convenience franchises in Sydney, Melbourne, Perth, Brisbane and Adelaide.

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Is investing in a 7-Eleven franchise worth it?

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Is investing in a 7-Eleven franchise worth it?

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YouTube

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Vetted Biz | Best Franchise Opportunities to Buy

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Is Investing in a 7-Eleven Franchise Worth It? 🤔

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How should a Chatbot be used in a reference list?

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How should a Chatbot be used in a reference list?

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Gemini

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How should a Chatbot be used in a reference list...

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How should a Chatbot be used in in-text referencing?

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How should a Chatbot be used in in-text referencing?

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Gemini

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How should a Chatbot be used in in-text referenci...

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Could you please evaluate the 7-Eleven franchise in Australia according to the criteria of stakeholder satisfaction and efficiency?

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Could you please evaluate the 7-Eleven franchise in Australia according to the criteria of stakeholder satisfaction and efficiency?

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Gemini

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Could you please evaluate the 7-Eleven franchise...

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Who are the closest competitors of 7-Eleven in Australia?

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Who are the closest competitors of 7-Eleven in Australia?

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Gemini

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Who are the closest competitors of 7-Eleven in Au...

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What would I need to buy into a 7-Eleven franchise in Australia?

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What would I need to buy into a 7-Eleven franchise in Australia?

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Gemini

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What would I need to buy into a 7-Eleven franchis...

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Gemini

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Could you please provide me with a PESTEL analysi...

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Gemini

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Could you please provide me with a SWOT analysis...

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YouTube

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7-Eleven for Sale in Australia Amid Growth Plans & $1 Coffee Price Hike

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YouTube

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Australian Convenience Store 7-Eleven Goes Cash-free

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Australian Convenience Store 7-Eleven Goes Cash-free

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YouTube

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Australian convenience store 7Eleven goes cash free | Nine News Australia

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Australian 7-Eleven Franchise Bought for $1.7 billion.

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Australian 7-Eleven Franchise Bought for $1.7 billion.

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YouTube

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Australian 7-Eleven franchise bought for $1.7 billion

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YouTube

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Take it to Eleven with the $3 BIG Meal Deal™

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Shopping at the World's Most Advanced 7-Eleven

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Shopping at the World's Most Advanced 7-Eleven

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YouTube

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Shopping at the World’s Most Advanced 7-Eleven Convenience Store

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Website

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Did you know coffee and Slurpee cups aren't recycled in Australia? That means more than 1 billion cups end up in landfill each year. As one of the leading coffee destinations in Australia, we want to be part of the solution.

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Did you know coffee and Slurpee cups aren't recycled in Australia? That means more than 1 billion cups end up in landfill each year. As one of the leading coffee destinations in Australia, we want to be part of the solution.

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Business FIA3

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Business FIA3

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Scotty Breaks it Down

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Scotty's Report Style Guide

A business report serves as an essential tool in strategic decision-making, providing comprehensive, data-driven insights on company performance, challenges, and opportunities. It assists leaders in making informed choices, detailing the rationale behind proposed changes or strategies through evidence-based analysis and clear recommendations. Its standardised format ensures focused, effective communication, aiding strategic initiatives.
This page is a guide for those looking for a starting point to construct a report. There are different ways to format and structure a report, these are suggestions based on Scotty's style guide.

There must be a consistent 'look and feel' to a report, and this is achieved by using formatting conventions that cover aspects such as page layout, type, and text.

A general structure for a report consists of clearly labelled headings and sub-headings that are consistently formatted.

'Figures' is used in this style guide to describe diagrams, graphs, sketches, photographs, screenshots, and maps included in either the body of the report or in an appendix.

Figures are used frequently in reports as they convey significant amounts of information quickly, and this also reduces the word count.

A figure needs to be numbered in italics, e.g. Figure 2. and titled. This is known as the label. The label is directly below the Figure, followed by the reference.

The full reference must be included in the reference list unless it is a figure that you have created yourself. All figures should be numbered in the order they first appear in the text.
Tip: Font size is to be smaller than the body text.

Figures must be referred to in the text by their label.

Do not use 'see Figure above' or similar.

Figures must always be on the same page as their content.

Examples of how to refer to figures in body text:
Although the population growth rate is positive across most states (Figure 1), there is a clear issue with population growth in the Northern Territory.

Figure 1 shows the lack of population growth in the Northern Territory (Australian Demographic Statistics 2019) and supports the view that Victoria has the fastest population growth.

Tables contain data in rows and columns. They may be in either the body of the report or in an appendix. Tables are used frequently in reports as they can convey significant amounts of data in a condensed format. A dash (-) in a table indicates no data.

A table needs to be numbered, e.g. Table 2. and titled. This is known as the label, which is. directly above the table. The reference is below the table.

The full reference must be included in the reference list unless it is a table that you have created yourself. All tables should be numbered in order they first appear in the text.

Words are used for numbers up to one hundred and common fractions.

Example: 'one-fifth of the class'.

Use figures for numbers:

preceding measurement, for example, 3 cm

grouped in figures, for example, 3 of 21

in statistics, for example, 4% of the population

in times, dates, ages, money.

A reference is a way of acknowledging the source of information. This is someone's intellectual property. It could constitute plagiarism if there is no acknowledgment.

A reference list only includes the sources referred to in the report. It is not a bibliography, which also includes all texts and other sources that have been consulted as part of the investigation, even if they are not referred to in the report.

Reference list examples

There are many sources of information that must be referenced in a specific way. Swinburne University has released an excellent document that set out how to use APA referencing (Swinburne, 2019). Below are a few examples of how to reference using APA.

In-text citation examples

When an abbreviated version of the reference is included in the body of the report, it is known as an in-text citation.

INTRODUCTION

Write four separate sentences here to introduce the report, so the reader knows what to expect in it.
If there are any assumptions made by the writer, then they are mentioned here.

One sentence for the background - What business the report is about - the existing situation. This sets the scene for the reader.

One sentence for purpose - Why the report was written and what the investigation is aiming to achieve - the main questions it intends to answer, such as Do they have a competitive advantage? Are they operating effectively? Is it a good investment?

One sentence for what is in scope - What the report covers.

One sentence for what is out of scope - What the report does not cover - any limitations such as cost, time etc

BUSINESS PROFILE

This is an overview of the business so that the reader understands what is being discussed in the rest of the report. Therefore, it is 'describing' only - no explanations or questions. It may be titled 'Business overview'. There are usually several components, so consider using subheadings.
Example of sub-headings

Business profile (or overview)

2.1 Business overview (structure, useful facts)

2.2 Business Environment (information about the industry)

2.3 Business Situation (about the business in the current environment. Could include challenges, barriers of entry, potential, the problem the business is facing.)
Criterion: Describing

Have you included the important facts, features, and characteristics of the business?

Have you described the business environment and situation as set out in the task?

Have you used appropriate business terminology in this section?

STRATEGY EXPLANATION

The title/s of the headings in this section will depend on what you have been asked to do in the task.
Examples of sub-headings 3. STRATEGY NAME
3.1 Innovation
3.2 Entrepreneurship

Strategy Name
3.1 Roles and personnel
3.2 Financial considerations
3.3 Legal requirements
3. NAME OF STRATEGY
3.1 IMPACT ON OPERATIONS
3.2 IMPACT ON MARKETING
Criterion: Explaining

Have you identified the most important elements of the concept, strategy or processes?

Have you clearly explained the concept, strategy or processes you are writing about and the relationship to the business?

Have you used appropriate business terminology in this section?

ENVIRONMENTAL ANALYSIS

Every business report investigates the environment in which the business operates to identify and analyse factors that may impact on the success of the business.

Analytical tools are used to identify and understand patterns, trends and relationships. Some are SWOT, STEEPLE, Porter's five forces, competitive analysis, unique selling proposition (USP analysis), force field analysis and power interest grid (PIG).

The analytical tool is included as an appendix or body. However, the summary is included in the body of the report. If there are two tools used, then their results are both summarised here. This section may have other tables or figures that support the summary in some way.

This section is about examining information to find patterns, similarities and differences. It is about exploring, comparing and contrasting the information. It is important to make sure that there are no suggestions or conclusions here. Think of this section as the evidence that will be used to support the next sections.
Examples of sub-headings

Environmental analysis
4.1 SWOT Analysis of Company
4.2 STEEPLE Analysis of Company
4.3 Internal Summary
4.4 External Summary (includes the external from the SWOT and the STEEPLE)
Criterion: Analysing

Have you chosen the best information you can find to provide a useful analysis?

Have you gathered information from both primary and secondary sources?

Have you analysed the information (data) to create a useful summary?

Have you closely tied the analysis to the business situation?

CONCLUSIONS

This is one of the most important sections. You were asked to prepare the report because of your expertise, so now you must interpret the information in the analysis and draw conclusions.

IT IS IMPORTANT THAT YOU DON'T:

introduce new information

speculate or exaggerate

suggest any actions

offer an opinion

There may be more than one conclusion, especially if more than one analytical tool has been used in the report. Two examples of conclusions -

Based on the analysis, Scotty's Soda Stream Pty Ltd, is not in a secure financial position. The data indicates that......., improvements in operations to improve efficiencies are required in the short-term, if the business is to become financially stable within the next year.

It is apparent from the data analysis that Scotty's Soda Stream Pty Ltd, is overstaffed in the metropolitan area and that operational processes are out-of-date. As a result, the financial position of the business will continue to decline unless this human resourcing oversight is corrected.
Criterion: Synthesising

Have you noted the important relationships, patterns and trends in both the internal and external business environment?

Have you drawn your conclusions based on these relationships, patterns and trends?

Have you made a good summary statement about the business situation?

EVALUATION

This is what the person who commissioned the report wants to know. You draw on the information in the sections above to make this evaluation. There must not be any new information here. This section has two parts to it:

Judgement/s - Decide the merit, value or significance of whatever you are investigating, based on criteria.

Recommendations - based on the judgments

Two examples of sub-headings

1. Evaluation
5.1 Efficiency
5.2 Competitiveness
5.3 Summary
5.4 Recommendations
or

2. Evaluation
6.1 Operations management
6.2 Human resource strategies
6.3 Summary

Make a decision
Decide about the main questions that relate to the purpose of the report, as set out in the introduction. In other words, tie the end back to the beginning of the report.

Do they have a competitive advantage?

Are they operating effectively?

Are they exhibiting critical success factors?

Is it a good investment?

Is there likely to be a long wait before there is a return on investment?

Justify your decision

All business decisions must be justified against business criteria. A decision must be shown to have merit, be advantageous in some way. The four criteria for evaluating a business are:

Competitiveness

Stakeholder satisfaction

Efficiency

Effectiveness

If you have been asked to use two of these, then make sure that you use them both to justify your decisions in both areas that you are investigating, such as human resource strategies and financial strategies.
Criterion: Evaluating

Have you made judgement/decision?

Have you justified these judgements/decisions using business criteria?

RECOMMENDATIONS

Recommendations should follow on logically from the judgements. Write an introductory sentence and then provide one or more recommendations about what the person who commissioned the report should do. Often recommendations are presented in point form.

A recommendation is a specific, action-oriented suggestion to solve the problem or answer the question that triggered the report. They go in descending order of importance. Powerful recommendations often begin with an imperative verb. An imperative verb is an action word that gives a command.
Two examples
It is recommended that the event organisers:

restrict the number of people attending the event to minimise the risk of participants being crushed because of overcrowding

erect a three-metre-high wire barricade around the venue to stop unauthorised entry

issue passes to people who leave the event and intend to return so that authorised participants can enjoy the full festival.

It is recommended that the organisation reduce its financial exposure by:

recruiting a qualified accountant to...

not extending any more credit to slow payers to avoid...

hiring a debt collection agency to...

Criterion: Evaluating

Have you made recommendations that follow logically from your judgements?

FINDING INFORMATION FOR YOUR STEEPLE ANALYSIS (8 mins)

WRITING A CONCLUSION (5 mins)

JOINING THE DOTS (2 mins)

STARTING THE EVALUATION (4 mins)

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Scotty's Report Style Guide A business report serves as an essential tool in strategic decision-making, providing comprehensive, data-driven insights on company performance, challenges, and opportunities. It assists leaders in making informed choices, detailing the rationale behind proposed changes or strategies through evidence-based analysis and clear recommendations.

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Coffee Club

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Guzman y Gomez

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United Petroleum

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Franchise Investigation

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Structure

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FIA3

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Franchises for Sale | Buy a Franchise Business Opportunity in Australia

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Australia's #1 Website for Finding 100s of Franchises and Business Opportunities. Get Free Information on How to Buy Franchises for Sale.

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Swim School Faces Court Over ACCC Claim It Mislead Franchisees 

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Swim School Faces Court Over ACCC Claim It Mislead Franchisees 

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The ACCC is taking franchisor Jump! Swim Schools to court, alleging it misled over 90 franchisees by failing to deliver their fit-outs, leaving them hundreds of thousands of dollars out of pocket.

In just the latest case of alleged franchisee exploitation to hit the scandal-plagued franchise sector, the ACCC will allege Jump! and director Ian Campbell made a series of false, misleading or deceptive statements in breach of Australian Consumer Law.

The competition and consumer watchdog has been investigating the company in the wake of reporting by the , which earlier this year published allegations Jump! accepted fees to construct pools for franchisees, but left them hanging.

On Tuesday the ACCC claimed over 90 franchisees had not received an operational swim school within 12 months of handing over between $150,000 and $175,000 in fees, while some are still waiting.

"We allege this conduct caused substantial harm to franchisees who paid significant sums but did not receive an operational swim school within the time specified, or at all," ACCC chair Mick Keogh said of the case.

News of the prosecution comes less than two months after the main trading company behind Jump Swim collapsed into voluntary administration, although existing franchisees are still trading.

Jump Swim director Ian Campbell, who was awarded "Australian emerging franchisor of the year" by the oft-criticised Franchise Council of Australia (FCA) in 2016, is also being prosecuted.

Campbell denies the ACCC allegations and says he will contest the claims in court.

Citing a slowdown in the swim school site approval process in recent years, Campbell argues delays experienced by franchisees are the result of red tape challenges.

"Our position with that is there is a number of factors and approvals required. We're not opening a local corner shop, we need approvals from a whole range of bodies," he says.

However, the ACCC alleges Campbell had no reasonable basis for telling franchisees their swim schools would be operational within twelve months, arguing he "wrongfully accepted payment".

In its statement of claim sent to the Federal Court yesterday, the ACCC said it had three versions of a brochure allegedly sent to prospective franchisees, claiming those who bought in would be provided with an operational franchise within 12 months.

"Jump Swim continued to accept payments when it knew, or ought to have known at the time it accepted the payments, that the timing for its delivery of operational franchises was dependent on events that were outside its control," Keogh said.

Campbell denies this.

"We don't believe we did promise people a 12-month time frame or represent that, we believe we have a range of supporting materials," he says.

The ACCC alleges 88 franchises were left waiting for longer than 12 months, experiencing an average wait time of 540 days, and in some cases longer than three years.
NOW READ: Choose carefully: Why buying a franchise could be a doorway to your dreams or the gateway to hell NOW READ: Donut King's days may be numbered, but Crust and Gloria Jean's are safe

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Jump! Swim Schools faces court over ACCC claim it misled franchisees - SmartCompany

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The ACCC is taking franchisor Jump! Swim Schools to court, alleging it misled over 90 franchisees by failing to deliver their fit-outs, leaving them hundreds of thousands of dollars out of pocket. In just the latest case of alleged franchisee exploitation to hit the scandal-plagued franchise sector, the ACCC will allege Jump!

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Retail Food Group Faces Class Action From Michel's Patisserie Franchises

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Retail Food Group Faces Class Action From Michel's Patisserie Franchises

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Embattled franchising giant Retail Food Group (RFG) has taken another blow this week, with law firm Corrs Chambers Westgarth announcing a possible class action against the company over its conduct with current and former Michel's Patisserie franchisees.

RFG copped criticism earlier this year over reports it had instructed franchisees to extend the use-by dates on certain items sold, which set off an investigation by various food safety bodies across the country.

The company later admitted to the practise but said it had told "less than 1 per cent" of its supplier network to extend the shelf life of products "where appropriate and safe to do so".

"RFG follows strict standards with regard to food quality and any product date extension was granted following written approval from the supplier and with consumer safety top of mind," the company said at the time.

However, on Friday, Corrs Chambers Westgarth announced it was fielding interest for a potential class action against the company for "conduct in relation to RFG's Michel's Patisserie franchise system".

"We intend to argue that if RFG had behaved lawfully, franchisees would not have purchased their franchises and that RFG's conduct caused franchisees (and other persons closely associated with franchisees) loss or damage," the company said in a statement.

The class action is being backed by litigation funder Augusta, meaning franchisees do not need to pay to participate, and Corrs is currently inviting former and current Michel's Patisserie franchisees to register their interest.

Speaking to former franchisee Devi Trimuryani announced she would be the lead plaintiff in the case, saying she could "take them down". The former Michel's Patisserie owner said her experience with the company had "ruined her life".

"My marriage, my financials. I can't sleep, I'm in a depression because everyone is chasing me for money," she told the publication.

"I never thought my life was going to be this hard by owning a business in Australia, because I can't get justice until now."

RFG has been in the wars for nearly two years now after a 2017 investigation prompted a parliamentary inquiry into the franchising sector, which was released earlier this year and devoted an entire chapter to the company, which also owns Donut King, Crust, Gloria Jeans, Brumby's and Pizza Capers.

In that chapter, the report alleged the company had profited at the expense of its franchisees and operated a "particularly unjust business model". It also claimed RFG and its executives participated in insider trading, tax avoidance and breaches of consumer law.

The impending class action, if it goes ahead, will add to an ever-increasing list of headaches for RFG, which also lost a court case earlier this year where it was found RFG breached Australian Consumer Law by misleading two Michel's Patisserie franchisees about a store purchased in 2012.

It's also the second class action to be laid against the company in as many years, with firm Bannister Law investigating a class action in January last year over the "severe financial hardship" experienced by Retail Food Group franchisees.

RFG shares were down 3% on Friday, and currently sit at 16 cents.

In a statement, a spokesperson for RFG said it had not been contacted by Corrs Chambers Westgarth "in relation to any potential class action".
NOW READ: Choose carefully: Why buying a franchise could be a doorway to your dreams or the gateway to hell NOW READ: Donut King's days may be numbered, but Crust and Gloria Jean's are safe

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Retail Food Group faces new class action lawsuit from Michel's Patisserie franchisees, alleging loss and damages - SmartCompany

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Embattled franchising giant Retail Food Group (RFG) has taken another blow this week, with law firm Corrs Chambers Westgarth announcing a possible class action against the company over its conduct with current and former Michel's Patisserie franchisees.

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If you're looking to start a business, buying into a franchise can be a good alternative to starting a unique venture. Similarly, if you're planning to expand your business, a well managed franchising agreement can be an effective way of moving into new markets.

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Franchise Business brings potential franchisees news, insights, advice and a directory of available franchise opportunities: it is your essential guide to buying a franchise in Australia.

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Franchise Business brings potential franchisees news, insights, advice and a directory of available franchise opportunities: it is your essential guide to buying a franchise in Australia.

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Read about the different types of franchises, what to think about before buying, and the Franchising Code of Conduct.

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From Chermside to Heritage Park, or Toowong to Wakerley, search for franchises for sale around Brisbane today! Whether you are looking for printing franchises for sale in Brisbane's CBD or home services franchises out in the suburbs, we have listings for a wide range of businesses for sale in the Brisbane area.

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What's going wrong with Australia's franchises

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What's going wrong with Australia's franchises

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The Conversation

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Two well-known franchise businesses in Australia are in trouble this week. At the time of year when businesses usually report their half-year financial results, petrol retailer Caltex announced it was stepping away from a franchise model just as a Fair Work Ombudsman report called its operating model "unsustainable".

Retail Food Group, which owns a number of popular chains including Gloria Jeans and Donut King, blamed intense competition, landlord rents and labour costs for its lacklustre business results. But the group has also been plagued by allegations of exploitation and underpayment of workers in media investigations.

According to the Franchise Council of Australia, franchises like these employee a lot of people. Approximately 79,000 operating franchises in Australia employ 470,000 direct employees.

But over the past few years there have been a string of scandals engulfing franchises, including retailers 7-Eleven and Caltex, and takeaway food businesses Domino's and Hungry Jacks.

So we're answering your questions about the franchise model and why these problems keep coming up.

Read more: What is going rotten in the franchise businesses plagued by scandals

Is the franchise model itself bad?
Short answer: not necessarily, it depends on the franchise relationship.
A 2012 study from the US actually found that franchise businesses have better rates of compliance with industrial relations law than comparable independent small businesses.

Other research from France shows franchisees benefit from marketing, research and development and training offered by company owned stores.

Researchers Lorelle Frazer and Maurice Roussety argue that:

"Franchisees have been found to perform better than company-owned stores. Franchisees have skin in the game and are motivated by the bottom line of their stores."

In fact a 2010 report from the Fair Work Ombudsman found franchisees that received industrial relations support from their franchisor were more likely to abide by the law than other employers.

But a group of researchers have pointed out that this support differs between large and small franchises. They say, as franchises mature, franchisor control over key processes in outlets tends to increase. But this doesn't always extend to industrial relations.

Read more: Franchising - all care and no responsibility

How does a franchise agreement work?
Short answer: franchisees pay to become part of the franchise but they are often too optimistic about the financial risks involved.
A the franchise agreement defines the rights and obligations of both parties. The franchisor usually charges the franchisee an upfront fee, an ongoing fee (such as a percentage of revenue), or a combination of the two.

Associate Professor Jenny Buchan describes it as a:

"...complex, expensive, purchase that will commit the franchisor and franchisee to a business relationship with each other for several years. The franchsior has usually sold many franchises, and signed many franchise agreements but buying a franchise is something a franchisee may do only once in their life."

The law requires that franchisors provide a disclosure document complete with the information needed to make this decision. These laws assume franchisees will make a rational decision but research shows they are unrealistically optimistic about risks of setting up their business, even after those risks have been disclosed to them.

Read more: The government needs to better enforce the laws it creates, to protect franchise workers

Who is accountable for what?
Short answer: franchisors are accountable to customers (and to shareholders), franchisees are accountable to employees (and the law).
If a customer is unhappy with what they've bought from any of the franchise outlets then they will take it out on the brand overall, by going to another business. So in that sense the franchisor is accountable to customers.

This means franchisor usually control anything related to their products, such as price, applying to suppliers and health regulations.

But researcher Jenny Buchan makes the point that venture capital firms buying up franchises means that franchisees now are seeing franchisors with less of a focus on quality goods and services:

A franchisee might buy their business from one franchisor, but, following sale of the network, have to deal with a new franchisor with different motivations. Venture capitalists and public companies have shareholders who prioritise dividends and capital gain ahead of ongoing success of franchisees' businesses.

When it comes to the day-to-day operations with employees, this is the franchisee's remit. It's the franchisee who is legally accountable and is usually investigated and fined for any breaches.

This can sometimes leave franchisees in a tricky position of not being able to set the price or control quality. The franchisee may have to adjust their employees' wages in order to make a profit or break even.

Read more: Franchisees don't do their homework and are too optimistic about risks: research

What happens when things go bad?
Short answer: the government passed a bill to make it clear that franchisors can now be punished as well as franchisees, but there are problems with the law.
In September 2017, a bill to amend the Fair Work Act passed parliament that is designed to hold franchisors accountable and punishable for breaches of industrial law.

But as academic Louise Thornthwaite points out, workers may still face obstacles in successfully pursuing their entitlements:

"Many workers simply do not know their wage entitlements or how to identify them. Also, proceedings in the Fair Work Commission take time, and are costly, unless a worker belongs to a union or represents him or herself.

She also notes the evidence needed to make a case, such as records like payslips, are often missing in action or deliberately falsified.

There's also an imbalance because franchisors are typically well-resourced and there are many big law firms whose names are on franchise agreements and who run law suits for franchisors.

But research from the CPA shows franchisees are more likely to seek advice, if at all, from suburban solicitors and accountants.

Read more: Why franchises care more about their coffee than their people
You can follow all of our coverage of franchising in Australia here.

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What's going wrong with Australia's franchises?

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Two well-known franchise businesses in Australia are in trouble this week. At the time of year when businesses usually report their half-year financial results, petrol retailer Caltex announced it was stepping away from a franchise model just as a Fair Work Ombudsman report called its operating model "unsustainable".

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Greg Nathan

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Welcome to the Franchise Relationships Institute

We offer a range of scientifically validated tools and services that help franchisors run healthy, vibrant and profitable franchise networks

The FRI Team

Learn More About Our Services and Solutions for the Franchising Sector

Improve your knowledge and get fresh ideas with FRI publications

"Profitable Partnerships is a first class contribution to the world of franchising. Even before finishing the first chapter I was completely hooked. All franchise companies, no matter what size and experience, can learn and benefit from Greg Nathan's experience."

Jacob Stabell, Director of Franchising Asia, Pacific, Middle East and Africa, McDonald's

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"I've been in franchising for over 30 years and Greg's Tips are the only thing that I stop to read every time - they nearly always remind me of something important or give me a new angle of thinking."

John O'Brien, Founder and CEO,
PoolWerx Corporation

Get a dose of inspiration and brighten your day with Greg Nathan's Healthy Franchise Relationships 2-Minute Tips

Read Greg's Latest Tips

See all recent Tips here.

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FRI: Franchise Relationships Institute: Home

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Welcome to the Franchise Relationships Institute We offer a range of scientifically validated tools and services that help franchisors run healthy, vibrant and profitable franchise networks The FRI Team Learn More About Our Services and Solutions for the Franchising Sector Improve your knowledge and get fresh ideas with FRI publications "Profitable Partnerships is a first class contribution to the world of franchising.