Fee change triggers franchisee backlash
A proposed reduction in commissions payable to franchisees of ANZ Bank’s home loans franchise that the bank has not applied to its independent loan brokers or internal staff has triggered a backlash with franchisees setting up a Mobile Lending Franchise Association in response, according to a media report.
Unlike most franchise networks where franchisees pay a royalty to the franchisor, ANZ mobile lending and other mortgage broking brands generally apply a commission structure whereby they pay franchisees for generating loans on their behalf.
In April this year, ANZ told franchisees that the upfront commissions paid to franchisees for generating home loans for the bank would decrease by nearly a quarter from 0.65% to 0.50%, with an annual administration fee to double from $7,500 to $15,000. Around 40% of ANZ’s home loans are generated by its own staff, and its franchise network, with the other 60% generated via independent mortgage brokers whose commissions remain at the 0.65% level.
ANZ franchisees have complained that any reduction in commissions should be spread across all home loan sources including the bank’s staff and independent brokers, and that franchisees have been unfairly targeted by the bank’s attempts to reduce its costs and increase its margins. The bank has offered an alternative commission of 0.57% and a staged increase to the annual administration fee, according to the media report. Read more
Multi-unit franchisee’s high-profile collapse
A multi-unit franchisee of international footwear brand Nike has closed its seven high-profile Sydney locations, resulting in the loss of more than 100 jobs following the termination of its Nike license, according to a media report.
The company, AF-1, has ceased trading and liquidators have been appointed. Customers with gift cards will be treated as unsecured creditors and may not receive any money back, while employee entitlements will be paid under the Commonwealth Government’s Fair Entitlements Guarantee Scheme, according to the liquidator BCR Advisory. The Commonwealth scheme is usually engaged as a last resort when insolvent entities have no assets available to pay employee entitlements. Read more
Reasonable Opportunity implications for term and investment
Franchisors should review the length of their initial franchise terms and investment level as part of their response to a new provision of the Franchising Code of Conduct which takes effect from November 1.
Section 44(2) of the new Code states that: “A franchisor must not enter into a franchise agreement unless the agreement provides the franchisee with a reasonable opportunity to make a return, during the term of the agreement, on any investment required by the franchisor as part of entering into, or under the agreement.”
The provision does not mandate what the return on investment should be, but instead requires that franchisees be given a fair chance to make a return, which may challenge some existing franchise offers, according to a panel of experts who discussed this topic in a recent webinar.
Where franchisees may only be achieving a return on their investment in their second term, franchisors may need to reconsider and lengthen the initial term going forward to comply with the new provision. Changing the length of an initial term (which is commonly five years for many brands) to a longer term (eg. seven years) may create additional leasing complications for site-specific concepts. Mobile franchise concepts not tied to a lease are unlikely to be similarly challenged in this regard.
Equally, franchisors may need to review and reduce the initial investment cost of their greenfield franchise offer to improve a franchisee’s ability to get a return during the initial term, or to overcome the need to grant a longer initial term.
To mitigate their risk of claims under the reasonable opportunity provision, franchisors should also improve their monitoring of franchisees’ financial performance to identify and support operators tracking below performance levels required to get a return during the initial term
The webinar, hosted by the Franchise Advisory Centre and sponsored by rostering, payroll and bookkeeping service IWS by Deel, featured franchise panellists Derek Sutherland (Keypoint Law), Kate Groom (Franchise Accounting & Tax), Peter Fiasco (Hip Pocket Workwear), Paul Tee (IWS) and Jason Gehrke (Franchise Advisory Centre).
With less than a month before the new provisions of the Franchising Code come into effect, the guidance material to help franchisors understand and comply with these new provisions is yet to be released by the Australian Competition and Consumer Commission (ACCC).
A recording of the webinar is available to view for free by clicking here.
Widespread misconduct found in franchise chain
An internal investigation launched in 2022 by major Australian bank Westpac into its now-closed RAMS Home Loan franchise chain raised concerns about more than half of its franchisees, according to a media report.
The internal investigation known as Project Guardian tasked a team of 200 employees from across Westpac’s risk, compliance, and mortgage teams with reviewing loan applications from across the RAMS’ network. Of the 70 franchises operating at the time of the review, 36 were found to be of concern, 29 were to be monitored, and just five raised no concerns. In 2023, Westpac self-reported results from the review to the Australian Securities and Investments Commission (ASIC).
ASIC launched legal action against RAMS in June 2025 alleging breaches of the Credit Act and systemic misconduct within the lender. In a court filing, Westpac described how Project Guardian rated levels of concern as high or very high, where a high rating indicated the franchise could not resolve issues that appeared systemic in nature and/or were of a serious nature such as potential fraud or other criminal concerns. ASIC allegations against RAMS included the submission of fake payslips from non-existent employers to approve mortgage applications for borrowers, and breaches of the Credit Act by RAMS’ failure to properly supervise representatives of the company. RAMS further admitted to conducting business with unlicensed persons and failing to implement proper policies and procedures. Read more
Franchise CEO’s sudden departure
The chief executive of multi-brand Gold Coast-based listed franchisor Retail Food Group (RFG), Matt Marshall, has resigned effective immediately after two years in the role, according to a media report.
Under Marshall’s stewardship, RFG announced a $5.8 million net profit after tax to June 2024, its highest for seven years. However, the company’s results to June 30, 2025 included a statutory net loss after tax of $14.9 million, a result driven by a $12.2 million impairment from its bakery brand Brumby’s and restructuring costs across the business.
Company chairman Peter George will become executive chair until a new CEO is appointed, a responsibility he previously undertook between 2018 and 2023 prior to Marshall’s engagement. Read more 1; Read more 2; Read more 3
Shock loss for listed franchisor amid store closures
Listed chain Domino’s Pizza Enterprises (DPE) has announced a $3.7 million loss, despite closing 312 stores worldwide, according to a media report.
The loss, down from the $92.3 million net profit after tax recorded in F24, is DPE’s first since listing on the Australian Stock Exchange (ASX) in 2005. Underperforming stores in France and Japan have been cited as key drivers for the result. Of the 312 underperforming stores closed globally, 233 were shut in Japan alone as DPE’s management attempted to rein in the losses throughout the year. Domestically, Domino’s Australia continued to grow, posting record profitability for F25, and the highest franchise earning before interest, tax, depreciation and amortisation for the last three years. To date, however, domestic sales for F26 are down by 0.9%.
DPE’s chairman and largest shareholder, Jack Cowin, recently took over the company’s day-to-day executive duties on an interim basis, following the abrupt resignation of CEO Mark Van Dyck after less than one year in the role. Cowin has highlighted the need to continue closing underperforming stores, while also building momentum to drive an increase in the frequency and value of consumer purchases. Further cost savings have been identified, and a commitment has been made to reinvest in marketing and franchise support, while also simplifying the business overall. Read more
Auto chain’s struggles continue with $52m loss
Listed company Bapcor, the parent of auto aftermarket franchises including Autobarn, Midas and Autopro, has failed to provide guidance for F26 following the announcement of its F25 results, according to a media report.
The company reported a statutory net profit of $29.1 million for F25, significantly short of the $46.2 million predicted by analysts, but more than a recent estimate by the company of between $31 and $34 million. Results for F25 included a $52.3 million write-down of significant items related to store assets, slow-moving inventory, impairments, and complex transactions across its multiple business units. In early August, Bapcor flagged the likelihood of $50 million in balance sheet write-downs which resulted in a 28% drop in its share price in just one day, and the simultaneous resignation of three company directors.
Since 2020, Bapcor has been restructuring its business which uncovered significant accounting issues which cost the company $253 million in write-downs in F24. However, 21 new stores, three new state distribution centres, and 13 new trade network stores were opened in F25, during which 70 sites were also exited or relocated, and 23 smaller warehouses were consolidated. Just six underperforming stores were closed. Read more
Fast food prank demonstrates “health halo” effect
A content creator has demonstrated the health halo effect by secretly serving attendees at a major Australian food convention McDonald’s burgers disguised as an organic brand, according to a media report.
Stanely Chen, a YouTube content creator with nearly 400,000 subscribers, set up a booth at the Good Food and Wine Show in Brisbane. His brand for the day, “Mark Donholds,” advertised Quarter Mark, Biggest Mark, and Mark’s Chicken burgers. Advertising claimed that the beef used came from Iceland from grass-fed cows, that the bun was collagen-infused, and that the entire burger was free from genetically modified organisms. Chen’s marketing clearly demonstrated how health haloes – a tactic whereby a virtuous aspect of a food is highlighted to make the food appear better than it actually is – can influence consumer choices.
While some customers, after tasting the offerings, were initially sceptical, when Chen and his accomplices insisted the burgers were a healthier option to other fast-food brands, they changed their opinions. Other customers praised the quality of the burgers describing them as juicy and tasty, and the buns as light and fluffy. When customers were asked how much they would be willing to pay for the sampled burgers, offers of up to $25 were tendered. Read more
Joint employer uncertainty to end in US with new Act
A new bill presented in the United States House of Representatives seeks to end uncertainty around employment relationships in franchising with the introduction of the American Franchise Act, according to a media report.
The Act is supported by the IFA, the franchise association of the United States, and overcomes many concerns about joint-employer rules interpreted by the US National Labor Relations Board and other agencies potentially construing franchisees or their workers as employees of the franchisor.
The American Franchise Act provides clarity to the joint employer standard in the franchise relationship that determines when two entities share responsibility for violations of the National Labor Relations Act (NLRA) and Fair Labor Standards Act (FLSA)—a standard that has changed four times over the past decade based on political control of the White House. The American Franchise Act only applies to the franchisor-franchisee relationship and does not affect joint-employer determinations outside of franchising.
The legislation clarifies that “a franchisor may be considered a joint employer of the employees of a franchisee only if the franchisor possesses and exercises substantial direct and immediate control over one or more essential terms or conditions of the employees of the franchisee,” consistent with the National Labor Relations Board’s (NLRB) 2020 joint employer rule which remains in effect today. Read more
Jason Gehrke is the Director of the Franchise Advisory Centre and has been involved in franchising for more than 30 years at franchisee, franchisor and advisor level. He advises both existing and potential franchisors and franchisees, and conducts regular education courses for franchisors in Australia and overseas. He has been awarded for his franchise achievements, and publishes Franchise News, Australia’s only fortnightly electronic news bulletin on franchising issues.
www.franchiseadvice.com.au