Business Franchise Newsletter 23 July 2014

ACCC takes action against cleaning franchisor

The Australian Competition and Consumer Commission has instituted proceedings against Coverall Cleaning Concepts South East Melbourne Pty Ltd (Coverall Melbourne) alleging that it engaged in unconscionable conduct in contravention of the Australian Consumer Law (ACL).

The ACCC also alleges that Coverall Melbourne made false or misleading representations, engaged in conduct that was misleading or likely to mislead, and contravened the Franchising Code of Conduct.

Coverall Melbourne is a master franchisor of a franchise system that establishes and operates professional cleaning services.

The ACCC alleges from August 2013 Coverall Melbourne represented to two franchisees that they would receive a volume of work that would enable them to earn specified amounts and that they would receive payment of those amounts each month. The ACCC alleges Coverall Melbourne did not have reasonable grounds for making the representations and failed to make the payments as represented and on the terms required by Coverall Melbourne’s franchise agreements.

Read more here.

NFC14 Keynote Speaker Announcement

Leading property investors, businesses and governments all turn to one man when it comes to understanding future trends and demographics, Bernard Salt. A partner at KPMG, Bernard specialises in the business implications of demographic and social change. He is a columnist with the Australian, wish magazine, and Property Australia.

Bernard is back at NFC by popular demand and will take the latest data and then transfer this into a highly entertaining, very informative and above all else extremely relevant presentation on what the future environment will be for both businesses and individuals.

NFC14 will be held at Sydney Olympic Park from 26 – 28 October.

Register here.

SumoSalad celebrates 100th store in Australia

The latest milestone for the franchise reflects the changing face of the food court, as more Australians commit to making healthy and ethical food choices. The 100th store at Lower Ground, Melbourne Central, Swanston St, also marks the start of great amplification for the franchise in Australia, with a goal of reaching 300 stores in the next 5 years.

Luke Baylis, Co-Founder and CEO of SumoSalad said “It has been just over a decade since the first SumoSalad store opened in Sydney. The 100th store in Melbourne represents a significant achievement for the brand, and confirms that our pledge to provide healthy and appealing choices has been embraced throughout Australia.  As we continue to see a growing thirst for fast, healthy and nutritious meals, we will continue to look for new opportunities to bring our healthy options to as many locations as possible.”

The 100th store is part of a new series of concept stores for SumoSalad, featuring live hydroponic vegetable walls, and cold pressed juice stations.

Franchisee Jason Wang is excited that the 100th store will be his second SumoSalad offering. He said his decision to embark on another venture with SumoSalad was an easy one.

“Following the success of my Knox store, the opportunity to open the 100th store in Australia was one that I did not want to miss. Luke’s vision of bringing healthy food options to food courts is something that I am extremely proud to be a part of. This 100th store is not just testament to the healthy and delicious meals available at SumoSalad, but also the ongoing support and innovation designed to help franchisees succeed in the retail environment.” 

Important considerations in applying for and
gaining finance from a bank… By Ian Watt, Westpac
 

This article appears in the July/August 2014 issue of Business
Franchise Australia & New Zealand

So, you have done your research and homework to identify the franchise that is right for you. Arranging how you will pay for it is just one of the many potential pressure points in the process of becoming a franchisee, so the more prepared you are the better when embarking on your discussions with a bank to apply for finance.

Going to a bank and applying for finance to purchase or set up a business can be daunting. This doesn’t need to be the case with some pre-meeting preparation and research.

An important part of this is preparing a business plan. One of the main reasons many businesses (including franchises) are not successful is because they fail to plan. It is vital for the long term sustainability of your business to take the time to develop a business plan. Westpac provides support for business owners on how to prepare a business plan through our business bankers and also through our Davidson Institute (Westpac Financial Education).

See website located at: https://www.davidsoninstitute.edu.au/

Many business owners, customers and non customers alike, have completed a range of the courses on offer and gained invaluable business knowledge and insight. Other banks may also have tailored a complete package for their franchise partners which will typically include financial solutions specific to your franchise system, for example including a group merchant deal.

Your banker will need to assess your financial capacity, both personal and for the business you are buying. In regards to the franchise you are purchasing, a copy of prior trading results, cash flow projections and breakdown of your funding requirements plus a business plan will greatly assist your banker understand the financial dynamics involved. A copy of the franchise and lease agreements plus a full list of your set up costs if you are setting up a new store, are crucial.

The type of security the bank will require will vary depending on the franchisees borrowing requirements. At Westpac with our accredited franchise partners we have funding structures that enable us to consider applications without having to provide a home or other collateral security for the loan, however, this depends on the applicant’s specific funding requirements.

One of the benefits of buying a franchise is the operational training and support provided by the franchisor. Your level of prior management experience is also considered as part of the loan assessment process so also include a detailed CV in your business plan that highlights any skills and education that you have undertaken that will assist you in running a business.

Banks may also have accredited the franchise system, assessing the system in terms of its business model and other key aspects. A bank accreditation creates many potential opportunities and benefits for a franchisor, including the possibility of growing their franchise faster (creating greater economies of scale and negotiating ability with suppliers too) which in turn benefits the franchisee.

For a franchisee, dealing with accredited franchise specialist bankers who have the experience, capability and understanding of the business you are purchasing will certainly lower the stress in applying for finance.

Obtaining advice from your business advisor, business accountant and lawyer, preferably skilled in franchising, is invaluable and definitely recommended. These advisors are able to recommend and advise on business structures, tax planning, GST obligations and book-keeping. It is also beneficial to speak to existing franchisees who already own a franchise to understand what will be involved in the day to day management of the business and the type of support provided by the franchisor.

And finally, but no less important, is family support which is critical to the success of any business. Buying a business can be both exciting and daunting all at the same time so it is important to consider how this will impact on you and your family.

Ian Watt is the Senior Business Development Manager – Franchising, NSW & ACT Westpac continues their long-term commitment to franchising in Australia.

The bank has a national network of franchise specialist business bankers who are able to deal with the specific needs of the franchise sector.

Contact Ian at:
P: 0419 271 995
E: ianwatt@westpac.com.au
W: www.westpac.com.au/businessbanking/industries/franchising/