Behind the Headlines

Jason Gehrke, Director, Franchise Advisory Centre

Jason Gehrke shares with us some hot topics in franchising.

SA DEPUTY SMALL BUSINESS COMMISSIONER APPOINTMENT QUESTIONED

The South Australian government has announced that the author of its Small Business Commissioner legislation has been appointed to the role of Deputy Small Business Commissioner.

SA Business Minister, Tom Koutsantonis, announced that University of New South Wales academic Frank Zumbo, who will remain based in Sydney, has been appointed to the part-time deputy role, and will stand in as South Australia’s acting Small Business Commissioner until a full-time appointment has been made.

The announcement has drawn a sharp response from the SA state opposition, who claim that due process was not followed in the appointment, and has been joined in its protest by the Franchise Council of Australia.

Zumbo has previously been involved in drafting private members bills presented in the South Australian and Western Australian State Parliaments, which have either lapsed or been voted down, and is an outspoken critic of the Franchising Code of Conduct and its enforcement by the Australian Competition and Consumer Commission.

REFUND HOME LOANS UNDER OFFER

Refund Home Loans, which was placed into administration late last year owing more than 100 creditors approximately $10 million, has received three purchase offers, according to the company’s administrators. The company was valued at up to $50 million prior to its collapse, but is expected to sell for a fraction of this amount.

URBAN BURGER SALE NEGOTIATIONS UNDERWAY

Negotiations for the sale of food chain Urban Burger were underway last year prior to owner and former Olympic basketball player Shane Heal declaring bankruptcy, according
to a media report. Heal declared bankruptcy on December 23, and at the time owned the Australian franchise rights for Urban Burger, as well as up to 12 food outlets across several major food brands.

STRATHFIELD EMERGES FROM SECOND ADMINISTRATION IN THREE YEARS

Embattled mobile phone and car audio retail franchise Strathfield has emerged from insolvency for the second time in less than three years after a deed of company arrangement was executed last month following agreement from a major creditor to contribute $650,000 in funding to the struggling company.

The listed company sank into insolvency mid last year after the company predicted losses of $1 million, and its shares were suspended after falling to less than one tenth of one cent each.

The company was previously placed in administration in January 2009 with a retail network of 62 stores (some franchised) and owing $37 million but emerged several months later with ambitions of adding a further 60 stores to the network primarily via
franchising.

At the time of its most recent administration, Strathfield had shrunk to 30 locations in Queensland, New South Wales and Victoria. Approximately 20 outlets are now believed to be operating.

PANDORA REDUCES JEWELLRY RESELLER NUMBERS TO GROW FRANCHISE

Jewellery retailer Pandora Australia has announced it will end its relationship with 100 independent jewellery retailers in order to improve control of the presentation of its products by concentrating on developing its own franchised store network.