Behind the Headlines

Jason Gehrke, Director, Franchise Advisory Centre

Bank of Queensland confirms first half $90.6 million loss

The Bank of Queensland has confirmed its earlier profit guidance that it would post a loss of $90.6 million for the first half of the current financial year, and is the first bank in Australia to announce a loss in 20 years.

However the bank, which has an extensive network of franchised branches, has almost completed a $450 million capital raising to strengthen its balance sheet, announced a 26c per share dividend, and maintained its share price despite the loss.

Franchising regulations in SA to be developed as a “priority”

Franchising and farming have been identified as two “priority areas” for mandatory industry codes to be developed by the newly-appointed South Australian Small Business Commissioner, according to the Commissioner’s website.

Mike Sinkunas was appointed to the role of full-time Small Business Commissioner on March 29, and is supported by a parttime deputy (University of New South Wales academic Frank Zumbo), and an administrative team.

The timeframe and nature for a mandatory franchising code in South Australia, which could differ from the existing national Franchising Code of Conduct, is yet to be revealed however the website states that a consultation process will be a critical part of the development of any code.

CEO barred from foregoing entitlements to boost profits

The CEO of listed franchise entity Collins Foods has been informed that he cannot give up his holiday pay and entitlements accrued over 33 years of service despite his offer to do so to reduce costs and boost the company’s profits.

Kevin Perkins made the offer earlier this year to appease investors who have seen their shares in the company – which listed last August – more than halve in value following significant profit downgrades. The company operates Sizzler Restaurants and 117 KFC outlets in Queensland.

Salmonella caused by incorrect food handling leads to $8m award against KFC

International fast food franchise KFC has denied liability for the salmonella poisoning that caused brain damage in a seven year old girl, and will appeal a $8 million NSW Supreme Court judgement against the company.

Then seven year old Monika Samaan ate a Twister bought from the Villawood KFC in Sydney’s western suburbs in 2005, which the court found caused her salmonella poisoning because staff at the store had failed to follow proper food handling procedures.

Monica shared the Twister with her family, who all suffered vomiting and diarrhoea afterwards, but Monica ate most of the Twister, and subsequently lapsed into a coma for six months, and is now a quadriplegic and severely brain-damaged.

The Supreme Court heard that chicken dropped on the floor was picked-up and reused, and that staff did not wash their hands or wear gloves when handling food. Cleaning checklists were not followed, and the store scored only 51 out of 100 for criteria including cleanliness.

KFC, who’s international legal team was opposed by a sole practitioner law firm representing the Samaan family, has undertaken to appeal the decision.

Jim defers public listing to seek $10m capital injection

Jim’s Group founder Jim Penman has announced he is shelving plans for a public listing of his company until he can find an experienced investor willing to invest $10 million to help grow the business and offer vendor finance to potential new franchisees.

The Jim’s Group currently has around 3,200 franchisees, and could be a $1 billion enterprise according to Jim, however plans to list the business have been deferred until an investor with the money and the right experience, particularly in international markets, can be found according to a media report.

While no timeframe for finding an investor has been announced, Penman says some discussions have already taken place, although no-one suitable has yet been found.