Behind the Headlines

Jason Gehrke, Director, Franchise Advisory Centre

Franchise complaints lower in 2012 compared to previous years

Statistics released by the Australian Competition and Consumer Commission (ACCC) indicate that it received a total of 488 franchise complaints during 2012, with slightly more lodged in the second half of the year compared to the first half. However overall complaints about franchising have dropped by more than five per cent compared with 2011 (515 complaints) and more than eight per cent compared with 2010 (532 complaints).

The leading cause of franchise complaints for the last six months of 2012 were (in order) misrepresentations, disclosure issues, unconscionable conduct, terminations and exclusive dealing (supply chain) issues. The ACCC also reports that more than 3,500 people have registered for free online education for potential franchisees since its launch in July 2010.

Up to 40 Crazy John’s stores to close as Vodafone terminates brand

The Crazy John’s brand will disappear from the Australian mobile phone retail landscape from February 20 following Vodafone’s decision to terminate the brand and close or merge its outlets. Vodafone bought the company for $150 million in 2008 from Patricia Ilhan, whose husband John had founded the company in 1991 and grew it until his death in 2007. Up to 40 Crazy John’s outlets are to be closed, with a further 20 to be rebranded as Vodafone stores. The closures will potentially result in the loss of more than 300 jobs.

Enthusiasm without planning won’t cut it: New Small Business Commissioner

Australian Small Business Commissioner Mark Brennan, who started in the newlycreated role on January 2, says that no amount of enthusiasm will overcome a lack of planning in starting and growing a business venture, according to a media report. Brennan, who is a former Victorian state Small Business Commissioner, says that business operators who work longer hours may not be able to overcome planning deficiencies by failing to adequately consider the cost of rents, the impact of competition and the need for differentiation. The new Australian Small Business Commissioner will work with government and big business to encourage faster payment to small businesses, and to promote education for small business owners, as well as dispute resolution.

SumoSalad sells 60 per cent stake to investor – plans 200 more outlets

The founder of fresh food franchise SumoSalad has sold a 60 per cent controlling stake to an investment group which plans to add another 200 stores to the network, and possibly distribute SumoSalad-branded products in supermarkets. Sumo co-founder Luke Baylis will remain as managing director and CEO to continue the expansion of the group, with new partners the Tulla Group, owned by one of Australia’s richest families, providing growth capital and strategic input. A sale price for the 60 per cent stake has not been disclosed.

Boost parent acquires coffee chain; considers China re-entry

Boost Juice parent Retail Zoo has acquired a 20-outlet coffee chain for an estimated $15 million, while the company also considers re-entering the Chinese market. Retail Zoo has acquired the Cibo Expresso chain, with 18 stores in Adelaide and two in Brisbane, and expects to double the number of stores in the next 12 months and continue to grow rapidly thereafter, according to a media report. Cibo’s founders will continue to operate a food business which supplies Cibo stores, and which was not included in the sale, and one of the founders will remain to manage the Cibo brand. The group is already scheduled to open another Adelaide store and two more Brisbane stores early next year, before continuing expansion in Queensland and Victoria.

Meanwhile Boost Juice has commenced negotiations with a potential new partner to re-enter the market in China following the termination last year of a previous master franchise agreement granted in 2009 which failed to achieve its success targets.