Behind the Headlines

Jason Gehrke, Director, Franchise Advisory Centre

Franchisor wins NZ gym franchise spat, rogue outlets to return

Three Auckland Club Physical franchise outlets which caused an uproar by rebranding overnight to become independent gyms will be rebranded back to Club Physical and operated as company-owned outlets following legal action in the New Zealand High Court. Negotiations for the franchisor to acquire the leases and equipment of the three outlets concluded after High Court injunctions had ordered the newly-independent outlets which had branded themselves as Jolt Fitness to close due to breaches of their franchise agreement with Club Physical.

The battle between the owner of the three outlets, Stuart Holder, and the founder of the Club Physical chain Paul Richards, has been fought in the courts, in the New Zealand media, and in person as disaffected customers recently demonstrated outside one of the outlets waving placards and demanding a return to Club Physical.

Byron Bay Cookies fail within days of announcing plans for expansion

Barely a week after announcing ambitious international expansion plans, fledging franchise Byron Bay Cookie Company has had its manufacturing business placed in receivership due to unpaid taxes of more than $1.2 million claimed by the Australian Tax Office (ATO).

A director of the six-outlet chain has claimed in a media report that the receivership of the manufacturing business does not affect the retail outlets or expansion plans, but fails to indicate how supply of the group’s core products can be maintained if receivers are unable to prevent closure of the manufacturing plant.

At least 13 staff have already lost their jobs in the company’s head office and manufacturing plant. Immediately prior to its receivership, the company’s chairman announced plans to expand to the United States and the United Kingdom, despite court papers lodged by the ATO stating that employee superannuation had not been paid since early 2010.

IT franchisor offers 285 free franchises nationally

Adelaide-based computer repair and audiovisual services business Dr PC is giving away 285 free franchises worth $10 million in order to accelerate growth and increase national coverage, according to a media report.

However, successful candidates must still outlay up to $5,000 for equipment and setup costs, have suitable experience, and are expected to devote 35 hours a week to their business.

Small business sector gets fifth minister in 15 months

The Federal Government has appointed Western Australian MP Gary Gray as the fifth Business Minister to occupy the portfolio in 15 months after Chris Bowen resigned following the abortive Labor leadership coup last week.

Gray will be the third Business Minister since the announcement of the latest review of the Franchising Code of Conduct in January.

Previous business ministers since December 2011 (in order) include Nick Sherry (resigned), Mark Arbib (resigned after three months), Brendan O’Connor (reshuffled after 11 months) and Chris Bowen (resigned after one month).

Cash Converters receives $60 million injection

Pawnbroking and short-term lending franchise Cash Converters has obtained $60 million from Westpac Bank via a securitisation program to increase the chain’s personal loan book.

Vale Elisabeth Ritchie – An outstanding commitment to Australian franchising

Widely regarded franchising lawyer and longstanding Franchise Council of Australia volunteer Elisabeth Ritchie passed away recently after a long and courageous battle with cancer.

Australian ice cream market heats up

Competition among ice cream brands in Australia will heat up as mature brand Baskin Robbins announces a 200-store expansion under new owners, and relative newcomer Ben & Jerry’s seeks to add a further 30 stores to its network.

Baskin Robbins’ Australian operations, which were previously fully-owned by United States-based corporate parent Dunkin’ Brands, has been sold to the owners of Baskins’ middle-east operations. Dunkin’ Brands retains 20 per cent of the Australian business, with the remaining 80% sold to United Arab Emirates-based conglomerate Galadari Brothers Group.