Behind the Headlines | Business Franchise Magazine Nov/Dec 17

Jason Gehrke | Director | Franchise Advisory Centre

Fast food chain launches major store refresh throughout Australia

International food chain Subway has announced it will renovate stores, introduce new menu items, add in-store terminals for customer self-service and soon offer home delivery across its 1,400 outlets in Australia, according to a media report.
The brand refresh is part of a global change to update 44,000 outlets in 113 countries. The changes also include new in-store colours and imagery, digital menu boards, complimentary Wi-Fi and USB charging points for dine-in customers.

Sugar tax proposal to improve Australian health

A coalition of 34 health groups and hospitals has banded together to propose a 20 per cent tax on sugary drinks to tackle obesity, which is claimed to be a greater national health risk than smoking, according to a media report. In Australia, around 63 per cent of adults and 27 per cent of children are obese or overweight, according to the group, which would like to see the tax introduced, as well as other measures to improve levels of public health.

Joint liability laws to take effect from October 27

After being passed by both houses of Parliament, the Protecting Vulnerable Workers Bill - which will make franchisors financially liable for underpayments to workers by their franchisees – will take effect from Friday, October 27.
The bill substantially increases the powers of the Fair Work Ombudsman to investigate wage fraud, and introduces significant penalties for failing to keep wage records, falsifying records, or forcing staff to repay wages to prevent cashback fraud.
In summary, the bill will (among other things):
  • Make franchisors and holding companies liable for underpayments if they knew or ought to have known but failed to take reasonable steps where underpayments occur;
  • Increase existing penalties under the Fair Work Act by up to 10 times;
  • Allow underpaid franchisee workers to seek restitution from the franchisor;
  • Prohibit cashback scams where workers are paid in full and then forced to repay some or all of their wages in cash;
  • Give greater investigation and enforcement powers to the Fair Work Ombudsman;
  • Reverse the onus of proof so that employers will have to disprove underpayment claims made against them by employees.
The bill also adopts a definition of a franchise different from that used by the Franchising Code of Conduct, and which will likely also encompass business models, such as licences, which do not consider them franchises and to which the Code does not currently apply. The Fair Work Ombudsman (FWO) has developed interim resources to help franchise sector stakeholders understand their obligations under the new laws available at

Small Business Ombudsman proposes government bank

Small Business Ombudsman Kate Carnell has proposed the idea of a governmentbacked bank for lending to small to medium enterprises (SME’s) as necessary to make affordable funding available to businesses without real estate security, according to a media report.
The bank could use taxpayer funding, or alternatively seek funds from a variety of sources, including superannuation funds similar to the British Business Bank set up by the UK government, but which sources funds from 90 different businesses.

7-Eleven wage claims pass $150 million

7-Eleven workers exploited by a wage fraud scandal which rocked the system and led to the new Protecting Vulnerable Workers legislation have now been repaid more than $150 million, according to the company’s Wage Repayment Program website. A total of $150,756,890 has now been paid to 3,662 workers, for an average claim of $41,168 per worker.

How to get franchisees to spend more on marketing

A unique case study to be presented at October’s Franchise Marketing Forum will show how national retail chain The Cheesecake Shop got its franchisees to agree to increase their marketing investment. The Forum, to be held in Brisbane on October 27, will feature marketing case studies and insights from four major national service and retail brands representing more than 500 outlets, as well as group discussions on hot topics and the results of Australia’s first-ever survey into how franchisors use marketing funds. For program details and to register, visit


Half of FWO litigations involve visa holders

The Fair Work Ombudsman (FWO) will write to more than 500,000 student visa holders currently in Australia to urge them to check they are being paid correctly after it was revealed that 49 per cent of all FWO litigations last year involved a visa holder, according to a media report.
Student visas account for more than a third of litigations involving a visa holder, which the FWO views as disproportionately low compared to other categories of visa holder. The FWO is concerned foreign student visa holders are not aware of their rights or rates of pay when working in Australia, and are often exploited by employers.

Private equity buys majority stake in Laser Clinics Australia

Private equity firm KKR has emerged as the majority owner of beauty chain Laser Clinics Australia, according to a media report. KKR was successful after a sales process in which other potential buyers are reported to have been rival private equity business Bain Capital, as well as Priceline Pharmacy parent company Australian Pharmaceutical Industries.
No sale price has been reported, however the chain has more than 60 clinics using a shared ownership model, and was previously 100 per cent owned by private equity investor The Growth Fund, along with its two founders. 

Taco Bell makes third attempt to enter Australian market

US-based Mexican food chain Taco Bell will attempt to re-enter the Australian market at a location formerly operated as a Sizzler restaurant in Brisbane, according to a media report.
Listed Australian fast food operator Collins Foods, which operates KFC outlets and owns the diminishing chain of Sizzler restaurants, has acquired the country license for Taco Bell and will repurpose the former Sizzler site, which traded for 31 years. Taco Bell has previously attempted to enter the Australian market in the 1980’s, and again in 1997 before departing again in 2005.