Behind the Headlines with Jason Gehrke

Jason Gehrke | Director | Franchise Advisory Centre

This article appears in the Jan/Feb 2016 issue of Business Franchise Australia & New Zealand


Muffin Break to open in Croc’s play centres

Bakery café chain Muffin Break has partnered with children’s play centre franchise Croc’s to open Muffin Break outlets in all new Croc’s Playcentres, and has taken a staken in the Croc’s franchising business. Franchisees of Crocs’ existing 12 outlets will have the choice to rebrand their existing play centre cafes to Muffin Break.

Analysts moot possible merger of Mitre 10 and Home Hardware

A merger of franchised hardware chains Mitre 10 and Home Hardware would create a $2 billion business to rival Bunnings, and would outshine Woolworths’ underperforming hardware store chain Masters, according to analysts quoted in a media report.

Domino’s under fire for offering permanent part-time jobs

Workers in Domino’s Pizza corporate stores have been offered permanent part-time jobs, however the company has come under fire for doing so amid claims that workers will be worse off and are being forced to sign new employment agreements.

According to a media report, casual staff as young as 14 were told that they would be moved from casual to permanent part-time employees, which would result in a reduction in their hourly rate of pay, but which would entitle them to sick and annual leave. However the report also claims that unless staff decided within 24 hours to sign up to the new deal, they would no longer receive any casual shifts.

The company has defended its offer of permanent part-time positions, claiming that it creates greater certainty for employees and bucks the trend of fast food outlets preferring to hire casual staff only.

“Vikings” launch nugget raid on Hungry Jack’s store

A Hungry Jack’s store in the Sydney suburb of Parramatta was invaded by 70 ravenous Viking barbarians who ordered the store’s entire stock of chicken nuggets as part of a prank by radio personalities Hamish Blake and Andy Lee to “de-nugget” a store. The duo claimed that nuggets  prices had crashed worse than the price for iron ore, and Australian consumers should be wary of the impact on the economy. They also chose the Hungry Jack’s store as they believed that the alternative McDonald’s outlet was due to be restocked on the day of the raid, thus making it harder to de-nugget the store.

Bakery franchisor tackles supermarket giants over premature buns

Ferguson Plarre Bakehouse CEO Steve Plarre has delivered an open letter to Australia’s supermarket giants Coles and Woolworths requesting that they stop devaluing Easter by making hot cross buns available well before the Easter period. For the second year, Ferguson Plarre is running its “Not Cross Buns” campaign to lobby the grocery chains to stop making buns prematurely available (ie. from as early as Christmas in some cases).

Furniture buying group entity collapses

A major entity within the Homemakers Australia furniture buying group has entered voluntary administration, according to a media report.

Homemakers North, which supplied Sleepzone and Floorzone stores in Queensland and northern New South Wales with bedding and flooring was placed into administration on November 17. However the administration does not affect any individual member stores, who are expected to  continue to trade without interruption.

Ninety per cent of franchisees sign new 7-Eleven deal following $25m sweetener

Besieged convenience retail chain 7-Eleven has announced that 90 per cent of its franchisees have signed up to its new franchise agreement, which gives franchisees a greater slice of the system’s unique grossprofit share arrangement in return for greater controls.

However the deal has also been sweetened by a commitment from the company that it will underwrite the first $25 million of repayments to underpaid workers, after which franchisees pay the next $5 million, and then all costs are shared equally between the franchisor and the franchisees, according to a media report.

The November 30 deadline required 7-Eleven franchisees to accept a new franchise agreement that increases their profit share with head office, but also required them to indemnify 7-Eleven from the consequences of any future wage fraud. Evidence presented to a recent senate hearing indicated that wage fraud occurred in more than two thirds of 7-Eleven’s 620 outlets.

To date, 100 staff have received outstanding wages totalling $2.3 million, however it is expected potentially thousands more claims will be presented to an independent panel set up by 7-Eleven to investigate widespread wage fraud in its business.

Franchised hotel chains merge to compete with AirBnB

Hotel brand Marriott International will buy Sheraton hotel operator Starwood Hotels and Resorts to become the largest hotel chain in the world with more than one million rooms in order to expand into markets outside the United States, and to compete with accommodation sharing service AirBnB.

Stock exchange lists first real estate franchise

McGrath, the first real estate chain to list on the Australian stock market, raised nearly $130 million, valuing the company overall at $272 million. However the shares dropped in value by as much as 13 per cent on debut, after launching at a list price of $2.10 per share and trading as low as $1.92 per share on fears that price declines in the Sydney property market, where McGrath is strongest, will impact future earnings.

McGrath currently holds about three percent of national real estate market share, and is strongest in New South Wales and the ACT.

Hairdressing franchise crashes - $4 in the bank

Only three salons continue to trade out of the 53 operated by Brisbane-based hairdressing chain Evolve Salons, following the appointment of a liquidator.

The other 50 hairdressing salons have been closed and the staff terminated, according to a media report which noted that the company had only $3.83 in one bank account and was $487 overdrawn in another despite raising more than $8.7 million from private investors in its short operating history.

The company collapsed after its last three directors all resigned, leaving the business broke and without direction. Evolve owned and operated chains such as Bach Hair, Lattouf Hair and Day Spa, Bossy Hair and Melbourne-based Meika, and was planning to list on the stock exchange  when it ran afoul of its loan covenants with the Commonwealth Bank, which is also believed to be owed more than $6 million according to a media report.

Helloworld to merge with private travel group

Listed travel franchise Helloworld will merge with privately-owned travel company AOT in a $106 million deal that will result in AOT’s husband and wife owners Andrew and Cinzia Burnes becoming Helloworld CEO and executive director respectively.

The merger is supported by Helloworld shareholders to increase the company’s ability to compete with larger rival Flight Centre, and is expected to be completed early in the new year.