Behind the headlines with Jason Gehrke

Jason Gehrke | Director | Franchise Advisory Centre

Senate inquiry recommends franchisor responsibility for franchisees’ workers

The final report of the Senate Standing Committee on Education and Employment’s inquiry into temporary work visa holders has recommended that the Franchising Code of Conduct be changed to include shared responsibility for franchisors where franchisees underpay their workers.

The recommendation in the report A National Disgrace: The Exploitation of Temporary Work Visa Holders makes specific reference to the widespread wage fraud found in up to two thirds of 7-Eleven outlets in Australia, where franchisees deliberately underpaid foreign workers on student visas, then threatened to have them deported if they complained. Although a number of the report’s 33 recommendations make reference to the 7-Eleven scandal, Recommendation 26 specifically recommends changes to the Franchising Code in direct response to the issues arising from 7-Eleven.

Specifically, the recommendation requests that the Federal Treasury and the Australian Competition and Consumer Commission (ACCC) review the Franchising Code of Conduct with a view to determine whether there is scope to impose some responsibility on the franchisor for breaches of their franchisees’ compliance with workplace laws.

The report also recommends that the Code review consider the possibility of franchisors terminating franchise agreements without notice where they have reasonable grounds to believe that serious contraventions of the Fair Work Act have occurred.

The report has also recommended that both the resources and powers of the Fair Work Ombudsman be reviewed and increased.

New 7-Eleven CEO indicates wage fraud not eliminated yet

Embattled convenience retail chain 7-Eleven has appointed a new CEO from outside the convenience and franchising sectors who has indicated that wage fraud could still be occuring in the network despite its best efforts to stamp it out.

New CEO Angus McKay was appointed on March 18 to replace interim CEO Bob Bailey who temporarily stepped into the role following the resignation of long-term CEO Warren Wilmot in the wake of media coverage following a joint Fairfax/Four Corners report by Adele Ferguson last  August about widespread wage fraud in the 7-Eleven network. New CEO McKay was most recently CEO of labour hire firm Skilled Engineering

RFG lays off field support staff in favour of sales roles

Multi-brand listed franchisor Retail Food Group (RFG) has made 68 operations staff redundant, but invited them to reapply for roles in its newly-created national sales and performance division, according to a media report.

The job cuts were in response to the evolving retail landscape and resources would be redeployed from operations to sales and business mentorship, according to a letter delivered to affected staff quoted by the Gold Coast Bulletin.

Sacked staff were encouraged to apply for either a new sales role, or another newly-created position in RFG’s franchise care centre, which is understood to be a call centre to provide operational support.

Franchise Council appoints former Business Minister as Executive Chair

The Franchise Council of Australia (FCA) has appointed former Federal Business Minister and retiring MP Bruce Billson to the newly-created role of Executive Chairman.

The member for the seat of Dunkley in Victoria served as the Federal Minister for Small Business for two years from 2013 to 2015, and announced his retirement from politics late last year, to take effect from the next federal election due later this year. Billson’s appointment will help raise the public profile of franchising and improve how the sector’s benefits are communicated to the broader community, according to outgoing FCA chairman Michael Paul.

Turnaround and multibranding topics added to Management Forum

Turning around a franchise brand in distress and how to operate a multi-brand franchise network are the two latest topics to be added to the program for the annual Franchise Management Forum to be held on July 6 in Brisbane.

Pie Face managing director Kevin Waite will provide an insight into the network’s continued turnaround since it was placed into administration a little over 12 months ago, and provide valuable insights into the problems faced by growing franchisors.

Also joining the program will be Stan Gordon, CEO and owner Franchised Food Company, which operates six franchise brands including ice cream brands Cold Rock Ice Creamery, Mr Whippy and Trampoline. Waite and Gordon are the latest speakers to confirm for the Forum, an annual professional development event for franchise system founders and leaders to be held in Brisbane on Wednesday July 6. They join existing franchisor leaders Richard Thame (CEO of Fastway Couriers), Paul Robinson (non-executive director of VIP Home Services), and Jason Smith, (founder and CEO of Back in Motion, a national physiotherapy franchise). Forum registrations will open next month. For more information about the Forum, see

Homewares franchise collapses

Earthborn, a small chain of homewares stores based in south east Queensland has collapsed, stranding three franchisees who continue to trade while the company-owned stores around them are liquidated.

KFC franchisee sells 42-store group to NZ company

A group of 42 KFC outlets in New South Wales operated by the one franchisee has been sold to New Zealand-based public company Restaurant Brands, which operates the KFC, Starbucks and Carl’s Jr brands in New Zealand.

The acquisition is the company’s largest outside New Zealand. The owner of the NSW KFC franchises, Stephen Copulos, joins the board of Restaurant Brands once the acquisition is settled at the end of April.

No damages for Subway claimants after they ate the evidence

A class action against Subway which alleged the brand’s footlong subs were consistently shorter than the 12 inches implied by the name has been settled with the company agreeing to implement practices for the next four years to ensure its footlong subs are at least 12 inches long, according to a media report.

However no monetary claims were awarded to members of the class action “because everyone ate the evidence” according to one of the lawyers acting in the case.

An Australian teenager uncovered the substandard sub length issue when they posted a photo on Facebook of a sub alongside a tape measure, which led to a worldwide trend in measuring subs.