Final version of new Franchising Code released; Silent on licensing
The Australian Government has released the final version of the new Franchising Code of Conduct along with an Explanatory Statement outlining changes to the Code which will take effect from April 1 next year.
The new Code will replace the existing Code which was due to sunset at that time, and includes changes in response to recommendations arising from the 2023 Schaper Review.
A draft version of the Code was released on October 10 for public consultation, which closed on October 29. It is understood that the final version of the Code includes technical amendments compared to the draft, with the major changes remaining essentially the same.
The new Code received Royal Assent on December 5, and has been available on the Australian Government’s Federal Register of Legislation since Monday, December 9.
Although the Government agreed in principle or in full with all 23 recommendations of the Schaper Review, approximately 13 recommendations are embodied in the new Code, with the remaining recommendations (such as possible licensing system for franchisors), still under consideration following a short public consultation which ended on December 8. This makes it highly unlikely that any future licensing system – if one is to be developed at all – will be launched in time for the commencement of the new Code on 1 April 2025.
Franchises spotlighted as unions target junior wages
Fast-food franchises are under the spotlight as the Shop Distributive and Allied Employees’ Association (SDA), backed by the Council of Trade Unions, has lodged an application with the Fair Work Commission to remove junior rates of pay for employees aged 18 and older, according to a media report.
Currently, employees younger than 21 are paid a percentage of the $24.10 hourly adult minimum wage. 18-year-olds earn $16.46 (68%), 19-year-olds earn $19.88 (82%), and 20-year-olds earn $23.55 (97%). Rates for 16-year-olds are 47% and 17-year-olds, 57%. The unions’ application wants all employees aged 18 years and older to be paid the full adult wage of $24.10 per hour, and rates for 16 and 17 year-olds to be raised to $12.05 (50%) and $18.08 (75%), respectively.
Unions and advocates for the abolishment of junior rates for employees older than 18 years, also known as a training wage, claim workers are being exploited by companies, including franchise brands, legally using the government-subsidised traineeship system. Meanwhile, economic academics, and business advocates and commentators, claim raising the minimum rate will disincentivise companies from employing younger, less-experienced staff, thereby increasing youth unemployment. Read more
Franchise outlook for 2025: February 5 free brunch
A free brunch event for franchise executives in Brisbane on February 5 will explore the top three franchise challenges for the year ahead in 2025, including the new Franchising Code of Conduct, franchise recruitment, and customer acquisition and retention.
The free morning event, which includes brunch and mimosas, will provide franchisors in south-east Queensland a final learning and networking opportunity for the year as well as critical insights to assist with franchise recruitment, marketing and network planning for 2025.
Speakers include Franchise Advisory Centre director and Franchise News publisher Jason Gehrke, and digital marketing expert and Constant Contact Asia-Pacific vice president Renee Chaplin.
The free 2025 Franchise Outlook Brunch and Learn will be held from 9am to 11am in Brisbane on Wednesday, February 5. For more details and register, Here
Primary school kids oppose fast food location
Students of Hendra State School in suburban Brisbane recently protested against the proposed development of a 24-hour McDonald’s just 200 metres from their primary school, according to a media report.
The site, currently a Hertz car rental depot, is zoned non-residential use but is surrounded by residential housing on all three sides. Protestors claim the land should be used for housing. The developer claims the site is unique in terms of its proximity to industrial zoned land and that an extensive review supported an Economic Needs Assessment that the proposed food and drink outlet would serve a local community need.
More than 430 submissions were received in relation to the development application, the majority of which are oppose it on the grounds of increased traffic, light pollution, housing needs, noise, smell, and proximity to Hendra State School as main concerns. Read more
Shareholders sue fast food chain over portion sizes
Shareholders of United States-based Mexican restaurant chain have filed a class action lawsuit against the business claiming a lack of disclosure around customers’ discontent with portion sizes negatively impacted financial results and market value, according to a media report.
Chipotle reportedly incurred increased expenses for ingredients as it attempted to ensure “generous portions” for customers who were posting on social media that the chain was serving inconsistent portion sizes. Class action claimants allege Chipotle concealed how many of their restaurants were skimping on portions and the impact of the social media complaints on the company’s second and third-quarter results. Chipotle’s market value lost USD$6.5 billion on announcement of those results. Claimants are seeking unspecified damages for purchasers of Chipotle stock and options from February 8 to October 29, 2024. Read more
RFG to acquire and rebrand coffee chain
Listed multi-brand franchisor, Retail Food Group (RFG), has acquired South Australian-based boutique coffee franchise CIBO Espresso from multi-brand food business Retail Zoo for $2.7 million, according to a media report.
CIBO Espresso’s 22 outlets will be transitioned into Gloria Jean outlets as part of RFG’s plan to increase its footprint in the SA market with RFG reportedly allocating a further $1.3 million to “provide compelling incentives” for CIBO franchisees to make the transition. Incentives include capital expenditure for rebranding and new equipment.
Currently, Gloria Jean’s six SA stores generate $5 million a year while the CIBO network of 22 stores generates $22 million. The acquisition is being funded from existing cash reserves and is scheduled to settle in mid-FY25. Read more
CEO retires after 40 years with brand
Don Meij, the CEO and Managing Director of publicly listed pizza chain Domino’s Pizza Enterprises (DPE), has announced his retirement after 37 years with the brand, according to a company statement.
Meij began his career with Domino’s as a delivery driver in suburban Queensland, becoming a multi-unit franchisee before eventually stewarding the corporation for 22 years as CEO. Under Meij’s leadership DPE’s market capitalisation has increased from $132 million at the time of listing in 2005 to a peak of $14 billion in 2021 with the business generating $4 billion in sales each year across the 12 countries in which it operates.
Meij has been succeeded by Mark van Dyck who has significant experience in the global food service sector with companies including Coca-Cola and Compass Group, one of the world’s leading providers of food services. Read more 1; Read more 2
NZ franchise revenue increases on fewer brands and locations
Total franchise sector revenue turnover in New Zealand has increased despite a decrease in the number of franchise brands and locations operating in the country, according to data from National Franchise Surveys conducted and published by Massey University’s Business School.
The Franchising New Zealand 2024 Report found that franchised locations have declined by 9% since 2021, while franchised brands declined from 590 to 546 (approx. 8%) over the same period. Meanwhile, average turnover for 2024 respondents increased by 20.5% with the total estimated turnover for franchising in NZ increasing to $73.4 billion, up from $58.5 billion in 2021.
The survey is prepared and published by Massey University in partnership with the Franchise Association of New Zealand, Westpac, Stewart Germann Law Office, and Iridium Partners. The report provides a comparison of data from 2017, 2021, and 2024. Read more
Jason Gehrke is the Director of the Franchise Advisory Centre and has been involved in franchising for more
than 30 years at franchisee, franchisor and advisor level. He advises both existing and potential franchisors and
franchisees, and conducts regular education courses for franchisors in Australia and overseas. He has been awarded for his franchise achievements, and publishes Franchise News, Australia’s only fortnightly electronic news bulletin on franchising issues.
www.franchiseadvice.com.au