Franchisee banned from employing trainees
A multi-unit franchisee of pizza chain Domino’s has been declared a prohibited employer and restricted from employing trainees or apprentices in South Australia, according to a government statement.
An investigation by the South Australian Skills Commission found the franchisee, who operates 12 stores in the state, breached its obligations to educate and/or train junior staff as per the South Australian Skills Act 2008. Breaches under the Act include paying trainee wages without meeting training obligations and not releasing employees from their workplaces to undertake accredited food handling safety training.
Government subsidised traineeships are designed to provide workers with real skills with meaningful benefit to the workers undertaking them. Since 2021 the franchisee registered 269 training contracts of which 145 were terminated by the Commission due to limited or no off-job training being undertaken, 72 were withdrawn, and only 48 were successfully completed. Read more 1; Read more 2
Franchisor’s $1.5m fine for contempt upheld following appeal
A $1.5 million fine imposed on automotive repair franchise Ultra Tune has been upheld by a Full Federal Court which dismissed the company’s appeal on two grounds, according to an Australian Competition and Consumer Commission (ACCC) statement.
In 2019 Ultra Tune was fined $2.6 million in the Federal Court for breaching both the Franchising Code of Conduct and the Australian Consumer Law (ACL) by providing false or misleading representations and failing to prepare and supply marketing fund statements. It was further found that Ultra Tune attempted to mislead the Court by claiming it had sent disclosure documents to prospective franchisees when it had not. On appeal the fine was reduced to $2.1 million, however Ultra Tune was still under orders to implement a compliance program and prepare and provide a number of documents within a specified time period which it did not do, resulting in it being fined an additional $1.5 million for four separate instances of contempt of court in 2024.
In their appeal of the contempt of court breaches, Ultra Tune claimed the Court did not have the power to impose a punishment for contempt where no endorsement was included on the relevant orders as to the consequences of non-compliance with those orders. They further challenged how the fines were calculated. The Full Federal Court dismissed the appeal, establishing that there was no error in the initial judgement based on the relevant Federal Court rules relating to the endorsement, and that Ultra Tune was unable to present any overt errors related to the determination of the fines which, themselves, were not excessive, individually or as a total penalty. Read more
Franchised bank to close 16 more branches
Listed retail bank Bank of Queensland (BOQ) has announced it will close 16 branches across the country in February, according to a media report.
In a move described by the Finance Sector Union as despicable, BOQ will close branches in Queensland (7), Victoria (5), NSW (3), and Western Australia (1). BOQ has justified the closures as a simplification of operations and the development of digital banking. While most BOQ employees impacted by the closures have been transitioned to new roles within the bank’s network, in August 2024 BOQ told shareholders that up to 400 jobs across retail operations, marketing and human resources would be cut to simplify and digitise operations, while simultaneously exiting from more than 100 franchise agreements. Read more
Meanwhile, the Banking Code Compliance Committee (BCCC) has sanctioned BOQ for serious and systemic breaches of the Banking Code of Practice related to a failure to stop or refund fees and interest that were incorrectly charged to the estates of deceased customers between 2019 and 2023, according to a BCCC media statement. Read more
Food franchise to pay damages to breastfeeding worker
An Australian multi-unit franchisee of fast food chain KFC has been ordered to pay $80,000 in general damages after it was found to have discriminated against a female worker by requiring her to remain on the premises during her unpaid breaks, according to court documents.
The franchisee, Southern Restaurants (VIC) Pty Ltd, own and operate a number of KFC restaurants in Victoria and the Australian Capital Territory. The full-time worker was employed as a store manager at the Tuggeranong outlet and was initially told when planning to return from maternity leave that the store could not provide a suitable chair or privacy to express milk in the store.
Subsequent arrangements made by the store, including requiring the worker to erect a portable tent in the outlet’s storeroom each time she needed to express milk were unsuitable and deeply stressing for the worker, who was then denied the freedom to use her unpaid breaks to leave the store and go to the parent’s room in a local shopping mall instead, which had the required privacy and chair.
The company was also ordered to pay up to $10,000 for treatment of a psychiatric condition developed by the worker as a result of the discrimination, and to develop policies and procedures to allow breasfeeding employees access to adequate facilities for expressing milk. Read more 1; Read more 2
Mortgage broking brand tailspin worsens
Mortgage broking brand RAMS has reported an $18.6 million loss for the 12 months to September 2024 as its parent company, banking giant Westpac, continues to fight allegations of fraud and misconduct within the franchise network, according to a media report.
In the first half of 2024, Westpac failed to find a buyer for RAMS which, by August, led to it mothballing the mortgage broker and its small lending arm, albeit while still servicing existing customers. RAMS’ $31.8 billion loan book was moved to Westpac’s own balance sheet and the brokers were cut off from acquiring new borrowers, resulting in franchisees launching legal action against the bank claiming their agreements were improperly terminated.
Meanwhile, Westpac is also facing a lawsuit from the former head of mortgages, business controls, and monitoring at RAMS who alleges she was bullied, ignored, and deemed a troublemaker after raising concerns about suspected fraud and other criminal activities. The Australian Securities and Investments Commission (ASIC) and Australian Prudential Regulation Authority are also continuing their investigation into allegations of conducting business with an unlicenced person and giving misleading information. Read more
PE buyer drops purchase of Australian fast food chain
Pan-Asian private equity firm Affinity Equity Partners has walked away from an $800 million deal to purchase multi-brand fast-food franchisor Craveable Brands following due diligence, according to a media report.
Currently owned by another Asian private equity firm, PAG Asia Capital, Craveable Brands owns and franchises fast-food brands Oporto, Red Rooster, and Chargrill Charlies, and has the rights to West Australian chain Chicken Treat. Four hundred businesses operate under the Craveable umbrella, employing more than 12,500 workers and serving nearly 1 million customers each week.
Craveable Brands remains for sale and talks have reportedly been revived with other prospective buyers. Read more
Vacuum brand relaunches one year after demise
Vacuum and cleaning retailer Godfreys will relaunch its business 12 months after filing for voluntary administration on January 30, 2024, according to a media report.
All 169 stores that were operating in January 2024 were closed by May 31 the same year after administrators declared no viable offers had been received for the business. Of those 169 stores, 28 were franchised stores which also faced closure once the brand was wound up and its central ordering and supply functions ceased. Many of the franchised stores have since joined vacuum and cleaning brand About Clean, launched last year by former Godfreys franchisees.
In June 2024, Future Innovation Holdings acquired Godfreys’ brands and assets and re-established the business’ online and wholesale business model. Read more
Food outlet ram-raided in cash protest
An outlet of chicken chain Nando’s was rammed by a stolen car in what appears to be a protest against the brand’s cashless payment policy, according to a media report.
A stolen Volkswagen with the words “we don’t accept cash here” spray-painted on its side was abandoned at the scene after it was used to ram into the Nando’s in Melbourne, Victoria. In May 2024, Nando’s announced it would only accept card payments in Australia, justifying their decision as a timesaving move that would allow them “more time to perfect your chicken”. Read more
Fast food and other businesses targeted over migrant workers
Officers from the Fair Work Ombudsman (FWO) and Australian Border Force made surprise inspections on about 40 Melbourne businesses recently to check that vulnerable migrant workers were being paid their correct wages and entitlements, according to a FWO statement.
The focus of the joint inspections was on fast food outlets, restaurants and cafés, but inspections also extended to businesses in the retail, hair and beauty, wholesaling and manufacturing sectors.
The on-the-ground inspections, which began on Monday, targeted those employing sponsored visa holders under the Temporary Skills Shortage (subclass 482) visa program. In Australia, ‘chef’ is one of the top occupations for sponsored visa holders. A particular focus for Border Forces officers was ensuring that sponsored visa holders were not subject to exploitation, were working in nominated positions and were not abused by excessive hours or unsafe work practices. 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