Franchisor faces dispute with more than half its network
More than half of the franchisees of the Bank of Queensland (BOQ) have accused the lender of breaches of the Franchising Code of Conduct and seeking to enforce unfair contract terms, according to a media report.
Fifty-nine of BOQ’s 114 franchised branches have engaged law firm Morris Mennilli, who has put the franchisor on notice of their grounds for dispute and given 21 days for a response.
In August, the Bank of Queensland (BOQ) announced it will exit franchising and assume corporate ownership of all of its locations in addition to laying-off at least 400 workers in a $160 million restructure program, according to media reports.
BOQ says its retail banking model was no longer sustainable and that it would bring all 114 of its franchised branches into its corporate structure by March 2025, which is expected to cost between $115 million and $125 million over four years. The bank will also axe 400 full-time jobs at a further cost of $35 million, after laying-off 250 workers in the last 12 months. Read more 1; Read more 2; Read more 3; Read more 4; Read more 5
Franchisor receives $72m govt subsidy
McDonald’s Australia and its franchisees received up to $72 million through a trainee and apprenticeship wage subsidy program implemented under the Morrison Coalition government, according to a media report.
Designed to bolster the post-pandemic recovery, the Boosting Apprenticeship Commencements (BAC) program allowed stores to claim up to $28,000 per year per employee in training. Unions, Labor MPs, and former staff of fast-food giants criticised the $5.8 billion subsidy program questioning both the quality of training offered and the concept of taxpayers subsidising highly profitable businesses.
McDonald’s Australia was the single biggest claimant of the program ($11 million) with an additional 226 McDonald’s franchisees also using the program. In total the training of 8,000 employees was subsidised with a completion rate of just 53%. Thirteen franchisees reportedly received more than $1 million in subsidies with most training for Certificate III in Retail delivered through the company’s in-house trainer. Read more
Pharmacy franchisees to exit without penalty under merger deal
Franchisees of retail pharmacy chain Chemist Warehouse will be able to opt out of their agreements without penalties as part of listed pharmaceuticals supplies company Sigma Healthcare’s strategy to facilitate a merger of the businesses, according to a media report.
The option for franchisees to exit without penalties for the next three years is one of three major concessions proposed by Sigma and applies to franchisees who joined at the start of 2024. In addition, Sigma is committed to remain a participant in the Commonwealth Government’s Community Service Obligation program for at least five years and has offered to limit the use of wholesale customer and franchisee confidential information for the next three years.
The proposed merger includes plans to list on the Australian Securities Exchange (ASX) at a merged value of around $8.8 billion, via a reverse listing through Sigma. Under the proposed terms, Chemist Warehouse shareholders will own 85.75% of the merged entity and families of the business’ founders will hold 49% of the group. New shares will be issued at 70 cents per share and current major shareholders of Sigma will have most of their shares escrowed until August 2026. Read more
Mexican chain doubles in value since IPO
Australian-based Mexican food chain Guzman y Gomez (GYG) has doubled in value to a market cap of just over $4 billion, nearly $2 billion higher than when it listed on the Australian Stock Exchange (ASX) in June of this year, according to a media report.
GYG, which is now also included on the S&P/ASX200, has traded at a high of $42 since listing, nearly double its IPO price of $22. Despite some early investors such as Sydney hedge fund QVG selling off shares and realising profits, many investment firms and portfolio managers maintain a hold or buy rating for the stock, however one firm has urged investors to sell the stock now in expectation of a 12% decline in value in the next 12 months. Read more 1; Read more 2
Kangaroo visits fast food outlet
Not to be outdone by a koala that made headlines earlier last month for visiting an IGA grocery store in Victoria, a kangaroo has hopped into a KFC restaurant in Western Australia, according to a media report.
The kangaroo entered the outlet in WA’s south-west region, bouncing around and over tables before attempting to leave through automatic glass doors which seemed to confuse it. A KFC spokesperson has confirmed that no customers, team members or marsupials were injured during the kangaroo’s visit. Read more
Paint and sip chain enters administration
The franchisor of Sydney-based paint and sip chain Pinot & Picasso has entered voluntary administration, according to a media report.
Pinot & Picasso employed 16 full-time and 41 casual employees across seven company-owned venues, and has 42 franchised locations in Australia and New Zealand. Seven employees have already been made redundant but administrators have advised franchisees that the business will continue to operate while options to restructure or recapitalise the business via a Deed of Company Arrangement, or an outright sale as a going concern are considered with the aim of preserving as much of the business and as many jobs as possible. Read more
Burger chain to exit Australian market
The Australian division of Japanese burger chain MOS Burger has announced the closure of all Australian stores effective 31 August 2024, according to a media report.
MOS (Mountain, Ocean Sun) Burger opened the first of its three stores in 2011. All three stores are located in Queensland. It is unknown how many employees will be impacted by the closures. Founded in 1972, Tokyo-headquartered MOS Burger is Japan’s second biggest fast-food franchise behind McDonald’s. Read more
Fast food sales flat
Fast-food sales in Australia remain flat as consumers rein in discretionary spending amid the ongoing cost-of-living crisis, according to a media report.
Fast-food giants KFC and McDonald’s have both recorded a decline of up to nine per cent in chicken sales at their outlets. Collins Foods, the operator of 279 KFC restaurants across Australia, has reported sales at some stores down 0.8 per cent year-on-year for the months of May and June, and while the number of transactions appear to be stabilising, consumers are spending less per transaction.
Comparison site Finder’s ongoing monthly consumer sentiment tracker survey has revealed that consumers believe fast-food prices have increased well beyond the inflation rate while quality and service has declined. 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