Franchisee with $300m annual sales terminated
The largest franchisee of electronics and furniture retail franchise Harvey Norman has been terminated after two of his staff were charged with fraud, according to a media report.
The former franchisee, who had been involved with Harvey Norman for more than 30 years, operated wholesale franchise Harvey Norman Commercial which sells directly to builders and developers, and generates more than $300 million in annual sales. Two former employees of the franchisee had 159 charges of alleged theft totally $594,000 laid against them in March 2023 as a result of a New South Wales police investigation.
Allegations of fraud and theft arose as Harvey Norman Commercial conducted a long-term stocktake while shifting stock from its Sutherland warehouse to a larger warehouse in southwest Sydney. Read more 1; Read more 2
ACCC releases updated Information Statement
The Australian Competition and Consumer Commission (ACCC) has released an updated Information Statement to include information about the Franchise Disclosure Register, which was launched in November last year.
The Information Statement must be given to anyone interested in becoming a franchisee, and no later than seven days after they have expressed interest and before they are given other documents, such as a disclosure document or franchise agreement. To see the latest Information Statement, click here.
EV’s potentially drive convenience chain sale
Growing demand for electric vehicle (EV) charging infrastructure may be a key driver for the sale of privately-owned fuel and retail convenience chain 7-Eleven, according to a media report.
7-Eleven has grown from a single store in Melbourne in 1977 to 750 outlets across Victoria, New South Wales, the ACT, Queensland, and South Australia. Its business is underpinned by fuel retailing, tobacco products, and snacks – three categories expected to decline over the next 20 years according to the media report.
The physical layout of traditional service stations is not conducive to the growing demand for EV charging infrastructure. Currently 7-Eleven sites are designed to allow consumers to quickly refuel their vehicles, purchase a convenience item, and leave. However, the rise in electric vehicles and the longer charge times required compared to refuelling requires services stations to reconsider the effectiveness of their real estate footprint. Read more
Franchisees risk criminal prosecution over VIC child labour laws
A number of food franchises in Victoria are facing criminal charges brought by the state’s Wage Inspectorate related to child labour law breaches, according to a media report.
The proprietors of a chicken franchise in Wodonga face 355 criminal charges based on the unpermitted employment of 10 children under the age of 15 on 168 occasions, while a dessert chain franchisee in Shepparton is facing 124 charges based on the employment of six children under 15 years-of-age. The charges in both instances also include allegations of exceeding the number of allowable employment hours, allowing the children to work past 9 pm, not providing required rest breaks, and failing to provide a supervisor holding a Working with Children Clearance. The cases will be heard in court in May with a coffee franchise in Cheltenham also scheduled to appear in court in June facing 360 charges related to the unpermitted employment of three children under the age of 15 on 111 occasions and other charges related to supervision, rest breaks, and working hours.
Victoria has the strictest rules of any Australian state regarding the employment of children, who typically seek after-school or weekend jobs, however many small business owners may not be fully aware of their obligations under state employment laws, which can result in criminal (rather than civil) penalties.
From July 1, 2023, employers in Victoria will need to obtain a licence from Wage Inspectorate Victoria allowing them to employ multiple people under 15 years-of-age at once, young workers will need to be supervised by a person with a Victorian Working with Children Clearance (family exemptions exist), and existing limits on working hours for young workers will need to be adhered to. Rules around the employment of children vary in each state.
Franchise worker dies in walk-in freezer
The family of a worker who died in a freezer in a Louisiana outlet of American fast-food brand Arby’s is suing the restaurant chain and franchisee for negligence and wrongful death, according to a media report.
The 63-year-old woman was employed by a multi-brand, multi-site franchisee and was on a temporary assignment at an Arby’s outlet 230 miles from the store at which she normally worked as general manager. Prior to her assignment to the store, employees at the store had reported to district and regional managers that a latch on the walk-in freezer had been broken for at last six months.
The worker was alone in the restaurant conducting pre-opening procedures before the arrival of other staff, including her son, when she became trapped in the freezer which was kept at minus 23 degrees Celsius. She died of hypothermia after beating her firsts bloody against the door in a vain effort to attract attention, according to the report. Read more
Australian franchise connection to royal coronation
Mobile coffee franchise Cafe2U provided coffee and pastries to around 6,000 military personnel involved in the coronation of King Charles III in London last month, according to a media report.
The brand was developed in Sydney in 2000, commenced operations in the United Kingdom in 2005, and was acquired by multi-brand listed franchisor Retail Food Group in 2014. A number of its UK franchisees were came together to support 3,500 military personnel and dignitaries involved in Queen Elizabeth II’s funeral procession in 2022 and was invited to tender to cater for the recent coronation of King Charles. Cafe2U estimate their franchisees served around 10,000 coffees and 5,000 pastries over two consecutive days of coronation rehearsals and ceremonies. Read more
ACCC blocks corporate acquisition of franchise outlet
The Australian Competition & Consumer Commission (ACCC) has opposed retail giant Woolworths’ acquisition of an independently owned SUPA IGA supermarket in New South Wales due to concerns over competition in the supply of groceries in the local area, according to an ACCC media release.
The SUPA IGA and co-located Liquor Boss store are located at Karabar, a residential suburb of Queanbeyan, near Canberra. Its acquisition by Woolworths would result in the giant operating three of the six supermarkets in the local area, which the ACCC concluded would result in a significant decrease in competition.
The ACCC’s decision was based on data analysis of the spending habits of local consumers, engagement with local businesses and industry bodies, and consumer feedback, including 700 survey responses and written submissions. The ACCC previously opposed a 2008 attempt by Woolworths to acquire the same supermarket, albeit it trading under a different name with a different owner at the time. Read more
Franchisee to pay $12 million to injured customer
A franchisee of US chain Burger King has been ordered by a court to pay AUD$11.8 million in damages to a customer who slipped and fell in a Hollywood, Florida, outlet, according to a media report.
The judgement is reported to be one of the largest slip and fall verdicts in the state, and includes AUD $5 million for lost earnings and $1 million for medical expenses. Lawyers for the franchisee claim the payment is excessive following an earlier settlement offer of $300,000, and filed a motion for a new trial. The injured customer needed surgery for his injuries, which included gastrointestinal issues. Read more
Free webinar recording: Overcoming franchise finance obstacles
A free webinar recently explored the topic of overcoming franchise finance challenges to help existing and potential franchisees maintain and grow their businesses.
The webinar featured Gaurav Sharma, Head of Commercial and Food Service (Retail) at Baskin Robbins Australia discussing how their franchisees have used online fintech platform Swoop to find best-in-market finance deals for new equipment, store fitouts and growth capital. The platform provides users with a single application process across multiple lenders that dramatically reduces the time and trauma involved in seeking business finance.
To request access to the video recording of the 45 minute webinar, email admin@franchiseadvice.com.au