FCA Article: Issue 3#3

By Steve Wright, Executive Director, Franchise Council of Australia

This article appeared in Issue 3#3 (March/April 2009) of Business Franchise Australia & New Zealand


In November 2008, the Franchise Council of Australia (FCA) elected a new FCA Chairman George Yammouni and three new members to the Board of Directors – Mike Stringer, Jason Gehrke and Ralph Edwards.

Having had the new year period to absorb the happenings of the economy and the recent inquiries into the franchising sector, the new-look FCA Board is poised to tackle the challenges ahead as we face a new year and a testing business environment.

And as George Yammouni said as he addressed the guests at the FCA Victorian Christmas function in December, “no blaming others – it’s up to us”. The essence of this statement is that action – educated and pro-active – is what has made franchising the success story it is in Australia. And this will speak volumes to governments and regulators about the sector’s willingness to evolve with the changing economic and regulatory climates and clear a path for an uninterrupted future.

There is no doubting the fact that business is most definitely “not as usual” this year. We are experiencing changes to the economy and changes to buying behaviour which dramatically affect the business landscape. 

Add to this government involvement through the implementation of various stimulus packages – as well as more direct influence through the Ripoll federal inquiry into franchising - and you get a business climate which – at the very least – is changing.

But it’s not all bad news. 

The Federal Government has implemented a helpful economic stimulus package and there are prospects for further initiatives and for further reductions in interest rates.

Historical evidence suggests that the franchise sector fairs pretty well during tough economic conditions. One of the fundamental reasons for this is because the risk of starting and running a franchise is minimised by the franchise business model and network.

Banks, for example, look more kindly at lending money to potential franchise buyers rather than other start ups. This is particularly important at the moment with many lenders tightening their belts when it comes to offering finance to small business.

The reason banks have more confidence in the ability of franchise businesses to repay their loans varies, but generally come down to a ‘safety in numbers’ principle. Factors such as existing supply chain arrangements, the strong bargaining power of franchise owners, economies of scale, the existence of an established brand and proven marketing methods all combine to instil confidence in banks and fortify many franchise businesses against inclement conditions.

With a changing business landscape, it is timely that the FCA has a new-look Board of Directors to help steer the FCA and the franchise sector through the choppy waters.

Starting at the top, George Yammouni has been elected as the new Chairman of the FCA for the next two years, taking over from retiring Chairman John O’Brien. For those of you who are unfamiliar with George’s contributions to the sector thus far, he is the founder of Melbourne-based nationwide franchise Bathroom Werx and has been a member of the FCA board for the past six years and deputy chair for the past two years.  He is also a former president of the Victorian Chapter of the FCA. 

We will hear more from George as the year unfolds, but his opening commentary as Chair is well worth reporting here. Regarding priorities for 2009, George said: “We need to do our utmost to ensure there are no new obstacles thrown up against small business in this challenging period, and especially for franchising, where we have the strictest operating rules of anywhere in the world.  I will do my utmost to ensure governments, regulators and finance providers - including our major banks - continue to acknowledge the very positive contribution franchising makes to economic growth and its strong contribution to Commonwealth tax revenues and compliance.  In return, franchising should be encouraged by governments and regulators, so that it can do what it has in the past – keep business investment rolling when many businesses are closing their purses, or their doors.”

For the first time, the FCA Board now has two deputy chairs. Franchisee representative Tony Melhem (Gloria Jean’s Coffees & Coco Cubano) and Women in Franchising representative Diana Williams (Founder, Fernwood Womens Health Clubs). Both Tony and Diana are current Directors of the FCA and now take on a stewardship role as deputies to George. 

With George at the helm and Tony and Diana at his side, the FCA Board has an inclusive frontline consisting of talent, experience and diversity that will hold us in good stead for the year to come.

But that’s not all – the FCA has also picked up some new recruits to add to the mix providing us with an injection of skill and enthusiasm.

Mike Stringer – New FCA Director (WA)

Mike Stringer is our new WA Chapter President. He is the Franchisor of Car Care and Housework Heroes, with around 150 franchisees across Australia and New Zealand. Car Care was established in 1987 and is Australia's largest mobile car detailer. Housework Heroes has been ranked in the top 50 fastest growing franchises in BRW's annual focus on the sector, over the last three years.

Mike’s previous experience includes 12 years at Canon in Europe where, as Marketing General Manager, he was responsible for developing the Canon brand from its traditional camera bios to a leader in integrated office environment. Since leaving Canon he has operated several businesses in the Internet and Graphics arena.

Ralph Edwards, Director (QLD)

Ralph Edwards is our new QLD Chapter President. He has spent the last 25 years owning and operating a variety of businesses, all of which are still in operation today. Ralph's intimate and varied understanding of the challenges business owners face will help guide the FCA Board in 2009.

For eight years up until 2008, Ralph owned and successfully managed Bright Eyes Sunglass Stores Australia. He took the existing business from 80 to 140 franchisees and in that time improved franchisee margins and profitability, making Bright Eyes one of Australia's largest sunglass retail networks. 

Under his leadership, Bright Eyes made the BRW Fast 100 list three years in a row.

Ralph has been a member of the FCA QLD State Chapter for the last five years, holding the position of Vice President for the last two and has now taken on the role of President.

Jason Gehrke – New FCA Director (QLD)

Jason's involvement in franchising covers more than 18 years at franchisee, franchisor and advisor level. He consults to franchisors and franchisees on systemic and best practice issues and runs educational courses for franchisors and franchisees.

Jason is a long standing member of the QLD Chapter committee. He is also a member of the ACCC's 12-person franchise consultative panel and is a past FCA award winner.

I think we all realise the next year or two will be challenging in franchising and throughout the business community. When markets lose confidence and are faced with a drop in demand, competition can become more aggressive and margins eroded. Businesses must adapt.

The FCA will be tailoring the topics of our events and round table calendars to reflect the changing needs of our members and guests. 

Just recently Alan Oster, Group Chief Economist at the National Australia Bank spoke at our Victorian Chapter breakfast on what’s in store for 2009 – a timely topic and an experienced and insightful speaker to say the least. Alan spoke about the world economic drivers, key economies, and drilled down into how these, coupled with local factors, influence our economic future. For those of you who missed out – it was an enlightening experience. Make sure to visit our newly re-vamped website – www.franchise.org.au – to see what other events might interest you.

The 2009 MYOB Excellence in Franchising Awards will be kicking off shortly too. Last year we received a record number of entries into the Awards, so to all franchisors, franchisees and suppliers - keep an eye out for entry promotions or contact the FCA on 1300 669 030 for further information.

Finally a reminder that the 2009 National Franchise Convention will be held at Burswood Casino in Perth WA this year from 19th to 21st of October and is shaping up to – again – be the number one event on the franchising calendar …and a great opportunity to visit a beautiful part of the world.