Hot Topics: Behind the Headlines

Jason Gehrke, Franchise Advisory Centre

RE/MAX Australia acquires WA network

Real estate brand RE/MAX Australia has acquired its West Australian RE/MAX master franchise to bring the national group under single ownership, according to a company announcement.

Domino’s hiring 2,000 more workers

Pizza chain Domino’s has announced it is hiring 2,000 more workers nationally to boost its pickup and delivery capacity as Australians self-isolate during the corona crisis, according to a media report.

McDonald’s to offer drive-through bread and milk

McDonald’s Australia has announced it will offer bread and milk grocery staples in addition to its usual menu items via its drivethroughs as part of its commitment to support the community during the coronavirus lockdown, according to a media report.

Delivery platforms offer assistance to food businesses

Food delivery platforms such as Uber Eats, Deliveroo, MenuLog and DoorDash are offering assistance to their restaurant partners who are no able to offer dine-in options, according to a media report.

Assistance offered by the platforms includes suspending or reducing fees charged on pickup orders, no joining costs for new restaurant partners, increased promotions, faster settlements to improve restaurant cashflow and reduced commissions.

Subway follows US parent to offer fee relief to Australian franchisees

Sandwich chain Subway Australia has announced it is waiving all marketing fees and collecting only half the royalty fees owed and deferring the remainder until the crisis is over to support its franchisees, according to a media report.

Subway has also been actively negotiating on behalf of franchisees with lenders, landlords, and suppliers as part of a strategy to ease immediate financial pressures. The strategy mirrors that recently implemented by its US parent, which reduced royalty payments for franchisees, suspended advertising funds for four weeks and offered rent abatement, reduction, or deferral.

Meanwhile, the company has also donated more than 17 tonnes of produce from its New Zealand stores impacted by the nation’s lockdown to food charity Kiwi Harvest to support local communities.

Six-month pause for small business loan repayments

Australian banks have announced a relief package for Australian small businesses which will allow borrowers to pause the repayment of their business loans for up to six months.

The industry-led initiative announced by the Australian Banking Association will apply to approximately $100 billion in existing small business loans and provide some relief for fixed costs impacting businesses forced to scale back or close due to the corona crisis. Business customers will need to apply to their banks to defer their repayments, with banks committed to offering fast-track approvals.

Free weekly Survival of the Fittest webinars for franchise leaders

A recent series of five free webinars in five days for Australian and New Zealand franchise leaders has been so popular that the webinars will continue weekly going forwards.

More than 160 people participated in the webinars hosted by Franchise Advisory Centre director Jason Gehrke on a variety of topics to inform and support franchise brands as they manage social distancing, network-wide closures and other pandemic problems.

The webinars will continue each Wednesday from 11 am-12noon AEST with topics and information to help franchise brands survive the coronavirus crisis. For more information, and to register, visit www.franchiseadvice. com.au/survival-of-the-fittest.

Unemployment could reach 15 per cent

Australia’s unemployment rate could reach 15 per cent, or more than two million people out of work as a result of the coronavirus pandemic, according to a media report.

Job losses are occurring across all industries, and one senior economist has warned that the long-term effects on the mental health and confidence of unemployed workers may create additional challenges for an economic recovery.

A separate economic analysis has indicated that one million Australians will be out of work by November, with unemployment peaking in May 2021.

Honda terminates dealers in Australian market restructure

Auto franchisor Honda has terminated a number of dealers in Australia this week as part of a national restructure. However, dealers are concerned that the move signals plans to exit the market altogether following Holden’s decision to exit the Australian market according to a media report.

The termination of the long-standing dealers prepares the company to introduce a new distribution model that will cut dealers out of the sales process, according to the report. Honda has denied it is planning to exit the Australian market and says it intends to maintain a similar number of sites, but with fewer owners.

Holden dealers prepare to sue GM for closures

Holden’s national network of 185 dealers are reportedly threatening to sue US-based parent company General Motors for alleged deceptive and unconscionable conduct prior to the company’s announcement it would exit the Australian market, according to a media report.

Compensation offers made to Australian dealers by General Motors have been described as “grossly inadequate” and are nearly half of what is being offered to New Zealand dealers. Forensic accountants calculated that dealers are owed approximately $6,100 per car sold over a nominated period, which is considerably less than the average $1,500 per car sold being offered by GM.

Former Caltex bidder buys food chain

British convenience and fuel retailer EG Group, who last month unsuccessfully bid $3.9 billion cash plus shares for fuel retailer Caltex, has entered into a scheme implementation deed with Australian healthy fast-food alternative franchise, Oliver’s Real Food, offering $27 million for a 100 per cent stake in the company, according to a media report.

QLD couple’s world-first fast-food wedding

The world’s first KFC wedding has taken place in Toowoomba, Queensland, with the chicken chain’s official wedding service providing the couple, who won a competition to be married by The Colonel, with personalised KFC buckets, a KFC-themed cake, and a KFC Food Truck for the event, according to a social media report.

Private equity buys majority stake in Total Tools

Private equity firm Quadrant has acquired a majority stake in Australian trade tool retailer Total Tools, according to a media report.

Total Tools was established 30 years ago as a cooperative and has operated as a franchise since 2010, turning over more than $500 million per year and employing more than 1,000 people across its 81 stores nationally. Quadrant reportedly will move toward a blended company-owned model and buy back some franchise sites.

US firm buys Australian HR franchise

US employment agency Express Employment Professionals has purchased Australian human resources company Frontline Recruitment Group, according to a media report.

Frontline currently operates as a fullyfranchised entity with three locations in

New Zealand and 31 locations in Australia. Frontline franchisees will continue to operate under the Frontline brand and will retain ownership of their individual offices. Express will also expand and market its temporary staffing franchise across Australia and New Zealand.

Two-thirds of new business owners are female

Analysis of Australian Bureau of Statistics’ data indicates that small business ownership has risen to more than 2.2 million, up from 700,000 in 1991, with 66 per cent of new businesses created over the last decade founded by women, according to a media report.

New auto dealership Code preempts Franchising Code changes

The release of draft regulations for new vehicle dealerships will create an industryspecific schedule, or sub-code, to be added to the Franchising Code of Conduct that sets a precedent for other industry codes to be added.

The draft New Vehicle Dealership Agreements Regulation 2019 proposes that car manufacturers must provide at least 12 months notice of their intention to renew or not renew a dealership agreement (compared to a current requirement in the Franchising Code for six months notice) and that reasons for non-renewal must be given. The draft regulations also require manufacturers to provide more specific disclosure information in regards to any capital expenditure to be undertaken by a dealership, with the capital expenditure requirement itself possibly being limited by the Code.

The draft regulations were released following consultation with industry stakeholders in early February, and consideration of issues put to the 2018 inquiry into the Franchising Code of Conduct. Consultation on the draft regulations closes on March 13.

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