The Social Responsibility Issue

FRANCHISE

Issue 33 Edition One 2013

Official Journal of the Franchise Council of Australia

FRANCHISEREVIEW

Russell Jenkins on keeping it local Bendigo Bank Page 22 The Social Responsibility Issue

INSIDE

Page 6 Federal Small Business Minister talks Code review Page 8 NAB - The outlook for 2013 Page 14 An inside look at the IFA Convention: Australian franchise systems among world’s best practice 1 NEW ORGANISER Now even

bigger! N

O U I R T N C

A A M TO BITION IN

If you want to start your own business then come to the Franchising & Business Opportunities Expo. Sydney 14-16 June 2013 Meet over 100 exhibitors, attend Brisbane 20-21 July 2013 ENDORSED BY free seminars and talk to experts. Melbourne 30 Aug - 1 Sep 2013 Turn ambition into action!

FRW-FP.indd 1 19/02/13 2:41 PM FRANCHISE

The Social Responsibility Issue Franchise Review is published four times per year by the Russell Jenkins on keeping Franchise Council of Australia (FCA) inside Cover story: it local Bendigo Bank Publisher FRANCHISEREVIEW The Franchise Council of Australia NAB 2013 Economic Outlook Design and layout 22 at+m integrated marketing Studio Manager Eddie Mallinson Social Responsibility Editorial content and in 2013 Advertising Sales enquiries Stephanie Wells, Where is your focus? Franchise Council of Australia 16 T 1300 669 030 8 F +61 (0) 3 9508 0899 E [email protected] Franchise Council of Australia ABN 17 002 789 988 PO Box 2195 Malvern East VIC 3145 T 1300 669 030 28 The benefits of giving F + 61 (0) 3 9508 0899 E [email protected] with no strings attached W www.franchise.org.au General information All material is published at the discretion of the FCA. Advertisements are published and positioned in the journal at the discretion of the editors. Editorial contributions, advertising bookings and artwork deadline information is available by 30 contacting the FCA on 1300 669 030. Why CSR and Social 18 Disclaimer The publication of articles is for Media belong together Social Responsibility: the purpose of promoting matters of interest to members of the FCA. The views expressed Why gather kindling when in this journal do not necessarily reflect the GEN Y - you can fuel a fire? views or policies of the FCA. Publication of A new breed of franchisee? advertisements for products or services do not indicate endorsement by the FCA. Franchising represents successful small business 4 32 Government awaiting independent franchising review 6 New organiser for Franchising Expo 12 IFA 2013 Australian franchising among world’s best 14 NAB FCA Excellence in Franchising Awards 2013 26 The Social Franchise: How franchising can improve social outcomes without philanthropy 34 I’ve done marketing and it doesn’t work 36

3 Franchising represents The Simplest & Most Comprehensive successful small business Online Accounting Software

FCA Chairman, Michael Paul For SME’s and Franchise Networks

However, despite the current impressive (to curb the excesses of major shopping growth, there is an underlying concern among centres) and promoting the introduction of a FCA members about where the nation is Small Business Act (to improve small business heading with costs, productivity and finance access to finance and government contracts). access for small business relative to other However, it will become even more markets in the world, and the potential Proudly owned, operated & 100% securely important for the FCA in the future to work • constraints these things will place on future hosted in Australia collaboratively with government to influence long-term small business growth. good policy for small business growth, Further, there is a frustration that political with our most important message being • Enjoy the freedom of accessing your accounts leaders express the importance and the need for rigorous and good process in from your laptop or iPad, anywhere, anytime commitment to small business growth to making legislative decisions. Commitment to our economy, yet tend to focus energies and regulation by political leaders through media

Michael Paul, FCAChairman resources in areas that will have little, zero or announcements and regulation making in • For small businesses that require the minimum even negative impact on growth. This includes the absence of thorough discussion with to run their business through to complex for some, a preoccupation in increasing stakeholders, analysis and debate is simply As the peak body that represents franchisors, businesses requiring flexible payroll, online regulation and compliance costs to franchise not good process. We know only too well that franchisees and franchise service providers, networks with no empirical evidence to justify these shortcomings will manifest themselves timesheets, job costings, divisional reporting, the Franchise Council of Australia (FCA) is such actions. into poor regulation, with a permanent cost to inventory, debtor management & more totally committed to developing a strong the small business economy. and financially viable sector. We continually To ensure our ongoing commitment to a strong measure our performance to ensure the and financially viable franchise sector, it will In contrast, the FCA develops policy positions Increase business efficiency while saving be important that the FCA takes a broad, non- based on rigorous research, international • activities we undertake (education, events, best time & money through central performance practice standards, government lobbying) are sectoral view of the issues facing small business best practice standards, long term vision and reporting tailored for your network continually making a contribution towards a and lead informed national discussion on what tapping into the vast on-the-ground experience healthy growing sector. are the key issues. of members who operate across all business sectors throughout the Australian economy. Give your bookkeeper and accountant access From that perspective, it is pleasing to note that Franchise networks are a major contributor • two separate market research reports that were to the economy with a $131 billion turnover, The franchise sector not only represents to real time data, remotely published in 2012 (by PricewaterhouseCoopers achieving growth rates that outperform the franchising, but it represents successful and Griffith University) highlighted a franchise broader small business market. The leaders of small business. As small business leaders, sector that continues to show strong growth Australian franchise systems are highly skilled the use of our knowledge and expertise is in challenging economic conditions. These men and women who generate national wealth, very important to ensuring Australian small results show that the sector is well-managed create jobs and through innovation ensure business has an environment that enables it Visit us at www.shoebooks.com.au/franchises overall and certainly back up the premise that Australia keeps up with rapid, ongoing change. to thrive in what is becoming a vastly different as a method of doing business, franchising is They operate across every business sector competitive world. fr Or call TODAY for a FREE consultation on 1300 882 428 definitely the optimum small business model. in different parts of Australia (capital cities, regional and rural centres) and internationally. The strong growth also highlights that leaders All of this gives the FCA a remarkably broad “These results show that of franchise systems have a strong eye on the overview of the economic circumstances for future. The PricewaterhouseCoopers report small business today and in the future. the sector is well-managed identified that a key reason franchise systems overall and certainly back up achieved strong growth in difficult times The FCA has actively lobbied to government was that they had a robust strategy taking to improve the business environment for small the premise that as a method into account the impact of an ever-changing business generally, notably championing the of doing business, franchising business and socioeconomic environment. initiatives of the Retail Leasing Code of Conduct is definitely the optimum small business model. ”

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5 Policy and Regulation Government awaiting independent franchising review to fine tune industry practice

The Hon Chris Bowen, MP Minister for Small Business

The 2010 amendments mainly dealt with “I understand a number end-of-term arrangements, disclosure of additional information by franchisors, of submissions were behaviour by franchisors and franchisees in received which will the dispute resolution process, and good faith. Additional enforcement tools for the Australian

ensure the review is Competition and Consumer Commission were well-placed to take into introduced in 2010, including the introduction of a power to audit franchisors to check that account the opinions of they are complying with the Franchising Code.

all those operating in the It’s important that we get the balance right, which is why there has been an extensive The Hon Chris Bowen, Minister for Small Business franchising sector. ” consultation process for the current review. During the consultation period, Mr Wein The Federal Government has announced a As the incoming Minister for Small Business, called on franchisees and franchisors, industry review of the Franchising Code of Conduct I want to acknowledge the passion and stakeholders and other interested parties in order to tackle these complex issues. The enthusiasm of Australia’s franchisors and to make their views known. I understand a review is being conducted by Mr Alan Wein, franchisees. number of submissions were received which who has extensive experience in the sector as will ensure the review is well-placed to take Franchising provides many Australians a former franchisor, commercial lawyer and into account the opinions of all those operating with an opportunity to fulfil their dream of mediator. in the franchising sector. running their own business and makes a vital The review’s primary purpose is to examine contribution to our economy, with around Mr Wein is due to report to government in the effectiveness of the 2008 and 2010 73,000 businesses, an annual turnover of April 2013 and I look forward to receiving amendments to the Franchising Code, as more than $130 billion and more than 400,000 his report. Further information about the well as look at issues identified as being of workers. review, including details of the 2008 and 2010 importance to the sector. These include good amendments to the Code, the discussion paper Franchisors and franchisees have a unique faith, end of term arrangements for franchisees, and the terms of reference, is available from business relationship, as a franchisor’s success and enforcement of the Franchising Code. www.innovation.gov.au/SmallBusiness/ is heavily dependent on the success of its Amendments to the Franchising Code, which CodesOfConduct. franchisees and vice versa. This, and the took effect on 1 March 2008, were designed potential difference in the bargaining power of In recognition of the importance of small primarily to promote disclosure between franchisors and franchisees, has led to a lively business to our economy, the government franchisors and current or prospective debate about regulation of the sector. has also implemented a number of measures franchisees, and to increase the transparency, to assist franchisors, franchisees and small quality and timeliness of disclosure by businesses more generally. franchisors.

Issue 33 Edition One 2013 “...as the new Minister for Small Business, I am acutely aware of and interested in the issues you and your businesses face. I plan to be active in helping the franchising sector go from strength to strength. ”

We’ve introduced a number of programs For further information and advice to assist We have also ensured that the Minister for Small and reforms aimed at increasing cash flow, in planning, starting, growing and closing a Business is a Cabinet role, so that the voices of providing easier access to information and business, I suggest you visit small businesses across Australia can be heard at reducing red tape. www.business.gov.au the highest level of government.

The government has established the Small The website is a free service and provides Finally, I want to make it clear to franchisees and Business Support Line to provide small information, tools and resources to assist small franchisors that as the new Minister for Small businesses with initial advice and referral business. A new Business Finances section is Business, I am acutely aware of and interested in services on matters such as obtaining finance, also available on the website, which includes the issues you and your businesses face. I plan cash flow management, retail leasing, practical information on managing and to be active in helping the franchising sector go promotion and marketing, and hardship seeking finance. The website was developed in from strength to strength. fr counselling. The Support Line can be accessed conjunction with business and finance experts. by phoning 1800 777 275 between 8am and Editor’s note: At the time of publishing, Minister This government’s commitment to small Bowen resigned from the Small Business Portfolio 8pm weekdays or by emailing business is reflected by our introduction of and Cabinet. He has been replaced by Gary Gray, [email protected] Member for Brand Western Australia. Franchise Australia’s first Small Business Commissioner. Review will keep you updated with changes to the Small Business Portfolio.

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7 Finance NAB 2013 Australian Economic Outlook

It’s important to understand that the world is changing rapidly. China and India are now the world’s second and third largest economies and together represent 40 per cent of the world’s population. The GFC and the rise of China and India are transforming the Australian economy through the growth of mining and the strength of the Australian dollar.

Our dollar has been high largely because of the

idea that the Australian economy gave access to the Chinese boom without exposure to the risks involved in direct investment in China. The high Alan Oster, Oster, Alan Group Chief Economist, NAB dollar has been a key mechanism forcing labour and capital out of manufacturing and related sectors and into mining and infrastructure. Gyrations in financial and While we expect the Australian dollar to commodities markets, depreciate over the next year or two, reflecting a general strengthening in the major advanced fluctuations in the world’s economies and a softening in commodities biggest economies and prices as more supply becomes available, the prospects for Australian dollar is likely to remain high relative to history. interest rates and the The structural shift in the dollar’s value needs to be considered by Australian businesses – exchange rate are just a few particularly those that are trade exposed – of the key issues affecting the in order for them to remain competitive. Australian economy. What are the big questions for the economy in 2013?

“Financial markets have lifted, consistent with improved confidence about the outlook for global growth. The turnaround in sentiment has been assisted by the temporary avoidance of the US ‘fiscal cliff’, an improved outlook for the Chinese economy and central bank action in the Euro-zone, US and Japan, which has boosted market hopes of sustained growth through 2013. ”

Issue 33 Edition One 2013 Mining investment seems likely to peak in With the Australian economy in a soft patch, we 2013/14 and we expect to see export volumes believe there is still room for the RBA to provide “With the Australian increase as projects become operational. But further stimulus to interest rate sensitive sectors economy in a soft patch, the Australian economy is expected to slow in of the economy via the cash rate. Despite the 2013 as the high dollar weighs on manufacturers myriad of rate cuts provided since late 2011, we believe there is still and the tourism sector, retailers and wholesalers there is still little indication that previous cash room for the RBA to provide struggle with continued soft consumer rate reductions have provided a material boost spending and governments continue to restrain to domestic demand. Given the downward further stimulus to interest spending. Consistent with this, we see upside demand and price pressures business now face, rate sensitive sectors of the risk to the unemployment rate over 2013, largely and combined with a soft outlook for inflation reflecting frictional employment changes from and a rising unemployment rate, we see the economy via the cash rate. an economy undergoing a continued process of need for additional cuts over 2013, with the final ” structural change. resting point at 2¼ per cent. Austerity programs and high levels of public debt in Europe and political infighting about The unemployment rate may reach 5¾ per Financial markets have lifted, consistent with fiscal policy in the US are likely to keep markets cent by mid-2013 and then drift higher as the improved confidence about the outlook for anxious. A major risk for Australia is the outlook mining investment phase slows and the capital global growth. The turnaround in sentiment has for China, which seems to be improving. intensive exports phase begins. been assisted by the temporary avoidance of However, economic reforms will be needed if the US ‘fiscal cliff’, an improved outlook for the Monetary and fiscal policy settings depend on China is to continue its journey to the first world. Chinese economy and central bank action in the the outlook for inflation, making it an important Euro-zone, US and Japan, which has boosted Much will depend on the new Chinese leaders, area of consideration when thinking about the market hopes of sustained growth through 2013. many of whom will retire over the next few future path for growth. years. Australia’s economic fortunes are still These developments have been particularly Inflationary pressures appear quite subdued more closely aligned with those of China than supportive for equity markets, with share prices at present, and with the outlook for demand at any time in the past. fr lifting by more than 10 per cent from their quite soft, we don’t think inflation will provide mid-November lows in the major developed a barrier to further RBA rate cuts over the year economies, with the Australian market gaining ahead. We see underlying inflation remaining by a similar amount. within the RBA’s target over the medium to longer term, with restrained consumer However, the question of whether the run up in spending, deteriorating labour market equity prices is sustainable remains unanswered, conditions, soft public sector demand and a as does the question of whether prices will snap still high Australian dollar likely to keep price back like an elastic band on signs of faltering pressures contained. Core inflation is expected activity. While much of the recent run up in prices to edge up to 2.6 per cent by late 2013, before may reflect a return to fundamentals, as we see it, lifting a touch to 2.8 per cent by late 2014. financial markets will probably remain unstable for a long time.

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Over 100 of Australia’s largest Franchise and Retail Brands “Since implementing the World Manager ® platform in 2009 we can ® ® are in the World Manager community. World Manager consistently ‘speak’ to our network of more than 2,000 team members, is officially the most awarded and recognised platform in 200 locations across the country, using innovative and inspiring in Australia winning 24 industry awards for advancements communication tools like notice boards, forums, image galleries and in technology, human resources and training. surveys. We have found these tools to improve efficiencies, increase involvement in internal communications, and promote team-based The platform is being used by over 20,000 business events and sharing of business successes.” locations in 51 countries. In early 2012 World Manager® launched over $1.4 million in new upgrades and created Bruce Myer, ground breaking online operations, HR, training and CEO, Lenard’s Pty Ltd communications tools. World Manager® Brands now have Operations teams using tablets on location to complete all Contact our Business Concierge Team on (02) 8007 7095 previous, paper-based reports. or email [email protected]

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Traineeship Tracker The Traineeship tracker allows RTO partner, Franklyn Scholar, to report on eligible trainees and deliver qualifications from within your World Manager® Platform. Issue 33 Edition One 2013 future landscapes NFC13

limited time only Early bird sponsorship and exhibition at National Franchise Convention

Participating as a sponsor and exhibitor of FCA gave Following on from the success of NFC12, the National Franchise Convention in 2013 us an opportunity to interact with various suppliers promises to be our best yet. This year’s event will be held at Jupiters Hotel and and members we would otherwise probably not have met. Being part of the conference gave us greater Casino on the Gold Coast from Sunday 20 October to Tuesday 22 October. understanding of the industry and how we can help with marketing franchisor’s businesses. I would Already confirmed for NFC13, The Franchise Council of Australia is proud to welcome recommend being an exhibitor. Hunter Leonard, PayPal, NAB, Foodco, Battery World, Ignite PR, National Fleet Australia, Minit Managing Director Rapid Marketing Commercial and Service Skills Australia on board as sponsors for Australia’s premier Systems franchising event.

Attendance at the National Franchise Convention Sponsorship of the National Franchise Convention allows you to showcase your 2012 exceeded our expectations. The engagement brand to franchisors, CEOs and key decision makers in the franchising sector from from the delegates was great and the ability to network and meet some of the most entrepreneurial around the country. If you confirm your sponsorship or exhibition booth before people in Australia was well worth it. Aon are proud to be the FCA’s insurance partner and we look forward Monday 15 April you will secure a 5% discount on the total cost of your package. to NFC 2013. Some of the premium sponsorships have already been sold. Chris Ristevski, Sales Manager Aon Risk Services Australia Ltd To place your business in front of the best of the best in franchising this October, contact Angie Cooksey on (03) 9508 0811 or email Partnering with the FCA and associating ourselves with their message has allowed us to establish [email protected] or download the prospectus. ourselves as an active, committed member and participant in the sector and the thought leader in franchise banking. The opportunities this kind of close contact created with such a large sector have proven to be invaluable and this single partnership has provided us with numerous relationships with individual systems and suppliers that continues to grow from strength to strength.

Darryn McAuliffe, National Manager Franchise Banking, Specialised Services National Australia Bank Events New organiser for Franchising Expo

Fiona Stacey, Stacey, Fiona Exhibition Manager, Specialised Events

The Franchising & Business Opportunities Expo has new owners, and they are promising to return the event to its rightful place as the She adds, “The franchising model has improved pre-eminent showcase for franchisors, service over the years and the industry is much larger suppliers and potential franchisees. than a decade ago. I think the shows are The new owner is Specialised Events, a dynamic more relevant than ever, and look forward to exhibition company that specialise in business introducing some new ideas that will make events including the popular Foodservice them even better.” Australia show. They have acquired the expo Kym De Britt from the Franchise Council of from Diversified Exhibitions, who launched it Australia says the association is delighted back in 1987. that the shows have a new organiser with the Managing Director, Tim Collett, says the show passion and experience to take them to the is a perfect fit with the Specialised Events next level. He says, “We have been closely portfolio. He says, “The shows are still in great involved in the handover and are confident this shape, but we look forward to adding a new is the right move for the industry.” level of energy and innovation that will deliver Fiona says she has been working closely with more business for exhibitors and information the Franchising Council and Diversified to for visitors.” ensure a smooth handover. She says, “Everyone In a popular move the company has appointed has been really supportive and focused on Fiona Stacey as Exhibition Manager. Fiona ran a positive outcome. The show has a proud the show from 1993 to 2005 and will be well history and nobody wants to lose that.” known to many in the franchising community. For more information contact Fiona Stacey She says she is looking forward to being at Specialised Events on 03 9999 5464 or involved again. visit the show website at Fiona says, “These events are the perfect www.franchisingexpo.com.au place to showcase all the different franchising options available. I just love seeing the excitement of people’s faces when they discover a new business opportunity, or an exhibitor finds a new franchisee.”

Issue 33 Edition One 2013 “...we look forward to adding a new level of energy and innovation that will deliver more New organiser business for exhibitors and for Franchising information for visitors. ” Expo

Dates for your diary Sydney Franchising Expo 14 -16 June 2013

Brisbane Franchising Expo 20 - 21 July 2013

Melbourne Franchising Expo 30 August - 1 September 2013

The Perth Expo will return in 2014. fr

13 IFA WRAP

This year in cooperation with IFA, the Franchise Council of Australia hosted the first US Franchisor Study Tour. A member’s The itinerary included site visits to some of the US’ most well respected franchise systems including Jani-King, FASTSIGNS, and Radio Shack. The view of the tour started in Las Vegas immediately following the IFA Convention, and covered Waco and Dallas in Texas, finishing with an invite only shopping IFA Convention showcase at eBay and PayPal in California. Details of next year’s Study Australian franchise Tour will be announced at NFC13. systems world’s best practice

What were your general impressions of IFA One thing to consider about conferences like this year? the IFA, which one of the speakers said and I agree with, is it’s all about what you do with the The very first thing you notice about the IFA information you take away from the conference is just the sheer size of it – there were about once you get back to work. That’s how you get 3,500 people, of which only about 20 were the benefit out of it – putting it all into practice. Australians. Any stand out speakers at the convention? I was immediately struck by the vast amount

of franchise systems I just hadn’t heard Condoleezza Rice was very impressive. She told of – it really does make you realise how big us about her inspiring journey to become the franchising is in the United States. 66th Secretary of State of the United States.

There are probably more franchise systems in Condoleezza was the second woman and first

Michael Renwick, Michael Homes Hotondo Director, Managing Atlanta alone compared with Australia and it’s African-American woman to hold the post. She now somewhere I would really like to visit. spoke about her experience with global affairs, national security and education. It was just What I do love about the IFA is that it is one of Hotondo Homes Managing Director Michael fantastic to be in her company. Renwick traveled to Las Vegas in February as those places where out of nowhere you might For me it was more about standout topics that part of the Franchise Council of Australia’s get a comment or a statement that is just brilliant; I could take away from the convention to help (FCA) Australian delegation to the International and more often than not it is simply how to do improve the Hotondo Homes franchise rather Franchise Association (IFA) annual convention. something better in your franchise system. than standout speakers. Here he gives his impressions of the 2013 event, In order to get those little gems, though, you From a purely business perspective, the topics offers up some of the highlights from his third need to be strong in your networking. This, for that resonated with me were those of strategic visit to the IFA and tells us about the FCA’s me, is where you get the best interaction at planning and benchmarking techniques, which inaugural franchisor study tour. conferences. were very valuable and I will incorporate a lot of these ideas into the franchise.

“One thing to consider about conferences like the IFA, is it’s all about what you do with the information you take away from the conference once you get back to work. That’s how you get the benefit out of it – putting it all into practice. ”

Issue 33 Edition One 2013 There were also some great discussions Are there any fundamental differences I had the advantage of meeting with some about the way in which digital innovation is between Australian and US franchising? very big franchisors; and they were all just ever evolving. I heard about future trends in normal people. Being in America you get a sense of how well technology - particularly in retailing – that are Australian franchises are run. Some of the Something that really stood out was that becoming more and more sophisticated. people in our systems are definitely world’s people in American franchising tend to be very What are the benefits of IFA if you’re looking best practice. specialised in their work, while in Australia to expand internationally? most franchisors are generalists. It’s incredible; Australia really punches If you’re thinking of expanding internationally, above its weight. It’s the same with the New We got to visit eBay and PayPal as well, which the IFA is a no-brainer. Those of us lucky Zealanders. It’s the people that make the was just incredible. I’d recommend the tour for enough to be in the FCA group had a great difference. We have seriously got the talent and others next year, for sure. introduction to the US – however there well run systems here. are some serious considerations around **Hotondo Homes has been building franchising in America. Other than the travel Another thing you notice within American affordable homes for individuals and families costs and establishment fees, there are franchising is the enormity of it all. I met a since 1979. The family business is dedicated to quality, service and the local communities different laws in many of the individual states. franchisee from Texas with 280 franchises. we work in. With over 85 franchisees Hotondo There is something like 13 states with their own Impressions of the FCA franchisor study tour? Homes is one of Australia’s largest building laws, which you would want to try and avoid networks. I was very lucky to have been on the tour. – California is one of those, apparently its laws It was incredible the way the people we met are a bit bizarre around franchising. with were so honest and welcoming.

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15 Vox Pop Social Responsibility in 2013 Where is your focus? The Franchise Review caught up with a few FCA members to hear about their plans for the coming year. Overwhelmingly, the focus is on grass roots community engagement and support.

Why is this cause close to Mrs Fields’ heart? What is your franchise passionate about when it comes to social responsibility? We don’t have a foundation as such, but we are a big believer in giving back to the local At our core, is a passion to be ‘local’ and community. We’ve started letting local stores integrate into [not impose on] the local pick three charities they want to donate money communities we call home. We want to be to, with something like 10c from each coffee recognised as a valuable member of the purchased. The customer can choose which community that really is concerned with cause they want to donate to. It’s about letting supporting our area and the people in it. By the community decide. Obviously it’s not aspiring to be local, Grill’d have a responsibility across the board yet, but it’s something that to support local community and give back we’re looking into. where possible.

Andrew Benefield,Andrew Managing Mrs Director, Fields What are your goals for 2013? Which campaign have Grill’d concentrated on this year? We are aiming to repeat the cookie giveaway on a much smaller scale around Christmas time, Our ‘Local Matters’ campaign. It’s a pretty high Andrew Benefield and let our franchisees opt who they want to tech system involving bottle tops, jars and Managing Director, Mrs Fields donate the funds raised to. counting. Every time a customer buys a burger we’ll give them a token. Our customers decide How important is the local community to you? who they’d like us to support by choosing (It’s about) recognising that it’s a circle, and which jar to put their token in. At the end of without community, we wouldn’t have stores every month we’ll count up the tokens to figure to open or jobs to offer employees. It comes out who gets what - we’ll split the money $300- full circle, and it’s about giving back to the $100-$100 so everyone gets something. community that has given so much to us.” Why is this campaign close to Grill’d’s heart? What has been the most successful At Grill’d, we believe we’re unique. We want to campaign this year?

make a difference and we want to give back to The cookie giveaway has been the most the communities we call home. We want to be successful to date. $320,000-$330,000 worth known as that local healthy burger restaurant of cookies were given to various charities. One that does more for the local community than child sold his share of cookies at his school Simon Crowe, andCEO founder of Grill’d just serve some pretty delish burgers. Simply fate and donated the money to the wildlife put, we want to make burgers good and do foundation because that’s what he wanted to good. We think that Local Matters is a simple do with it. Simon Crowe way that we can give back to and support the CEO and founder of Grill’d communities that have been so good to us.

Issue 33 Edition One 2013 Which foundation has been close to Kumon’s “We want each of our heart this year? students to have a We heavily promoted, and became partners wide exposure to books, in the ‘National Year of Reading’ campaign, aiming to educate families on the benefits of to read often and reading together for as little as 10 minutes a widely and to be avid day. Technology brings information to one’s fingertips like never before but if children are Social Responsibility readers for life. no longer curious, or cannot problem solve ” or read, comprehend and summarise then their independence, their opinions and their It really is a matter of locals supporting capacity to live productively is compromised. Where is your focus? Menagh,Allan Deputy General Manager of Kumon Australia and New Zealand in 2013 locals and also being able to make a positive So what can we expect from these market contribution to the community we are a part of. leaders in terms of social responsibility this year?

We’ve also found that Local Matters is a great Allan Menagh This year will see robust campaigning for way to discover those smaller, lesser known Deputy General Manager of further literacy development of young people groups who do some amazing and often Kumon Australia and New Zealand across the country. Apart from continuing our selfless work for their local area, but who are partnership in the Reading Hour, this year we often anonymous to the community they are Can you tell us about your foundation? will be hosting the Kumon Reading Month What drives it? supporting. It’s really rewarding to be able to across Centres. We want each of our students not only financially give back to these groups, Our belief is that guided self-learning and to have a wide exposure to books, to read but also generate awareness of the great work practice by oneself by children allows for often and widely and to be avid readers for life. they do to our customers (their neighbours!). greater learning. Children have more potential A perfect example of self-learning ability which What do Grill’d have planned for 2013? than we give them credit for so we created all Australians understand. fr worksheets, an instruction method and centres We hope to maintain a focus for Local Matters to prove it across 47 countries. for 2013, (continuing) to support truly ‘local’ groups and causes. In the coming year we want What does social responsibility mean to you? to uncover and connect with even more local Our franchisees are committed to developing groups that need a little helping hand. confident learners. In this way, our children develop into great thinkers, voracious knowledge-seekers, and keen contributors to society.

17 Social Responsibility Why gather kindling when you can fuel a fire? Ian Johnson, Marketing Manager, STREAT The system you’ve worked so hard to build is achieving success and you want to start giving back. Your business may not need its own foundation. Social enterprise is alive and well in Australia – and your franchise can get involved.

Getting a franchise off the ground takes a A social revolution It was about eating great food and having monumental amount of work. There are legal, a great coffee – this is Melbourne after all. The Victorian Chapter Committee hosted financial, and operational requirements that Rebecca did however encourage us to exercise; Rebecca Scott, co-founder and CEO of STREAT can just about take over your life. And that’s exercise our choice to buy a coffee or meal that at their annual Christmas Breakfast in 2012. before you start searching for franchisees. not only tastes good – but does good. It is not very often you get Trotsky quoted Once you’ve finally recruited key franchisees That’s STREAT’s mission. Their cafes offer you to you at 7 in the morning. The quote was to help build your business, you’ve only just that choice, because the food is good and all something like “society is only ever three meals begun. Then comes further territory planning, the profits and benefits go to help train and away from revolution”. I was not sure whether training, technology upgrades… the list never support young homeless people. that meant the lack of those meals would cause actually ends. a revolt, or that in just three meals with your As Rebecca said, “STREAT’s customers are So how do you make time to give back? Where military mates you could cook up a coup. happily eating away at youth homelessness – do you start? How do you ensure you’re having one delicious mouthful at a time”. As it turns out, the Trotsky quote was spot on. a positive social impact? For some, starting a Rebecca has started a bit of a revolution herself Making these healthy choices will, in the long foundation from scratch is the way to go. For and it is all around eating. Fortunately the run, improve our health, the health of our others, there may be an alternative option. topic wasn’t about diets, weight-loss or sports young people, the health of our businesses and Ian Johnson from STREAT shared the following supplements. ultimately the health of our society. with Franchise Review.

Issue 33 Edition One 2013

STREAT graduate “Your business may not need its own foundation. Engaging with an organisation like STREAT will empower your staff, franchisees and customers to put their social responsibility commitments into action. ” Food for thought or time for action? Judging met a small homeless child of maybe 5 or 6, and by the queue to speak to Rebecca afterwards felt utter despair in not being able to help him many were on the action side. She said in any lasting way. The third meal was back recently “I was really buoyed by the response in Vietnam a couple of years later when she and especially grateful that people like David lunched at the KOTO cafe in Hanoi, a social Muffet from Franklyn Scholar and Peter enterprise providing homeless youth with Buckingham from Spectrum Analysis made training and futures in hospitality. After this generous commitments to help – and they third meal she determined to change careers have already followed through!” and threw herself headlong into the world of social enterprise. Rebecca spoke first of the three meals that changed her life, that started the STREAT The stories have stayed with me. Rebecca is a revolution. natural communicator. From just a few notes on a page came a bucket load of power points The first was in 1986 in Vanuatu where a young (not slides on a wall). I think we got a glimpse of girl gave Rebecca one of her dresses. It was half an up and coming leader and top CEO too – if of everything the girl owned. That generosity STREAT’s results and growth are anything to to a stranger was to become a life-changing go by. Two un-paid years of yakka, planning, moment. The next meal was during a motorbike building strategy and pitching for start-up funds. adventure in the Mekong in 2001 when Rebecca Rebecca Scott, Co-founder and CEO of STREAT, with their amazing cookbook, which helped raise the funds to build a Continued over page new cafe at Melbourne central

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19 While the current engagement with Franklyn Scholar is in “ What is STREAT? the conceptual stage, we are reviewing the conditions and There are over 100 million people procedures in offering VET education scholarships to Streat living and working on the world’s graduates that are under the employment of a FCA Member. streets, and 105,000 of those people ” are in our own Australian communities. STREAT is a not for profit social Then, from nothing in 2010, to now one of This is where STREAT needs the assistance enterprise that provides homeless Australia’s leading social enterprises, with three of supportive cafes and businesses. This and disengaged people aged 16-25 cafes, a coffee roasting business, 30 staff and ‘transition step’ is crucial in the young person’s years with a supported pathway from around $2 million in turnover. Hard yakka. The future. While the current engagement with the streets to careers in hospitality bigger impact though has been on the lives Franklyn Scholar is in the conceptual stage, we and other industries. The organisation of 60 young trainees, and that was the real joy are reviewing the conditions and procedures currently runs three cafes and a coffee you could hear in Rebecca’s voice. in offering VET education scholarships to Streat roasting business in Melbourne graduates that are under the employment of a where the young people receive Rebecca spoke about how we can consume, FCA Member. their social support, life skills and purchase and eat every day in a way that hospitality training. STREAT is almost makes a real difference – that changes lives. Your business may not need its own foundation half way to becoming fully sustainable Conscious consumerism, social enterprise, or charity. Engaging with an organisation like (i.e. generating all of its income needs ethical sourcing and scalable social business STREAT will empower your staff, franchisees through its businesses) and will expand models are part of Rebecca’s complex lexicon and customers to put their social responsibility into other cities/states once that and life. commitments into action. Less paperwork too! objective is achieved – in about 2015. But her vision is clear - to make it easy for us to Why not start by just visiting a STREAT café STREAT’s social support team works behave this way. That’s what STREAT offers its or their website www.streat.com.au extremely hard to find young people customers, offers each of us. Every single cup Every donation or purchase you make will who are willing and able to take on the of coffee, bag of coffee, every meal, cookbook, count. There’s a good maxim for life – make program, which leads to accredited or food service purchased from STREAT helps every purchase count. hospitality qualifications through the stop youth homelessness. When those single William Angliss Institute. Committing to sales become hundreds of thousands of meals By Ian Johnson, Marketing Manager, STREAT three or six months of training is a big and coffees – then many young lives can be challenge. Turning up on time every day, recovered. All we have to do is find a way to Members take action in good shape, ready for a class or a café trade with STREAT, they do the rest. Sweet. “I found Rebecca’s speech very motivating and shift is one of the biggest challenges for the trainees. It is also their biggest Rebecca’s talk wasn’t abstract. Homework had decided to make our Christmas donation to STREAT as an alternative to Christmas cards. We also offered achievement and the first key step in been done. Businesses, franchises, the market, our services pro-bono to assist in the analysis of rebuilding young lives. individuals, families – Rebecca’s examples future café sites and have already provided detailed showed how all can be part of the solution to demographics for specific locations in and around To date 60 young people have taken homelessness – or any social problem. Melbourne”. part in the program and helped STREAT serve its customers over Tasty Trucks, Mrs Fields, Bakers Delight, Peter Buckingham, Managing Director, 400,000 meals and coffees. Through Boost Juice, Grill’d and many more are doing Spectrum Analysis its businesses STREAT gives all these wonderful things – and have been for years. wonderful customers a tangible way Take it further though. What about taking on “I was pleasantly surprised by the humility Rebecca to help stop homelessness – through a graduate, or sponsoring a whole class, or brought to a cause that she believes in so passionately. every delicious mouthful. fr putting a STREAT product (coffee, sauce, spice, The way she thinks in bite size chunks really struck me, preserve) onto your shelves and into your and it challenged the business people in the room to think in the same manner. supply chain, or doing your own special edition If you would like more information on of STREAT’s amazing cookbook? Rebecca’s talk cut through and many of us went up and thanked her afterwards. Good to hear David STREAT and how you or your franchise As the young trainees approach graduation, Muffet from Franklyn Scholar offered scholarships to system can get involved, contact Ian at STREAT’s youth team start seeking suitable further train and assist the young people and STREAT”. [email protected] employment and education options and Peter Fiasco, General Manager, Franchise helping them get ready for that next step. Establishment, Quest Serviced Apartments.

Issue 33 Edition One 2013

Franchisor Interview Russell Jenkins on keeping it local Bendigo Bank had its beginnings Even though we were a smaller Victorian-based bank, we had all these regional communities as a building society in a Victorian approaching us asking if we’d like to set up gold rush town in the 1850s. a branch in their community. We saw an Today, it is a significant banking opportunity. There was no point trying to grow a business continuing to do the things the institution in Australia, a top 100 way they’d been done before. It was a matter

Russell Jenkins, Executive Customer Bendigo and Bank Community, ASX listed company and employs of working out how we could win the hearts 5,500 people. Bendigo Bank is and minds of those communities that were speaking with us. So we revisited the model. also a franchise business – with a At the time, technology was becoming In 1998 when we launched our first Community difference. more prevalent with ATMs and other ways Bank® branch we had 74 branches in our total of transacting. I guess our competitors were Franchise Review caught up with Russell network. To look at it now, we’ve got more than sitting there thinking, ‘we no longer want Jenkins, Executive Customer and Community, 500 branches, and we have 300 community to carry the cost of all that infrastructure.’ who’s been there since day one of the branches with franchises held by locally owned The community model was the point of company’s franchise story, to get the low down companies. difference. If all we did was put in another on the unique franchise model, the company’s When we went out with this model in 1998, the traditional branch, what would be the drive community focus, and plans for the future. whole world just went bang for us. We went of getting people to come and bank with us? What was the lay of the land prior to the from a Victorian-based institution to a truly A number of these communities, and I’m not launch of Community Bank®? national player. just talking regional, I’m also talking about suburban shopping strips, had three or four From 1994 to about 1997 there was a rash of Where did the idea for the Community Bank® bank closures that took place across Australia. model originate? local branches. One had closed, everyone had About a third of bank branches, both in moved their business on, and then the next We knew we had to come up with a different metropolitan and regional areas across the had closed. There was no point us opening model (to the big banks). The existing model country, were closed. There was enormous a traditional branch. We might get some wasn’t working. If that sounds like a big public outcry about essential services being business, but we wouldn’t change anything. statement, then why were a third of bank removed. That’s why we came up with the Community branches closing Australia wide? Bank® model.

Issue 33 Edition One 2013

Maldon Community Bank – School kids thankyou Kew Community Bank Branch opening February 2013

Why franchising? “That’s what a Community Bank® is. It’s a private franchise The way we originally developed the financials branch of Bendigo Bank, but that private franchise is was to build the model on the basis of a traditional private franchise to ensure it was owned by literally hundreds of shareholders, who have commercially viable for both franchisee bought in at a local level. and franchisor. There are actually only two ” franchisees in the whole network that operate this way, but there are more than 300 branches Those decisions are again made by the local Can you tell us a little bit about the Bendigo that run on the community model. Board, not Bendigo Bank. and Adelaide Bank merger?

The twist in the tail of our model was to really There are provisions in each franchise Over the years, we built our model by merging get ownership from the communities that agreement that set a limit on the amount that with a series of other building societies to build approached us. Rather than go with a single can be paid as dividends. The bulk of the profit an ever-expanding retail banking company. owner, why not get hundreds? We wanted to must go to community projects, because that’s That’s all well and fine, but with increasing make it attractive for people from across that what the model is all about. Even with those competition forever putting pressure on retail community to buy into the model as shareholders provisions in place, where 80 per cent of profit banking margins, as well as getting bigger you of a private franchise. That’s what a Community must go to community projects, at times we’re also need to diversify your earnings base. Bank® is. It’s a private franchise branch of Bendigo still seeing up to eight and ten per cent fully Bank, but that private franchise is owned by franked dividends. Where Adelaide Bank (pre-merger) differed literally hundreds of shareholders, who have What were some of the challenges in setting with us was that the main part of their business bought in at a local level. up the Community Bank® model? was in third party banking – mortgage origination, loan brokers and a very large It works incredibly well. Very rarely have we There were a number of challenges. Not least wealth business in margin lending. gone to a community – we don’t do it at all being, as a relatively small player, we were now – they come to us. Once the research and flying in the face of conventional wisdom Why that is so key strategically, was Bendigo feasibility has been covered, they then go as to what was taking place in the banking had a very strong retail banking model - that about raising capital. Typically, a community world in Australia at that time (1997-98). We was our great strength - and Adelaide had that will raise around $700k from local investors to had the major institutions and any number of great third party wealth model. get started. commentators saying it was no longer viable to So from our perspective you could see it was a Do your shareholders then earn dividends on operate in communities of the size we wanted good match, as we bought our retail strength their investment? to. We thought we could so long as there was and they bought their third party and wealth local buy-in. That was quite a radical concept Yes they do. Each franchise is set up as a public expertise to the table. It really diversified our at that time. company, they have their own Board of Directors business model, and that meant that we could and they actually determine where the profits Because banking is all about protecting funds continue to operate with the Bendigo retail are spent in terms of community projects. On and mitigating risk, we had challenges, even brand around retail banking, and use the top of that, dividends can, and are, allocated to internally, getting people to understand the Adelaide brand around third party origination. shareholders. model and get behind it.

Continued over page

23 CFA Research Bendigo Bank Youth Foundations launch

What determines where you locate the branches geographically? “For the past three years the Foundation, on behalf of its It’s primarily as demands call for it, but having funding partners, has been the largest provider of disaster said that, at this stage our preference is, where relief funding to the Red Cross in Australia – about a possible, to fill the gaps in the network. We have very broad coverage throughout Victoria, million bucks in all ” Queensland, and the south corner of Western Australia. South Australia is very strong, but Plan Big is an online engagement forum to put We’ve got a whole series of projects being there are clearly opportunities to expand our people with great ideas in touch with others funded through local communities donating network, in particular in parts of NSW. who can help them with funding and advice. to the foundation, other members of the At the end of the day it is about demand, but It’s an online meeting place created as a free community, individuals also put funds in, or in in Community Bank® you’re better off dealing resource to help community groups get their the case of a bush fire we have people nationally with a company that wants to develop a plans off the ground. To get a Community Bank putting funds in to support a particular project Community Bank®, rather than trying to sell brand up and running it can typically take led by the community branch structure. two or three years. Not every community can into an area. New South Wales is a key area of It’s a traditional corporate foundation, but it’s or wants to go through that sort of process. opportunity for us. been adapted to support the individual needs of Plan Big is an alternative form of support to Bendigo Bank was recognised with the the community involved. communities that aren’t in a position to raise Franchisor Social Responsibility of the Year award Lead On is one of our other programs, at last year’s Excellence in Franchising Awards. the capital for a branch. established in 1999. It’s basically getting young Take us through the different programs We also realised communities needed their people involved in business and community that Bendigo Bank have in place that run in own foundation for charitable purposes. But it conjunction with Community Bank®? based projects. The Lead On initiative is costs a bomb to set up and run a foundation, so something we’re exceedingly proud of. One of We’re a $50B business now. We employ 5,500 instead we created the Community Enterprise the things that we’re incredibly conscious of people. We’re a top 100 ASX listed company. Foundation in which each community can have when talking about community sustainability We’re getting to be a substantial size in its own account and share the costs of just is youth. It’s the greatest investment that we anyone’s terms. But not compared with our key one foundation. Our franchisees can channel all make. competitors. To go out and take them on in their gifting through the foundation for tax- terms of pricing, it’s still David Vs Goliath. We effectiveness. Lead On’s not about high achievers, it’s about knew we had to build on our point of difference engaging as many kids as possible in projects It was launched in 2005 and does everything – partnering with communities and grass roots that expose them to the way communities work. you would typically expect a corporate community engagement to become really It started life as a sort of branch model like mini foundation to do. For the past three years the relevant in those markets. Community Banks, but over time Lead On has Foundation, on behalf of its funding partners, taken on more of a central coordination role for So we developed a number of initiatives to has been the largest provider of disaster relief programs that our franchisees can plug into. Our engage and help people: funding to the Red Cross in Australia – about a other major program is probably Generation million bucks in all. Green. Like the name suggests, it runs environmental programs at a community level.

Issue 33 Edition One 2013 A classic example was Ban The Bulb where we engaged local groups like the SES to swap Russell on the 2012 WA Franchisee Community Service award winners, out old incandescent globes for new energy Bendigo Bank North Perth: ones. It was a classic win-win. The globes saved The thing about North Perth is that they epitomise so much of what this model is about. emissions and the carbon credits generated They were early pioneers, certainly in the Western Australian market, and one of the first were paid through to the community groups. branches that was launched there. They have now put more than a million dollars back into And finally, what are the plans for locally based projects. It’s a great example of the model and of the partnership. One of the Bendigo Bank in 2013? things that I like about North Perth is that they, over the years, have been great supporters of the Community Bank® model, and we have learnt a lot by working with them. We have We’re looking to continue the development developed a great relationship. fr of the Community Bank® model. This financial year has been one of the slower years in terms of branch numbers that we’ve had for some time. Having said that, the previous 12 months we launched 22 Community Bank® branches, the following 12 months to this we’re expecting to launch 15 or 16, so I think you have to look at it being just one of those timing things.

But this year we will be considerably raising the profile of community banking through advertising campaigns. In around June or July the total grants made by Community Banks to their communities will tick over the $100 million mark and we think that will generate a whole new level of interest from communities that want a piece of the action.

Bendigo Bank North Perth WA Franchisee Community Service winners 2012

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25 It’s that time of year again... NATIONAL ENTRIES ARE OPEN

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Winners will be announced at a Gala Dinner at the culmination of the National Franchise Convention at Jupiters Hotel and Casino on the N ational CaTEGORIES Gold Coast on Tuesday 22 October, 2013. Established Franchisor of the Year Click here to read the category criteria and download an entry form. Emerging Franchisor of the Year www.franchise.org.au/awards.html Excellence in Marketing Excellence in International Franchising

Please call FCA Head Office for more Franchise Innovation information. fr Franchisor Social Responsibility Supplier of the Year “We are thrilled to win Established Franchisor of the Year in 2012. We are proud to participate in a program that Kytese Da celebrates excellence in franchising.” Entries open 1 April 2013 Warren Wilmot, Entries close 1 June 2013 7-Eleven, Established Franchisor 2012 Submissions due 17 June 2013

“This award has highlighted a lot of hard work by our team, but also proves we are on the right track as the best practice tools we have been building have been recognised by the peak body in franchising.”

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fr_advert_1302134_v04d.indd 1 13/02/13 10:55 AM Case Study The benefits of giving with no strings attached

How to get your mojo working Of course, rather than giving with no strings attached, we usually bring mixed motivations An example of a shallow motivation is not to the contributions we make. Speaking of wanting to be seen to do the wrong thing. In strings, I recently heard that one of my part- this case, we may give money or show some time staff was interested in taking up the consideration to others while underneath mandolin, but was short of money to buy one. feeling resentful or cynical. We may also play at So I offered him an indefinite loan of mine. being a good citizen so we can get something Yes, I genuinely wanted to provide him with in return. While this is not bad in itself, the the opportunity to enjoy and master a new benefits of faking generosity are usually short instrument. But if I was honest, part of me was lived and limited. also thinking it may help to build his loyalty to At the other extreme, we might be motivated the business. Greg Nathan Relationships Institute Franchise to contribute to a cause because we genuinely Often sought but can’t be bought believe it is the right thing to do. This intrinsic motivation to live according to our values It may seem unreasonable to expect a business builds personal character, enhances self- to contribute time, money or resources Philosophers have long esteem, contributes to emotional stability and to a cause without some sort of tangible asked the question “Why be promotes a sense of purpose. A well known return. Yet, just as individuals can benefit good?” In this article I’ll have and effective antidote for anyone who feels in a psychological sense from giving in a a crack at answering it. In my despondent or has lost their mojo (motivation heartfelt way, businesses can also benefit and joy) is to get involved in meaningful, more than they realise when they contribute to experience, the reasons why charitable work that helps others. community causes in a genuine manner with people and businesses try to do no strings attached. the right thing range from the superficial to the profound. “...brand passion is significantly and positively correlated with delivery of the customer experience, franchise citizenship and financial performance. ” Issue 33 Edition One 2013 The culture of a business is like the character of a Harvey World Travel has consistently supported “Just as personal generosity person. It answers two important questions that programs for disadvantaged children, including any thinking employee or franchisee wants to the Loreto Vietnam-Australia Program. builds a healthy character, know. “Who are we and what do we stand for?” David then revealed the suppliers had raised corporate generosity Businesses that have a strong sense of wanting money to purchase 62 bicycles at a cost of $80 builds a healthy culture. to do the right thing are subtly building each. The head of the program, Sister Trish something more valuable than they may Franklin, came to the stage and graciously And healthy cultures are realise. Just as personal generosity builds a acknowledged the gift. As she turned to leave breeding grounds for healthy character, corporate generosity builds the stage a franchisee in the audience stood up, a healthy culture. And healthy cultures are looked around the room and said, “Surely we commitment, loyalty and breeding grounds for commitment, loyalty and can do better than this. How about each table brand passion. brand passion. Prized attributes such as these sees if it can raise enough for an extra bicycle.” ” are often sought but simply can’t be bought. There was much head nodding and a buzz of It is worth noting here that our latest research enthusiasm as the room got to work. The people Just as a generous social conscience is an into franchisee performance and satisfaction at my table talked thoughtfully about what indication of a well-adjusted person, at the has empirically demonstrated how brand they would like to do. Without any pressure we business level it is also an indication of a well- passion is significantly and positively committed to buy five bicycles between us. Ten adjusted culture. And as mentioned above, correlated with delivery of the customer minutes later a tally was taken around the room there is good research to show this drives experience, franchise citizenship and financial revealing an extra 169 bicycles would now be higher levels of personal and organisational performance. purchased for the program! performance. Now that’s what I call a win-win. What do you think? The nun, the suppliers and the bicycles While this was a wonderful effort, what was even more wonderful was the positive I was recently at a Harvey World Travel Greg Nathan is Founder of the Franchise spirit this spontaneous gesture of goodwill conference in Vietnam. We were getting to the Relationships Institute and author of generated. The pride and sense of joy was final part of the program and 300 or so people several popular books including Profitable palpable and has stayed with the individuals were seated at round tables finishing their Partnerships. The Institute mission is to help and the group. This is a simple example of how lunch. The atmosphere was upbeat as there franchisees and franchisors create profitable generous acts of social responsibility, while had been a solid agenda of inspiring business partnerships. For more information go to being good for the recipients and a company’s and motivational speakers. www.franchiserelationships.com fr reputation, also generate a culture of pride, David Rivers, the Managing Director, passion and commitment. announced that the suppliers had decided to replace the usual achievement prizes to franchisees with a donation to buy bicycles for underprivileged local children.

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29 Social Media Why CSR and social media belong together

Social media is much more than a marketing Integrating your brand values and your CSR tool. It builds customer relationships and objectives into your online communication engagement with your brand, which is so is a powerful way to help drive connection powerful in terms of online marketing. In between you and your advocates, as well as helping your corporate and social responsibility seek out new ones. initiatives come to life, it is important to More and more consumers are expecting to be consider social media channels. They are a able to connect with brands via social media, great way to maximise exposure and build a and often we can see an engagement with a community of people who love your brand and business’ values and actions even before its what it stands for. All of which will ultimately product. The digital environment helps you drive awareness and sales. find your customer before they have even The digital sphere has evolved completely. It stepped into your physical store. now plays a significant role in your consumer’s

Specialist tool franchise, Snap-on Tools, has seen day-to-day life. It offers a myriad of additional huge dividends from launching a Facebook places for you to reach out, to inform, and page last year. The Snap-on Tools’ Facebook educate these consumers. The temptation is to page is a place where customers, fans and simply launch into the digital space, but quickly franchisees alike converse about all things to Rebecca Stalker, Keep Left PR your product or service can become irrelevant do with the business and the products. But – seen as spam or simply annoying. conversation also focuses on Snap-on Tools’ Any communication must be thoughtful and Apprentice of the Year program, which rewards considerate. up-and-coming talent and is representative of the business’ commitment to education. Social media and CSR programs are a match made in heaven. Your CSR programs are a Soon after launching a Facebook page, manifest example of your business’ values and Snap-on Tools discovered that discussion quickly vision – and social media simply helps you start blossomed about the program, and not only was a conversation about your values, and hence it a great way to inform potential entrants about your brand, online. the processes, it also built a sense of goodwill.

“Social media and CSR programs are a match made in heaven. Your CSR programs are a manifest example of your business’ values and vision – and social media simply helps you start a conversation about your values, and hence your brand, online. ” “The digital environment helps you find your customer before they have even stepped into your physical store. ”

Fans joined the page to join the discussion about To reach this level of engagement with a Many franchise operators know that they the program, and this in turn drove interest in the community, it is crucial to have clarity of vision need to have a social media presence, and products. Franchisees could actively see that the when you are knitting your CSR programs into many are asking the question of how to business was taking the program seriously, and your social media initiatives. One franchise make this translate into sales and brand this encouraged greater morale. network that does this well is McDonalds with awareness for them. By accurately blending its annual McHappy Day. values and visions, charitable efforts, Often businesses run their CSR programs corporate responsibility and the social media alongside registered charities or affiliated Last year the business included a ‘virtual’ way environment, it is possible to drive passion, organisations. Businesses can enhance their to get involved in this popular promotion, increase fans and ultimately deliver sales. own brand reputation by driving engagement, lifting the fundraising initiative from just in- positive momentum and growing their own store and taking it directly to the people who communities by joining the conversation with are the most engaged and passionate about Advice for integrating these partner organisations. It’s a symbiotic the business. social media and CSR relationship. The consumer was driven in-store to purchase >> Be genuine – choose a CSR initiative Lord of the Fries, the Melbourne-based product to raise money, but the message that you are truly passionate about. vegetarian food franchise, has a strong moral was also online. By offering a ‘virtual helping ethic and clearly articulated values. As part of hand’ through an online environment, and >> Be relevant – align with organisations its CSR initiatives, Lord of the Fries had already coordinating $1 donations for each, McDonalds that are relevant to your brand and developed strong affiliations with community ensured the campaign was shared. your audience to garner the authentic entities. The next step was to simply take these support and allow you to cross- The most successful CSR initiatives are relevant, online, and cross-promote messages to shared promote awareness with like-minded link to the business’ passions and have a communities. By partnering with organisations communities. connection to sales. Being genuine about the close to its brand values around sustainability activity is important on social media, more so >> Be active – continually drive ongoing and animal welfare, such as Edgar’s Mission and than any other communication environment, conversations online by monitoring and Wildlife Victoria, the business is able to tap into a as your community can see through any half- promoting relevant posts regularly about passionate network. baked attempts at CSR. Not only that, but also your values, issues and alliances. Most recently, the business has leveraged its the two-way conversation offered by social support of the Melbourne Sustainable Living media means criticism of a failed CSR initiative, >> Be integrated – think about the impact Festival by creating an official ‘sustainable’ when it comes, will be swift and vocal. of social media campaigns on your CSR burger for the event. programs and integrate where possible to Emerging fast-food franchise, Zambrero, secure maximum exposure. This new product was launched with an gives us great insight into marrying together integrated campaign including an online social media and CSR passions. Relevant and >> Hero products – by linking the CSR competition where the community was invited integrated, Zambrero donates a plate of food initiative to product sales you can secure to submit photos of the burger through social to people less fortunate for every plate they sell footfall as well as engagement. fr media channels. This cross-promotion secured through their Plate 4 Plate program. Content wider exposure for the brand, launched a new online about the relevance of the program, and product as well as promoted its core values. the merits it delivers, are a great opportunity to spark social media discussion. Many people Clever use of social media means that a franchise find out about the Zambrero business through can start to recruit online advocates who become their charitable efforts, and this drives passion the conduits of communicating the business and interest in the franchise and the product. message to others. When a not-for-profit or community organisation is involved, passion and enthusiasm simply spurs this activity.

31 E

Franchisee Recruitment – the new breed of

franchisee? Manager, Sales Fernandes, Raffael FranchiseBusiness.com.au

As a franchisor, finding There are many reasons why a prospective They are tired of working for the man and franchisee will opt for buying into a franchise. would rather be putting their skills and fresh, new, entrepreneurial Some feel that working for themselves would knowledge learnt over the years towards prospective franchisees to be a more rewarding career move. Others have something they can personally feel responsible recruite is a priority. Expanding experienced redundancy or job loss and feel self for and proud of. employment is the best option. Many want to However, franchisors also need to begin your franchise and ensuring get in touch with their entrepreneurial side and focusing on those that, although may not your brand is being managed find out what it is like to run their own business. have the decades of experience and skill, have and operated by the right The majority of these people mentioned are entrepreneurial spirit and fresh, creative ways person or people is no easy feat. those who have had a run in the corporate life of thinking. and feel they need a sea change.

Issue 33 Edition One 2013 “...by hiring a Gen Y franchisee, a franchise company could be setting themselves up with a base of life-long franchisees. ”

Generation Ys are often spoken of in a Create a presence on social media Keep an eye on current employees negative light, but as one of the younger If there is one thing Generation Y is renowned Lastly, keep in the loop with your current generations they are also the future of our for it is digital media. Although advertising in a franchisees about any of their employees that workplaces – with those who were the first of magazine or print newspaper can bring in the are showing interest in taking on their own their generation coming up to, or possibly just occaisonal Gen Y prospective, the majority will franchise unit. exceeding, the first decade of their career. be paying more attention to the businesses A great example of a franchise doing this These Gen Y-ers are willing to take risks and that have created a reputation and connection well would be Bakers Delight, offering enter into a work environment with different with them on social media. apprenticeship opportunities which can then ideas, goals and visions for a business and, Not only are you connecting with them at their lead to these bakers opening their own Bakers contrary to popular belief, many of them – level you are also showing that your business Delight franchise. Bakers Delight have found 30 especially those entering into their mid to late is up to speed with the digital trends and per cent of their franchisees began their career 20s or early 30’s, have much more experience understand the social media world. as an apprentice baker. than first assumed. Ensure you are visible on the web and mobile Many Gen Y-ers take on a part-time job while Many franchisors may dismiss a Gen Y going through uni or college and begin prospective because they do not have the Online and mobile visability is a must. building on their management skills during experience or financial skills to run a business. The majority of Gen Y-ers will look you up via this time. Many don’t understand that by hiring a Gen the internet – either on their laptop, tablet or Y franchisee, a franchise company could be mobile – and you have to ensure you are visible If your current franchisees notice a particularly setting themselves up with a base of life-long on each one or essentially you don’t exist. talented or enthusiastic employee, this may be franchisees. an opportunity to take on a new recruit that Ensure your website is interactive and provides already has the knowledge of how the franchise Advantages of recruiting a Gen Y: information that is relevant and up to date. works and just needs mentoring and guidance If possible, ensure your website can be converted • Understand they don’t know everything on how to manage a business in itself. into an m-site (a website created specifically for a about the business and are willing to learn. mobile screen) so that prospective Gen Y-ers can About FranchiseBusiness.com.au • Tend to have fewer pre-concieved views access your information even while on the move. about running a business. FranchiseBusiness.com.au is the official online Ensure your SEO is good and include business directory of the Franchise Council • More likely to adapt to a franchise system your business on search engine of Australia, listing franchises and service as they are not set in their ways. friendly online directories, such as providers. Owned and operated by Catch, an FranchiseBusiness.com.au, that can give • They bring a high energy and enthusiasm online division of Reed Business Information your business better online exposure. to the business. Australia, FranchiseBusiness.com.au provides a comprehensive central online source of franchise • They crave new technologies and opportunities and industry updates and news. new skill sets. www.franchisebusiness.com.au fr • They can bring in new, fresh ideas and

a different point of view. But how do you market your franchise to prospective Generation Ys?

Many Gen Ys rank work-life balance as a priority; franchise businesses can market their franchise to show the many disadvantages a young entrepreneur may have in starting their own business and present their franchise system as a solution to this problem.

The trick to targeting Gen Ys is to ensure you are visible within their own environment. Below are some tips on where you can market your franchise business to directly target prospective Gen Y franchisees.

33 Commentary The Social Franchise: How franchising can improve social outcomes without philanthropy

The key difference, and the one which makes By this definition, franchises which support any kind of not-for-profit unique, is that the charitable causes are not social franchises, as purpose of the business model is to create a their philanthropic endeavours are incidental social benefit in lieu of profits. to their profit motivation, and not the organisation’s sole reason for being. This is in contrast to many commercial franchises which deliver some social or Types of Social Franchises charitable outcomes, but which are incidental For those social franchises where the social to their profit focus. benefit is to provide empowerment and life

Social franchising is a relatively new field of skills via employment to beneficiaries such as franchising practice, and largely unknown the disabled or disadvantaged, two distinct in Australia. Of the 1,180 franchise systems trends emerge in the commercial model.

Director, Franchise Advisory Centre Jason Gehrke, Gehrke, Jason found by Griffith University’s 2012 Franchising One trend is where the social franchise Australia survey to be operating in Australia, provides employment for its beneficiary group, less than one per cent are likely to be social but accepts a lower level of profitability as a franchises. It’s possible to apply the result. This is often the case where the social franchise model to more However, identification of social franchises enterprise has developed the franchise model than financial goals... can be difficult and is limited by an observer’s in its own right, and seeks to increase the social knowledge of both franchise and non-profit benefit by maximising beneficiary participation Franchising has thrived in the private sector to sectors. throughout the organisation. the point where the largest franchise brands While many franchise systems may provide The primary focus in this instance is to create in the world are held up as testaments to the social benefits through their products or employment opportunities and a quality of life triumph of capitalism and free markets. services, this is incidental to its for-profit for beneficiaries over profit (notwithstanding But can this method of business be extended existence. For example, a tuition franchise that the business must still make enough even further into the not-for-profit sector? delivers a social benefit by enhancing children’s money to cover its costs). literacy and numeracy, but does so to make The answer is a resounding yes – within reason. An alternative social franchise model is one profits as a return for the operators of such where the social organisation acquires a Franchising in the not-for-profit sector businesses. franchise of an existing commercial franchise (also known as social franchising) requires If profits are generated in a social franchise, and employs a lower overall proportion of a fundamentally different approach to the they are redistributed to one or more other beneficiaries to maintain the operation. principles of franchising adopted by most parts of the organisation to create other social existing brands. benefits, rather than be passed to shareholders as dividends.

“Socially-developed franchises are likely to be innovative, highly creative and fill a market niche that is either untapped or not well-serviced by private enterprise. ”

Issue 33 Edition One 2013 “Franchising in the not-for-profit sector (also known as social franchising) requires a fundamentally different approach to the principles of franchising adopted by most existing brands. ” This approach provides a reduced social benefit via employment for beneficiaries, but aims to maximise profitability so that the profits can subsidise other social enterprise programs managed by the organisation and which are able to provide greater benefits to stakeholders.

For example, a charitable group might acquire a local franchise for a national fast food brand. It then includes a number of its beneficiaries in the employment roster, but seeks to operate the business as profitably as possible so that it can continue to fund its other socially- beneficial activities (eg. Hospice care for young cancer sufferers).

For social enterprises where the social benefit is to provide employment for beneficiary groups, The development of a franchise concept by a For a start, it will not be using the family home the relationship between employment and not-for-profit organisation in order to maximise as security for the business loan (unlike a profit is inversely proportional as illustrated by employment or other forms of engagement traditional franchisee owner-operator), and the figure below. by its beneficiaries could be referred to as a therefore faces different consequences if the socially-developed franchise, whereas the business fails. The social franchise may also be acquisition of an outlet from a commercial controlled by a volunteer committee which will chain by a not-for-profit could be known as a be potentially more difficult for a franchisor socially-acquired franchise. to manage and support than one or two individuals with a vested stake in the future of Socially-developed franchises are likely the business. to be innovative, highly creative and fill a market niche that is either untapped or not There are further considerations about the well-serviced by private enterprise. However maintenance of the brand image and integrity socially-developed franchises also risk being required by the franchisor contrasted against the undercapitalised and lacking in the necessary need to engage beneficiaries such as the disabled EMPLOYMENT Developed systems, procedures and disciplines present in or disadvantaged in the franchise workforce. commercial franchises. Bought Social enterprises that are considering Socially-acquired franchises, on the other hand, franchising should seek specialist advice, benefit from the established brand, systems and franchisors who are approached by PROFIT and procedures of a commercial franchise, but social enterprises should be mindful that Figure 1: Social Franchsing Model are not without challenges, key among which these types of franchisees have very different is to be granted the franchise in the first place. characteristics and seek different business Furthermore, enterprises which have Franchisors have an overwhelming preference outcomes compared to traditional owner- developed their own business operations to grant franchises to owner-operator operator franchisees. tend to have a greater focus on employment franchisees, whose profit motivation – often participation for its beneficiary group than backed by a sizeable investment to acquire Jason Gehrke is the director of the Franchise organisational profit, whereas those enterprises the business – generally ensures they remain Advisory Centre and has been involved which have bought a franchise to operate are focussed on achieving the highest possible in franchising for more than 20 years at more focused on profit to subsidise other social levels of performance. franchisee, franchisor and advisor level. Jason is outcomes, rather than employment. However, for a social enterprise the stakes also the Deputy Chair of the Franchise Council are different. of Australia. fr

35 Marketing

I’ve done marketing and it doesn’t work “Overwhelmingly, in fact 80 per cent of respondents, believe their marketing is unsuccessful. ” A critical question faced by many franchise Overwhelmingly, in fact 80 per cent of companies is whether their significant respondents, believe their marketing is investment in marketing is money well spent. unsuccessful.

Are businesses sinking national and local “I have done marketing and it doesn’t work,” market funds into a bottomless hole, devoting commented one CEO to us during our budget to the “black arts” known as marketing? benchmarking process.

Debbie Richardson Debbie 9Strategic Director, If the experience of typical small business in This is not to say that Australian small business, Australia is anything to go by, then for more and the franchise sector specifically, doesn’t than three-quarters of franchise companies the “get” marketing. It’s more about the gap that answer is a resounding “yes”! exists between intent and execution. The activity businesses typically call ‘marketing’ is In the past two years, 9Strategic has usually tactical rather than being aligned with, undertaken more than 510 marketing and guided by, business goals. performance benchmarks nationally with business owners and CEOs.

Issue 33 Edition One 2013 According to Phillip Ciniglio, Managing The mystery customer Revenue driver, not cost centre Director of Marketminds, a specialist franchise Critical to all of this is a deep understanding As we know, the typical franchise model consultant, the costs to franchises in missing of your customer. Insights into when, how and for marketing is based on a levy paid by the connection are significant: why they purchase your services inform every franchisees comprising a percentage of gross • Lack of sales aspect of your strategic marketing and delivery. revenue. For some franchisees, this spend is seen to be a “necessary evil” rather than a • Wasted marketing spend Businesses can easily lose sight of customers in direct contributor to revenues. the focus on day-to-day operations. That may • Loss of competitive advantage sound odd, but think about the last time you Shari sees marketing as a critical revenue driver. • Heightened culture of conflict between looked at a website and had to spend too much “It’s important to us that our franchisees know franchisees and franchisors. time trying to get to the solution you wanted. our marketing model and see that it works. Energy doesn’t make up for lack of strategy LookSmart Alterations, Australia’s and New They need to see both national and local area Whilst there is no doubt franchises generally Zealand’s largest tailoring franchise, conducts marketing programmes that drive people work incredibly hard to promote their products regular online surveys with end customers, and through the door, and most importantly, they and services, this immense energy is wasted if even more importantly, overlays them with need to take ownership.” it’s not directed by a strategic plan. ongoing coalface conversations conducted LookSmart is proving the case, with business by every level of the organisation from the The marketing “black hole” appears even growth outpacing the volatile fashion retail CEO down. deeper and darker when there is nothing to sectors in both Australia and New Zealand. inform and validate the marketing spend, and By connecting marketing strategy to business measure campaign outcomes. strategy and revenue generation, franchise What exactly does a marketing strategy achieve companies are deploying a vital weapon to for business? find, convert and service customers.

1. It aligns your marketing function with your Whilst franchises are predicting robust business goals; growth in both revenue and profit in the coming year, according to the PwC Franchise 2. It identifies your position in the marketplace, Sector Indicator, the question for CEOs and your capability to market, and your channels business owners is whether this projection is to market; I’ve done marketing underpinned by a cohesive marketing strategy 3. Your strategy supports customer to support revenue generation. conversion by mapping the buyer’s journey, If we go back to that startling statistic, that 80 developing consistent marketing messages, per cent of small business owners believe their and it doesn’t work and activating and measuring revenue marketing is unsuccessful, we can see the gap outcomes; and where a strategic marketing approach should 4. Your strategy identifies how you develop lie. And that gap, no matter how much energy product and services, manage your goes into campaigns, can quickly become a customers and deliver customer service. yawning black hole. These rolling insights support the annual A marketing plan will simply not deliver on strategic planning process, from which The benefits of a well informed, commercially its full potential in terms of new and repeat LookSmart’s marketing plan is developed. driven marketing strategy to the overall business if it is done in a vacuum without an franchise, and the cascade effect at the local National Marketing Manager, Shari Mitchell, over-arching strategy. area level, will translate to customers in the door. commented, “Any franchisor who perceives www.9strategic.com.au fr marketing to be a black hole is narrow minded.

“We know that marketing sets the future of “By connecting marketing the business. If that’s not understood, then I’ve strategy to business strategy missed my pitch.” and revenue generation, franchise companies are deploying a vital weapon to find, convert and service customers. ”

37 Issue 33 Edition One 2013