New register for franchise operators

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While the general economic performance of Australian franchising is positive, the sector is still vulnerable to reports and often distorted perceptions about the credibility of the franchising business model.

Franchising is one of Australia’s most robust and successful sectors, boasting over 1,100 franchise systems, 70,000 franchised businesses and a contribution to gross domestic product of $131 billion annually. However, the cloud of uncertainty that persists over franchising because of a small but vocal minority who disregard the Franchising Code of Conduct continues to impact the wider sector and unfortunately there has been limited independent and reliable information available to disperse it.

This week Federal Small Business Minister Bruce Billson officially launched Australia’s first registry for franchise operators in front of founders and leaders of prominent Australian franchise brands, senior bankers, professional advisors, sector regulators and senior officers of the Franchise Council of Australia (FCA) – all of whom have directly or indirectly driven the demand for a franchise registry.  In fact, such a concept has long been mooted including parliamentary inquiries into franchising.

The Franchise Registry requires franchise brands to provide a current Disclosure Document and current Franchise Agreement each year, and also to confirm these documents comply with the Franchising Code of Conduct, in order to register. It’s this industry leadership and practice of transparency that will enhance the credibility of Australian franchising, improve franchisor compliance and give greater confidence to those looking to invest in franchising.

We were delighted to see Minister Billson support the initiative and its ability to aid decision-making in the franchising sector. The Federal Government has long had an appetite for better indicators of stability in franchising and the registry will be able to generate more meaningful data that they can use to enhance their support of the sector. The ACCC can also use more detailed information on the sector to focus resources on the real issues in franchising and justify its legislative forbearance.

With some of the lowest rates of franchisee disputes in the world, the FCA will also be able to use the broad and insightful data on the sector to put issues into context by highlighting credibility and strength in Australian franchising.

As a former finance lender in franchising, I know the registry will also improve a franchise brand’s finance lending potential by evidencing their commitment to closing the current information gaps that hinder the identification and assessment of key lending risks, helping both franchisees and franchisors access finance.

This is a real opportunity for franchise brands to protect and enhance the reputation of their industry and disperse the tainted views of franchising. It’s the opportunity to bridge the information gap in the sector and make it easier for potential franchisees looking to invest in franchising, and their advisors, to identify genuine and responsible franchise brands.  And fundamentally it’s about raising the standards and transparency in a sector that has grown into such a significant part of the Australian economy.

Darryn McAuliffe is CEO of objective information and analysis provider FRANdata, which administers The Franchise Registry
This article originally appeared at SMH.com.au.

CSR and reputation in franchising

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CSR

CSR is fundamental in managing reputation

Over the past decade, more and more companies have turned to corporate social responsibility (CSR) strategies to manage their reputation. Ignite PR has helped many Australian franchises leverage CSR initiatives to not only build stronger consumer awareness of their brand but also to attract suitable franchise recruits who share the same values.

However, gone are the days of simply supporting a cause – be it training, employment, or sustainability – and leveraging it for reputation gain. Add-on CSR strategies don’t establish long term credibility and in some cases may even do the opposite. Changing social attitudes also spark new consumer expectations around CSR meaning companies have to address these changes.

So what does this mean for Australian franchising?

The first challenge is how to use CSR as a means to differentiate from competition while still maximising business benefits. Franchises will need to develop their own way of doing CSR that is consistent with both their core values and unique position in the industry. It needs to go beyond a food franchise educating people around healthy eating or coffee franchises supporting ethically and sustainably sourced coffee beans. An effective CSR program will make consumers feel good beyond the product or service they’ve purchased by supporting a company that supports a cause they believe in.

CSR can also be the difference when it comes to franchise recruitment. In a period when finding suitable franchisees is more difficult than ever, the reputation of a franchise is crucial. It’s about giving prospective franchisees another reason to invest in your brand beyond income potential or support offered. The culture that exists within your franchise and your corporate behaviour provide a great indication of the values you hold, helping to attract the people you actually want in your system.

The challenge is how to tackle CSR into the future.

CSR needs to be consistent with your franchise’s core values and supported by the entire network. It also needs to be a long term program – add-on CSR strategies won’t do much for your reputation if elsewhere you’re perceived to be contributing negatively. CSR should start at the boardroom table and be included in your business strategy, setting the tone at the top and incorporating CSR into business objectives and responsibilities of franchisees.

As franchises strive to become closer to their customers – whether through old and new media or digital marketing – CSR will bear greater importance in managing reputation as expectation of your corporate behaviour also increases.