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Franchising news:The good, the bad and the awful

Posted by Carolyn Dufton on 24 October 2010
Franchising news:The good, the bad and the awful
The good news
  • Franchising profits are up according to the latest survey from PricewaterhouseCoopers.
  • Franchisor profits rose an exceptional 19 percent, while franchisees showed growth about twice the rate of the Consumer Price Index.
  • The current franchise profit levels of about six percent are set for a huge jump to just under 46 percent over the next three years, the report indicates.
The bad news
  • The sector does face challenges, not least the funding of franchisees who are unable to get the appropriate finance from banks, an issue 73 percent of franchisors cite as a major hurdle.

The really awful news!

Have you been reading about the chaos surrounding the demise of Allied Brands? Franchisingplus believes that this debacle is a blight on the franchising sector.

The company's shares remain suspended from trade on the Australian Securities Exchange, its Cookie Man chain is in the hands of liquidators and reports from disgruntled creditors are growing.

The company is also locked in a dispute with the global owner of the Baskin Robbins brand, US company Dunkin Brands.

To add to the chaos The Department of Immigration & Citizenship has accused Allied Brands of breaching immigration laws by running an elaborate immigration rort where it sponsored a group of Korean nationals to work in administrative roles under 457 visas, put them to work in Baskin Robbins stores and in some cases sold Baskin Robbins stores and in some cases sold Baskin Robbins franchises to their family members.

To add to the bad press, the CEO admitted last week that the company has fallen behind on some employee's superannuation payments with employees acknowledging they have little hope of being recouped for their losses.

Any prominent negative media story like this affects all franchising personnel:

  • Franchisors selling franchises
  • Franchisees trying to onsell a franchise
  • Franchise advisers who establish new systems
  • Any franchise professional who does not want the reputation of franchising to be further tarnished.
  • Financiers who are nervous about putting all their financial eggs in one basket. If a Franchisor goes down and they have funded many of the Franchisees in that system, the impact for a lender can be severe.

These bad news stories only reinforce why creating and then maintaining responsible, sustainable  franchise systems is so vital for the benefit of the reputation of franchising and all  involved in the franchising sector.

© franchisingplus

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Carolyn DuftonAuthor: Carolyn Dufton
About: Carolyn Dufton Dip. Bus (Franchising) heads the team as the owner and manager of franchisingplus. Carolyn has a wealth of small business experience, and many years of hands on franchising experience.
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Tags: Franchising

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