ACCC warns juice industry

ACCC warns juice industry

SYDNEY: Misleading claims in the fruit juice industry about alleged nutritional, health and therapeutic benefits of certain ingredients will be targeted by the Australian Competition and Consumer Commission, ACCC chairman, Graeme Samuel, has warned

“The ACCC wants to see an overall improvement in trade practices law compliance at every level of the industry – from packaged juices in supermarkets and convenience stores through to the exotic juice bar blends,” Samuel says.

“The ACCC is particularly concerned about the growing use of health claims widely used to promote fruit juice, smoothie and related juice products being sold in juice bars. These claims about certain ingredients may not exist, cannot be substantiated or, in fact, may adversely impact on a consumer or their diet.”

The industry is valued at more than $1 billion, of which the juice bar sector contributes around 15 percent and is reported as having a national turnover of $150 million. That amount is expected to double in 2005.

“Clearly consumers have embraced the juice bar concept but the ACCC is concerned that profits should not include benefits from misleading and deceptive conduct,” Samuel says.

“The ACCC has written to juice bar franchisors to advise them of their obligations under the Act and to alert them and their franchisees to the ACCC’s scrutiny of industry claims.”

Companies: the dinosaurs

of the small business age?

SYDNEY: Reductions in the individual income tax rates announced by the Treasurer in the Federal Budget may encourage small business operators to favour partnerships, trusts and other alternative structures over the traditional corporate vehicle, according to Deloitte tax partner Kel Fitzalan.

“The Treasurer estimates that more than 80 percent of taxpayers will face a top marginal tax rate of only 30 percent from 1 July 2005 which is, of course, also the company tax rate. In the past there has been an incentive for small business operators to incorporate due to the significant differential between the personal and company tax rates. This differential has now been eliminated in many cases, leaving taxpayers with a wider choice of business vehicles and lower compliance costs.

“For example, a husband and wife operating a small business will only wish to incorporate for income tax reasons where their combined income exceeds approximately $190,000 for 2005/06 and $250,000 for 2006/07 income years respectively.

“The existing marginal income tax rates currently encourage incorporation where the couple’s combined incomes exceed $150,000. With less incentive to incorporate, compliance costs are likely to reduce. Of course, tax considerations should be balanced with other commercial factors such as ensuring the business proprietors have limited liability.

“Further, the abolition of the superannuation surcharge means those small business operators able to fund their retirement are encouraged to make superannuation contributions.

“While these measures are welcomed, the simplicity, equity and fairness promised to small business operators in the 1999 Ralph Review were noticeably absent from this year’s Budget,” Fitzalan says.

Domino’s takes on Mad Dog

CHRISTCHURCH: Domino’s Pizza Australia New Zealand Ltd has consolidated its position as New Zealand’s second largest pizza chain by merging with Christchurch-based Mad Dog Pizza.

Currently owned by Grant Williams and Barry Cox and founded in 2000, Mad Dog Pizza operates six stores across Christchurch that will be converted to Domino’s stores. However, the stores will continue to be owned and operated by Williams and Cox.

The move follows Domino’s purchase in March of Pizza Haven New Zealand.

“Through our expansion program and mergers such as these, we will continue to grow our presence in New Zealand and meet the demands of consumers,” says Domino’s Pizza CEO, Don Meij.

According to Williams, Mad Dog Pizza decided to merge with Domino’s to ensure the long-term future of the business and create future opportunities for growth.

“There is ongoing consolidation in the New Zealand industry and we saw this as an opportunity to position our business for the future. By joining Domino’s we are able to access its proven business model, buying power, marketing force, training and support systems,” he says.

In another development, Dominos’ has announced that the offer for shares in the company through the initial public offering (IPO) has been completed and shares have been issued and transferred to successful applicants.

The offer price was fixed at $2.20 per share and the offer was fully underwritten by Goldman Sachs JBWere. The market capitalisation of Domino’s Pizza at the offer price is $132 million.

Domino’s Pizza holds the exclusive master franchise agreement for the Domino’s brand and network in Australia and New Zealand. The Domino’s brand is owned by Domino’s Pizza Inc, a listed US company.

Stock shortfall forces

the selling of Sam’s

BRISBANE: The receivers of the Sam’s Seafood, John Greig and David Lombe of Deloitte, are offering the Sam’s business for sale and calling for expressions of interest from potential buyers.

Sam’s Seafood distributes and processes a wide range of fresh and frozen seafood for the local and export markets. In addition, Sam’s operated restaurants on the Gold Coast and Brisbane, as well as a chain of fast food franchises located in Queensland and New South Wales.

Greig says that during his initial investigation into the business he uncovered significant stock shortfalls that had compromised his ability to trade the business in the short-term.

“There appears to have been a significant overstatement in the carrying value of stock for some time in the accounts of Sam’s Seafood Hamilton Limited, a subsidiary of the listed Sam’s Seafood Holdings,” he says.

“Stock on hand in the December and March management accounts had a carrying value of $14.6 million and $14.1 million respectively, but a full stock take found actual stock on hand was only $1 million.

“The value of stock in the December management accounts represents the majority of the amount of stock disclosed in the group’s half-year accounts to 31 December 2004 of $15.05 million lodged with the Australian Stock Exchange on 28 February 2005.

“The matter appears to relate to accounting errors and has therefore been referred to the Australian Securities and Investment Commission. Our investigation into the business also uncovered several under-performing subsidiaries which prompted the closure of 13 Sam’s operated fish and chip takeaway stores and two restaurants – Sam’s on Suttons at Redcliffe and Sam’s Pier.”

According to Greig, Deloitte continues to operate Sam’s fresh seafood retail stores and wholesale operations and has received strong support from suppliers and employees. However, as a result of the stock shortfall and store closures, it is seeking to sell the Sam’s business as quickly as possible which, Greig says, is in the best interest of all stakeholders.

Sponsorship coup for FCA

SYDNEY: The Franchise Council of Australia (FCA) has secured its largest ever sponsorship, worth $120,000, following trade exchange Bartercard signing as an alliance partner.

The FCA is the peak body for the $80 billion franchise sector in Australia, representing franchisees, franchisors and service providers.

Bartercard is the world’s largest trade exchange, facilitating the cashless exchange of goods and services for its 56,000 members worldwide. It is also one of Australia’s leading franchise networks, with around 50 brokerages situated throughout the country. Last year, Bartercard brokerages helped generate more than $1 billion in trade dollar transactions within the Bartercard network in Australia alone.

“A large factor in Bartercard’s success is formed through the efforts of our brokerage franchisees who work tirelessly to support our ever-increasing membership base,” says Bartercard Australia managing director, David Johnstone.

“In continuing our cultivation of Bartercard’s franchise network, it is imperative that we work as closely as possible with the franchise industry’s peak body. Supporting the FCA in our capacity of alliance partner is a perfect fit for us, and we’re excited by the prospects the future holds for both our organisations.”

FCA CEO Richard Evans describes the alliance with Bartercard as being a “quantum leap” for the FCA.

“Through this product exclusive opportunity, Bartercard will receive FCA corporate endorsement, gain commercial advantages, be able to educate the sector about what it can offer and be introduced to key stakeholders,” Evans says. “The FCA is totally committed to making this alliance partner arrangement work to the benefit of all involved.”

As part of the alliance arrangement, Bartercard’s brand will be associated with FCA corporate material, have signage and branding at all FCA public events and also have a presence on the FCA website. Other benefits of the alliance for Bartercard include a presence at the FCA national convention and regional conferences packages, appearing in the FCA membership package supplement, a commercial offer to membership and monthly editorial opportunities within FCA publications.

Bartercard formalises the age-old concept of barter, facilitating a cashless exchange of goods and services between its members using a currency known as trade dollars ($T1 = AU$1). As a result of trading, new sales are generated and cash is conserved in the business, leading to a reduction in the cost of borrowing and a healthier bottom line.

Push to cut trans-Tasman tax

MELBOURNE: In a critique of particular relevance to the growing number of trans-Tasman operating franchises, a leading lawyer believes taxation obstacles that are impeding the seamless transfer of skilled people across the Tasman could be removed at a relatively low cost to both Australian and New Zealand governments.

“Trans-Tasman businesses regularly transfer people between Australia and New Zealand to meet their business needs. This relocation of people promotes the transfer of skills and experience which can be extremely beneficial to the economies of both countries,” Andy Hutt, a partner in KPMG’s tax practice, observes.

“There are however a number of taxation barriers which impede the seamless transfer of skilled people to the detriment of both economies. These barriers may reduce the free flow of skills between the countries and consume unnecessary management resources. Neither economy would benefit from businesses meeting these additional tax costs for their people.”

Hutt recently launched a KPMG whitepaper entitled ‘Portability of Human Capital Trans-Tasman: Identifying and Managing the Major Taxation Obstacles’ at the Australia-New Zealand Leadership Forum in Melbourne, which contained seven key recommendations.

“These recommendations involve amendments to the domestic law of both countries and some revision of the Australia/New Zealand Double Taxation Agreement (DTA). They should be relatively low-cost to both countries and aim to significantly reduce tax compliance costs for Trans-Tasman assignees,” he says.

The KPMG whitepaper recommends the following amendments:

1. Harmonise the tax treatment for superannuation contributions.

2. Tax salaries of short-term assignees soley in home country.

3. Harmonise the tax treatment of employee share acquisition schemes.

4. Exclude employee mortgage and other loans from withholding tax.

5. Tax home country-sourced investment income and gains soley in home country.

6. Remove foreign exchange gains and losses from the host country tax net.

7. Exclude family trusts from accruals taxation in the host country.

New bakery for Michel’s

MELBOURNE: Australian franchise group, Michel’s Patisserie has built a new bakery in the suburb of South Dandenong in Victoria to cater for the company’s expanding trade throughout the state. The purpose-built bakery is nearly 2000sqm in size – three times the size of the previous facility.

Huge growth in the Victorian market in the past year forced the development of the new facility, which will supply all current stores throughout the state. However, with a conservative estimate of another 35 stores this financial year, the bakery’s expanded capacity is an important addition to the company’s resources.

Managing director, Noel Carroll, believes the bakery is a necessity for the future growth of the company.

“This bakery will become the heart and soul of our operation in Victoria. Michel’s Patisserie prides itself on being a specialist provider of a large variety of fresh baked goods and this will allow us to meet demand for a long time into the future,” he says.

Queenslanders in particular are getting the taste for Michel’s Patisserie. Indeed, the state will match its Victorian counterpart in new store openings, with a planned 35 stores in the current financial year. This will bring the national total of Michel’s Patisserie stores close to 400 by the end of 2005 – a number projected to increase further from both current and future franchisees.

“The demand for Michel’s Patisserie stores is overwhelming. At the moment Victoria and Queensland are experiencing huge interest from people looking to become Michel’s Patisserie franchisees. We are having to take an aggressive approach to keep up with requests for new sites,” adds Michel’s Patisserie Victoria director, Jon Sully.

Jani-King goes platinum

DALLAS: Jani-King Australia has received the prestigious ‘Platinum Club’ award for outstanding growth results in 2004, making it the fourth time the region has experienced top growth among the entire company.

Managing director and founder of Jani-King Australasia, Ben Stoltz, recently returned from Dallas in the US after attending the awards ceremony to accept the award on behalf of his team.

“The International Business Growth awards are an internal Jani-King competition which has been running since 1990 to encourage and record each regions’ growth among Jani-King worldwide,” Stoltz says.

“There are a number of categories included in the International Business Growth awards, with the Platinum Club award standing as the top award. It is given to the region that achieves over US$5 million in annualised growth within a calendar year.”

In addition to accepting the Platinum Club award Stoltz was asked to speak at the awards to address the 80 remaining Jani-King regions on the successful growth of his region.

Jani-King Australasia has grown by $4.6 million per annum on average since 1997, which is almost double the growth of the next fastest growing Jani-King region. Stoltz says the result has been achieved through a collective regional focus.

“Growing by US$5 million per annum is substantial and something we have been able to consistently accomplish through ensuring that our people in all regions throughout Australia and New Zealand are creatively and happily working together towards a common goal – the satisfaction of our clients through the success of our franchisees,” he says.

Jani-King Australasia previously received the Platinum Club award in 1996, 1999 and 2002, and shared it once with Jani-King Canada.

“Jani-King Australasia is already well on its way to locking in the Platinum Club award for 2005. We’re definitely going to give the other regions a run for their money by maintaining our strong strategic focus on future growth,” Stoltz predicts.

All in the family

at Mr Rentals

BRISBANE: The achievements of Mr Rentals as a family business were formally recognised recently by its winning the second generation Family Business of the Year award for Queensland.

In a market where there is little scope for competitive advantage the Mr Rentals franchised network is distinguished from its competitors through strong family values and culture.

The home appliance rental industry has traditionally consisted of one major player, being the foreign-owned Thorn group, and numerous small independents. However, since franchising three years ago Mr Rentals has steadily gained market share, a core reason for which is that customers are serviced by locally owned, qualified franchisees with the support of a national network.

Hosted by Family Business Australia (FBA), the nation’s peak family business association, the gala awards celebrated the achievements of family businesses, which account for 80 percent of all businesses nationally.

The top companies were rated on criteria that included bottom line performance, commitment to family business best practice, corporate citizenship, management professionalism and the existence of succession planning.

Marketing manager Renee Hickman, daughter of Mr Rentals founders Glen and Kerrianne Hickman, accepted the award on behalf of the Hickmans.

“The family culture in our business is intangible and extremely hard to duplicate. As long as we continue to nurture this, we will have a massive competitive advantage over our competitors,” Hickman said upon accepting the award.

CEO Glen Hickman also credits an enormous amount of his business success to the emphasis he and his wife have always placed on family values.

“From family we expect unconditional support, honesty, open and positive feedback, a sense of belonging and sharing of values, beliefs and morals,” he says.

Mr Rentals was also the overall winner in last year’s Caboolture Shire Excellence in Business Awards.

The national Family Business Awards will be held on 27 August in Adelaide at Family Business Australia’s national conference.

FBA is a national, member-based, not-for-profit organisation for family business owners and their professional advisors.

(with pic)

Howards Storage World

targets regional centres

SYDNEY: Howards Storage World (HSW) has embarked on a 12-month period of regional growth, with the franchisor planning to open up to 10 stores in regional NSW, Queensland and Victoria in the 2005/2006 financial year.

HSW launched its first regional store in Albury, NSW in April 2005 and will be opening in Coffs Harbour this month and Cairns in September.

“Howards Storage World is targeting regional centres in the eastern seaboard states that have a population of 50,000 and above. We are canvassing interest from potential franchisees in these centres and identifying potential sites,” says HSW CEO, Dirk Spence.

Key cities and towns that have been earmarked by HSW include Wagga Wagga, Port Macquarie, Ballina and Lismore in NSW, Rockhampton, Mackay, Toowoomba and Townsville in Queensland, and Bendigo and Ballarat in Victoria.

Howards Storage World, a specialist retailer of storage solutions for the home, is making the same product offering available in regional centres, however it will be utilising a combination of sites from strip locations and stand-alone stores through to leasing space in shopping centres. The new Albury store is HSW’s first strip location and the Cairns store, which opens later this year, will be a 700 square metre stand-alone store.

“The Albury franchise was our first strip location and signalled a departure from the shopping centre model used for our city franchise stores. The strip location in Albury is working very successfully and will be used more widely in regional centres,” says HSW franchise manager, John Watt.

Howards Storage World is currently undertaking a series of free information seminars across regional centres, providing people who are interested in franchising with information about the retail concept.

For a detailed insight into regional franchising see the Special Report in this issue.

Civic gets connected

SYDNEY: Civic Entertainment Ltd , which operates the Civic Video franchise group, has announced the purchase of the master franchise for Card Connection in Australia and New Zealand.

“The purchase of the Card Connection master franchise is a natural progression for Civic as an integral part of our future growth strategy for the company. Many progressive franchisors are diversifying their business to leverage their established infrastructure in supporting a new brand,” says Civic general manager, Rod Laycock. “Card Connection was chosen by us because it is a leader in its field and shares similar, ambitious business philosophies and culture to that of the Civic group.

“The Card Connection franchise offers the opportunity to own your own business operating from a home base, great flexibility in working hours with minimal capital investment. This is very appealing for someone seeking their first business. The first franchisees have commenced their business in Sydney, and we expect that following the enormous interest and response from the recent Sydney Franchise Expo, the remaining territories will be quickly filled.”

Card Connection was first established in the UK and began franchising in 1992 with franchise operations in Holland, Ireland, Wales and Malta. It currently has in excess of 100 franchisees servicing more than 16,500 outlets in Europe. The system is well proven, with Card Connection the market leader in the UK. Franchisees purchase the product, which is exclusive to Card Connection, and place the greeting card ranges in retail outlets on a ‘consignment’ basis. Customers include convenience stores, service stations, pharmacies, newsagents, supermarkets and gift shops.

Big Mac set to rap

NEW YORK: If McDonald’s has its way, rap artists such as Snoop Dogg, Jay-Z and 50 Cent may soon be lauding the Big Mac in their lyrics.

In a controversial move, the fast-food franchise in the US is launching a campaign that will offer financial incentives to rap artists who mention its Big Mac burger in their songs. McDonald’s will not pay an upfront fee, but intends to pay artists between US$1 and $5 each time a track is played on the radio.

According to McDonald’s, the aim is to identify artists whose style will identify with the brand. Significantly, McDonald’s will have final approval of the lyrics.

The campaign has already been condemned by the US lobby group Campaign for a Commercial-Free Childhood, which has accused McDonald’s of targeting a young audience that is already prone to obesity.

KFC ad hard to swallow

LONDON: Fast food usually looks better in ads – and in the case of the new KFC Mini Chicken Fillet Burger, appearances really were deceptive.

A UK television ad for the burger has just been banned after advertising watchdogs ruled it had misled viewers about the food’s size. In the ad, a group of people were shown holding Mini Chicken Fillet Burgers at a railway station, with one burger-less man serenading a woman with one, asking if he could “have a bite”.

However, a close-up of the burger in the woman’s hands sparked numerous complaints that the real thing was much smaller than the on-screen sandwich. KFC tried to defend the ad, arguing that the burgers used for the ad had been cooked in a KFC store that day, and that the woman in the ad “may have had small hands”.

New burger a

‘Belly Buster’

NEW YORK: In a bid to reclaim its crown as the home of the world’s biggest burger, Denny’s Beer Barrel Pub has just added a new item to its menu – a burger that weighs a whopping 15 pounds.

Dubbed the Beer Barrel Belly Buster, at US$30 the burger costs a lot more than your average Big Mac, but comes with 10.5 pounds of ground beef, 25 slices of cheese, a head of lettuce, three tomatoes, two onions, a cup-and-half each of mayonnaise, relish, ketchup, mustard and banana peppers – and a bun.

Earlier this year Denny’s Beer Barrel Pub introduced a six-pound burger with five-pounds of toppings, but was soon outdone by the Clinton Station Diner in Clinton NJ, with a 12.5 pound burger dubbed the Zeus.

The new Belly Buster is supposed to be able to feed a family of 10, but there has been no shortage of punters trying to get through the entire burger alone. So far no one has managed it.

Wendy’s sent reeling over

human finger in chili bowl

LOS ANGELES: Fast food chain Wendy’s is offering a US$100,000 reward for information on the origin of a human finger that was found in a bowl of chili at one of its restaurants in Los Angeles.

Wendy’s says that its own investigation into the matter has found no evidence of any finger or hand accidents among any of its workers or suppliers, and that all its workers have passed lie detector tests.

Regardless, a human finger definitely was found by a woman while eating a bowl of chili, and the surrounding publicity has had a devastating impact on sales. Some franchisees have laid off workers or reduced their hours, while the brand’s reputation has been severely compromised.

According to Wendy’s it will stop at nothing to find out what really happened in the incident.

The Franchise Council of Australia is a not for profit membership organisation that is the peak body representing the franchising sector in Australia.

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