Franchise Council of Australia fights back against franchising criticism

Franchising is not the weak link in the business world according to the Franchise Council of Australia ’s executive director Steve Wright. Wright has fought back against media and public criticism of franchising, highlighted by the collapse of Kleenmaid, by pinpointing the current trading successes of some key franchise brands.

Delegates at recent state conferences have heard how Clark Rubber, Eagle Boys Pizza and PoolWerx have all reported strong sales growth.

PoolWerx CEO John O’Brien reported sales and profitability were up in the first four months of 2009, with sales growth of 19 percent compared to last year’s corresponding period.

Pizza brand Eagle Boys has had double digit growth year on year and has 16 new stores opening in the next six weeks and plans a further 50 before 2010.

Chris Malcolm CEO of Clark Rubber said steps to tighten operations had helped produce a record December with the first quarter 09 well out stripping sales and profitability from the previous 2008 period.

“These strong results, and history during prior downturns, show us that franchise systems typically respond more quickly and effectively to changed market conditions, as the dual dynamic of having franchisor and franchisees close to the market and focused on meeting changed consumer expectations produces a synergistic response,” Wright said.

“They are also in stark contrast to some recent public claims linking economic and industry issues to the franchising model. The financial troubles of the Kleenmaid organisation, caused essentially by manufacturing costs and reduced demand in the wake of the global economic crisis, had been seized upon by some to try to claim weakness in the franchising model in times of economic downturn. The results that many systems are currently reporting show this to be a weak and superficial analysis,” he said.

“Some franchisees are out of pocket for commissions owed to them by Kleenmaid, for sale of Kleenmaid products and for servicing work done under warranty contract. There has been no suggestion of any fundamental disagreement, conflict or dispute between Kleenmaid and its franchisees other than its unpaid commission and servicing payments issues, which has the effect of including some franchisees in the list of Kleenmaid unsecured creditors.”

This article appears courtesy of 5 Minute Franchising Newsletter