Franchisors warned on overseas risks

SYDNEY: Australian franchisors considering off-shore expansion should be aware of unpredictable political risk that continues to shape the international investment climate, insurance broker, risk management and human capital consulting firm, Aon Australia, has warned.

According to Aon Australia’s 2005 Political and Economic Risk Map, Australia – along with the US, UK and most of Western Europe – is considered low in terms of unpredictable political risk. However, several African, Middle Eastern and Asian countries, such as Nigeria, Iraq, Afghanistan and Laos, are considered high.

Simultaneously launched in Australia, the US, UK, Brazil, France and The Netherlands, Aon’s Risk Map is an analysis of the world’s trade credit and political risk hotspots. It reviews political and economic risks facing organisations doing business globally, providing an important annual guide to key risks around the world.

Aon Australia political risk manager, David Pulver, says political risk is unpredictable by its very nature.

“The risks facing investors are significantly more complex than they were 25 years ago,” he says. “Political, economic, religious and other tensions can shift at a moment’s notice and disrupt business operations for all organisations involved in international commerce.

“Companies can be subjected to the discriminatory actions – or inaction – of foreign governments and third parties, potentially leading to forced shutdowns, relocations and other unexpected expenses without adequate compensation.”

Pulver notes a continued focus on China as the world’s largest growth economy.

“Many Australian companies are looking to trade, develop resource projects or increase their activities to China. However, this level of interest has done little to mitigate the significant political risks endemic to the region,” he says.

Political risk is not always a clear case of cause and effect. The insurance market is conservative and countries must establish an improving track record before ratings can be upgraded. Regardless, the risk outlook is not entirely negative.

For example, despite the devastating physical effects of the Asian tsunami, South East Asia’s political risk profile is not perceived to have changed for the worse as a result. Meanwhile, the Ukraine’s high risk rating remains unchanged this year, despite the recent election of Viktor Yushchenko. Similarly, Libya’s rating remains medium-high, despite closer cooperation with the West.

Argentina has become more politically stable following restructuring of the country’s sovereign debt. Central and Eastern European countries such as Bulgaria and Romania have been assessed as having less risk in anticipation of their 2007 accession to the European Union.

“Commercial decisions to enter international markets should not be solely driven by economics,” Pulver explains. “Businesses should avoid making assumptions based on superficial market readings and constantly monitor the markets in which they choose to invest, so as to properly protect themselves.”

In other words, forewarned is forearmed.

Brands in no-gain sponsorship crisis

LONDON: In a shock finding, a new study has revealed that more than three-quarters of advertisers seriously doubt whether sponsorship deals improve the visibility of their brands in the media.

Just 10 years ago only half of advertisers expressed any doubts about the merits of sponsorship.

The new worries come on the heels of Adidas signing a £100 million deal last year with Chelsea Football Club and HSBC sinking £10 million into golf tournaments after its Formula One sponsorship crashed and burned with no increase in brand awareness in the US.

According to the study, just 3 percent of TV viewers notice billboards at sports events, with 97 percent focusing their attention on the action.

The problem for sponsors is compounded by logos occupying just a small portion of the screen, whereas a TV or press ad covers the entire screen or page. On top of this, in most cases sponsorship does not put forward a message to the viewer like a traditional ad does.

Applicant screening the safest option

SYDNEY: In the January/February 2005 edition Franchising published a new feature (page 22) revealing that approximately one-third of all resumes are falsified, with many candidates lying about their education and exaggerating their job responsibilities.

Sally Mooney, co-managing director of Australian Background, commented that hiring the wrong employee can mean increasing staff turnover, high absenteeism, discipline problems and theft – resulting in costly consequences to the company. For small businesses, she warned that this can lead to bankruptcy or worse, the business closing down.

Following are some checks for franchisors and franchisees to use when screening employees – from directors to general administration assistants – before hiring them. According to Mooney, the checks will help employers prevent fraud, enhance the safety and security of the workplace and improve the overall quality of the hiring decision. However, before conducting any of the checks it is essential that employers obtain the candidate’s consent as required by the Privacy Act.

Identity

1. Sight originals of identification documents, for example, passport, driver’s licence and birth certificate. Alternatively, use the ‘100 Points of Identification’ similar to that used in the financial industry. Most large banks can provide this information.

2. Verify current address via electronic data sources, electoral roll and telephone directory.

Entitlement to work

1. Sight passport, visa or birth certificate.

2. The Department of Immigrations and Multicultural and Indigenous Affairs (DIMIA) can verify work rights held.

Employment history

1. Check all employment details over the past previous five to 10 years.

2. Verify employment details with HR or payroll departments.

3. Watch out for any unexplained gaps in employment.

4. Check all positions held, dates of employment and remuneration.

5. Ask why the candidate left the company.

Reference checking

Do

1. Check with the candidate before verifying current employment, as this may jeopardise their current employment.

2. Verify the referee is who they claim to be – telephone the company switchboard number and verify position of the referee before being transferred.

3. Ask whether the candidate would be rehired in a similar role.

4. Ask whether the candidate ever did anything dishonest or lacked integrity.

5. Confirm the candidate’s responsibilities.

6. Ask whether the candidate was subject to any disciplinary actions or warnings.

7. Ask about attendance or reliability issues.

8. Ask for examples of where the candidate has demonstrated certain behaviours and competencies required for the role.

Don’t

1. Don’t just contact nominated referees – speak with all previous direct managers, clients or senior colleagues.

2. Don’t call referees on mobile phones as your candidate may have provided you with a bogus referee.

3. Don’t leave a message with anyone regarding the name of the individual you are looking to conduct a reference on, as it is important to maintain confidentiality at all times.

Criminal record

1. Conduct a national criminal record check (while it is legal to conduct a criminal record check, ensure that you do not discriminate against an applicant if you find him or her guilty of something irrelevant to the role).

Bankruptcy or individual commercial enquiry

Bankruptcy and individual commercial enquiry checks provide insight into

an individual’s reliability and sense of responsibility.

1. The Australian National Personal Insolvency Index records all bankruptcy information.

2. An Individual Commercial Enquiry will reveal bankruptcies, court judgements and summons tied to an individual and defaults in their capacity as a director.

ASIC disqualification

1. Check with the Australian Securities and Investments Commission’s (ASIC) Banned and Disqualified Register for persons disqualified by ASIC from holding senior management positions or directorships.

Education, professional qualifications and memberships

1. Don’t just accept what the candidate says: verify qualifications or memberships directly with the institutions.

2. Fake degrees are readily sold on the internet, so check the authenticity of the degree with the institution.

The secret to the successful implementation of pre-employment screening is an effective communication strategy, according to Mooney.

“We have found that job applicants have an enormous amount of respect for organisations that tell them upfront that they have a screening strategy in place. They know they will be working alongside colleagues with the right skills, experience and qualifications and don’t have any adverse behavioural problems that may impact their safety or security.”

Jani-King donation saves home from detonation

SYDNEY: The operations team from Jani-King’s business services franchise Sydney office recently joined the team at Channel Nine’s Renovate or Detonate to lend a helping hand on the show’s premiere special.

The team of six donated their time and cleaning skills for a home transformation that took place to aid a New South Wales Central Coast family who had been doing it tough.

Sydney Jani-King regional manager, Rod Winterton, says that when he heard of the family’s situation, he was keen to volunteer for the job.

“It’s an amazing story really – two daughters acting as the primary carers for their wheelchair-bound mother as a result of a tragic accident 11 years ago,” Winterton says. “When I learned what the family had been dealing with and how strong the two daughters were to look after their mother for so long, I had no hesitation in helping with the renovation.”

Considering the business nature of Jani-King, Winterton says it was obvious his team could be of assistance.

“Jani-King is the world’s number-one commercial cleaning franchise, so it was very fitting that we helped out with the cleaning during the renovation,” he says.

“I was extremely proud of my operations team, who jumped straight into the task – they put their whole heart and soul into the cleaning to make the renovation a success for such an amazing family. We carried out a ‘builders clean’, which is basically cleaning everything in detail, including washing windows, fixtures, walls and floors.

“The cleaning took six hours and it was quite a frantic task, trying to ensure the home was complete with all the finishing touches.”

In addition to donating its time during the renovation, Jani-King Sydney will continue its involvement with the family.

“We felt there was more Jani-King could do for this family than just offering a day of cleaning. Looking after their mother is a full-time job in itself for these girls, so we decided to donate Jani-King’s cleaning services for a year to take some pressure off the family,” Winterton says.

The ongoing cleaning will be carried out by Jani-King franchise owner Bill Ballard.

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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