The Franchise Council of Australia and the “fabulous franchising folk”

It would be easy for those not part of the franchising sector to dismiss Franchise Council of Australia CEO Richard Evan’s description of the 600-plus attendees at the recent National Franchising Convention as “fabulous franchising folk” with the same words – “well, he would, wouldn’t he?” The uninformed may suggest that of the dictionary meaning of ‘fabulous’ the CEO was referring to was “absurd or exaggerated” rather than “celebrated or marvellous”. The unkind may suggest that on returning to the national capital an ex-politician’s rhetorical gene is reactivated and that words like ‘fabulous’ are used carelessly and insincerely. Such interpretations would be unfair and inappropriate. Without wishing to join the mutual admiration society there was much that was fabulous and marvellous about the 2005 National Franchise Convention and the franchising folk who made it such a memorable occasion.

This year the expected usual high standards of the sector’s peak event were enhanced by its location in the nation’s capital. The Chairman’s Dinner under the wing of Lancaster G for George in the Australian War Memorial Museum, the cocktail party in the National Museum of Canberra and the Franchising Awards Dinner in the Great Hall of Parliament House were particularly special occasions. The lunch to recognise the first graduates of the Diploma in Business (Franchising) was particularly satisfying to one who has long been committed to education for the franchising sector. Like any successful and established franchise system the current education initiatives did not originally emerge fully formed but they are now world’s best practice. The prospect of a postgraduate qualification is an exciting and not unrealistic next step.

The Canberra convention also offered the opportunity for addresses by both the Prime Minister and the Leader of the Opposition and key ministers and shadow ministers. Unlike other industry associations, the franchise sector went to Canberra not to lobby for special concessions but to showcase the sector to the country’s leaders – both in government and opposition – and to remind them of the sector’s growth and its economic, commercial and social contribution to Australia. It was pleasing to learn that both the PM and the Leader of the Opposition were well-informed as to the sector and its continuing contribution to employment, small business and entrepreneurship. The critical role played by the franchising sector was publicly acknowledged by both government and opposition, as was its contribution to a business skills base to enhance the country’s future. As a director of the FCA Board in an era – not so long ago – when relations with government were strained it reflects highly on the efforts of those who have worked so hard in various capacities within the franchising sector to hear the Prime Minister comment that the “transformation [of the sector] has been remarkable,” that “world’s best practice can be found here in Australia”, that the franchising sector has significantly “contributed to the enterprise culture which has transformed this country over the past few decades … and has stamped the Australian brand as a brand to be respected and to be followed and in some parts of the world to be admired”.

Richard Evans’ request of the Prime Minister, that the franchising sector be accorded the recognition and respect it has earned, was directly acknowledged:

… the government does recognise the contribution that the franchise community has made to the Australian economy and we do very much respect the values on which your organisation has been founded and the motivation behind the efforts of your members. The contribution that many in this gathering have made, the contribution that franchise people have generally made to the Australian economy has been an integral part of the success story of the Australian economy over the last decade.

FCA chairman Stephen Giles’ message to the Prime Minister was simple and direct – the sector wants the government out of its way and out of its pocket – and was also acknowledged directly: “You don’t want governments telling you what to do, you want governments both out of your pocket and out of your way, and if you are given the right environment and the right climate, you can build businesses and you can generate jobs.” In this context the apparent renewed commitment by federal and state governments to reduce the ‘red-tape’ burden is encouraging.

A 2001 OECD study estimated that small and medium-sized Australian businesses spent over $17 billion to comply with taxation, employment and environmental regulations. The federal parliament alone passes an average of 100 pages of legislation every sitting day. To this regulatory mountain must be added the regulation that pours out of state and territory parliaments as well as from those to whom the power to make delegated legislation is conferred. In this context the Australian franchise sector is fortunate that a single national Franchising Code of Conduct has spared it from the nightmare that bedevils many industry sectors in a federal system – that of multiple regulation in each of Australia’s nine jurisdictions.

In relation to the proper role of government in the franchising sector there was acceptance and acknowledgment by sector and government of their respective roles. The following words were spoken by the Deputy Prime Minister of Malaysia in opening that country’s International Franchise conference in August, but the underlying sentiments were echoed by Giles, Prime Minister Howard and Opposition Leader Beasley:

The government’s role is only a facilitative one. It is the business communities themselves which, in the final analysis, need to take on the challenge of entrepreneurship to develop their respective businesses both in the domestic and global markets. They are the ones who will finally need to make their own decisions and make the necessary commitments as well as assume the risk of their business ventures. They are the ones who would have to aggressively compete for markets and make sure their business models match up to the expectations of the consumers and that they are capable of standing up to competition.

Of course not every franchising story has a happy ending. Not every fledgling franchise system succeeds and not every franchisee, even within successful and established systems, succeeds. This is unfortunate, but inevitable in a free enterprise system. Prospective franchisors are nevertheless warned, and prospective franchisees comforted, by the fact that Australia’s regulatory scheme for franchising is world’s best practice. The world’s strongest laws prohibiting misleading conduct and unconscionable conduct supplement the Franchise Code of Conduct and in the Australian Competition and Consumer Commission there is a strong and active regulator.

It is little comfort, of course, for failed franchisees – but disputation in the sector is very low and mediation compelled by the Code has a high success rate. Although franchisees who have legitimate actions against franchisors must be able to exercise their legal rights through mediation and ultimately litigation, it is disturbing to read that “some plaintiff law firms, hit by the decline of personal injury litigation, see franchising disputes as a growth area” (Australian Financial Review, 30 September 2005).

As a franchising novice I made an observation which has been continually reinforced over that last 30 years – that the franchising sector is a close, cooperative and collegial community willing to share its knowledge and experience within the community and to those considering joining it. Those new to the sector make similar comments. The entrepreneurial nature of franchising attracts a diverse and dynamic constituency who, in addition to the usual leadership qualities, are willing to share, to help and to encourage to an extent not as apparent in other sectors. Australia is fortunate that the founding fathers of franchising in Australia set high standards of collegiality which have become the norm. The 2005 National Franchising Convention continued and reinforced this tradition.

It is a moot point whether the visiting US delegates were more surprised by our access to our political leaders or by the energy and verve of the conference dinner in the Great Hall of Parliament House which continued until midnight – in stark contrast to the equivalent IFA function at which the cleaners take over from the guests at about 9.30pm – or by John O’Brien’s use of a word more usually heard at medical conferences in the course of his typically passionate speech reviewing his year as Franchisor of the Year – or by the easy and natural Australian blend of style and substance delivered with a degree of informality.

Will Rogers, the US cowboy and humorist, didn’t attend the 2005 National Franchise Convention – he died in 1935 never having visited Australia! If he had he would not be recorded in the standard dictionaries of quotations as saying of conferences that “there is no better place in the world to find out the shortcomings of each other”. I noticed few shortcomings in my fellow conferees but much to admire in the achievements of the old hands, the dreams of the new hands and the enthusiasm, commitment and passion of all.

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