Franchisors have been warned not to interfere with the parliamentary inquiry into franchising after a letter from Foodco to its franchisees warned that false allegations would be met with legal action.

Fairfax media reported the communication provoked harsh words from inquiry deputy chair Senator Deborah O’Neill.

“Silencing, by implied or actual threat, those who want to speak up and inform the democratic processes of the nation is both immoral and illegal,” she said. “If you are a franchisor who thinks it’s OK to threaten retribution to your franchisees, or their staff, because they participate in a Senate inquiry, you’re doing the wrong thing. Stop it and withdraw any such threats immediately.”

However a spokesperson for Foodco (the franchisor for Muffin Break and Jamaica Blue) told Inside Franchise Business “At no time was the letter intended to discourage franchisees from participating in the Inquiry. We strongly refute any suggestion this was the case, and absolutely respect the rights of anyone to lodge a submission.”

The spokesperson said the franchisor welcomed the parliamentary inquiry and said the company’s support is stated in its letter to franchisees dated 13 April 2018.

“The letter was sent to our current franchisees in response to numerous franchisees having contacted us regarding allegations made by a former Muffin Break franchisee publically, on Facebook and other forms of social media which they felt will have a detrimental effect not only on their businesses but the Muffin Break and Jamaica Blue brands as a whole.

“Our franchisees are our priority and we are committed to protecting their businesses and the brands under which they operate.

“The success of our business is entirely underpinned by the success of our franchisees and it is in no one’s interest to pursue practices which would lead to a failed franchise. We support any changes that improve the franchising system.”

Former Foodco franchisee Faheem Mirza has made allegations the business model is a fake in a submission to the inquiry, claims that Foodco “strongly rejects”.

Foodco is a family run business that began operating in 1989 and now has a network of approximately 480 stores across seven countries.

“This achievement is possible because we work collaboratively with our franchisees to help them achieve business success, and we are confident the vast majority of franchisees share this sentiment.”

Craveable brands franchisee stands up against claims

A second fast food franchise group has hit back at what it claims are untrue franchisee allegations.

Craveable brands, which operates the Red Rooster, Chicken Treat and Oporto chains, last week denied claims outlined by a group of franchisees (the Franchisee Association of Craveable) in a submission to the senate inquiry on franchising.

Now a franchisee who has been part of the Red Rooster business for 30 years and sits on the network’s Franchise Advisory Council has spoken out at the claims and in support of the business model.

According to news.com.au Dimi Cutner said “I speak to a lot of franchisees and they were a little bit surprised, because most of us, particularly in the last two or three years, our business has thrived.

“Sure there will be a handful of people that aren’t doing things as well as others, but the majority just simply don’t agree with it. You’ve got to take responsibility for your own business as well — it can’t just be the [fault of the] franchisor.”

Reiterating his statement from last week, Craveable Brands CEO Brett Houldin said “Australians wanting to start a business are four and a half times more likely to be successful with Craveable than any other small business owner. Our franchisees receive some of the best support of any franchisee business in Australia, explaining why so few of them close each year.”

In response to qeuries about the cost of goods raised by the Franchisee Association of Craveable, Houldin has indicated the company’s buying power ensures chicken delivered to stores is about 10 per cent cheaper than comparable chickens.

“This helps explain why the most recent Franchisee Survey from last year found an astonishingly high 80 per cent satisfaction rate,” he said.