In The News

Clampdown on rogue employers 23rd February 2017

23 February 2017 - Immigration Minister Michael Woodhouse has today announced new measures to stop employers who breach immigration and employment law from recruiting migrant workers.

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Economy in a sweet spot 22nd February 2017

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Mixed prospects for local Chinese businesses 22nd February 2017

February 2017 – The economic outlook for local Chinese businesses is mixed, according to a survey by accounting software provider MYOB.

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Domino's NZ reports strong first-half profit 16th February 2017

ASX-listed Domino's Pizza Enterprises, which franchises 106 stores in New Zealand, posted net profit after tax of A$59.7 million ($63.8m) for the six months to January 1 - up 30.8 per cent on the same period the year before. The New Zealand stores were a strong contributor to the results, said NZ general manager Scott Bush.

Group chief executive Don Meij attributed the result to its focus on digital innovation, easy payment solutions and investment in premium ingredients, as well as support for its recently upgraded menu.

In its results briefing, the company sought to reassure shareholders after revealing it had returned A$4.5m in unpaid wages to staff over the last three years and seen 26 franchisees leave after internal audits.

Meij said the there was "no correlation between store profitability and the underpayment of staff wages" and the company had zero tolerance for unethical behaviour.

"I make no apologies for expecting the highest standards from our franchisees," Meij said.

Read more at http://www.nzherald.co.nz/b...


Employment fraud a risk for franchises 9th February 2017

February 2017 - Employment issues continue to dog the franchise sector in Australia – are New Zealand franchisors prepared?

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New event - Future-Proof your Franchise 8th February 2017

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Veritas sells Nosh for c$4 million 3rd February 2017

Veritas, which was ordered to sell Nosh or close the outlets by its bank, has sold the struggling chain for $3.98 million. The buyers are apparently a group of anonymous NZ investors going under the name of Gosh Holdings. According to the Companies Office, the newly-formed Gosh is 100 percent owned by Sydney-based New Zealander Andrew Phillips.


Nosh currently has two stores operating under franchise, although the Constellation Drive franchisee recently removed all Nosh signage. No comment has been made so far on the position of franchisees under the new owners. Although Mr Phillips says there will 'certainly' be more stores, it is not clear whether these will be franchised or company-owned.

Phillips, a New Zealand corporate finance specialist who has been based in Australia for 15 years, helped a consortium of New Zealand investors buy Nosh.

He would not identify the "two or three people" behind the purchase, but said they were involved with consumer products in New Zealand.

The group thought Nosh was a "great brand" and believed there was an opportunity to develop it and the chain.

Phillips, the new Nosh chairman, said his Australian base was also a hint as to what the future might hold for the business.

In New Zealand, there would be an internal restructure, but no change for customers with all stores open for business.

"We'll grow the brand there and then assess our options."

He said the company and its overhead costs needed to be looked at, but would not go into any possible job losses.

"We see this as a good opportunity.

"There will be more stores, certainly."

Phillips was confident it could turn Nosh around, and said private ownership would prove a better fit than being publicly listed.

 

Read more at http://www.stuff.co.nz/busi...


Booze delivery co uses McDonald's to promote 1st February 2017

An Auckland home delivery company which offers to collect fast food as long as you order alcohol as well is has been taken to task for using McDonald's images on its website without permission. Alcohol abuse watchdogs have expressed concern about the service. The' On The Rocks' website reportedly has no age identification check and lists a number of fast food options that can be ordered, including kebabs, pizza and McDonald's.

A McDonald's spokesman said it was not aware On The Rocks would be delivering its food.

"Aside from Menulog, which is part of our home delivery trial in New Lynn and Glenfield, we don't have any formal relationship with delivery companies," the spokesman said.

He said On The Rocks was using McDonald's images on its website without permission.

"While businesses are able to offer the delivery service, they are not allowed to use our trademarks in their marketing.

"Typically we would ask businesses using our trademarks without our permission to stop doing so," the spokesman said.

The spokesman said he was not aware of any other company selling alcohol alongside McDonald's in New Zealand.

Read more at http://www.stuff.co.nz/busi...


Nosh deadline extended for possible buyer 31st January 2017

A statement from Verita Investments reads: 'Further to the announcement of 16 January 2017, ANZ has agreed to extend the date for Veritas’ delivery of a proposal for Nosh to 4pm on 2 February 2017, to allow conclusion of negotiations with the
preferred bidder for Nosh.'

Read more at http://www.veritasinvestmen...


Hell champions disabled training 31st January 2017

Hell Pizza is continuing to leave its controversial past behind as it builds a reputation as 'champion of the underdog’.

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Optimistic start for franchising in 2017 31st January 2017

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NZ franchise survey for 2017 26th January 2017

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Hell champions disabled training programme 17th January 2017

Hell Pizza is continuing to leave its controversial past behind as it builds a reputation as 'champion of the underdog’.

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Veritas gets extension from bank 17th January 2017

17 January 2017 - ANZ has agreed to extend the deadline for Veritas Investments to either sell or begin winding up its Nosh food supermarkets until the end of the month.

The owner of the Nosh franchise on Constellation Drive in Auckland's Mairangi Bay has dropped the Nosh brand from its store. Veritas said the franchisee has indicated that he will operate independently of the Nosh franchise and "has purported to terminate its franchise agreement. Veritas does not accept that termination, and the parties are in dispute over the matter."

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Nosh franchisee removes branding 15th January 2017

One of the two Nosh franchisees has removed the branding from their store ahead of the deadline set by ANZ for the brand's owner, Veritas Investments, to sell its own stores. The six company-owned stores are being offered for sale through a business broker, but it is not clear from their advertising whether they are being sold as franchises or as independent outlets.

The store on Constellation Drive has removed its Nosh signage and appears to be attempting to remove all references to the brand. 

A shopper at the Constellation Drive shop in Auckland said the store had gone as far as scribbling over Nosh logos on items such as cheese, which had Nosh pricing labels stuck on the outside of their packaging.

A sign at the check-out told customers it was no longer Nosh and said that due to changed arrangements, American Express would no longer be accepted.

Owner Phillip Mead would not say what lay behind the changes, or whether his plan was to trade independently. He confirmed the store was not accepting Nosh loyalty cards or vouchers.

Read more at http://www.stuff.co.nz/busi...


No news on Nosh as deadline approaches 13th January 2017

Veritas Investments is still working through the process ahead of a deadline to present a plan for its unprofitable Nosh supermarket business to ANZ. Individual stores have apparently been listed for sale through a broker.

In mid-December the company, which also owns the Mad Butcher franchise, said it had until Jan. 15 to deliver either an unconditional contract for the sale of Nosh Group, or a proposal to close and wind it down to its lender.

At the time, it said the sale or closure of the loss-making Nosh business would result in non-cash asset write-downs and one-off expenditure related to the sale or closure but provided no further details.

On Friday, chairman Tim Cook said he had no comment other than "we are working through the process."

Read more at http://www.nzherald.co.nz/b...


KFC trials menu suggestions based on facial recognition software 2nd January 2017

2 January 2017 - Diners at a Chinese KFC concept store can use facial recognition technology to choose meals for them based on their mood and age. KFC collaborated with Chinese search engine Baidu to launch the system.

Baidu stated that the principle behind the system was based on setting certain set meals, food and beverage choices to a specific age range, as reported in People's Daily Online.

For instance, the AR-operated machine will recommend a lunch combo of zinger burger, boneless mini fillets and coke to a 20-year-old male customer; and a breakfast of porridge and soya milk to a 50-year-old female customer.

The food suggestion leaves some customers to question: 'What if a 50-year-old wants to have fried chicken?'

'Why is the computer not recommending healthier choices to younger people?' One Chinese web user wondered.

 

Read more at http://www.dailymail.co.uk/...


Caci offers incentive funding for new regional franchisees 22nd December 2016

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Christmas already a winner for retail 19th December 2016

A total of $2,642 million was spent through the Paymark network in the first 14 days of December, up 6.1 percent on last year. The trend reinforces the positive expectations in the latest MYOB Small Business Monitor.

Annual growth rates for the first 14 days were strongest in Hawke’s Bay and West Coast. Spending growth was lowest in Gisborne and Marlborough region (that includes Kaikoura in Paymark’s coding), both due to exceptional circumstances.

The majority (52%) of spending remains through debit cards although the growth rate is faster through credit cards, which today also includes contactless cards.

As an insight into the pre-Christmas spending patterns, the spending rises through the day from 6-7am to reach a peak between noon and 1pm most days and then gradually tapers off.

Read more at https://nzbusiness.co.nz/ne...


7-Eleven deed sets new standards for franchise compliance 19th December 2016

Embattled Australian convenience retailer 7-Eleven has entered into a proactive compliance deed with the Fair Work Ombudsman to reform its internal systems and procedures to stamp out the wage fraud which has scandalised the brand for more than a year, according to a media report.


Jason Gehrke of the Franchise Advisory Centre advises that the proactive compliance deed – a binding legal agreement – requires 7-Eleven to undertake and implement a number of initiatives that will reduce and potentially eliminate the capacity for wage fraud to re-occur in its network.


Jason notes that that 7-Eleven is unique in the franchise sector in its application of a gross profit-share royalty model (rather than a fixed fee or percentage of turnover royalty model), which has been criticised by some observers as a contributing factor for franchisees in the underpayment of employees. The Fair Work Ombudsman does note that 7-Eleven has since changed its financial model to provide greater financial assistance to franchisees, and is now also required to provide detailed wage information to potential franchisees.

The initiatives include thumbprint scanning of workers to clock on and clock off at the start and end of their shifts, backed-up by a network-wide CCTV system monitored by 7-Eleven head office; continued rectification by 7-Eleven of unpaid staff wages; the introduction of a mandatory centralised payroll system that all franchisees will be required to use; the establishment of an employee consultation group that specifically excludes franchisees; and a raft of other measures.

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Focus on franchisees as CrestClean celebrates first 20 years 16th December 2016

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Close Nosh or find a buyer, ANZ tells Veritas 14th December 2016

14 December 2016 - Veritas Investments, the owners of Mad Butcher and Nosh, has been told by its bankers to sell the Nosh gourmet food store business by 31 March 2017 or close it down. The company was previously hoping to franchise the six Nosh stores it owns. Two other Nosh stores (Constellation Drive on the North Shore and Mt Maunganui) are already franchised; there is no mention of how those franchisees will be affected in today's NZX announcement.

Veritas is required under the revised ANZ facility to deliver to ANZ by 15 January 2017 either an unconditional contract for the sale of Nosh, or a proposal to close and wind down Nosh. Veritas is also required to close and wind down Nosh by 31 March 2017, if it cannot be sold by that date.

Given the time available before 15 January 2017, the Board cannot be certain that a sale of Nosh can be agreed by that date. The Board therefore proposes to investigate the proposal to close and wind down Nosh by 31 March 2017, as part of its strategic plan for the group.

Read more at https://www.nzx.com/compani...


Retail, hospitality expect a good year ahead 14th December 2016

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Kiwis name NZ’s favourite takeaway 8th December 2016

8 December 2016 – One home-grown franchise has replaced another at the top of a major customer satisfaction survey

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Creator of the Big Mac dies 1st December 2016

Jim Delligatti, the McDonald's franchisee who created the Big Mac nearly 50 years ago and saw it become perhaps the best-known burger in the world, died on Monday in Pittsburgh.

Jim Delligatti told The Associated Press in 2006 that McDonald's resisted the idea at first because its simple lineup of hamburgers, cheeseburgers, fries and shakes was selling well.

'They figured, why go to something else if (the original menu) was working so well?' Delligatti said then.

McDonald's has sold billions of Big Macs since then, in more than 100 countries. When the burger turned 40, McDonald's estimated it was selling 550 million Big Macs a year, or roughly 17 every second.

Read more at http://www.nzherald.co.nz/b...


Another minimum wage breach in New Zealand 1st December 2016

More and more breaches of the Minimum Wage Act, Holidays Act and Employment Relations Act are hitting the headlines, with the latest being at a kebab shop in Rotorua. All the New Zealand cases to date have involved independent businesses; however; franchisors would be well-advised to audit their franchisees' employment practices to avoid the publicity which has affected brands such as 7-Eleven and Caltes over the Tasman.

The job description attached to his employment agreement specified Mr Corten would work 40 hours a week at $18 per hour.

But for the duration of his employment Mr Corten worked six days a week, from 8.30am until 10pm. He took no holidays while employed and was paid $720 a week, either in cash or cheque, which works out to about $8.90 an hour.

He resigned in September 2013 following disagreements with Mr Efendi.

Read more at http://www.nzherald.co.nz/b...


Another wage problem for Australian franchising? 27th November 2016

The Caltex chain in Australia has been accused of systemic worker exploitation throughout its franchise network. An investigation by the team of journalists behind the 7-Eleven expose last year has, according to Fairfax Media, 'unveiled a brutal franchise structure which some operators claim leaves little option but to defraud workers.' The Australian Fair Work Ombudsman confirmed it has been contacted by a worker in relation to this group but couldn't comment further due to the 'wider compliance activity relating to Caltex franchisee outlets.'


Caltex Australia CEO Julian Segal has said, 'Depriving employees of their entitlements is illegal and immoral' and has promised the company will review the franchise model, including the franchise agreement, the financial returns as well as the ongoing governance and compliance arrangements.


When the 7-Eleven scandal broke in August 2015, one franchisee wrote an email warning: 'It is inevitable that this will get out. It is only a matter of when, not if. What damage will this cause to the Caltex brand?'


The company took action, including auditing some franchisees for suspicions of wage fraud. It then made contact with the Fair Work Ombudsman and separately investigated eight franchisees and terminated five of them, equivalent to 13 sites. It is reportedly investigating 50 more sites. However, the terminations have themselves been criticised as termination due to a breach of the franchise agreement means the value of the business returns to Caltex.


There is no connection between the Australian-owned Caltex operation and the Caltex brand in New Zealand, which is operated by Z Energy Ltd under licence from Chevron International. The largest individual shareholder in Z Energy is the New Zealand Supernnuation Fund.


Read the Fairfax report


Is it worse than 7-Eleven?


Caltex SEO speaks out on illegal and immoral actions

An internal Caltex document presented to franchisees in August on workplace obligations outlines "common mistakes".

The list includes not paying an employee for trial/training shifts, not recording and rostering the hours worked by the franchisee and not having these records available and not checking if visa requirements are up to date.

One of the more egregious "common mistakes" was "not paying wages … on a regular basis/on time and not having required records of wage payments (especially when cash wages are paid)".

In a statement Caltex described the "common mistakes" as examples "provided by way of illustration and do not reflect Caltex's behaviour".

It says the company had always made it clear to franchisees that they are required to operate their businesses in full compliance with all laws, including the Fair Work Act.

But it will not commit to a compensation scheme where it finds exploited workers who have been systematically ripped off, similar to the scheme set up by 7-Eleven, which has so far paid A$50 million in back pay to workers.

Instead, it points the finger at franchisees, saying "franchisees are responsible for ensuring their employees are correctly paid. Caltex is providing practical support to those employees such as helping them secure ongoing employment if possible as well as assisting them to pursue a claim against their former employer".

But it isn't as simple as that. If a franchisee is terminated and loses the value of the goodwill, it is hard to chase them down to repay workers as some of them will have nothing left except a big bank loan to repay for a business loan they took and no income to repay workers.

In addition, many workers are too afraid to come forward for fear of retribution.

Read more at http://www.smh.com.au/busin...


NZ economy – stronger for longer 22nd November 2016

Stronger population growth, rising business confidence and a rebound in milk prices point to an enduring period of growth for the New Zealand economy, says the latest Westpac Quarterly Economic Overview

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Mad Butcher liquidator on ridiculous crusade, claims owner 16th November 2016

A dispute between Veritas Investments, owner of the Mad Butcher franchise, and the liquidator of the original Mangere store could end up in court after liquidator Peter Jollands accused the company of having 'an unworkable business model' for franchisees and of failing to provide company records. Veritas chairman Tim Cook says the company had provided everything required and called Jolland's actions 'a ridiculous crusade.'

Veritas chairman Tim Cook, however, on Tuesday detailed what he called the facts of the Mangere liquidation and his frustration with Jollands.

He said he could not comment on Jollands' claim the Mangere store had begun losing money in the years prior to its sale, other than that Leitch had a "very successful business" there.

But he ran through a series of phone calls, meetings and other dealings with Jollands, where the franchisor wanted to find a workable solution for the store's owner rather than put it in liquidation.

Other stores, such as one in Rotorua, had become one of its big successes after a "motivated" operator took it over using exactly the same business model.

Cook said they offered "an enormous amount of free help" to turn around the Mangere store, including bringing in a proven operator and free advertising.

The franchisee had admitted in those meetings the failure was his fault, and was a minority shareholder and manager before buying the store outright, Cook said.

But the next thing Cook knew, the store had gone into liquidation

Read more at http://www.stuff.co.nz/busi...


Franchise Awards 2016 RESULTS <br>- learning from experience 12th November 2016

12 November 2016 – The top titles this year have gone to franchises with decades of experience - and home-grown franchises took the majority of the honours

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Franchise figures honoured at Awards 12th November 2016

12 November 2016 - Two people who have made huge contributions to franchising were honoured at the Westpac New Zealand Franchise Awards

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Immigration to NZ, Brexit and the Trump Factor 9th November 2016

Simon Lord talks to Bill Milnes of Laurent Law and Andy Chang of Westpac about immigration trends and their impact on franchising

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McDonald's US ditches 'Create Your Taste', franchisees say brand in deep depression 4th November 2016

McDonald's has put a halt to its Create Your Taste made-to-order programme in the US and replaced it with a simpler version which offers fewer options. A Business Insider report says that many franchisees in the US had invested around NZ$170,000 per location with plans to install the 'Create Your Taste' kiosks in up to 2,000 restaurants across the US. Create Your Taste is in around half of all outlets in New Zealand, where service time is arguably less of an issue than in the US.


An October survey by a Nomura analyst suggested that many McDonald's franchisees in the US believe the brand is in a 'deep depression' and could be facing its 'final days', with one suggesting, 'Probably 30 percent of operators are insolvent.' However, the survey represented only 29 US franchisees with 226 restaurants out of more than 14,000 in the US. Nomura maintained a Neutral rating on McDonald's stock.

Business Insider's Hollis Johnson tested the programme at a New York City McDonald's and paid US$10 for a burger with bacon, tomato, onions, cheddar cheese, guacamole, and two sauces, along with sides of fries and a drink. That's about twice the cost of a Big Mac meal. His meal took eight minutes to prepare.

Some franchisees also complained about the cost of the programme, and said it slowed down kitchen operations and targeted an upscale customer that McDonald's shouldn't be going after.

McDonald's decision to get rid of the full Create Your Taste menu and replace it with Signature Crafted Recipes should help solve some of these issues.

Signature Crafted Recipes has fewer options for customisation than Create Your Taste with bundled toppings that should make it easier for kitchens to handle. The company started testing it earlier this year.

Read more at http://www.stuff.co.nz/busi...


High-earning US brands seek local partners 31st October 2016

A top US franchise executive is visiting NZ this summer to look for partners for some of America’s top-earning franchises

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Australian franchising: <br>growing or not? 28th October 2016

11 October 2016 - Initial results from the Franchising Australia 2016 survey show that sales and employment within franchising are up slightly since 2014 but numbers are static. Is it out-performing the general economy?

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Australian Franchise Awards<br>2016 Results 28th October 2016

Updated 13 October 2016 - Poolwerx won the top title at the Australian Franchise Awards last night, with franchisee awards being spread over four different brands

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Making it easy to share information 27th October 2016

October 2016 – Lauren Taylor brings fresh energy to providing franchisors and franchisees with the information they need to build better businesses

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Restaurant Brands says 'Aloha' 26th October 2016

Restaurant Brands is looking outside NZ to Hawaii for further expansion. The company, which has the master licences for several of the Yum! Brands stable, plans to buy Pacific Islands Restaurants which is the franchisee for 82 Taco Bell and Pizza Hut stores in Hawaii, Saipan and Guam. Restaurant Brands previously acquired 42 KFC stores in Australia in April 2016. The company's agreement with Starbucks expires in 2018.

Restaurant Brands, New Zealand's largest fast-food operator with 173 stores, is expanding into new markets to drive future earnings growth, opening new burger chain Carl's Jr in New Zealand and expanding into KFC in Australia where it has 42 stores. To improve profitability in its legacy businesses, the company has been refurbishing and adding to its local KFC outlets, exiting low-performing Pizza Hut stores and closing its worst performing Starbucks Coffee outlets.

"A while ago we looked at the growth potential for Restaurant Brands in New Zealand and it was in our view limited to a steady 'business as usual' growth of one or two KFCs per year, maybe one or two Pizza Huts per year, that sort of pace. The ability to grow rapidly with new brands as we have seen with Carl's Jr is a very slow path, and there's not many other brands that we could purchase or would be interested in purchasing to add step change," chief executive Russel Creedy told NBR's BusinessDesk

Read more at https://www.nbr.co.nz/artic...


NZ overtakes Singapore as best place to start a business 26th October 2016

New Zealand has been named by The World Bank as the best country in which to start a new business. It also ranked first in registering property, getting credit, dealing with construction permits and protecting minority investors. The news follows the recent World Economic Forum Global Competitiveness Report which showed New Zealand outranked Australia, China and Canada in competitiveness, but suggested infrastructure, government bureaucracy and innovation are holding us back.

World Bank chief economist Paul Romer said simple rules for doing business were a sign that a government treated its people with respect.

'They yield direct economic benefits: more entrepreneurship, more market opportunities for women, more adherence to the rule of law.'

However, in a separate article a Wellington academic has warned that 'ease of doing business does not always equate to more business.'

Read more at http://www.stuff.co.nz/busi...


Women mean business <br>-Awards Preview 2016 22nd October 2016

22 October 2016 - We’re just three weeks away from the Westpac New Zealand Franchise Awards. Who will come out on top for 2016?

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