In The News

One in three Aucklanders would consider leaving 24th August 2016

A poll conducted for website The Spinoff by research company SSI found one in three people (32.2 per cent) surveyed had considered moving away from Auckland in the last two years because of house prices, says the New Zealand Herald.

A further 36 per cent hadn't considered the option but thought it was a good idea. Auckland housing prices have risen by 85 per cent in the last four years, taking the average price to around nine times the average household's income.

Between the 2008 and 2013 Censuses, 32,184 people left Auckland for the Waikato, Wellington and Canterbury regions, while 29,301 moved to Auckland from those areas.

Economist Shamubeel Eaqub said there were two types of Aucklanders leaving for the provinces - retirees heading for cheaper areas like Tauranga and Northland, and families looking for a better lifestyle.

Since the 2013 Census, Auckland had become even less affordable, but the decision to leave the city was a challenge for some.

"The challenge for a lot of people is they're not able to get the same kinds of jobs or job security in other parts of New Zealand.

"That's [probably why] it's only a third of people saying they've actually considered it."

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BurgerFuel to expand to US despite losing Subway 23rd August 2016

23 August 2016 - BurgerFuel has announced that it is to go ahead with its US expansion plans despite ending its collaboration agreement with Subway and Franchise Brands following the death of Fred DeLuca last year. The company said it would continue to maintain a close relationship with the group which still has a ten per cent holding in BurgerFuel as well as a position on its board.

"The passing last year of Subway founder, Fred de Luca, our key contact within the organisation and the ultimate vision behind the partnership, has meant that Franchise Brands and Subway's priorities have had to change," CEO Josef Roberts said.

"It is clear that for now they have their own challenges. Given this situation we felt that it would be best to seek an end to the operating partnership, which if not in full swing, only delays us from developing in the United States."

"We are confident that we will get something off the ground in America soon and that our goal of opening in the USA will still be fulfilled," Roberts said.

"Let's not forget we have a strong business, no debt and a significant amount of knowledge about doing business in the USA which frankly has been necessary to understand."

The company requested a release from its agreement which has now been granted. Roberts said while the outcome wasn't what the company wanted, it had to be adaptable to the circumstances.


Keep on truckin’, says NZ economic forecast 18th August 2016


Kiwi diners put off by dirty bathrooms but forgiving of slow service – survey 17th August 2016

17 August 2016 - Findings from a nationwide study suggest that most Kiwi diners (70 percent) prefer casual dining over a formal setting, and that excellent food is what will keep them going back to a restaurant time and time again.

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Cartels Bill to be amended to clarify franchising issues 12th August 2016

August 2016 – A law that could have badly affected franchisors and franchisees is to be amended.

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Field managers and community awards - last chance to enter 10th August 2016


Hospitality spending up; fuel down in July 9th August 2016


EmbroidMe celebrates 10 years in New Zealand 9th August 2016


Foodstuffs grows as Countdown slows 9th August 2016

As Australian-owned chain Countdown plans to close six supermarkets, Foodstuffs is planning to open seven new stores under its Pak'n'Save, New World and Four Square franchises - all outside Auckland. 11 other stores are to be refurbished.

Foodstuffs' general manager for property development, Lindsay Rowles, said many growth opportunities existed for retail development in New Zealand.

"Consumers are becoming more discerning about where they shop," said Rowles. "Some want more modern facilities and a wider range of products, while others are focussed on cost savings and environmental sustainability. We are well aware of all those factors, and are investing in order to cater for these needs well into the future."


McDonald's US to revise ingredients in 50 percent of menu 2nd August 2016

In a bid to address customer concerns, McDonald's US has announced plans to remove fructose in its buns, remove artificial preservatives from Chicken McNuggets and some breakfast items, and brought forward its ban on chicken (but not beef) raised with antibiotics. McDonald’s also has begun serving some of its milk and yogurt from cows not treated with an artificial growth hormone. But is it 'too little, too late' to reverse slowing growth trends in McDonald's homeland?

Once ubiquitous in products ranging from soda to ketchup, high-fructose corn syrup has fallen out of favor since scientists and consumer advocates identified a possible link between consumption of the compound and obesity and diabetes. Many food and beverage companies, including PepsiCo Inc. and ketchup maker Kraft Heinz Co. , already have removed the sweetener from products or introduced separate lines without it.

At a press event on Monday, McDonald’s supply chain chief, Marion Gross, said it takes time to make changes at a company with 14,000 U.S. restaurants. “It’s been a journey,” she said.

The chemical composition of high-fructose corn syrup, derived from corn, is nearly identical to that of sugar, and it is unclear whether natural sugar is indeed healthier. Medical research has reached conflicting conclusions on whether corn syrup causes weight gain and other health problems.

 The American Journal of Clinical Nutrition in 2008 published a paper concluding that there is no such link. But a 2010 Princeton University study found that rats that consumed high-fructose corn syrup gained significantly more weight than rats that consumed table sugar, even when their overall caloric intake was the same.


Franchisee profitability expected to grow - survey 1st August 2016


Mad Butcher disagrees with liquidator over franchisee failure 29th July 2016

The Mad Butcher's original store in Mangere failed because of 'unsustainable' sales costs, says the first liquidator's report. But a spokeswoman for Veritas Investments, the Mad Butcher's NZX-listed franchisor, said the company "disagrees strongly" with the liquidator's conclusions.

The Massey Rd store owes $465,014 to creditors, including $418,172 to suppliers and $18,264 in staff wages and holiday pay, according to the report by liquidator Peter Jollands, of Jollands Callander.

He said the liquidation appeared to have resulted from "unsustainable cost of sales giving insufficient gross profit".

The Mangere outlet is one of 10 Mad Butcher stores that have gone into liquidation, receivership or been closed down, according to Veritas.

Two of the stores that had been through liquidation were trading again and a third, in west Auckland, would re-open in around six months.


Court battle after franchisor takes over outdated store 28th July 2016

A franchise seeking to enforce a requirement for franchisees to upgrade their fit-outs turned nasty when the franchisor used a private security firm to take over a store after-hours. The dispute, which took place in Australia, has now landed in court and is reportedly causing other Nando's franchisees in Australia to delay renovating their stores until it is resolved. Renovation to current standards is a common requirement under most franchise agreements.

Since the pair acquired the four venues between 2007 and 2011, Nando's has been trying to force the franchisors into making significant investment into the businesses. It is this the dispute centres on.

Nando's says the franchisees haven't upgraded the restaurants since they bought them, in some cases as long as nine years ago.

 "As a consequence, the fit-out and branding used in all four restaurants are out of date and not in line with Nando's current standards," business development manager Scott Hamilton says in an affidavit tendered to court as part of the case.

The company wants the franchisees to spend almost A$1.2m to refurbish the Narre Warren, Wareca and Braeside businesses, the documents indicate.

The case has become a key test in head office's ability to force franchisees to invest in their business, Hamilton's affidavit says.

"A number of franchisees in the Victorian market have already raised the pending litigation... as a reason to delay their own refurbishment works".

 Franchisees have a requirement to upgrade and invest in stores when head office "reasonably requires" them to do so written into their franchise agreement, a counterclaim filed by the company says.


FANZ turns 20 in style 28th July 2016

July 2016 - The Franchise Association's 20th birthday went off with a bang as over 100 people gathered to celebrate.

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Macca’s trials McDelivery in Auckland 27th July 2016

July 2016 - McDonald’s NZ has confirmed its McDelivery service will be trialled at its New Lynn and Glenfield restaurants in Auckland.

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McDonald's US sales disappoint 27th July 2016

Although McDonald's is still achieving global sales increases, performance in the US is continuing to disappoint investors. Sales rose 1.8 percent at established US locations in the quarter ending June 2014, despite the introduction of all-day breakfast - something which places additional strain upon operations.

Jefferies analyst Andy Barish said he believes an increase in competition will keep pressuring sales growth in the restaurant industry. He wrote in a note to investors that people's options for eating out or dining in "have increased tremendously," particularly with the emergence of smaller chains and independent concepts.

 Chains are also pushing more deals to attract customers amid the intensifying competition. Wendy's has been promoting a "4 for $4" deal, while Burger King recently said it would start a promotion for $1 hot dogs.

To boost results, McDonald's has been closing underperforming stores. It ended last year with fewer stores in the U.S., its first contraction after decades of expansion. It is on track to shrink its domestic store base of more than 14,000 again this year.

Globally, McDonald's said sales rose 3.1 percent at established locations. That included a 2.6 percent increase in the division that includes established markets like the United Kingdom, Canada and Australia. The high-growth segment, which includes China and Russia, saw a 1.6 percent increase.

For the quarter, McDonald's earned $1.09 billion, or $1.25 per share, including a 20-cent negative impact from restructuring charges. Analysts expected $1.39 per share, not including one-time items.


Festive coffee cups help young artists win $9,000 for schools 27th July 2016


Franchisors finalists in EY Entrepreneur of the Year awards 26th July 2016


Maccas shuts down website after customer offensive 22nd July 2016

McDonald's New Zealand has been forced to close down its new Make Burger History website after customers made a range of offensive and bad taste suggestions for product names on the design-your-own-burger web page. The Stuff website suggests the problems have 'left the company red-faced', presumably because it under-estimated the immaturity and stupidity of its users.

The company launched its "Make Burger History" site this week, as part of a new promotion where customers can "build your own unique burger" and get free fries and a medium soft drink.

"Just come in to a participating 'Create Your Taste' McDonald's and order your Creation at the self ordering kiosk," McDonald's promised.

But its failure to consider what pranksters might dream up online has left the company red-faced, with the website overrun by racist, homophobic and otherwise offensive suggestions. The page now redirects to the McDonald's homepage.



Original Mad Butcher store closes 18th July 2016

The very first Mad Butcher store in Mangere, Auckland, has closed, with intense competition from supermarkets being blamed for the demise of a store which was a top performer just three years ago. Howver, Tim Cook of franchisor Veritas Investments has said the problem lies with the franchisee, not the business model.

"Despite many offers to help and a rent holiday being negotiated on his behalf, the [current] franchisee has been unable to turn around a consistent slide into poor performance," Cook said.

He said the franchisee was offered a "top performing proven operator free of charge" and an advertising package to help turn the business around.

"This was rejected by the franchisee," Cook said, adding that he had been surprised by the liquidator's lack of understanding of the state of the business.

"It is a lesson for all franchisee businesses that you can't simply buy a business and expect good performance to be maintained if you are not working in and on the business."


Domino's robot kerbs enthusiasm 7th July 2016

Domino's driverless pizza deliverly robot has hit a few snags - like kerbs and crossing roads. It hasn't slowed down the company's plans for new store openings in New Zealand, though, especially in Christchurch.

The vehicle, based on United States military hardware and input from Australian defence contractor, Marathon Robotics and other advisers, was a four-wheeled vehicle with compartments "built to keep the customer's order piping hot and drinks cold whilst travelling on the footpath at a safe speed from the store to the customer's door".

It was able to navigate from a starting point to destination, selecting the best path of travel, the marketing said. "His on-board sensors enable him to perceive obstacles along the way and avoid them if necessary."

Domino's wants to spin its robot wheels in New Zealand, where law covering the rollout of driverless technology is less rigid. Australia allows testing of semi-autonomous vehicles but not the unguided type that Domino's has in mind.

It hoped to start an DRU trial in this country in the first half of 2017, Bush said


Tracking franchise performance – breakfast meeting 27th June 2016


McDonald's registers McDelivery trademark in NZ 26th June 2016

McDonald's has registered the 'McDelivery' trademark in New Zealand consisting of a golden McDonald's arch zipping along on a skateboard.

Big Mac deliveries have taken off in Australia, with customers able to order online after setting up an account with the fast food restaurant. The online account can be set up to allow super-fast reordering with a "save your favourites" function.

There is no McDelivery option on the New Zealand McDonald's website, but the McDelivery logo has made an appearance on the Government's Intellectual Property Office's register of trademarks this month.


BurgerFuel's US expansion on hold 15th June 2016

BurgerFuel's planned expansion into the USA has been delayed following the death last year of Fred DeLuca, the founder of Subway and the major investor behind Franchise Brands LLC. Franchise Brands was to have taken a 10 percent stake in BurgerFuel with an option to increase to 50 percent, and the company planned to use the Subway network to establish its presence in the USA.

Subway was going through significant challenges and changes – largely due to the death last year of Subway founder, Fred de Luca, said BurgerFuel chairman Peter Brook.

Franchise Brands had not confirmed it would continue its involvement with BurgerFuel and the New Zealand company was not prepared to enter the US without that support, he said. A decision was expected in the next few weeks.

BurgerFuel posted a $1.1 million loss in the year to March 31, compared to a $817,000 profit the previous year. The loss was largely attributed to spending related to the planned US expansion.

The chain opened 12 new stores in the past year in New Zealand, Australia and the Middle East, taking the total number of BurgerFuel stores to 78.

Terrorism and instability in Kuwait resulted in lower sales than originally anticipated and in January the two BurgerFuel stores there were closed . A new store opened in May in Baghdad was performing well.

BurgerFuel pulled out of Iraq in 2014 due to an increased threat from Islamic State militants.


Celebrating 20 years - an invitation 14th June 2016


WFC shares information to help franchises grow 12th June 2016

June 2016 - 45 members of the World Franchise Council gathered in Italy to discuss joint employer legislation and share information on franchising country-by-country

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McDonald’s celebrates 40 years in New Zealand by going back to 1976 7th June 2016

June 2016 - 75 cent Big Macs as Macca’s Queen Street revisits the good old days

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Big names join line-up for Franchise Conference 25th May 2016


Burger King NZ for sale? 25th May 2016

You can't buy an individual Burger King outlet in New Zealand, but you might be able to buy the whole operation - including 83 outlets around the country. An Australian report suggests that private equity firm The Blackstone Group may be preparing the business for sale. The Australian Financial Review says that the company is 'trading pretty well', after is reported a 7.5m loss in y/e 2014.

Industry analysts say Burger King is now trading pretty well. They are tipping the company, which could fetch between A$140 million (NZ$149 million) and A$160m, will soon release financial results that reflect an ongoing improvement in performance.

Should Blackstone give the green light to a formal sale process, likely trade buyers include 'Hungry' Jack Cowin, who owns the Hungry Jack's franchise in Australia and is a major shareholder in Domino's, as well as Stephen Copulos, a former KFC franchisee who sold 42 outlets to New Zealand outfit Restaurant Brands in March for A$82m. 

The business may also be attractive to some regional private equity funds who are building pan-Asian portfolios of fast food outlets.


New turn in 7-Eleven PR disaster affects all Australian franchisors 23rd May 2016

The 7-Eleven employment scandal in Australia continues to have repercussions for the whole franchise sector there. Jason Gehrke of the Franchise Advisory Centre provides an update.

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Mixed growth outlook offers opportunities, challenges 22nd May 2016


Franchisee tops Aotearoa NZ Maori Business Leaders Awards 14th May 2016

A New World franchisee has been named Outstanding Maori Business Leader for 2016

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The Coffee Club heads north 14th May 2016


Maccas launches all-day breakfast 3rd May 2016

3 May 2016 - McDonald's is launching its all-day breakfast nationally tomorrow

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Starbucks sued for too much ice 2nd May 2016

A disgruntled customer in the US is suing Starbucks for $US5 million for putting too much ice in its cold drinks. Stacy Pincus alleges the chain is cheating customers by underfilling drinks. Adding ice to drinks is a standard practice in most food outlets unless the customer requests otherwise. Interestingly, the report chooses to end by referring to the recent publicity about Starbucks in Saudi Arabia not admitting women - something that was later shown to be erroneous.

"In the iced coffee example, a Starbucks customer who orders and pays for a Venti iced coffee, expecting to receive 24 fluid ounces (709mL) of iced coffee based on Starbucks' advertisement and marketing, will instead receive only about 14 fluid ounces of iced coffee."

The suit also claims Starbucks is making more money off its customers than it should.
"In essence, Starbucks is advertising the size of its cold drink cups on its menu, rather than the amount of fluid a customer will receive when they purchase a cold drink - and deceiving its customers in the process," the complaint states.

Ms Pincus is seeking $US5 million in damages. The case is a class action, representing anyone who bought a cold drink from Starbucks in the US in the last decade.

Starbucks has dismissed the lawsuit, saying staff would happily remake a drink for any unsatisfied customer.


New franchise scheme called ‘meaningless and dangerous’ 27th April 2016

27 April 2016 - A specialist lawyer and the Franchise Association have spoken out against a new scheme which offers franchises ‘warrants of fitness’. The scheme was initially promoted to franchisors via an email sent out on 22 April that said: ‘Stop – Now there is no need to be a member of the NZ Franchise Association.’

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Over 40% of new business owners and franchisees don't know what due diligence is 26th April 2016

A survey of over 600 current and former franchisees and independent small business owners in Australia has found that 42% hadn't heard of the term 'due diligence' or didn't know what it meant. The research also found that time spent on undertaking due diligence was found to be “relatively low”, although prospective franchisees were found to be consulting more widely than owners of independent businesses. Only around a third of business owners surveyed said they consulted with an accountant, lawyer or financial advisor prior to purchasing or starting a business.

Professor Lorelle Frazer, director of the Asia-Pacific Centre for Franchising Excellence, told SmartCompany the apparent lack of time and money spent on undertaking due diligence was the most surprising finding to come out of phase two of the research.

“Business owners are often so concerned to know how much it will cost to buy or start a business, which is a big investment, that the last thing they invest in is education leading into it,” she says.

While Frazer says there are some free resources available to prospective business owners, including from governments, it is more often the case that these individuals are missing out on specific, expert advice that applies directly to their business.

“Each business is unique,” Frazer says.

“They need to do their own personal due diligence for their particular business, to make sure they are in the right market, understand the competition and if they are paying the right price for the business.”

Frazer says one of the concerns in the franchising sector is the tendency for prospective franchise owners to seek general professional advice, as opposed to specific advise about franchised business models.


Confidence strong but it's still a buyers' market for franchisees 25th April 2016


Good health and safety procedures offer bottom line benefits 21st April 2016

All About People improves franchise businesses by keeping them safe

Health and Safety is in the news with the new legislation that came into force earlier this month. 'But it's not something you bolt on to a business because you’re scared of legislation – it’s something you build into your business to make it perform better. Once you think of it that way, it’s a benefit, not a threat,' says Michelle Macdonald.


Mature franchisees need intelligent support 20th April 2016


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