I was recently in Phoenix Arizona for the International Franchise Association (IFA) conference and my Uber driver told me that every American city has its own dirty little secret, an area where the homeless gather. My hotel was only a few minutes’ walk from this area in Phoenix and I could feel the effects of this when I looked out my window at night to see shadowy figures walk through the hotel car park.
This made me think of the current situation of franchising in Australia and the shadowy figures hidden amidst its dirty little secret. It is now time to call it as it is….to call a spade a spade.
Don’t get me wrong. I love franchising. My family’s small franchised toy shop fed two families in a small coastal town in Northern NSW in the 70s and 80s. That’s the power of franchising. When it’s done well, families can prosper and live the lifestyle they desire. Although our family lived modestly, we owned our own home and all children attended university supported by that small toy shop.
But when franchising’s dirty little secret is left to grow and not ‘called-out’ we see families lose their houses and sometimes their lives. This is a tragedy. This could have been my family.
Together we are franchising. That was the theme of this year’s IFA conference. I like that. Together we are a sector that can make choices on which direction we will go. Together, we need to address the issues that can see franchisees suffer, see power misused and greed grow. To paraphrase a term that has had plenty of exposure in America – together we can be great again (lol).
So back to that dirty little secret of franchising in Australia, which has now been revealed. There are pockets within the sector, where people guided by self-interest and greed have created misery for others who do not have as much power nor the skills to recognise a bad investment. With limited transparency and little consumer guideposts in franchising , the potential franchisee is left to their own skill set to uncover the viability of their investment. Unfortunately, many get it wrong.
So together, what do we do about it?
Transparency is the key. Education is the key. Being ethical and aware that shared value is good for business is also the key.
Franchising currently has limited transparency. When there is increasing transparency in most other industries, why is franchising not more transparent? Think social media discussion or viral posts when enough consumers are not happy. Why does it take a major media organisation, and now a parliamentary inquiry to uncover the problems?
The truth is that many franchisees scream long before the media pick up the story yet we choose to ignore it. Until the media takes a stand and holds up the mirror, the screams are not heard. Why is that?
I agree with the recent sentiment of Michael Sherlock and much of it is outlined in the Australian Financial Review articles of March 11 and 12. Ideas include making sure that franchisees are fully involved in the Franchise Council of Australia (FCA), having high performing and ethical franchisors and limiting other influences on Boards that can create self-interest.
Increased transparency could include such things as having all disclosure documents on an ASIC style registry where people could access this if required. A rating system based on franchisee feedback and return on investment measures will also improve transparency. Financial disclosure may only be one page in a 300 page disclosure document. How can a franchisee make an informed decision on such scant information?
I can check my super return on investment, the energy consumption of electrical goods in my home, and the safety of my car. It’s time consumers can check the safety of their franchise investment before they purchase. It won’t always stop the car crash, but at least it might prevent some going up the “Wrong Way Go Back” lane.
To the majority of franchisors and their staff who work their butts off every day to help franchisees thrive, I salute you. These people with their hearts and minds in the right place, I thank you. How do we tell these stories and how do we get these people in leadership positions to build a better culture within the franchise sector?
Together we are franchising and together as part of the sector we’ve made choices. Together we can create change.
What ideas do you have to encourage change? Please comment below or on LinkedIn.