Complex Regulations: How to Reduce Risk in Franchises
Franchise operators are passionate about their businesses and their people. Recent regulatory challenges, however, have imposed challenges and cast franchises into the media in a negative light. These challenges have revealed powerful opportunities to improve performance while reducing risk.
Franchise legislation in Australia was upgraded significantly in late 2017 when the Fair Work Amendment (Protecting Vulnerable Workers) Act 2017 took effect. The intention was to protect vulnerable workers from employers that accidentally, or intentionally, exploited their workforces.
More recently, on 1 July 2021, the Franchising Code was amended to include greater dispute resolution options, and to require more clear and thorough disclosure from franchisors and franchisees.
This disclosure included rebates and financial benefits, early termination options, restraint of trade obligations, capital expenditure information, leasing information, and more.
These and other legislation changes have come about as a result of a long, and sometimes unpleasant, history of transgressions by some franchisors and franchisees in Australia.
Recent actions by the Australian Competition and Consumer Commission (ACCC) have been taken because of:
- Unfair contract terms
- Non-compliance with end of term and renewal of agreements
- Non-compliance with certain disclosure obligations
- False or misleading representations around future earnings
- Unconscionable conduct
The ACCC’s dirty laundry list is long. Each transgression by a franchise comes with a major penalty for the business. From multi-million dollar fines to court-enforceable undertakings, they’re typically expensive and enormously distracting.
Why is this going on?
Most food services, dining, and hospitality businesses in Australia operate in a franchise model. Often it’s a model that is fragmented in terms of ownership.
Fragmentation can mean systems held in silos, disjointed and disparate, making visibility low and compliance a challenge.
In many franchises, different parts of the business seek their own technology vendors — by choice or necessity. This results in systems that typically don’t share data and that suffer low user adoption by people that work across the business.
A long-term strategy involving a common technological solution, and all of the data-driven opportunities it offers, would benefit all of the many stakeholders of a franchise.
The enormous opportunity of tech
A unified solution with real-time access to data via dashboards will benefit a brand’s operations through increased productivity, visibility, and control.
When a clear, real-time view of the current business can be seen through data, decisions become proactive rather than reactive. Insights reveal patterns and trends that were previously unattainable.
Best of all, in a fast-changing compliance environment, all parts of the business are enabled to follow the same processes within the same system. Outliers are quickly and easily identified before an issue becomes a multi-million dollar legal problem.
In an environment in which technological disruption has significant impact, and where food services, dining, and hospitality businesses need to innovate quickly to stay afloat, a unified solution to manage a business’s largest controllable expense — their workforce — can be transformational.
Workforce and human capital management solutions offer:
- Employee and manager self-service tools that make it easy to manage the entire employee lifecycle from pre-hire to retire, driving absenteeism down and engagement up.
- Time and attendance tools with real-time visibility into employee information such as accrued pay, hours worked, time off, absences, and more.
- Advanced scheduling and forecasting tools that eliminate manual processes and allow franchisees to create predictable schedules optimised for demand.
- Tools that enable the business to see in real time how employees and franchisees are performing.
- Analytics and reporting tools that provide actionable insight into performance by franchise or location, to identify opportunities for cost savings and productivity gains.
Reduce risk, boost performance
Traditional franchising models are risking more than just low-performance compared to their data-driven competitors. They’re also at greater risk of being dealt major financial and reputational penalties by regulators.
Streamlining and standardising solutions can automate compliance processes, bring consistency and visibility across the entire business, identify compliance risks before they become a serious problem, and give access to potentially transformational data.
Ultimately, unified and cloud-based technology optimise all business operations, and it’s fast becoming something that food services, dining, and hospitality franchises simply cannot do without.