Bella Katz: The F word in Australia is Franchise

There are too many stories of franchisees in Australia who put their livelihoods into someone else's brand only to be left holding worthless businesses. Photo / Thinkstock

Opinion

The last few months I've been ensconced in channel marketing across all levels of sophistication.

On one end of the scale I'm working with a prestige automotive brand with long established processes. Communication through the global channel is extensive and tightly controlled. The premium reputation of the brand is guarded fiercely and every point of customer contact is intended to build on this, with partners following stringent guidelines under the watchful eye of HQ.

At the other end of the scale is a much younger manufacturing brand entering the next phase of its business maturity cycle. What's more, it's a New Zealand company operating in Australia for over a decade.

With an Australian at the helm, this company is at that crossroads of standing alone as a subsidiary while remaining part of its Kiwi namesake.

The struggle of balancing the needs of the channel with running an independent business is a difficult one. Add in an international head office and it's even harder. Then take into account the relative youthfulness and loose processes of the head office and it can be an even more challenging affair.

Potentially, there's another level of complexity and one that's especially relevant for companies in a franchising structure.

In the last few years franchising has become a dirty word in Australia.

Too many stories of franchisees who put their livelihoods into someone else's brand only to be left holding worthless businesses; or bought into promises that failed to deliver. Even worse, perhaps engaged in fraudulent practice.

In January this year, a new mandatory code of conduct was introduced that puts much more onus on the franchise owner. Along with the many changes, one is an obligation for the franchisors to invest in marketing and regularly disclose the strategy to all partners. They must co-contribute to a marketing fund and keep all funds in a separate account.

There are penalties to companies that break these rules.

I know of several New Zealand-owned franchises in Australia that could do with a serious shake up. I've met with their frustrated Australia-based franchisees desperate for more support from New Zealand head office.

In the case of one food brand, this particular company used to have a great reputation and a product that people paid a premium for. They had a great niche, good locations and put money into marketing. People knew the name and chose it over competitors.

Now, I'm amazed that the Australian business is even afloat. The stores look tired, the staff are young and disinterested (probably underpaid and uninspired), the product hasn't changed - or if it has, the market certainly doesn't know about it.

Meanwhile the Australia-based franchise holder is reluctant to add yet more of his own money when the New Zealand master franchisor won't dip in his own pocket.

It's a recipe for disaster. And when I bring it back to the prestige car brand, the gaping difference makes it clear why some businesses become huge global brands and others slowly whittle away until and investment bank breaks them into pieces and sells them for parts.

There's an obligation that a head office or a master franchisor has to its subsidiaries. I hope New Zealand companies coming into, or those already in Australia, can offer that robust support to their channel. Not just in the honeymoon period, but at every stage of maturity to continue to lead the way.

Bella Katz is an Australia-based brand and marketing consultant and advises New Zealand companies exporting to Australia. She is also a New Zealand expat, calling Australia home for over a decade.