Minister Fails Franchising

Yesterday, 05 November 09, Small Business Minister Craig Emerson tabled his response to the Franchising inquiry. His response lacks leadership on this issue and plays into the hands of rogue franchisors by allowing them to continue to get away with dishonest and unethical behaviour that is just not accepted in other areas of business.

 Minister Emerson has failed the franchising sector. Again.

The problems within the sector have been clearly identified; the result of three separate inquiries. The recommendations that were tabled by the Parliamentary Committee last year had full bi-partisan political support and should have been implemented in full. Instead he has chosen to skirt around the edges, establish yet another inquiry, and fail all Australian franchise participants.    

The Minister has failed to implement the two key recommendations; that of good faith and pecuniary penalties for breaches of the Franchise Code of Conduct. His response? Establish yet another inquiry.

Why can everyone else see that Good Faith is integral to Good Franchising? By failing to understand this basic connection, Minister Emerson continues to show no understanding of the franchising sector. It is as simple as Associate Professor Frank Zumbo writes: “All that Minister Emerson needed to do is to amend the Franchising Code to say that “the common law requirement of good faith applies in relation to franchising agreements covered by the Code”. Simple.

Minister Emerson will instead submit us to yet another Inquiry, an “expert panel to inquire into and report on the need to introduce into the Franchising Code any further provisions to prevent specific behaviours that are inappropriate in a franchising arrangement.” The panel is to report by the end of January 2010.  So we wait.

Another inquiry is a waste of time and yet another delay; the result of which is that franchisees will continue to suffer at the hands of rogue franchisors. The problems have been identified repeatedly in this sector; they do not need to be re-hashed again. The sector needs action. Consider the money being wasted on these continual ‘inquiries’. That money could have been put to better use – perhaps by providing funding to get some of these franchisee cases to court.

The Minister has failed to send a message that non-compliance with the Code and unethical behaviour will not be tolerated within the franchising sector.  

He has failed to implement penalties for the Franchising Code, instead flicked the issue to an inquiry. He has failed to address the problems within the ACCC; giving them powers to “conduct random audits” does not address the fact that it is the ACCC’s failure to use their existing powers that is the main issue. He has failed to address the issues of the termination of franchise contracts and franchisor insolvency. His approach “to provide clarity on the “end of term” of franchise contracts is positive, but falls far short of what is needed.

Minister Emerson has shown he lacks the leadership and courage to tackle this issue. He needs to stand aside and let someone else take on the job.

Bakers Delight Continue to Rip Off Young Workers!

UNITE, the “Fighting Union for Fast Food & Retail Workers” is currently representing a group of workers in three Bakers Delight stores in the northern suburbs of Melbourne.

The UNITE website reports that “Their (Bakers Delight) employer is attempting to get through a workplace agreement that does away with many retail award entitlements.”

UNITE is in the process of informing local residents of what was going on by handing out leaflets, their blog site and now by organising a public rally that will take place today .

The details are: 3pm Wednesday 4th November @ St Helena Marketplace, 214 Aqueduct Road St Helena

They would really appreciate your support!

For those who have been following Bakers Delight behaviour over the years, you will know that this is not unusual behaviour from this franchisor. In 2006 there was the case of 15 year old Deanna Renella in South Australia who took Bakers Delight to the Industrial Relations court where it was found that she had been paid 25% below the Award. rate. Bakers Delight Appealed that decision, and lost. 

In a 2007 media Release, the Australia’s Workplace Ombudsman Nicholas Wilson said “It is about time Bakers Delight Holdings took some responsibility for their franchisees awareness of their obligations to their workers under workplace law. We are happy to work with Bakers Delight Holdings to assist them to achieve this outcome.”

The Workplace Ombudsman finalised investigations into alleged breaches of workplace laws including claims of underpayment of entitlements by Bakers Delight franchises across Australia in 2006 and in the first half of 2007.

The media report states: “In 2006 the Workplace Ombudsman finalised investigations into seven separate Bakers Delight franchises in Victoria, Western Australia, New South Wales, Queensland, South Australia and the Australian Capital Territory.

In 2007 (the first half of the year) investigations were finalised into eleven separate Bakers Delight franchises in Queensland, New South Wales, South Australia, Victoria and Western Australia.”

Perhaps it is time for the Ombudsman to revisit Bakers Delight.

Read former franchisee, Deanne de Leeuw’s, story and see how Bakers Delight deals with franchisees who stand up for young workers who have been paid incorrectly.

Bakers Delight – Outrageous $143 Million charity claim

Bakers Delight has been awarded the ‘Franchisor Social Responsibility Award’ at the Franchise Council of Australia (FCA) MYOB Excellence in Franchising Awards. In their own press release dated 22 October 2009, Bakers Delight states that part of the reason for receiving the award is its participation in charity:

“Bakers Delight has been a major corporate partner of Breast Cancer Network Australia (BCNA) for nine years, raising almost $3.7 million in this time. Through its bakery network, the company donates approximately $143 million of bread to charities each year.”

The good work done for the BCNA by the Bakers Delight franchisees is acknowledged and is to be commended. This is not the case with the outrageous claim of 143 million dollars of bread being donated to charities each year. This is yet another example of Bakers Delight manipulation of the truth.

 This figure is based upon the Closing Stock wastage. With 700 bakeries, each bakery would have to “donate” $204,285 to charity each year. That is $560 each and every day of the year. As shown in the Closing Stock Scam , this is close to the level of stock that Bakers Delight demands their franchisees hold at the end of the day. And of course, Bakers Delight profits directly through the rebates that it receives from suppliers. But does this all this wastage go to charity?

It would be interesting to see whether Bakers Delight now states in its disclosure documents that each franchisee will be donating $204,285 to charity each year. It would also be interesting to compare this figure to the actual profit that a franchisee actually makes. Actual profit is different to the misleading figure Bakers Delight quotes when they say operating profit, as this figure still has significant outgoings. In simple terms, it seems that being a franchisee of Bakers Delight means you give away more than you earn.

The claim of 143 million dollars is deceitful. It is based upon the wastage at the end of the night as reported by the Point of Sale system. How much of the wastage actually goes to charities. Food safety regulations do not allow products with cheese, meat or fruit to be donated; they go straight into the bin. How many bakeries actually give their bread to people so they can feed their horses, or the local butcher to make sausage stuffing with? How many bakeries just simply throw shopping trolley loads of bread out each night?

This claim of 143 million dollars is based upon retail figures. Bakers Delight knows this; they know it is not the real cost value of the wastage yet they allow the Australian public to be deceived. They also know that this does not all go to charities like they claim.

Bakers Delight Lies challenges the CEO of Bakers Delight, Roger Gillespie, to provide an audited account detailing and proving the claim of 143 million dollars donated to charity each year.

It is no surprise that the FCA has presented this award to Bakers Delight. The FCA is the public face of Franchisors in Australia and is their primary lobby group. The FCA is funded by Franchisors. It is the FCA’s job to promote the Franchisors message, which in the case of Bakers Delight is an attempt to appeal to the social conscious of ordinary Australians so that they can sell more franchises. It seems Bakers Delight needed some positive media.

The Bakers Delight press release goes on further to state “Bakers Delight also actively supports environmentally conscious practices through a range of initiatives and is currently rolling out new ‘Green’ artisan ovens, which will result in a 25 per cent reduction in energy resources.” The question here is how much of a kickback will Bakers Delight receive for each oven that a franchisee installs?

This award and Bakers Delight press release is yet another example of Bakers Delight deceitful and misleading conduct.