FCA: Franchising Not a Weak Link Pleads Steve Wright

Apparently the Franchise Council of Australia is feeling a little vulnerable and insecure as evidenced by this article.

Steve Wright tries to deflect criticism levelled towards franchising by describing three "key brands" that claim to have some "trading successes".

John O'Brien is quoted as saying that Poolwerx's sales and profitability were up in the first four months of 2009.

I can't speak to the validity of the claims from the two other systems, being Eagle Boys Pizza and Clark Rubber but I can speak to John's claims.

Big increases in the cost of swimming pool chemicals and equipment alone (as much as 65%)  can account for any increase in turnover upon last year. As can the high number of severe weather events around the country that saw insurers forking out for new equipment for flooded, fire damaged and wind affected pools and equipment. Two Australian States experienced record breaking heatwaves. 

Conversely, the 2008 equivalent quarter was, in many States, a cold one and contained very few of these weather events that have a very strong correlation with sales movements. I should point out that Clark Rubber are also in the pool industry as well as the rubber products industry and this fact needs to be taken into account when deciding if the "growth" is more than a statistical blip. 

 For John O'Brien to claim "profitability" is up is kind of laughable.

This franchisor did not collect data on franchisee profitability until 2009. 

Really, what John is referring to here when he says profitability, is FRANCHISOR profitability.

This entire article amused me. Trying to claim franchising is not a "weak link" in the business world based on some questionable statistics from three brands actually discredits their own arguments. Is that all they can come up with? Three brands having an ok quarter, one of whom plans to sell more franchise locations?

As for the massive understatement:

 "There has been no suggestion of any fundamental disagreement, conflict or dispute between Kleenmaid and its franchisees other than its unpaid commission and servicing payments issues, which has the effect of including some franchisees in the list of Kleenmaid unsecured creditors.”

Well thats just the kind of nonsense We've all come to expect from the FCA. There's no fundamental dispute they just didn't get paid and can do nothing about it thats all. No biggie. No need to become concerned.