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Can you give specifics?

How many total franchises does PoolWerx have this month (January 2015) compared to January 2014? Please tell us how you are coming up with these numbers.

What do you estimate is the break even point in revenue for a PoolWerx? What are you making now?

Who is your main competitor? How is it doing?

Of course the silence is deafening!

There would not be one person who comes out of PoolWerx franchise making $$$ & coming out in front. It is a loose loose situation for Zees.

Ray Borradale's picture

Zodiac maybe?

Zodiac was by far the strongest rumor but until it is confirmed I'm not going to say a word.  Should such a sale occur then franchisees will be treated as contracted distributors utilizing mandatory purchasing to maximize franchisor profit. 

It's a copy-cat thing along the lines of Waterco and the Swimmart franchise. Should that happen at Pooljerx it is designed to heal a sickly franchisor.

poolwerx

I find that comments re third line enforcing and internet advertising interesting as a major manufacturer is rumoured to be buying poolwerx. -nothing like cutting out the middle man.

Ray Borradale's picture

defend Poolwerx

I think it’s time someone came out and defended Poolwerx and O’Brien. I just happened to come across another Poolwerx franchisee yesterday that had the audacity to tell me he was just about broke but the upside was his divorce.  

His impudence went further to where he stated he was planning to join the trend and get his $5,000 - $30,000 from the franchisor for his business.  It seems the growing number of those who received such payouts have little appreciation that Poolwerx could have extended itself and left them with nothing. 

I would like to hear some of the success stories where departing franchisees received more.

And the silence was deafening.

Ray Borradale's picture

Poolwerx and Battery World franchisees

And many others should take their third-line forcing complaint to the Commonwealth Ombudsman.

The ACCC is charged with protecting and regulating healthy market competition but the process of handing out third-line forcing [tie-ins] for any lame application every time one is received is at least ill considered.

Firstly it should be noted that the notification process doesn’t notify any of the franchisees that an application is being considered.  The ACCC is well aware that franchisees generally find out about the approval after it is given and where the franchisor then educates the franchisee network that their new revenue streaming has government sanction. They are simply not put in a position to table their case against third-line forcing.

Secondly, the ACCC must determine whether there is a detrimental effect to consumers should approval be given.   No consideration is given to the detrimental effect to franchisees and it is not required that consumers benefit.

In taking a microscopic look at one instance at Poolwerx and the consumer effect that occurs look to their pool pump preferred supplier.  Poolwerx franchisees will lose customers because their mandatory purchases of a particular brand of pump means incurring additional costs in adapting that pump where the alternative would simply ‘bolt-on’.   Customers confront non-competitive quotes but they can go to an alternative provider so the ACCC see no detrimental effect to consumers.

Two points missed by the ACCC in their evaluations.  One being that they potentially decrease competition in the pool pump business so in fact they are not proactively ensuring protection of consumers by promoting competition. 

The second point relates to abusive revenue streaming to the detriment of franchisees.  Who can possibly deny that this is an area within franchising that is taken advantage of by most franchisors to varying degrees and quite often signals absolute disaster for a network subjected to the extremes.  Looking at the disaster that befell Midas Australia franchisees it is obvious that the extreme revenue streaming was instrumental in that franchisor’s long drawn out fall into eventual administration.

The growth in rubber stamping by the ACCC for any approval of third-line forcing has seen growth in abusive revenue streaming and the natural consequences are that franchisors will eventually fail and thereby diminish competition.

Consumers are not protected when desperate franchisees are in survival mode and while from industry to industry how consumers may be targeted may vary there remains clear incentive to rip customers off.

The ‘get-out-of-jail-free-card’ for the ACCC is the combined reliance by franchisors and the ACCC on supporting the contractual ability of the franchisor to achieve brand consistency.  I am more than a great believer in brand consistency but the arguments to the ACCC by franchisors are typically a ruse where the ACCC is satisfied that their collective butts have been covered.

One problem is that the vast majority of third-line forcing applications have been so broad in their description of what franchisors are requesting the ACCC to sanction that there is simply no relationship between the consumer awareness of brand consistency across every aspect of the franchisee’s business right down to basic consumables.

If these brands were serious about brand consistency then we would see it in the delivery of training, support and advertising but usually training and support have been subjected to cost cutting and in many cases the advertising funds are simply being ripped off.

The ACCC are not that stupid as not to fully understand what they sanction in franchising.

Next time a prime Minister is handing out Inquiries there should be one into the handling of third-line forcing applications to remove the ruse and the ACCC sanctioned ‘bait and switch’.

Re: Reality

This suspiciously smells like a response from the Franchisor?

Boudica Lawson's picture

The reality about your agreement

Neither the old or the new pro-forma franchise agreement specify who the actual suppliers are. They are only referred to as "approved suppliers" so I am not really sure what you can be referring to with your comments that "there are multiple suppliers......according to the agreement I signed."

Suppliers are defined by the operations manual not the agreement.

Guest you should be careful, it sounds like you are selling non approved products and brands if you think there are multiple suppliers for each product. You'll get a few dozen of those breach notices sent to you that Poolwerx are so fond of. Probably all in one week.

Ray Borradale's picture

Re: Reality

Either you are big Johnny or you understand little about what is now to happen to the Operations Manual now that the ACCC have allowed Poolwerx to screw you across the board.  How is the eye socket?  Musta hurt huh ...

How is all that advertising going at Poolwerx.  Or did I miss something ... anything.

Reality

Its a shame "Boudica" doesnt report complete facts. There are multipule suppliers in several areas mentioned above according to the agreement i signed - and the purchases I make...why let fact get in the way of a good story - perhaps this kind of activity is why she cannot sell? Or perhaps the heat up there has affected her judgement?

Boudica Lawson's picture

Re: Poolwerx got away with it

You are most correct Ray.

This notification covers all franchisee suppliers, all aspects of business and has been going on for as long as most existing franchisees can remember.

I wake up in the morning and put on my uniform from our only supplier and answer my  approved supplier (only one) mobile phone as I get into my  approved supplier (only one) work vehicle with its  approved supplier (only one) signwriting. I use an approved supplier (only one) photometer to test the clients water with approved ( only one) reagent tablets. Then I treat and balance the water with  the approved (only one) range of chemicals. I supply the customer with a CPR sign,  a new filter gauge, and refresh their stock of filter socks that all have to come from the only  one approved supplier. My customer wishes to replace her pool pump and instead of offering her a pump that will fit on her existing pipework without alteration I have to offer a pump from only one supplier which will require alterations to her existing pipework at an additional cost. It will be the same if she wants her filter fixed or her salt chlorinator repaired. She asks me to supply her with a product she has seen that lets her animals get in and out of the pool easily. i have to tell her we don't stock them as the profit margin on the product of around $10 does not warrant the time I will have to invest in getting the franchisor to approve my request to supply from a manufacturer who is not a poolwerx nominated supplier. I give her a print out of her water test results (from our one and only water testing software supplier) and her invoice which is printed on special paper obtained from our only stationery and printing supplier ( who charges you upfront for the goods and takes weeks to send them)and she asks me to take a look at her spa heater. Its made by a manufacturer who would love to give me some training in their products but is disincentived to do so because they know I cannot actually sell their product. The customers heater needs a spare part which concerns me greatly as the parts she needs are not available from our nominated suppliers and so I am unlikely to get any sort of meaningful trade discount that would allow me to supply these products competitively.

Then I come home and discover that i have 12 days to implement a massive price rise on chemical products becasue no obligation exists for the franchisor to give franchisees 30 days notice of pricing changes. Some franchisees have locked in contracts with commercial clients for chemical prices and have to support a loss on those products until new contracts can be negotiated. 

Out of all this the franchisor gets a 10 % rebate on the cost of just about all the above goods ( as well as 11% royalty and 4% to the branding fund when I sell the goods) of which half goes into the franchisors pocket and the other half to the branding fund. I call it the branding fund because it does very little in the way of driving sales to franchisees. As an example, the marketing campaigns run by the national branding fund has netted my franchise 5 transactions worth less than $100 in 4 years.

(Most of the advertising you see being done from poolwerx has been paid for by the franchisees who also pay poolwerxs' only  nominated graphic design company to do the artwork for them. Artwork used to be free for zees but money must be tight because they dropped that particular benefit about 12 months ago)

This is what the ACCC  is sanctioning in its acceptance of the third line forcing notification.

You bet we are angry.

As far as I am aware from asking them, the ACCC did not obtain copies of the disclosure documents, the franchise agreement, new or old, or copies of the contracts between poolwerx and nominated suppliers. One of these contracts with our major equipment supplier has a clause written into it that states that X supplier must support financially or otherwise the Poolwerx notification of third line forcing.

There was ZERO consulation between the ACCC and franchisees despite the submissions pleading for it and citing other cases and considerations where this was done.

Despite the pleas that they investigate whether franchisees supported the third line forcing notification the ACCC ignored their own previous comments that the benefits of such activity may be  illusory if the majority of franchisees do not support the activity.

By the time Poolwerx zees were alerted to the very existence of the third line forcing notification it was too late to make a submission. (An independant franchise association would have REALLY helped here)

I don't think they even mentioned it to the poolwerx franchise advisory council but I cannot be sure because they re wrote the guidlines so that meeting minutes form council meetings cannot be released to franchisees. (!!!)

Many franchisees are still stunned as to how mislead they were about the existence of rebates prior to purchase, having been told in written and oral form that "poolwerx makes no margin on products sold". Some have disclosure docs that say that the rebates apply from "time to time" and many have the words "majority of rebates" written into their contracts. Half is not a majority and for many this is the first time they have heard of something called a "strategic  investment premium fund" to which these rebates are apparently paid.

 YES, this is the same Poolwerx that the FCA likes to trot out as an example of a good franchise system, It's the same John O'Brien who is so confident in the satisfaction of his franchisees that he neglected to even mention to them that there was a Senate Inquiry into franchising. If his franchisees are so happy and profitable why did he not ask them to write to the Inquiry to support his claims that franchise regulation needed just a tweak and a polish?

Its the same John O 'Brien who privately stated to franchisees after the fact that the Senate inquiry was a big waste of his time and a load of BS and that he was just going through the motions whilst badmouthing the franchisee who made a submission and most of the politicians involved.

 Its The same John who stated during the consultation phase of the senate inquiry that he had paid one employee a full year wages to re write the franchising agreement to comply with recent changes to the code when asked about the costs of code compliance but neglected to mention that actually, the agreement was re written to almost treble the number of pages contained to have the effect of stripping franhcisees of their exclusive territories and most other rights and protections and was initiated before changes to the code were even implemented.

Its the same Poowlerx and John O'Brien that publishes an article stating that they give a moratorium on fees if franchisees are struggling but then refuses to do so even when the franchisees will have to walk away from their businesses for lack of money to continue.

In fact Poowlerx is doing such a good job of destroying its relationship with zees both during and after the franchise term that I feel sure this is why they are struggling to sell any. Just ask franchisees who have been trying to sell for two years how they feel about Poolwerx destroying their assets by continuing to treat struggling and exiting franchisees in such a disgusting fashion.

This same franchisor has clauses written into its contracts that state that the franchise will be terminated if the franchisee who has been ordered to sell their business fails to do so within the alloted time frame. ( round about 3 months). 

So poolwerx make your business unprofitable by slapping you with expensive to rectify breaches,  taking huge slabs of money from you in fees and rebates and then when you fail to sell the lemon your business has become in the alloted time they take it from you anyway by calling it a default event. 

Churning anyone?

 

Ray Borradale's picture

Reasonable?

A prospective franchisee should ask, and be honestly answered, about the effects of changes 'from time to time' to the Operations Manual.  It is reasonable that a franchisee must find that information during due diligence.

It is unreasonable that a change to the Operations Manual, authorised by the ACCC, makes 'from time to time' one huge hit across everything.  Who would have expected that in any franchise?  I would now expect it in any number of franchise systems.  Everyone gets a free ticket to ride [franchisees] at the ACCC.

One other thing; disclosure of rebates and back-door payments can be hidden in a number of ways.  I won't give examples because newbie franchisors don't need help.  Many put these in practice when disclosure made it necessary.

Re: Poolwerx Third Line Forcing Wars: The Revenge of the Coproli

"In particular I note that PoolWerx is required to comply with the disclosure requirements of the Franchising Code of Conduct in relation to the notified arrangement."

And if they don't? NOTHING.......

NOTHING would happen if they breached the disclosure requirements. Nothing ever does happen.

What hope have franchisees got if decisions like this are seen as beneficial to anybody other than the pockets of the Franchisor.

This stinks....and I totally agree about the comment about Disclosure to current franchisees. Would they have signed if they knew this was coming?

It seems from this that it is perfectly acceptable for a franchisor to offer you a franchise agreement that is only truly transparent after you have signed. That is to say, the franchisor can slip all their little nasties in after the fact, so long as they tell the franchisee about the new enema they are about to receive. Is that the negotiation thing the FCA keep spruking about?

FRANCHISING IS EVIL!!!!

Ray Borradale's picture

ACCC destroys bottom line?

This decision by the ACCC is consistent, consistently suspicious, and I cannot imagine the justification to allow profiteering across the board from every aspect of a poolwerx franchisee's business where I can't see any 'public benefit', but I can see a detrimental effect to competition.

The 100% purchase rule means that their customers will often incur increased costs where products may not compliment a customer's existing product and therefore require additional product or repair to get a result which would be negated if the franchisee had some choice.  If you look at what is authorised here [refer link to ACCC/Poolwerx submissions] then you cannot possibly argue brand consistency to any degree on a whole lot of what will now be a scam. 

Apart from damaging the franchisee's customer base, this decision authorizes what is clearly the uncontrolled plunder of franchisees and to hell with the effect on the public.

So where does that take us when the financial model for the franchisee is destroyed to enhance the financial model of the franchisor?  Eventual collapse as franchises cannot be sold and infrastructure costs get out of whack and blow the model anyway?  Are these idiots too stupid to understand the intent of s47 or is there an ulterior motive?

What role has this type of decision and the general approach of the ACCC to franchising played in the failure of franchise systems? 

Ray Borradale's picture

Poolwerx free pass on this

Poolwerx and the ACCC free pass but wait ..... the final decision will be published.

Ray Borradale's picture

If I was hit by a

If I was hit by a drunken truck driver while I was walking along a footpath signed to suggest that I was safe then I would learn about what it took to find some justice in that situation.  Fortunately most people don't get run over by drunken truck drivers.  Fortunately drunken truck drivers can't buy a ‘get out of jail free' pass.  Point - people take the time to learn about franchising after they get hit.

And 'oder' is really skimping.  Ya' kno whada mean mate.

Barbara Jorgensen's picture

US spelling is

..oder.  Which is right? 

I imagine it is the same everywhere in the world.You just don't think about it until you experience something like franchising because it is political when it comes to laws. 

Ray Borradale's picture

Do, I don't mean people

with body odour.

Barbara Jorgensen's picture

"infulence"

You mean people with money? 

Ray Borradale's picture

Poolwerx got away with it?

It is my understanding that the income streams developed by the franchisor covers all but wiping your butt.  It Is my understanding that many or most of the practices now authorised by the ACCC have been in practice ‘forever'.

Is this the same Poolwerx that were severely reprimanded following ‘interference' at the Federal Inquiry?  Is this the same John O'Brien speculated on HERE.  They could not be the same .. or the Australian Competition and Consumer Commission may have acted within s47 and within the intent of s47.

Franchisees here have a right to be angry.  The ACCC would know as much as I would about product and/or services purchase influences in this business as I do.  NOTHING!

The ACCC contact the franchisor to address any opposition with lawyers; they do not spend 4 hours calling a sample of franchisees to at least gain some insight into the argument against and to better evaluate any effects on competition.  They make decisions behind closed door and produce bullsiht to jsutify such decisions and in this case there is absoluitley no relationship between this decision and what s47 is intended to stop. 

Your question about retrospective disclosure ... many outcomes and decisions from the ACCC in relation to franchising includes a ‘don't do it again' and a clean slate.

The ACCC make the same decisions on s47 after the same lazy process virtually every time.  Boudica you should have expected this - the ACCC have few friends and they need to keep those they have.  'Those' friends have lots of ‘influence'.