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Australia's Best & Worst of '08

With 2008 quickly winding up, it is time to review the year's best and worst business events in Australia. James Thomson of SmartCompany, reports a list of 15 gong-winners and clanger scams. The  two below are what franchising has contributed.

SmartCompany AwardsThe 'Britney Spears ugly collapse' award

The spectacular and sad failure of jewellery franchise chain Kleins was terrible for staff, suppliers and franchisees. This was a franchise system that had failed to move with the times and adapt to changes in consumer tastes and increased competition. But this was more than just a simple corporate failure - the Kleins episode raised questions about the way Australia's franchise sector handles disputes and franchisor collapses. In some critic's eyes, those many of questions remain unanswered.

Winner: Kleins

Lessons emerge from Kleins collapse, Wednesday, 7 May 2008

The collapse of Kleins jewellery retailer provides two lessons for all businesses - stay relevant and respond quickly to any downturn in sales. Amanda Gome

As announced in SmartCompany yesterday, the Victorian-based jeweller collapsed with debts of $20 million.

As the administrators of collapsed Kleins jewellery business look for a buyer for the $40 million revenue business, questions are being asked by franchisees about why problems were not flagged earlier.

One franchisee says she had heard rumours for six to 12 months that things were not right. Jo Berthon, who runs a store in Sydney's western suburbs, told the ABC that she had witnessed a decline in stock deliveries.

But when she questioned headquarters she was told everything was fine. She would then rely on the fact that the owners of the business Greg and Terry Campbell had had 20 years in the business and knew what they were doing.

So what was at the heart of the collapse? While discount retailers are doing it hard in the current downturn, there were other signs that Kleins had just not kept up. The Kleins website is a good indication. The brand of the discount jeweller that sold under the catch cry "Looking good costs so little" looked old fashioned and dowdy.

Its product range was far too broad and confusing and included everything from hair accessories, miniature clocks and cubic zirconia earings. And competitors like Diva entered the market and offered the consumer a bolder, more contemporary brand.

The administrators, Ferrier Hodgson's partners James Stewart and George Georges, are selling the Kleins brand and the franchise network (of the 200 outlets, 150 are franchised stores). They are hoping to sell the business as an ongoing concern but will carve it up if they have to.

Meanwhile unhappy creditors who had been withholding goods from stores will not be holding back at next Monday's creditors meetings.

The 'franchise we don't want to see' award

There are around 1000 franchise systems in Australia and the number seemingly keeps growing by the day. One idea we don't want to see adopted in Australia is the franchise chain that specialises in picking up dog poo. Groups such as Pet Butler, DoodyCalls and Yard Guards are flourishing in the US. The poo pick-up industry is so established that it holds "turd herding contests" where operators compete for a golden shovel. No thanks.

Winner: Poo pick-up franchises

New franchise opportunity: Dog poo pick up, Friday, 14 March 2008

There is a burgeoning poo collection business in the United States and some operators are starting to franchise, reports the Wall Street Journal Online .

The franchised pet waste collection franchises, such as Pet Butler and DoodyCalls, have found growing demand for their services. With pet ownership at a record high, the demand for pet waste removal is growing - Americans would rather play with their pets than clean up after them.

Some of the chains are large by Australian standards; aPAWS has grown from 12 businesses in 2002 to about 200 today.

Cheresee Rehart, owner of Yard Guards on Doody in Florida, told the Wall Street Journal that she will be making $US100,000 this year from her 110 customers - a far cry from when she started the company in June 2003 with $40 to buy a book on professional pet waste scooping.

The poo pick-up industry is so established that it holds "Turd Herding Contests" where operators compete for a golden shovel. You can watch it here.

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About Ray Borradale

Ray Borradale's picture

Public Profile

Over forty years experience in Small Business and more than twenty-five years in franchising operations as a franchisee and employed by three franchisors, mostly in operations.

I have dedicated more than ten years and over 15,000 hours in the pursuit of quality franchising and exposing franchisor abuse of franchisees while advocating for the introduction of franchise relationship Law and the levelling of the dispute processes between bigger business and small business.


Area of Interest
Franchise Operations