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How to resolve AdBlock issue? Tereza Murray explains why franchising works for some and ‘not quite’ for others
By Leon Gettler, Talking Business >>
FRANCHISING IN AUSTRALIA is generally considered a safer pathway to business ownership than starting an independent business as a solopreneur.
Franchising has a reported average success rate of roughly 80% over five years across Australia.
That’s the plus side. But there are risks. 
Examples include Retail Food Group (RFG) which operated brands including Michel’s Patisserie, Donut King, and Gloria Jean's. RFG got into trouble over high fees, poor support, and unsustainable debt. That led to hundreds of store closures.
In the end, the Australian Competition and Consumer Commission (ACCC) imposed a court-enforceable undertaking which saw RFG making payments to – and waiving – historical debts of a number of affected current and former franchisees, in relation to the purchase of certain corporate stores by those franchisees.
RFG also had to pay $5 million to the franchisees of Michel Patisserie stores who paid levies into that franchise’s marketing fund between July 1, 2012 and June 30, 2017.
Investing in a proven system
Franchise and business consultant Tereza Murray, who set up TMPlus, explained the franchise success rate citing the fact that franchisees were investing in a proven system.
“They’ve got brand strength, they’ve got systems and processes that they can follow. Quite often, they’ll have buying agreements, they’ll be able to access better rates on products and services,” Ms Murray told Talking Business.
“Obviously having an experienced franchisor at the other end of the phone to answer any questions, it’s not something that a small independent business operator has.
“They have to try to work all of that out themselves. They have all that financial risk themselves without realty understanding what the biggest pitfalls are,” she said.
“Whereas the franchisor has come out the other end of that. They’ve started a business, they’ve built it from scratch, they’ve taken all the risks, they’ve made mistakes. They’ve come out the other end with their shirts still on their backs and they’re ready to impart that wisdom and they’re learning with franchisees.
“So that really is why the model is so successful and so popular, particularly in Australia.”
No single franchise model fits all
Ms Murray said there was no “one size fits all” model for franchise systems in Australia.
“Franchising is the process of replicating a business model and operating system, so there is no such thing as a standard franchise structure,” she said.
“Every single business we work with is different and every way they approach things, like marketing, will have slight differences.”
This means the franchisor can choose to manage all of the marketing and the franchise contributes to the marketing fund or they will allow the franchisee to do all their local area marketing.
Marketing seems to be where SME skills gaps exist
However, Ms Murray said marketing remained one of the “biggest skill gaps for business owners starting out”. It is also one of the biggest “black holes for money, if you don’t know what you’re doing.”
She said TMPlus had set up an alternative to hard-wired franchise or licensing methods with its innovative CorAlliance system.
As Ms Murray explained it, CorAlliance offers a smart, sustainable growth pathway for business owners who want something more flexible than a franchise and more involved than a licence.
It’s a modern solution, she said, that removes many of the barriers associated with franchising, licensing, or expanding through employees without sacrificing brand integrity or momentum
“We notice a lot of business owners want something that is less prescriptive, less resource-heavy to manage and more collaborative,” she said.
“CorAlliance is essentially a community of business owners working together under one brand. It’s like forming a buying group but with the added benefits of shared systems, brand strength and support.” 
Hear the complete interview and catch up with other topical business news on Leon Gettler’s Talking Business podcast, released every Friday at www.acast.com/talkingbusiness
https://shows.acast.com/talkingbusiness/episodes/talking-business-7-interview-with-tereza-murray-from-tmplus
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