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February 11, 2017 at 2:58 am #996129Up::0
http://www.theage.com.au/interactive/2017/the-dominos-effect/
I went to a franchise expo probably back in the late 90s and dominos were nt in the market but they had a stall, I took a brochure home and flicked through it. I ended up doing doing other things
fast fwd 20 years, you see Don Meijs face everywhere, he appears as a genuine hardworking honest guy, who knows if he is,
I then see articles like the above all the time,
and ask myself, are rumours true that theyre in the business to to destroy their own franchises, sell them to the next buyer and make profits like this.
$21k at $7 per pizza is 3000 pizzas per week, or 35 pizzas per hour!!! or 1 pizza every 2 mins!! if the shop is open 12 hours a day
no way ive seen any pizza shop do that many, the most ive seen is 20 mins and 3 pizzas come out, and that was peak time
all the fees mentioned in the article do seem high but its how franchises operate.
as for underpaying wages, i know it happens,
putting these issues aside,
I dont hear any good domiones franchisee stories, it seems most of these people buy these thinking either it will be a decent profit or a “work 3 hours per day and drive a ferrari” type expectations. however ive never heard one person say its worked well for them.
are there any actualy decent profitable dominoes out there
it seems the owners of these franchises are often not there, as I only see young students or south east asian workers (sorry fro the steretyope)
I had a hospitality business years ago, and I paid myself $0, any profits fro mthe business were my salary, and some weeks profit was $500, some $-500, and during peak times $1500, so if there was a full time manager working, and I was at home doing nothing, my business probably was a slight red for breakeven for the year
however I enjoyed it and was happy as long as I didnt go in the red
March 15, 2017 at 5:45 am #1205678Up::0Interesting perspective. To be fair it is not just the Dominos franchise model that is questionable. As an accountant and business advisor I have had to advise clients on a wide range of some of the most well known franchises in Australia and even the world. Most lock you in, restrict your trade by making you purchase your supplies from them and by refusing to allow you to provide local market specific products or ranges. (Shocked Trade Practices allows this but they do)
You will also see many reselling stores that other franchisee have walked away from and they will do things like provide you with the last 6 or 12 months sales figures ONLY but no expenses figures and they will make statements like “Our business model provides you with X% profit margin, wages should be Y% rent/Overheads Z% and if your are not making that then it is your fault not ours” in real English they are saying “the last guy left because he failed because he never had a chance of making X% but we told him he could. That is why we are only willing to give you sales figures and not REAL and ACTUAL expense costs for the particular store.”
The whole franchise modelling and business practices needs an HONEST legal overhaul but it will not get it. That’s the way the world is.
regards
EvanMarch 15, 2017 at 6:24 am #1205679Up::0ahh yes, forgot about the fact that you force your franchisees to buy your stock at whatever price you deem to be, EXTRA PROFIT
what I dont understand is that , by roping guillable or innocent people into the model and then spitting them out,
I would assume the negative publicity associated with it would do far more damage , so it pays to be honest and if it is a dud, not to over promisethats my thinking, however the fact it isnt like that means its not how it works,
unless these guys are in the business of churning franchisees for profit
March 15, 2017 at 7:04 am #1205680Up::0stories pop up every now and then but in the over populated and crap filled stream of what is called news that is spat out every day, it really is no negative press because it never makes it past a passing story or a 10-15 second mention. The business is churning franchises for profit. The franchises that I have assessed for clients that were actually running and operating mostly only provide a minimum wage for all the risk and responsibility that comes with buying one. One of my standard lines I use with clients is – you could earn more working as a labourer on the council without spending the half a million dollars. Franchises can be very profitable if they are in the right place. Problem that place is not identifiable most of the time. You often have as more of a chance of success by flipping a coin and I don’t gamble. I did have one client who had a relatively obscure franchise that was clearing 500k per year but that is the only one I know of and trust me it is not for sale.
March 15, 2017 at 8:12 pm #1205681Up::0I wonder if it comes down to what I will call the McDonalds Effect? – as a kid, I remember hearing that if you were able to buy a McDonalds franchise you could make millions of dollars.
It seems like a lot of people still believe in it.
March 16, 2017 at 9:40 am #1205682Up::0Not a lot of good stories really and I am yet to meet anyone with a raving review.
Even the long sandwich one, you need to run multiple in order to derive a good profit as the business owner. Running one average one in the suburbs is pretty mediocre stuff.
Most of the operators in the home services arena don’t seem to have a lot of job satisfaction or happiness compared to a regular job.
The smaller ones are sold to people hating their 9-5 job, but as said often end up appreciating what they had before.
March 17, 2017 at 1:30 am #1205683Up::0Agree 100% with the comments above. There is an illusion created by the master franchisors that their “brand” and “system” will create an immediate return on investment on a managed basis. They often use questionable forecasts in their franchise packs. This is typical in many major franchises – not just smaller ones.
There has been a boom in litigation around franchisor forecasts and misleading and deceptive conduct under the Competition and Consumer Act. Most people are unaware that when it comes to forecasts, the burden of evidence falls on the person making forecast to demonstrate it was made on a reasonable basis. That means if you use blue sky figures with no provable foundation you are wide open to litigation.
Helping build better businesses and better lives with expert financial and taxation advice. info@360partners.com.au www.360partners.com.au 03 9005 4900March 17, 2017 at 1:38 am #1205684Up::0Wow all this negativity around franchises.
My disclaimer before I comment is I looked at one, and said no, because it just didn’t stack up, and I wanted to be my own boss.
But, if they were as bad as everyone says, why have they being around so long, and why hasn’t the litigation sent them all broke. Because some do work.
From what I can tell they are a good way for people who want to buy themselves a job, but don’t have the get up and go to build their own business. In effect everything is done for them, from setup, recipe, books, etc, etc. Some people just don’t have the nouse to setup themselves but are more than happy to follow the franchise way of doing things.
Ok, just some thoughts, rather than all this negativity
March 17, 2017 at 1:48 am #1205685Up::0Its not all negative and some do seem to make a decent living. It just seems if what they are doing isn’t exclusive, unique or more bullet proof in the market place then the framework is more questionable and you are more the little one at the bottom with not much say.
If some are able to create positive employment and business outcomes when they otherwise never could under their own umbrella I am all for it.
So far positive reviews are limited on who some-one may have bumped into. First hand experiences would be better.
We need those that do operate under franchise to tell us how good life is to balance the discussions. Don’t many with positive franchise experiences frequent these type of forums?
March 17, 2017 at 2:01 am #1205686Up::0bb1, post: 245855, member: 53375 wrote:Wow all this negativity around franchises.My disclaimer before I comment is I looked at one, and said no, because it just didn’t stack up, and I wanted to be my own boss.
But, if they were as bad as everyone says, why have they being around so long, and why hasn’t the litigation sent them all broke. Because some do work.
From what I can tell they are a good way for people who want to buy themselves a job, but don’t have the get up and go to build their own business. In effect everything is done for them, from setup, recipe, books, etc, etc. Some people just don’t have the nouse to setup themselves but are more than happy to follow the franchise way of doing things.
Ok, just some thoughts, rather than all this negativity
Australians love the idea of being self employed (seen as a freedom). I think we have the highest rate of franchising in the world. As many FS members know, self employment does not generally mean the same pay with less effort.
With regard to litigation. There is a lot going on every day – you just don’t hear about it all. Much is settled before trial. Keep in mind the cost of running litigation to trial is probably in the order of $75k to $150k or more. Even if you prevail there is no guarantee of a costs award. So the economics of the legal dispute means that franchisee class actions work best. That requires a degree of co-ordination and still requires franchisees to fund the case. Plenty happening in this space. Its all relative to the franchisees loss. If you paid $15k for a mowing franchise that failed (and you were mislead) then the cost benefit of a trial is not there. However if you paid $500k for a larger franchise and fitout / setup then litigation may be justified. This is why the franchise code was formed and recently amended. Too many unscrupulous franchisors.
The franchises that don’t involve commercial leases, fitouts and lots of staff are obviously a lower risk path. Probably better for someone looking for employment income replacement. They may not make more more but at least that gives them some sense of freedom.
Helping build better businesses and better lives with expert financial and taxation advice. info@360partners.com.au www.360partners.com.au 03 9005 4900March 25, 2017 at 3:35 am #1205687Up::0arrowwise, post: 245840, member: 54026 wrote:Not a lot of good stories really and I am yet to meet anyone with a raving review.Even the long sandwich one, you need to run multiple in order to derive a good profit as the business owner. Running one average one in the suburbs is pretty mediocre stuff.
Most of the operators in the home services arena don’t seem to have a lot of job satisfaction or happiness compared to a regular job.
The smaller ones are sold to people hating their 9-5 job, but as said often end up appreciating what they had before.
interesting point,is the end goal the definition of success,
lets assume you run a franchise that fully manged earns $20k per year, on paper , its a pretty average business,
however, if you have 10 of them, you nbasically sit on your bum and earn $200k per year
great money, but indiviudally they are poor businesses,
to me , a collection of bad businesses is still a collection of bad businesses,
March 28, 2017 at 9:20 am #1205688Up::0It would be several million to buy into 10 subways. Putting the same money into an index fund would give your similar return as you point out for much less work and stress – but I get what you are saying
April 12, 2017 at 6:14 am #1205689Up::0I can think of nothing worse than being in an industry like Domino’s where you entire business strategy is competing purely on price and racing to the bottom.
April 18, 2017 at 4:21 am #1205690Up::0I have had or currently have clients who own Dominos franchises and some are/were happy with them – one set of clients was not happy and got out quite quickly. – their model ie cheapest in town is not that smart in my opinion but their business and system does work fairly robustly. Overall return based on capital is not high enough for me but the same can be said for a range of other well known food based franchises.
Clients still buy them and similar franchises and the majority of clients are happy with them.
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