Most people here wouldn't know how Franchises Collapse.
It is MAINLY BROUGHT DOWN BY THE TAX OFFICE.
Here is an INSIDE VIEW.
As we progress try to imagine the Franchisee, hard working , decent, customer focused, his/her life on the line.
They put their faith in a FRANCHISE................... First Big Mistake.
If they are a clever person and generally they are, then they make ................... FATAL ASSUMPTIONS.
a. The Franchiser has their interest at heart................ NOT THE CASE.
b. The brand will bring proven products methods and skills NOT THE CASE.
In Business there are THREE critical components. 1. RENT 2. Wages 3. Food Costs mainly.
If any ONE of these is WRONG, the Business is in GRAVE DANGER.
The Franchiser (here RFG) has NO INTEREST or power to influence a veracious Stockland or Westfield Leasing Person, who has a BAG of DIRTY TRICKS to "ratchet up" the rent .
When the franchisee cant pay, eventually then RFG will have little or NO INPUT in helping..... The rent accumulates.
The STRESS this causes is almost immeasurable. "Oh my GOD.... we are in rent ARREARS and CANT PAY!"
The AVALANCHE that this unleashes from the LANDLORD is almost Impossible to WRITE in words.
The last thing a Business Person wants to do IS NOT TO PAY BILLS.
Today is wages day, and the Franchiser has DIRECT DEBITED his COMMISSION. $2000 today GONE.EACH WEEK.
As Michael Bulley stated "I earn $30,000 a week at one store" His commission would be near $3,000 fro the WEEK.
But remember the GST is also 10 % so $3000 will go to the TAX OFFICE.( and I know you divide by 11)
The Aust Tax Office Benchmark for RENT is 14%. In reality it is often as high as 22% of Turnover but at 14 %
The rent is then $4,200 at $20% it is $6,000 CATASTROPHIC and UNSUSTAINABLE.
Wages if well controlled and NO SUNDAY PENALTY RATES would be $8,000 includes SUPER
Food Costs well.............being generous I will use 22% but most Franchisees will LAUGH. at $6600.
$30,000 LESS............. this is EXCEPTIONAL .
$3,000
$3,000
$4,200
$8,000
$6,600............ REMEMBER THESE ARE MINIMUMS and all going well. The Sales drop seriously AFTER Christmas ....' Don't they Michael Bulley???"
That is $5,200 earned in a PERFECT WEEK at absolutely BOTTOM EXPENSE PERCENTAGES with Maximum SALES.... very very few in Australian Donut Shops do anywhere NEAR $30,000 a week . You have to be selling nearly 60,000 donuts a week . Who believes that???
Do the sums if it is NORMAL.... UNEXAGGERATED at $14,000 Sales for the week
But now there is MORE.
Insurance Cost.
Workers Compensation Bill
Equipment Leasing Costs
Shop Fit Leasing Costs.
Bank Fees
Electricity Costs in Townsville one Franchisee Pays $1800 a month.
Interest.
Advertising Fee by the Franchisor @$30000 sales it is $1300 for the week
Vehicle Costs
Telephone and Internet. BUT THE BIG ONE IS BANK REPAYMENT of the LOAN.
and the Franchisee is now working 56 to 60 hour weeks. NO SEX. NO FUN. NO HOLIDAYS. But you the shareholder derive $3000 each and every week from this Poor hard-working Business Person.
Do you HONESTLY believe it is even HALF MORAL that you the RFG shareholder earn MORE than the FRANCHISEE.?
Get real PLEASE. In reality the RFG company takes COMMISSION each and every week as the OWNER cant pay his GST BILL. You see RFG just keep taking fees whether the business is in PROFIT OR IN LOSS. COMMISSION is BASED on SALES..................NOT PROFIT.!!!!!!!!!!!!!!!!!!!
If it is in LOSS it wont be able to PAY ITS GST BILL, because the GST OWED to the TAXOFFICE has been TAKEN by
the FRANCHISER.
RFG morally has TAKEN the GST as Commission and the INJUSTICE........ THe TAX OFFICE will pursue and CLOSE the Business DOWN, saying the FRANCHISEE OWES the tax when all along RFG has TAKEN it as COMMISSION. Don't for a minute tell ne THEY DONT KNOW WHAT IS GOING ON HERE.
And you wonder ...should you wait for your DIVIDEND.
Would you invest in RFG if the Commision were properly BASED on Net PROFIT.
If that were the case I will guarantee.................there would be NO RFG .. NO DOMINOES.....No Mc Donalds.
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