Burger billionaire’s plea to protect franchisees

HUNGRY Jack's founder, billionaire Jack Cowin, has spoken out about the abuse of franchisees, saying there needs to be more legal protections in place to stop innocent mum-and-dad investors being fleeced.

In March a parliamentary inquiry made 71 recommendations to address problems in the franchising sector after a number of abuses were exposed by franchisors, including Gold Coast company Retail Food Group.

RFG came in for the most scathing criticism with the inquiry recommending its past and present bosses be investigated for the possibility of insider trading, tax avoidance, short selling and more.

Mr Cowin, who will speak at the Titans of Industry Forum event at Bond University on Wednesday, said franchisors should be legally obligated to provide accurate financial figures to prospective franchisees.

Retail Food Group, the Gold Coast-based operator of Pizza Capers, has come in for scathing criticism over its treatment of franchisees.
Retail Food Group, the Gold Coast-based operator of Pizza Capers, has come in for scathing criticism over its treatment of franchisees.


"That is to be legally responsible for the information they provide rather than offering a wishlist or theoretical numbers," Mr Cowin said.

"Because what you are dealing with are the innocents that don't know or can't really judge something so they put their money up and then find out the reality."

He said franchisees who lost their money running a shop had limited recourse to recover lost funds.

"The reality is mom and pop operators can't defend themselves in court (from franchisors)," he said.

ABusinessman Don Dervan owned the Australian trademark for Burger King, which meant the US Burger King chain was unable to roll out a chain of Burger King restaurants in Australia. Instead, the Australian franchisee, Jack Cowin, was forced to pick a new name and settled on Hungry Jack's.
ABusinessman Don Dervan owned the Australian trademark for Burger King, which meant the US Burger King chain was unable to roll out a chain of Burger King restaurants in Australia. Instead, the Australian franchisee, Jack Cowin, was forced to pick a new name and settled on Hungry Jack's.


"It is too expensive."

Mr Cowin said there should also be an obligation for landlords to act in good faith when dealing with franchisees. He said they could be tempted to look at the sales and profits of existing franchisees at their retail property and consider bringing in direct competitors.

"I also think contract law should be expanded so that franchisors are bound to act in good faith on things such as renewals of franchise agreements," he said.



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