Blog

HOW FRANCHISING BUSINESSES CAN STAY COMPLIANT

Monitoring compliance is an essential function a franchisor needs to perform. However, it is commonly observed that franchise business development and area managers, as a part as their compliance activities, visit the stores and do cursory checks of what their franchisees are doing.

Australian industrial relations and workplace laws are very complex. They are not superficial, and random checks and certifying that everything is fine doesn’t cut it. If you want to check the functioning of your car, how do you go about it? Do you stop at checking fuel and the battery? Not really; you call a mechanic or take your vehicle to the garage for a complete check-up. The same is true of industrial relations and workplace laws.

If you are just starting with compliance employment, there is no need to take big leaps; simply begin in a small way. Prepare a plan, review it, execute the plan, check for results and repeat the process. Let us look at the steps you need to take to remain compliant.

#1 Review Your Network

The first step is to conduct an online survey of your business network. The framework and scope of the survey should enable you to get a good overall idea of the systems and processes that are in place for running the business and determine whether there are any existing knowledge gaps.

#2 Create A Plan Based On The Survey

The survey results are useful to provide a quick snapshot of the online survey. It enables you to do a risk assessment, highlighting the areas of high risk and the plan to cover those risks. If you focus on these areas while managing business risk, the impact on the network will be significant. These surveys invariably spot common risks such as insufficient time and attendance record systems, inferior reporting methods, as well as lack of education and understanding of the requirements at the workplace.

#3 Mitigate The Common Risks

A sound network system, early identification of risks, attention to triggers and immediate corrective action all play a crucial role to remain compliant with Australian IR laws. David Price, who is the General Manager at ERS recommends that franchise businesses follow these four steps to achieve compliance on the three common issues mentioned above:

• Insufficient Time & Attendance Systems – Under the Australian Industrial relations and workplace laws, there are certain recordkeeping obligations under the Vulnerable Workers legislation. You are required to keep an updated record of specific types of information under these obligations and check it to ensure compliance. You are in a tight spot if you fall back in maintaining these records as per the Vulnerable Worker legislation,. As the “onus of proof” is reverse in nature, franchisors are obligated to maintain records.

They face the risk of being exposed, if they do not maintain records as per the legislation guidelines. It benefits franchisors to set in place a Learning Management System (LMS) to produce education and information to the network. The LMS consists of modules; the completion of which can be tracked at regular intervals. Over time, this can also become the best practice solution for mandating and implementing.

• Education – The problems faced by franchises are often related to their ignorance, lack of education or poor understanding. The solution lies in designing a result-oriented system of education that is consistent, easily understood and measurable. The franchises can be educated by providing them regular training and IR updates at both the state and national meetings. This helps bring them up to speed with all the compliance requirements and keeps your franchise business on track.
• LMS Modules – LMS modules are useful in the early identification of reporting issues and franchisors can resolve them using the appropriate mechanism. An employee helpline is an effective method to encourage franchisees to report the problems. The resulting business data can be analysed to the advantage of a franchise. For example, the franchise may zero-in on data relating to labour to sales percentage that is beyond the normal standards and needs to be rectified.

#4 Check

An audit check is an essential step for the effective functioning of any system of an organization. Is there an answer to a question like, “How many outlets or franchisees in the network should be audited?” Price says they recommend that a minimum of 5 percent of the network should be audited.

But there are certain triggers that may indicate the need for less or more network auditing. Some of these triggers include – when a franchisee ignores the need for educational activities and seems disengaged from them, or when they are lax in looking at business information collected from the helpline or data garnered from data analytics. The triggers indicate the need for vigilance and corrective action.

The Key to Compliance Success Lies in Repetition

Australian IR laws are complex in nature and are constantly in evolve-mode. It means that the systems put in place by the franchisors need continues monitoring the franchisees must remain updated and incorporate the changes in their business workings. This is the way to stay compliant and mitigate compliance risks in Australia.

Each year, the ACCC proactively conducts a code compliance program. This requires certain franchisors to provide document copies relating to the requirements under the Franchising Code as well as other legislation they administer, including the law related to Business-to-Business unfair contract terms.

The Franchising Code is specifically designed to minimise the requirement for legal & regulatory intervention. It necessitates that important disclosures be made to allow informed choices, establishes the expectations of fairness and transparency, and facilitates dispute resolution via mediation.

Educating all the franchisees within the network and ensuring they are in line with all the compliance requirements is key to maintaining this code of conduct. This is why the 4 step process outlined in this article becomes and important aspect of owning and operating a franchise.

If you want to know more, feel free to get in touch with us at The Franchise Institute. You can call us on 1300 855 435 or fill in this contact us form and we’ll reply as soon as we can.

Thanks for reading,
The Franchise Institute Team
1300 855 435