Todd Clayton

You guys are owned by a private equity firm. What impact does that have on the business? Are there better structures, better disciplines?

We’re a private, Australian-owned business and we always have been. Private equity came along when the owner/founder [Tom Potter] stepped out some three years ago and joined forces with current management. So it’s management and private equity. At the end of the day private equity obviously gives us the opportunity for capital in order for us to grow. But also to bring different disciplines to the business as well. So a much more corporate, not a public company view, but certainly a lot more disciplines in the way we run business and they’ve been able to give us that guidance, particularly from a corporate point of view.

And I guess that support is important when you’re growing aggressively?

Absolutely, a different sort of set of ears and eyes at the board that have a different interest, so it’s not just about our business as it is. But it’s about looking at the whole category and the growth of the company in its entirety.

As one of the leaders of the franchise sector in Australia, have you paid much attention to what’s been going on with these various government inquiries and changes to the franchising code and the way the sector’s been regulated?

Yes, and I think there are pros and cons for the way the business has been regulated. If you go back some 20 years ago obviously from a franchisor and a franchisee point of view, we’re a lot better off. It’s a lot more sustainable business, it’s a lot fairer for franchisors and it’s a lot fairer for franchisees. And I think as the years evolve particularly with the amount of franchises systems that are here in Australia it will continue to be looked at and I think that’s a good think. I think that’s a good thing for the franchisor and the franchisee that it continues to be regulated because it does add a lot of money to the GDP of this country. So it’s a business that needs to be sustainable and continues to need to be scrutinised.

In your opinion does the relationship work pretty well between the franchisee and the franchisor? There can be high profile disputes but it seems that most of the sector gets on pretty well and gets down to business.

I think that’s what the regulation has brought into play. I think that the people that weren’t running a business model from a franchising point of view fairly for the franchisee and the franchisor, those people have gone away. You will see very few disputes really at a high profile level. I think what’s happened here in Australia is that everybody’s sort of buckled down and said okay, we need to get on. Yes, there’s always going to be those challenges between franchisors and franchisees, but if you have the right systems in place, you have the right communication strategies in place, both parties can get on. And that’s what happened to us. In the last three years we’ve grown our multi-store ownership from 12% to 40%. So we’ve actually engaged our franchisees and I’ll think you’ll find most franchisors out there in Australia right now today will be doing that for the benefit of their business.

And just finally, obviously you are at the coalface of the economy, it seems to be recovering but it seems to be a bit patchy at times. What’s your verdict?

There is absolutely no doubt that it is patchy and yes we are definitely coming out of it. I think once the interest rates settle down and people get used to some of these rate rises coming through, I think we’ll continue to see some cash come back into the economy. But I think it’s going to take us the best part of the next 12 months to actually really come out of that. From a retail point of view we have felt the blips in the radar, there’s no doubt about that, but I can certainly say particularly from our business model and from most food categories, we’ve survived this pretty well. As an economy we’ve come through it reasonably unscathed but I think there’s a little way to go as yet.

It would appear you’ve got a good platform for expansion coming into that recovery.

Unemployment’s going to tighten up and it’s going to make it a little more difficult for us to secure franchisees once they start to be more confident about being employed and getting some stability. But while we continue to grow I think that’s very attractive for someone who is wanting to go into business for themselves.