01 Jul McDonalds and other food franchises announce home delivery across Australia – Significant Capital Expenditure for Franchisees
Tips on Significant Capital Expenditure for Franchisees. McDonalds and KFC have both unveiled plans in the past month to trial home delivery in partnerships with UberEATS and Foodora. LaPorchetta has also announced that they will trial delivery service, and RedRooster has also announced a stronger push into home delivery, although both will involve the franchisee expending their own capital to roll out the service. What happens when a franchisee is required to buy the expensive equipment for a new service introduced to the market or brand, especially mid-way through the life of the franchise agreement? Another high-cost situation can include the requirement to implement a completely new fitout which is more than a standard refurbishment. Many franchisees have experienced tough market conditions over the past few years and may struggle to afford any significant outlay. Notwithstanding your financial difficulties, it may come as a shock to hear that the franchisor can require this expenditure provided certain conditions are met. In 2015, the Franchising Code of Conduct was updated so that a franchisor can require a franchisee to undertake significant capital expenditure if either: the franchisee approves the spend; it was disclosed to the franchisee in the disclosure document they received prior to commencement or...