FCA management turmoil – where to from here?

FCA management turmoil
FCA chair Brendan Green and interim CEO Tanya Robertson at the 2024 NFC in Cairns. (Source: Supplied)

The Franchise Council of Australia board has categorically rejected the claims made by The Age and SMH yesterday. The Fairfax mastheads called into question the FCA’s appointment of the CEO, the handling of staff complaints, and the peak body’s financial status.

On the financial claims, Brendon Green chair of the FCA, said “The FCA’s financials are audited annually by independent experts and publicly available in our Annual Report. The Board has always taken a conservative approach to financial management. We make no apologies for this nor for continually reviewing costs to ensure the FCA’s sound financial position continues.”

The FCA has had a testing year. Two new CEOs, the exit of the CFO, staff tensions, and a national office relocation created internal challenges. Disgruntled members and declining numbers added financial pressure. 

The board saw the departure of three members, and the National Franchise Convention (NFC) faced slow uptake. The FCA responded by parting ways with then CEO Matthew Monaghan and appointing an interim CEO to help boost membership and NFC delegate numbers.

There were rumblings of discontent and members’ flagging confidence in the organisation, although the FCA claims a recent swathe of membership renewals.

How did we get here and where to from here?

CEO appointment: “We could have made a different choice”

The FCA has had a high turnover in leadership since the departure of CEO Mary Aldred in November 2022. It appointed then GM Peter White as acting CEO before hiring Matthew Monaghan in May 2023. When he left in April Tanya Robertson took up the interim CEO role.

Was Monaghan the wrong appointment? 

Monaghan lacked franchise knowledge but brought industry association experience, which FCA chair Brendan Green said matched the search criteria – someone who could take up the franchising cause in Canberra.

Green told Franchise Executives, “Matthew interviewed extremely well, his background, his understanding of memberships and organisations was a stretch above everyone else. We had a sub-committee of four people who were long term franchise people and we landed on him being the better choice.

“At the end of the day there was nothing that Matthew did as CEO that was at odds with his employment agreement,” Green said, confirming results fell short of Monaghan’s ambitious goals, prompting a review and an “amicable” separation.

In a video update to members before the NFC, Green said “I’ve had a lot of feedback coming through whether the appointment was the right one. Probably with the benefit of the hindsight lens, we could have made a different choice.” 

Staff issues at national office

In line with Monaghan’s brief to position the FCA for growth, there were new appointments to the national office in Melbourne. However the office also suffered from high staff turnover and staff tensions and there were two workplace complaints. 

In a statement to Franchise Executives, the FCA said the board “has taken prompt action in relation to the two workplace complaints made to it over the past year and to satisfy itself that there is an appropriate workplace culture and environment at the FCA office”.

Green said “There was a lot of new positions being created, a lot of changes happening, we had a few people come and go. A challenge for us as a board, who meet bi-monthly, was to be across everything that was going on.”

Green said it directed Monaghan to “just slow the pace down” to get visibility on outcomes and ensure the right decisions were being made.

Spotlight on financials

Green is insistent the financial status of the FCA is positive, despite leaked board documents sighted by the Fairfax mastheads reportedly revealed falling revenue.

According to the news outlets, the FCA reported a net loss of $1 million for the first nine months of FY24 and is projected to lose further in the remainder of the financial year with the costs of the NFC.

However Green told Franchise Executives “We completely reject the allegations made in The Age/SMH. The numbers reported are simply wrong”.

“The FCA continues to be in a sound financial position with strong cash reserves. It is not and has not been in deficit this financial year,” Green told Franchise Executives.

Green said the NFC was profitable and the FCA is “on track to deliver another healthy financial result this year”.

He added the early bird membership renewal prior to NFC had an “overwhelmingly positive” response.

“The remainder of renewals are also due to be realised on or before 30 June 2024, and the forecast financial outcomes suggest the FCA will have a positive cash position when we close FY24.”

Green said the result was greater than earlier forecasts. In April lacklustre NFC registration for the National Franchise Convention, the organisation’s biggest revenue earner, was a red flag for the board and it parted ways with Monaghan.

Monaghan has been contacted by Franchise Executives for comment.

Governance and processes

However, while the appointment of Tanya Robertson as interim CEO has seen a shift in the FCA’s fortunes, it has also muddied the waters. Robertson is an FCA board member and CEO of Franchise Development (part time) at BDC Partners.

Early in 2023 the FCA tasked two separate, independent recruitment firms with the CEO talent search. One of these was a division of franchise service providers BDC Partners and it was BDC that put forward Monaghan for consideration.

The involvement of BDC Partners in the executive selection for the CEO and the subsequent appointment of Robertson has raised questions about processes at the FCA.

Green said the FCA’s CEO recruitment process in 2023 was conducted with full diligence.

“We engaged two recruitment firms on a non-exclusive basis as is standard practice.”

He stressed that “BDC in the consultancy role is nothing to do with the component piece that was part of the HR selection process”.

Green said Robertson’s skills in running the state chapter in Victoria matched the immediate demands of the board.

“We had no other immediate solution that we believe was going to give the membership the outcome they were after. Tanya’s done a really good job of getting things back on track,” he said.

However, Green admitted the processes that have resulted in controversial outcomes this year would be subject to review by the board.

“We will look at that now and say is there anything we need to do better? We will certainly review that and if we need to recommend change we will.”

Green said the board has reflected on whether it has “done anything wrong or ill-intentioned or we’ve misused any FCA money, and the mirror test that we’ve applied says no”.

Where next for the FCA?

FCA members were recently presented with a new membership fee structure while a plan introduced in February to change the FCA constitution was adjusted after member feedback. However the revised proposal remains controversial.

Now the question of the next CEO appointment and board directives will be top of mind for members. 

Darryn McAuliffe, CEO of FRANdata Australia, told Franchise Executives “There is certainly some concern and anxiety across the franchise community in relation to issues raised in the article. Like many we are looking forward to clarity and comfort around the position and direction of the FCA”.

These unnecessary dramas are a distraction for the industry, said Peter Fiasco, head of franchising at Kwik Kopy.

Fiasco told Franchise Executives “The FCA needs to find the right permanent CEO as quickly as possible to get back on track swiftly”.

He said the CEO must “build up the FCA as a truly member-driven body to support members in best practice”.

Jeremy Hassell, City Cave co-founder, also emphasised the importance of the organisation to the sector. “I’m in full support of the FCA and want to see them continue,” he said.