Laser Clinics Australia franchisees will face an internal review as a measure to ensure the brand is “optimised long-term”. The news of the review comes in the wake of an ongoing dispute between some franchisees and the franchisor.
The Australian Financial Review revealed the latest initiative by the franchisor in an article on 5 July 2021.
According to the AFR, 55 of the 123 clinics in the Australian network are in dispute with the franchisor and looking to exit the business as a result of what they consider unreasonable conduct and aggressive price discounting.
The franchisees claim they have spent more than 12 months complaining to LCA about excessive discounting, the cost of equipment and supplies, the company culture, and a failure to deliver the expected support, the AFR reported.
“They have treated us with complete contempt from day one,” a franchisee said. “They have used every effort to discredit us and to divide and conquer and to scare us into going away and giving up.”
The latest development is a letter from the franchisor to franchisees indicating an internal review would be taking place with a critique of those franchisees whose agreements are due to end between January 2023 and December 2025.
Laser Clinics Australia boss, CEO John Veitch, declined to comment on the veracity of the claims in the AFR article but confirmed an internal review is upcoming. He also confirmed LCA had entered into mediations this year to resolve franchisees’ “outstanding issues”.
“These discussions were mediated by former Federal Court Judge The Honourable Kevin Lindgren QC and we treated this mediation with the utmost importance,” he told Inside Franchise Business Executive.
“The mediation was confidential so we are not at liberty to respond in detail, except to say that the discussions were professional and sought to be constructive. We considered with the franchisee group a range of options to ensure we could collectively move forward from this process.
“Above all, our aim is to always work collaboratively and professionally with all of our franchisees in the best interests of Laser Clinics Australia and all of the clinics in our network – while being fully compliant with the obligations outlined in our franchise agreements and under the Franchising Code of Conduct,” he said.
Veitch said that while the LCA board remains a strong supporter of the franchise model and the 50/50 shareholding structure, market position is crucial.
“We must always endeavour to uphold the highest level of service, standards and care for our staff and customers across our entire clinic network,” he said. “The purpose of the internal review is to ensure we are optimised long-term in our locations and with our franchisees, so that we can maintain our market leading position.”
Veitch said the review will take into account franchisees’ ability to achieve results, their commitments to both the business and franchising, as well as their “positive contribution to the network, their passion for the Laser Clinics Australia brand and their alignment with our strategy and culture”.
He said the review will ensure clinical excellence is maintained and provide certainty over franchise agreements due to end in the next few years.
“We are also aware this clarity has been sought by franchisees,” he said.
LCA is owned by KKR, an international investment group, which acquired the Australian business in 2017. Recently LCA announced its expansion in the Singapore market in partnership with local clinics.
- This article has been updated to correct LCA ownership, which is held by investment group KKR.
