The Franchise Council of Australia posted a huge loss for the past financial year

The Franchise Council of Australia has called for unity after a shocker of a year in which it posted a steep loss and “serious concerns” were raised about its performance.

Richard Thame, former chief executive of Snap Franchising, chairs the Franchise Council of Australia.

The Franchise Council of Australia’s loss for the past financial year blew out by more than $1.2m, with the organisation also losing its chief executive after less than a year following complaints to the board.

Chair Richard Thame, who himself has only been in the position since the resignation of previous chair Brendan Green in September, has written to members in recent days, calling for unity and saying the board will give more clarity on the organisation’s path to a sustainable footing at its annual general meeting to be held late on Thursday.

The annual report for the organisation, which represents 425 franchise owners nationwide, shows its loss rocketed from $85,460 in FY23 to $1.35m in FY24.

The financial report included a “going concern” statement from the organisation’s auditors, given its plunge from $667,871 in member equity to negative $683,169 over the course of the year, and negative cash flow of $444,938.

The Council had only $170,683 in cash at the end of the most recent financial year.

“The group’s ability to continue as a going concern is dependent upon its future profitability, continued financial support from the Australian Taxation Office, and the company raising new funds from the members, if required,’’ accounting firm DFK International said in its going concern statement.

Jayson Westbury has taken over at the Franchise Council of Australia after the previous CEO left in April. Picture:Justin Lloyd.

The preface to the financial report recognises the challenges faced by the organisation.

“It is very clear that the FCA has faced some significant financial headwind during the financial year of 2024 and while the results do show a loss, it is important to report that direct and deep decisions have been made to arrest the loss and place the FCA on a strong footing for the future,’’ the report says.

Mr Thame, in his letter to members, said mistakes had been made, and he wanted to address the “serious concerns raised regarding the performance of the organisation and our recent challenges’’.

“The past year has been a difficult chapter for the FCA, marked by significant financial strain, decisions that did not meet member expectations, and the need to rebuild trust in our leadership,’’ he wrote.

Mr Thame said the board is charged with recruiting a chief executive and to “provide the CEO with the space to implement agreed strategies, monitor their progress, and intervene when necessary.

“In the case of our former CEO, the board approved an ambitious strategy designed to grow the FCA.

“While some good progress was made, this strategy was not executed well and resulted in unacceptably high staff turnover and significant cost over-runs.

“When it became apparent that the CEO’s approach was not delivering the desired outcomes, the board acted to end his tenure and took the necessary steps to reset the cost base of the organisation.’’

Former chief executive Matthew Monaghan was hired in May 2023, but left for “personal reasons” in April of this year.

It was later revealed in media reports that he left after two complaints about him were made to the board.

Mr Monaghan was one of five people who have led the organisation in a permanent or acting role since 2022.

Mr Thame says in his letter that “The board acted on information that was available at the time’’.

“With the benefit of hindsight, we acknowledge that the board could have acted sooner.

“It is important to recognise that the board did have a legal and ethical obligation to follow a process of procedural fairness and took steps to thoroughly and independently investigate concerns raised by staff, members and suppliers.’’

Mr Thame’s letter says the over-run in the organisation's expenses in FY24 “largely relates to employment cost and includes redundancy, restructuring cost and the settlement of outstanding claims’’.

“I am pleased to report that the financial position of the FCA has improved in the five months since the financial year end. More details will be provided at the upcoming AGM.’’

Mr Thame called for unity from members, and said the directors, who worked for free, took their responsibility very seriously.

“We hear and respect the criticism from members and understand the calls for greater accountability and transparency.

“I can assure you that each and every director on the board during the time these losses were incurred, as well as those on the current board, remain committed to restoring the FCA to a position of strength,’’ he said.

The FCA appointed Jayson Westbury as its new chief executive in September.

Four years ago Mr Westbury left a previous role as chief executive of the Australian Federation of Travel Agents after saying A Current Affair host Tracy Grimshaw “needs to be given a firm uppercut or a slap across the face, and I mean that virtually, of course. I wouldn’t want to invoke (sic) any violence on anyone.”

Grimshaw and ACA had outed unscrupulous travel companies, including Flight Centre, which had hit travellers with large cancellation fees in the wake of coronavirus travel bans.

A statement from AFTA at the time said Mr Westbury resigned because of his comments, which he recognised were “inappropriate and unacceptable in any circumstances”.

“My comments relating to Ms Grimshaw involved a very poor choice of words. I apologise for that choice and accept the language used was completely inappropriate,” Mr Westbury said at the time.

Mr Thame declined to comment further about the FCA’s turnaround plans before the Thursday AGM.