'The environment is toxic': Croc's Playcentres under scrutiny
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'The environment is toxic': Croc's Playcentres under scrutiny

Croc's Playcentres is under pressure from centre operators who have accused the franchise of a culture of bullying, misogyny and cronyism in a submission to the parliamentary inquiry into franchising.

The company has 15 sites across Australia with indoor play spaces and party venues for kids, but its franchise model is under scrutiny after a damning submission by franchisees who have banded together as the Association of Croc's Playcentre Franchisees. Croc's "vehemently denies" the claims.

Stacey Dowsett outside the Croc's Playcentre  in Carnegie.

Stacey Dowsett outside the Croc's Playcentre in Carnegie. Credit:Luis Enrique Ascui

Franchisees claim in the submission that investment costs advertised for new Croc's franchises - usually between $650,000 and $750,000 - are "unrealistically low".

The submission claims not a single franchise has ever been delivered within budget and lists five different franchises which required investments of up to $1 million and ended up being between $100,000 and $250,000 over budget.

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"When confronted about the advertised investment costs versus actual costs and the ethics in providing misleading information, the directors have simply advised that they need to attract investors, and providing a realistic investment range would not be attractive to potential franchisees," the submission said.

Short-lived celebration

The franchisees claim that under the Croc's business model the first year of operation sees the greatest income due to the playcentre being a new attraction but "the celebration is short-lived".

"The business model is then characterised by a continuously declining income over the following years, and predominantly the earnings have almost halved within three years of operation," it says. "Most (if not all) franchisees who have owned a Croc's playcentre franchise which has been operating for more than three years are suffering significant financial stress."

The franchisees claim a select few centres achieve $1.2 million turnover in their first year of operation but this drops substantially over each subsequent year despite franchisees working more than 60 unpaid hours each week.

"Profits continue to drop and franchises become impossible to sell," the submission says.

"The franchisors also insist that continued capital projects and reinvestments in store refurbishments (for which they receive a significant kickback) are essential for improving store earnings."

Franchisees claim operating costs are much higher than disclosed.

Former accountant Cathie Snell now operates the Croc's Ringwood franchise and told Fairfax Media she was misled about the operating costs.

"The sales flow has been pretty much correct but the expenses are grossly underestimated," she said.

"I’m a trained accountant and I can’t believe this has happened. Wages we were told would run at 16 per cent in the first two years, we were lucky to have them under 30 per cent. Public liability insurance was [quoted at] $600 a month, ours is $1600 a month. I work two other jobs now just to keep the doors open and feed my family."

Stacey Dowsett and lawyer Prue Greenfield, who acts for franchisors and franchisees, with Croc's franchisees and their families.

Stacey Dowsett and lawyer Prue Greenfield, who acts for franchisors and franchisees, with Croc's franchisees and their families.Credit:Luis Enrique Ascui

Safety concerns

The franchisees also claim Croc's has no governance audit or regulatory processes that ensure basic compliance with industry codes or standards.

Franchisees claim Croc's failed to provide training for the safety aspects for indoor playground amusement rides and devices.

"The franchisor has consistently failed to comply with Australian Safety Standards by failing to provide adequate basic training," the submission claims.

Franchisees claim Croc's targets female franchisees, pressuring them into signing agreements and denigrating and humiliating those who speak out.

"The relationship between franchisor and franchisee at Croc's Playcentres is characterised by a culture of bullying, misogyny and cronyism," the submission claims.

I have four kids and I've just turned 41 and we could end up with nothing and we could be on the street in a matter of months.

Stacey Dowsett

One franchisee reported in the submission that the chief executive had yelled at him: "What are you going to do about your f-cking wife?".

Stacey Dowsett, Croc's Carnegie franchisee, told Fairfax Media Croc's said it needed to come in and manage her store to turn it around as it was struggling.

"But they also framed the conversation around the fact that they had found out I was pregnant so I clearly wasn't the person to do it," she said. "They said the store needed time, money, resources, etc, etc, etc, and now that I was pregnant I couldn't possibly do it. It was heartbreaking."

Ms Dowsett said the impact of her failing franchise had been devastating. The franchise cost $750,000 to set up, $250,000 over budget, and after nine months she was $170,000 behind in rent and "in a really dire situation.

"I am an intelligent woman and the guilt is there, you feel, 'What did I do wrong, why was I suckered in?'," she said. "But you speak to everyone else, we come from a variety of walks of life and you realise it is not me."

Ms Dowsett said she had not slept properly in two years.

"I do not sleep," she said. "It's just awful. It has to end. It's toxic, the environment is toxic. I have four kids and I've just turned 41 and we could end up with nothing and we could be on the street in a matter of months. I don't even have words for how sickening it is. It’s exhausting it’s debilitating."

Muffin Break

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Croc's introduced Muffin Break cafes into its playcentres in 2016 after negotiating a deal with Muffin Break owners FoodCo.

Croc's claims all the centres with Muffin Break cafes report significantly higher revenue but franchisees claim they are being crippled by the costs of two franchise agreements.

In the submission, franchisees claim when the Muffin Break deal was done the female partners of  franchisees were pressured into signing an additional and separate Muffin Break franchise agreement.

"There was no opportunity to seek legal advice, no cooling off period, and no apparent opportunity to discuss the commitment with their spouses and/or business partners," the submission claims.

No exit

Franchisees claim that not a single franchisee electing to renew their franchise agreement.

Michelle Danswan, Croc's franchisee for Ringwood, told Fairfax Media rather than work with anyone Croc's is starting to get nasty.

"Some of my colleagues are in danger of losing their homes and some are borderline suicidal and they continue to breach them rather than to offer any concessions with what is a flawed business model," she said. "Any stores trading for longer than three years they are in financial hardship. For the time I have been there I haven’t earned a cent. The only way it stacks up is if you don't take any income."

'A fair and equal opportunity'

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Croc's denies allegations. A spokesman told Fairfax Media Croc's encourages open communication with its franchisees.

The spokesman said he was unaware of the association that made the submission and had never been approached by them.

He said the claim that Croc's receives kickbacks for store refurbishments was "completely untrue" and he denied there were safety issues at the playcentres.

"We pride ourselves on ensuring a safe environment to both franchisees and customers, and we fully understand our obligations in relation to training and safety standards," he said.

The spokesman said Croc's was unaware of any franchisee working up to 60 hours of unpaid work.

"To the contrary, most owners draw market competitive salaries or pay managers an above award wage for an average 38 hour working week," he said.

"We pride ourselves on giving everyone in our business a fair and equal opportunity. We take offence to, and vehemently deny the mischievous and false claims of bullying, misogyny, cronyism and intimidation contained in the association’s submission. Our head office team consists of both men and women with significant retail and hospitality experience."

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