Hey hey, Flux fam!

Here's everything you need to know today - in under 3 minutes.

Today's big stories 

🍟Maccas is looking for its next top franchise owner

🛍Amazon will build a futuristic department store

😡Quadpay is suing Merrill Lynch

Oh and get this...

The Australian government has finally bought the rights to the Aboriginal flag from its creator, Harold Thomas. The $20 million agreement means the flag can now be reproduced for free by all Australians… as long as it’s done so respectfully.

Maccas is vetting franchise operators but turns out not everyone has $1.5 million to own one

Background: McDonald's are a big deal in Australia. Apart from their delicious McFlurry's and scrumptious chippies, Maccas has over 970 restaurants in Oz and employs more than 100,000 Aussies. 

What happened: Since its inception in the 50s, Maccas has largely been a franchise business. In fact, more than 80% of Aussie Maccas restaurants are owned and operated by individual businessmen and women. 

What else: Now, they've got plans to open up a further 100 restaurants over the next three years. But finding the right operators can be tough...particularly when each one needs to sink around $1.5 million into the business to kick it off.

So what's the key learning? 

💡A franchise is a contractual business model is where an established brand (aka the franchisor) lets an independent business owner (aka the franchisee) use its branding, business model and other IP to run their business.

💡In return, the franchisee (aka the small business owner) will pay an upfront franchise fee and other ongoing fees to the franchisor (in this case, Maccas). 

💡For McDonald’s, the franchise contract stipulates a 20-year commitment, plus a minimum cash investment of $1.5 million. So we can see why this one might take Mickey D's a while.

Amazon's new department store will have tech that tells you what to try on next and thanks, I guess?

Background: Amazon have been at the forefront of tech since their humble online bookstore beginnings. They've got cashier-less stores...and now, they're planning on opening a department store that's teched up to the heavens.

What happened: Shoppers will scan clothing items on mannequins to select the colour and size of the item they need...and then they'll take it to a fitting room with a touchscreen that lets customers request more items from staff. 

What else: The touchscreen will even suggest items for shoppers to try on thanks to a trendy algorithm. This is Amazon's way of significantly improving the customer experience in retail.

So what's the key learning?

💡In the business world…there’s an old rule that says if you’re gonna build a new product…you need to make sure it’s at least 10 times better than your competitors.

💡Peter Thiel (investor in Facebook, LinkedIn, Spotify and Airbnb) reckons if you're not aiming to produce something 10x better than the closest substitute...then what's really the point?

💡Even as a startup, Amazon could offer at least 10 times more books than a traditional bookstore. And now, Amazon’s applying a similar theory to department stores. It wouldn't do anything in physical retail unless it could 10x the customer experience. Never having to leave the changeroom? That comes pretty close.

Massive YIKES: Quadpay is suing the bank that told them to sell 13 million Zip shares

Background: QuadPay are a buy now, pay later service that launched in the US back in 2017. And in 2020, they were acquired by Aussie BNPL Zip for a whopping $400 million.

What happened: Just after QuadPay was acquired….the founders sold almost 13 million shares in Zip on the advice of a company named Merrill Lynch. But the founders are now saying that advice was conflicted.

What else: Ya see Merrill Lynch were also working for Zip as a corporate adviser. And the Quadpay founders claim that the type of share sale recommended (ie a block trade) made Merrill Lynch more commission too. Juicy, juicy stuff.

So what's the key learning?

💡A block trade is the sale or purchase of a large number of shares at an arranged price between two parties. 

💡Because these trades are so big (i.e. more than 10,000), they can significantly impact the company’s share price. So, to reduce this impact, block trades generally take place outside of the normal market opening times.  

💡Block trades also need to be initiated by big investment companies, called blockhouses (like Merrill Lynch). But with Merrill Lynch working for the QuadPay founders and Zip, we can see how tensions have risen.