V8 Franchise system

[XW GT]

Can somebody go back to square-one and explain to me and others, just how the V8 Supercar franchise system started and works, and what are the rules as of now?

[Just Do It!]

Would someone please knock on GTRMagic's dressing room door while the sound technician cues the music.....

[risky]

i know some of the story.
there are 13 level 1 (2 car franchise) and 9 level 2 (1 car franchise) which are on offer.
all owners of a franchise must guarantee a car is entered in each spot. use it, lease it or lose it. remember john faulkner's drama's with cars not being provided for a round and the fines. actually can't recall if he was fined or not. anyone?
one reason why the franchise systems was brought in was to stop teams like 'dewalt racing' and so on, showing up at event and prequalifying for a grid position here and there. this move closed the series to the non regulars.
there's some of it, now where's gtr magic?

[Average Punter]

Nothing more than a simple (although I didn't say fair...) way to divide up the booty that the series generates. When was the last time you heard anyone talk about "prizemoney"? That's because there is none.

The franchise is a guaranteed income stream for each of the players, but I have no idea how large that income is. Must be substantial or you wouldn't be interested paying out big dollars to lease one would you?

It is also a way of making sure the teams don't pick and choose the rounds they participate in. In the "old days", teams may have chosen to sit out the WA round but make sure they were at the biggies like Bathurst and Sandown. If there is a "show up or pay the fine" clause, you make sure your team goes everywhere...

And what's all this pandering to the guru? Is this GTRMagic.com?????

[hgmonaro]

I don't follow the in's and out's of this, since it bores me to tears, but can anyone turn up with appropiate (legal) weapon and have a go in the 2nds?

[manwell]

Originally i thought a Level 1 licence covered 2 cars. Teams such as HRT, DJR, SBR, FPR.

And i thought a Level 2 licence was for 1 car. Teams such as TKR, PMM, and PLR

Level 1 licence holders had to turn up to every round. Level 2 licence holders could miss a certain percentage of rounds i thought (that may have changed now)

But im all confused with it since Dynamic sold off half their level 1 to Tony Longhurst. I didnt know you could do that, i thought they were grouped as a 2 car team.

So im not 100% sure whats going on with it now.
If im wrong about it all and confused anybody, i apologise

[storyline]

From the December 2004 Team's licence agreement:

Section 4.2 - Category Restrictions and Entitlements
Teams with Licenses appointed to the various Category Levels are subject to the following restrictions and entitlements:
(a) (i) (Category Level One) Category Level One is restricted to a maximum of
26 Licenses and each Category Level One Licensee is restricted to a
maximum of one (1) V8 Supercar starting in any one race.
A Team with a Licence appointed to Category Level One:
(A) is entitled to two (2) votes at general meetings of TEGA; and
(B) is entitled to fifty (50) ordinary Shares in TEGA.
(ii) Irrespective of the number of Licenses a Team owns, the maximum number of votes the Team may exercise is four (4) votes at a general meeting of TEGA.
(b) (i) (Category Level Two) Category Level Two is restricted to a maximum of 9
Licenses and each Category Level Two Licensee is restricted to a maximum
of one (1) V8 Supercar starting in any one race.
A Team with a Licence appointed to Category Level Two;
(A) is entitled to one (1) vote at general meetings of TEGA; and
(B) is entitled to fifty (50) ordinary Shares in TEGA.
(ii) A Team which owns or sub-licenses one or more Category Level Two Licenses but no Category Level One Licence will exercise a maximum of one (1) vote at a general meeting of TEGA.
(c) (Category Level Three) Category Level Three is unrestricted as to the number of
Licenses and a Category Three Licensee is restricted to a maximum of one (1) V8
Supercar starting in any one race in the Secondary Series.
A Team with a Licence appointed to Category Level Three:
(i) is not entitled to any shareholding in TEGA; and
(ii) is entitled to attend a general meeting of TEGA however is not entitled to vote on any resolutions.
(iii) may only compete in the Primary Series when invited to do so in writing from the TEGA Board at its sole discretion. When determining whether to invite a Category Level Three Licensee to compete in the Primary Series, the TEGA Board must ensure that the interests and Rights of Category Level One and Category Level Two Licensees are fully protected.
(d) To make it absolutely clear, a Team may exercise a maximum of four (4) votes at a
general meeting of TEGA regardless of the number of Category Level One and Category Level Two Licenses the Team may own.

[emjaya]

Three questions,if anyone knows the answers;

A Team with a Licence appointed to Category Level One;(A) is entitled to two (2) votes at general meetings of TEGA

Out of how many votes in total and who has them?

(B) is entitled to fifty (50) ordinary Shares in TEGA:

Out of how many shares in total and who has what number of shares?

A Team with a Licence appointed to Category Level Three:

(iii) may only compete in the Primary Series when invited to do so in writing from the TEGA Board at its sole discretion.:

Have they invited anyone?

[cavvy]

No body seems to address the question of how it started ?

Didnt some of the team owners lead by Bob Forbes meet with SEL (Sports & Entertainment) where the head honcho Erskine Esq. allocated Tony Cochrane to the job.
How it happened from there I am not sure but CAMS allocated one of its prime assets the Australian Touring Car championships to the body set up by Cochrane in association with the prime movers of the race teams involved.

Did CAMS get anything for the transfer of this asset?
Will the Touring Car title ever revert to CAMS ownership?

By allocating a limited number of franchises, it put a value on the franchise when new racers wanted to ply their trade - none of the time honoured buy a car & turn up to race, you must buy the franchise of someone prepared to sell, & market forces dictate the value - no different to your ordinary garden variety taxi licence.

By limiting testing the value of the current franchise is enhanced, drivers wanting a start are prepared to bring dollars to the franchisee.

How it started, the steps along the way are more about the business of money than racing cars ... some of us find it very interesting, as the spin doctors massage the reality. I'm sure many of you know much about the set up procedure ... lets hear it.

It would be a great study for MBA students

[storyline]

Section 5.1 states:

Teams with a Licence may own or sub-licence, or any combination of own and sublicence, up to four (4) Category Level One or Category Level Two Licenses, or any combination of Category Level One and Category Level Two Licenses. To be absolutely clear, no Team can have an Interest in more than four (4) Licenses or more than four (4) V8 Supercars.

[manwell]

Originally Posted by storyline

Section 5.1 states:
Quote:
Teams with a Licence may own or sub-licence, or any combination of own and sublicence, up to four (4) Category Level One or Category Level Two Licenses, or any combination of Category Level One and Category Level Two Licenses. To be absolutely clear, no Team can have an Interest in more than four (4) Licenses or more than four (4) V8 Supercars.

I'd love to see how Tega/VESA would have worked out a situation like this.

What if FPR who were originally a 3 car team, didnt sell off their extra licence and were still a 3 car team and had say Bright, Seton and Winterbottom racing for them.

Then Jason Bright goes out and buys his own team and licences and starts Britek.

According to those extremely intellegent boffins at TEGA/VESA, FPR and Britek are joined due to a conflict of interest or whatever they call it with Bright driving for 1 team and owning another.
But then they wouldnt be able to group them because their own rules state no team can have more than 4 cars, and if they did group them there would be 5 cars. Wonder what they would do.

They should just let just FPR and Britek run as separate entities..... BECAUSE THEY ARE..... and no more grouped HRT and HSVDT who seem to have no problems with the Walkinshaw connection.

[storyline]

In adition, Section 6.1 states that for each and every Category Level One Licence held, one (1) V8 Supercar must compete at every race meeting in the Primary Series including all special events it has been invited to compete *through YEGA).

6.2 requires each and every category level two licence holder to have one (1) V8 Supercar compete at the number of race meetings required under section 7.2(b) invluding all special events it has been invited, again through TEGA, to compete. Section 7.2(b) gives this figure as 80% of the Race Meetings and MUST compete in all events where the distance exceeds 400km OR where directed by TEGA Board to compete (these 'directed' meetings to be part of the licencees 80%.

If a team fails to compete in the required meeetings the the team will

surrender its Racing Entitlement contained in this Agreement to TEGA for the following year.

[RotorFan]

Except now Level 3 teams get a vote at meetings.

[B!tchie Renault]

With TEGA absorbing some of the Level 2 licences to try and get the field back to 32 cars, then there are:

Level 1: 26 Licences (13 Teams x 2)

SBR, HRT, Tasman, FPR, WPS, LMS, BJR, HSVDT (Toll), DJR, GRM, PWR, PMM (under investigation) & 888

Level 2: 7 Licences (7 Teams x 1)

TKR, Perkins, Romano (leased by Perkins), Britek x 2, PCR (ex. Nash) & PMM.

The other Level 2 licences (from the original 9) of WPS (ex. Thexton) and PLR (Tratt) have been taken over by TEGA.

[WebberForWDC]

No, IMHO 3 FPR + 2 Britek = 2nd Britek Car banned from entry, that attempted entry is illegal.

[anthony81901]

The franchise system was introduced in 1999. Twelve Level 1 franchises were issued. I don't know what the exact criteria to gain a Level 1 franchise was, but it seemed to cover the teams that had competed in all races since V8s had gone 'Professional' in 1997, although Gibson Motorsport had misssed a few rounds in 97 due to sponsorship issues. The recipients were:

Holden Racing Team
Lansvale Smash Repairs
Stone Brothers Racing
Glenn Seton Racing
Gibson Motorsport
Perkins Engineering
Larkham Motorsport
Dick Johnson Racing
Romano Racing
Longhurst Racing
Garry Rogers Motorsport
John Faulkner Racing

A 13th was issued to Bob Forbes Racing in 2000. Other teams received Level 2 licences. At the time V8 grids were rarely fully subscribed, the number of cars able to be entered was not defined, in 99 6 Level 1 teams entered only 1 car while HRT entered up to 4. In 2000 Rod Nash entered 2 cars in a few rounds under a Level 2 franchise.

In 2001 the number of cars able to be entered under a Level 1 was limited to 3, hence HRT entered the K Mart cars under the Romano franchise and Romano's car was entered as a 3rd car under the HRT franchise.

In 2002 with the grid now reguarly over subscribed with Perkins and Briggs for all rounds and DJR and SBR for some rounds having expanded to 3 cars along with a few more Level 2s, prequalifying was introduced.

The Top 25 franchise spots from the previous year were granted automatic entry, with the remaining spots being settled by a shootout. However teams could nominate which driver would be one of the 25 and which would pre qualify. This we had the ridiculous situation of lead drivers like Bowe, Ingall, Lowndes and Skaife prequalifying to maximise a team's chances of all its cars starting.

The situation came to a head when a few leading names failed to qualify because of mechanical problems. The rules were changed and only those teams comitted to the full season granted entry. Larry Perkins volunteered not to run at Waneroo due to the limited grid size.

For 2003, all Level 1 teams had to enter 2 cars and Level 2 teams 1 car at all races. This has been the situation since, although the bottom runners have had to miss the races with smaller grids.

Of the 13 Level 1s, 6 are still owned by their original owners, the other 6 having been sold as follows:

Glenn Seton Racing sold to Prodrive with team at end of 02.

Gibson Motorsport sold with team to Garry Dumbrell at the end of 99, bought back by Fred Gibson at the end of 00, seperate from the team which went to Bob Forbes, and then sold to Briggs Motorsport at the end of 01. Sold with team to 888 in 03.

Perkins Engineering sold to WPS at the end of 04.

Romano Racing sold to Team Dynamik at end of 02. One was sold to Tony Longhurst at the beginnging of 05 and the other mid way through 05. Longhurst sold both at the end of 05, one to Paul Morris, the other to Paul Cruikshank.

Longhurst Racing sold with team to Brad Jones Racing at the end of 99.

John Faulkner Racing leased to Kelly Racing for the beginning of 03 and then sold to Paul Weel Racing

Bob Forbes Racing sold to Kelly Racing midway through 03.

I think the franchise was valued at $100k as part of the sale of Longurst Racing to Brad Jones Racing at the end of 99. In the Gibson Motorsport Merchandise court case it came out that Fred Gibson paid $400k for the franchise from Garry Dumbrell at the end of 00 and sold it to Briggs 12 months later for $650k. The talk at the beginning of 05 was that Birtek paid $800k for a Level 2 from Mike Imrie and WPS paid £3mill for the Perkins Level 1.

[storyline]

For 2003, all Level 1 teams had to enter 2 cars and Level 2 teams 1 car at all races. This has been the situation since, although the bottom runners have had to miss the races with smaller grids.

Yet the TEGA Teams Licence Document for 2003 quoted each level 1 licence could only enter one car with a team entering a maximum of 4 cars (ergo they could hold a maximum of 4 licences).

As many have been talking in terms of a Level 1 licence permittin 2 cars maybe the number of licences is not actually what people have believed for the past few years then?

[Antrodemus]

Originally Posted by storyline

Yet the TEGA Teams Licence Document for 2003 quoted each level 1 licence could only enter one car with a team entering a maximum of 4 cars (ergo they could hold a maximum of 4 licences).

As many have been talking in terms of a Level 1 licence permittin 2 cars maybe the number of licences is not actually what people have believed for the past few years then?

I think all the 'old' L1s were split up in the lsat year or two, so each car had a franchise associated with it (hence Dynamik selling its two L1s to different people).
Basically its gone from 13 2-car L1s to 26 1-car L1s, so I guess the only distinction from L2 now is $$$.

[anthony81901]

1) Presumably 26 x 2 + 9 x 1 = 61, although any L1 one team may only exercise a maximum of 4 votes and any L2 team only 1 vote regardless number of franchises held

2) Presumably 26 x 50 + 9 x 50 = 1,750

3) Level 3 teams were invited to bolster the enduro fields up until 2002. Since 2003 only the Level 1 & 2 teams have competed.

[Lowndes Fan]

Perkins bought a Level 2 for the #7, Rod Nash now has the Tony Longhurst #44 licence,Paul Morris Motorsports has the Tony Longhurst #45 licence (number not confermed) and Paul Cruckshank Racing has the 2005 Rod Nash Racing licence but with there Level 3 number #65

[GTRMagic]

This is fun, i am enjoying reading.

Nice work there Storyline, I am surprised I havent been summoned to appear before the powers at V8SA for copyright or something....

This is something I wrote for the people at ibrutes.com when they asked what the franchise system actually did

Originally Posted by ibrutes.com

Buying a franchise is akin to getting your drivers licence, it lets you drive on the road - here read taking part in V8 Supercars. We have three levels of franchise unsurprisingly designated L1, L2, and L3.

L1. This is the prime franchise that allows you to sit on the TEGA board, get a pretty good share of franchise income, appearance fees, and prize money. Originally requiring the entrant to supply two cars at every series meeting, this has been changed so that one of the current 13 L1 franchise owners of 2 car slots each, can sell off, or lease one of their two slots (like LRT did with WPS). Supposedly they also get preferential treatment at grid restricted rounds such as Barbagallo, Darwin, NZ, China etc.

L2. Requires 1 car to participate in at least 80% of meetings including the two enduros. The holder of this franchise cannot sit on the TEGA board, is generally an outsider to the management of the sport, and consequently gets a smaller share of franchise income, appearance fees, and prize money on a per car basis.

L3. Is the franchise required to operate in V8 Lites, it entitles you to appear at V8 Lites meetings, but with hardly any income at all. There does not seem to be any limit on how many rounds these licences may have to appear at, or indeed how many L3's there are.

There are a combined 35 L1 and L2 franchise licence slots available, according to the latest Teams Agreement each franchise owner has to sign to participate in the series, 26 L1 cars and 9 L2 cars.

This has to have been run by the TEGA board for its agreement, but in reality the process is such that the other team owners get the chance to bid for the franchise before the sale actually happens- keeping it in the family so to speak !!

Therefore if, say SBR, wanted to run 4 cars one year, they could bid for the franchise which would have to be considered by the seller.

Similarly there is a set of rules as to what constitutes a 'fit and proper person' to hold a franchise licence as well, with interviews, transparent business plans, and all manner of other things to prove that the investment os an ongoing one and not a spoiler, while the Teams Agreement which allows TEGA/AVESCO rights to view any or all contracts to do with the ongoing operation of the V8 Supercar team, drivers, sponsors, employees, suppliers et al

[storyline]

fit and proper person

So does this mean that you, I and a few others here would be eligible? Gives me a few ideas this does!

[GTRMagic]

Well you have to pass a probity test to work at a casino, so this is kinda the same thing... Russian Roulette to race a Supercar

[storyline]

Probity test - do they wear gloves when they do that?

[GTRMagic]

Depends if the board likes you or not........