According to the SMH, a joint media investigation by Fairfax and ABC’s 7.30 can reveal scores of current and former franchisees have been financially devastated after signing up to the high profile brand.
One of the country’s biggest mortgage brokers, Mortgage Choice, is in damage control as it faces an uprising from its franchisees on the back of a business model that is pushing many into financial ruin, depression and cutting corners on arranging loans.
Confidential documents show as many as 173 franchisees, almost half the franchisees in the system, are considering setting up a fighting fund to take legal action if the company doesn’t make the relationship fairer. Late last year they agreed to commit almost $200,000 to set up the fund if their demands aren’t met.
The investigation can reveal that a harsh business model and remuneration structure is pushing franchisees to cut corners, including churning customers, writing inflated loans to meet aggressive targets and in some cases committing fraud.
Mortgage Choice, which has a loan book worth $54 billion, has been making record profits for its shareholders, which include Commonwealth Bank and the founders, the Higgins brothers, who also sit on the board.
On Monday, shortly after being contacted by the joint investigation, Mortgage Choice issued a statement to the ASX saying it was reviewing its franchisee remuneration structure. It says the purpose of an “updated remuneration model was to increase franchisee remuneration and reduce franchisee income volatility to allow them to grow their businesses and assist more customers with their home loan needs.
See The ABC’s 7.30 program tonight.
