Franchisees could buy Refund

by Adam Smith14 Oct 2011

Franchisees could put in a bid to buy Refund Home Loans following the company's announcement it will enter voluntary administration.

Refund Home Loans announced to franchisees on Wednesday that it had entered voluntary administration due to $2.5m in debt. The company's communications consultant Peter Sawyer has told Australian BrokerNews that franchisees may launch a bid to buy the business.

"It is feasible," Sawyer said, commenting that Refund founder Wayne Ormond first announced the developments to a group of senior franchisees.

"Their immediate reaction was, 'We must support this, we must maintain business as usual and we must look for like-minded colleagues who want to bid for the business. Wayne and the directors are going to take a bit of a personal battering probably, but the support of the franchisees was really good to hear," he said.

Sawyer said the task of the administrators will be to sell the business, and that there have been a number of interested parties "for whom the franchise network is obviously very attractive". He said some potential buyers will wait for the administration process to play out before launching their own bids. In the meantime, Sawyer commented, franchisees will operate as normal.

"The general agreement is to work to business as usual. There's a degree of - I think reasonable - hope. We're 24 hours in and people have a reasonably positive state of mind. It's an obvious blow. It's a blow to any company and it's a blow to the directors," he said.

Sawyer put the company's problems down to "over exuberant growth" in the years following its founding. He commented that this was exacerbated by banks retreating from financing the company's debt following the Queensland floods.

"The growth was to take advantage of the market at that time. What knocked it around was the reluctance of the banks after the January floods. We're a company that's had valuations of $50m that only have to clear $2.5m. That's ridiculous," he said.

Sawyer added that the administration would not affect Refund Real Estate or Refund Financial Planning.

COMMENTS

  • by Broker 13/10/2011 9:55:43 PM

    Well it was only a matter of time, as their business model was seriously flawed from the day they opened their doors. It’s hard enough to make a decent income in this industry, without gifting a portion of your income away and therefore creating unrealistic expectations from borrows that wish to utilise a broker, may those that reimburse trail go the same way asap, for the betterment of this industry.

    Does your mechanic, doctor, dentist, physio or accountant give you a kick-back on his fees received; I doubt they would survive if they did, why brokers would ever consider this is beyond my imagination.

  • by anne1966 14/10/2011 7:59:21 AM

    So what about Wayne Ormond - he was reported as very wealthy - why cant he save his poor franchisees for only $2.5m? What's the rest of the story we ar enot being told yet? I recently looked at their franchises and could tell they were struggling. They had a great customer idea but just way too many costs and Wayen kept goign on TV drumming up low value customers with his "if you're struggling come to us" message. I then looked at other models and I am not here to promote anyone but there are some new players around that offer customer refunds and have much easier businesses to run - I wouldnt be a broker these days and I feel sorry for the franchisees that are now being pressured to dip into their pockets further to save waynes world

  • by anne1966 14/10/2011 9:11:53 AM

    So what about Wayne Ormond - he was reported as very wealthy - why cant he save his poor franchisees for only $2.5m? What's the rest of the story we ar enot being told yet? I recently looked at their franchises and could tell they were struggling. They had a great customer idea but just way too many costs and Wayen kept goign on TV drumming up low value customers with his "if you're struggling come to us" message. I then looked at other models and I am not here to promote anyone but there are some new players around that offer customer refunds and have much easier businesses to run - I wouldnt be a broker these days and I feel sorry for the franchisees that are now being pressured to dip into their pockets further to save waynes world