Brokers associated with Refund Home Loans are split on whether the sale of the business will be successful, or franchisees are simply being treated as "cattle at the slaughter floor".
A former Refund franchisee, who wished to remain anonymous, said brokers who are patient with the administration process will see benefits from the sale.
“I expect that they will be taken over by someone who will manage the business more efficiently, because they'll be run purely as brokers. They'll have more focus on them as brokers, and they'll have a better outcome. I see them gaining, not losing,” he said.
The broker predicted that the business could be bought by another large mortgage broking franchise and defended Refund’s business model, saying the company was sent into administration because lenders wanted an interest in the business if they were to recapitalise its debt.
“The reality of it is not so much that Refund had issues finding a lender to recapitalise; it's that banks wanted to have ownership. In these times for any lender to go out and renegotiate with a business, they would want some interest in it. It happens. It wasn't a reflection on the business model,” the broker said.
However, a current Refund broker also speaking on the condition of anonymity has claimed the administration process has amounted to “bullying bordering on unconscionable conduct”.
As exclusively obtained by Australian BrokerNews yesterday, Refund’s administrator, SV Partners, sent a letter to franchisees reassuring them that a sale of the business was being negotiated, with the field of buyers narrowed to three. The administrator told franchisees a sale contract would likely include conditions that outstanding trail and upfront commissions owed to franchisees be paid on settlement.
The administrator warned, though, that this is likely to be conditional on franchisees waiving their right to issue breach or termination notices to the company, or withdrawing them where they have already been issued. SV Partners told franchisees that termination of franchise agreements could "jeopardise commissions owing”.
The current Refund broker said precluded a “fair and reasonable exit” by franchisees wishing to leave the company.
“I think the letter speaks for itself, that SV Partners wish to bully franchisees into being an asset for sale, cattle at the slaughter floor, and tell us we have no right to walk away while they serve the interest of creditors,” he said.