Refund Home Loans is likely to "implode" as a franchise, a rival refund model has claimed.
Robert Graham, chairman of Refunds Direct, has predicted that the struggling franchise network, now in voluntary administration, will collapse unless a "white knight" buyer appears. The company entered voluntary administration in October, and its real estate and financial advice arms have since followed it into insolvency. Graham, whose company offers a referral service rather than a broker-based service, pointed to reports of legal action being launched by a number of franchisees, and the lack of commission payments to the company's brokers. He said Refund's network was on the verge of collapse.
"They are at a tipping point right now where some good news is needed, such as a cashed up or high profile buyer," he said.
If the company is beset by more "bad news" or if franchisee litigation spreads, Graham declared it would be "game over" for the company's network.
"Emotions will be running high among franchisees as they are scrambling to save their investments and livelihood. There will also be franchisee factions forming. At one end, some franchisees trying to rally the troops to stick together and minimise publicity and at the other end a growing number of franchisees seeking compensation and retribution for all sorts of things," Graham said.
Graham advised the company's brokers to "get on the front foot" and leave the franchise network rather than "stay and pray".
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