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Log In / Register | Apr 18, 2014

Australian Bank Franchise Model Flawed

The community banking franchise model has been condemned claiming many are costing more than they generate for the communities which own them.

This is how the model works: community banks operate under a franchise arrangement, with the local community owning and operating a branch, and Bendigo provides the infrastructure and support.  SMH

John Williams, a retired auditor and major shoe retailer has studied their performance:

According to his findings, at least 55 community banks of the 77 he studied lost money in the 2009 financial year, 17 have spent all of their equity capital from the period they started to June 30, 2009, and at least 58 had a negative cash flow in that year.

In a somewhat related matter and after years of complaints of terminations and closures, Bank of Queensland franchisees have gained IMF litigation funding to pursue their franchisor.

The bank has maintained it looked to resolve franchisee gripes or denied it was at fault with NSW problems. BoQ managing director David Liddy in April last year, when the bank closed almost 20 per cent of NSW branches, said choosing `some wrong people' was ‘our accountability’.   Courier Mail

These franchisees seemed unaware they were always small fry on a very big skillet.  

Related Reading:

Bendigo Bank Manager Admits Theft

Bank of Queensland Franchise Manager Robs Himself

BoQ Franchise Model Criticised

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