Midas Australia Company Stores Closing
SYDNEY, Australia (Blue MauMau) - It is estimated that more than half of the Midas Australia chain will begin closing this Friday; while in administration. Company staff have been advised of store closures this morning and that they will be advised of the state of their entitlements after Friday.
A number of company staff have raised concerns that they have "just lost pay, holiday pay and unpaid superannuation".
This move will remove unprofitable company shops and along with them, unwanted leases previously negotiated where a franchisee was expected to pay exorbitant rent. Along with company shop leases, it is expected that Midas will rid itself of something in the vicinity of 15 to 20 leases on already closed shops.
The new owners, expected to be John Fletcher and Lazard Carnegie Wylie (previously directors with Philip Bonney), will most likely be announced 12 January.
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The more things change; the more they stay the same.
That is exactly the point missed by those who could make a difference.
The FCA and the ACCC won't commit to repairing the repuation of franchising in Australia; in fact, they deny there is a real problem.
FCA at least had the good manners to 'move [Les'] deck chairs' by changing most of the directors [but leaving Giles/Deacons]; while at the ACCC it was the end of Chairman Samuel's term - but after review he is still there.
Politicians have previously ignored the potential for these disasters; because that would have meant dealing with a complex franchisee protection issue. They have all gambled with an industry that provides 14% of Australia's GDP.
These business collapses and the franchisee failures are the huge costs today. Tommorrow it can, and probably will, continue.
The more things change; the more they stay the same.
They didn't! They just pretended to. "Off the record" comments reported from meetings and functions clearly indicated that Graeme Samuel and John Martin [ACCC], and Joe Hockey MP and Fran Bailey MP [both Small Business Ministers at the time] knew Midas was a "terrible situation". But it was all too hard and after all; they were only mere franchisees.
The ACCC couldn't go up against Deacons [FCA] and get their collective asses whooped, that would have been embarrassing to the government, and besides, the FCA was/is the industry advisor to the ACCC.
They lunched together, they drank together and the scutllebutt is that they even .... no I won't go there.
The administrator should be required to investigate Midas. He has the power to do just that. All they have to do is investigate the money trail to PBH [Philip Bonney Holdings] from Midas. All they have to do is get advertising industry reports. Then they can build a gallows.
Maybe everyone in Australia was wrong? Lets find out?
The more things change; the more they stay the same.
The administrator has been hammered but he is non-committal - meaning probably not. It was a scam before administration - during administration - and don't expect much to change after administration.
9 February will be an interesting day in Court - for some strange reason I received a subpoena? I believe it is a case of 'mistaken identity' - I was 2,000 miles away playing golf that night.
The more things change; the more they stay the same.
Midas Australia up for sale after collapsing into administration
And this was my response to the editor of SmartCompany.com.au;
Amanda,
below is the real situation at Midas. I expect you will delete it however; you can feel free to refer to any part of it when this becomes public over the next week. And it will.
..............................
Rumours abound throughout the automotive and franchising industries that Ferrier Hodgson have already found a buyer in John Fletcher [ex-Brambles & Coles/Myer] and Lazard Carnegie Wylie, both previously partners in the Midas business. The industry grapevine is suggesting that they have staged a coup to remove ex-director Philip Bonney and to take a broom to unwanted leases on closed shops and unprofitable company shops.
Today 3 Midas company shops closed in Sydney and 1 in Perth and others received an email suggesting they "be careful about bookings next week; you may be undergoing renovations". Renovating would be a first for an administrator. Existing franchisees suggested there would be very few company shops that would pass as viable and expect that either all will be closed, or at least the majority will be closed.
The suggestion that the company has been "hit hard by the global credit crisis" and the Midas LPG program was hit by 'petrol prices' is at best misleading.
Midas suffered acute negative supplier confidence due to a history of poor compliance to payment terms.
Smart Company refers to ex-franchisees and legal action. The ex-Midas franchisee group has been evolving and growing where submissions to the recent Federal Inquiry into franchising saw Midas complaints referring to the high level of franchisee turnover, unconscionable conduct, criminal complaints, misrepresentation and fraud; to name but a few of the issues.
Most of these issues were referred to as far back as 2004 by Paul Barry on A Current Affair. And in 2005 by Jacqui Walker in BRW. And as far back as Peter Switzer in the Australian in 2004, 2005 and 2006. As a franchising brand this company will never recover from the media, political and internet coverage. It was 'hit' long before the 'global crisis'.
Mr Georges says he is getting "good support" from employees and landlords but he cannot be talking to those I have contacted. They are fearful and looking elsewhere. They see that it is obvious where this mess is going and while the administrator collects his estimate of $500,000, they believe they are about to lose out.
Mr Georges suggests that the network contains 91 centres; the Midas website indicates there are 89 in total with 45 company operations under threat - 41 after today.
Smart Company contacted 'stores' that suggested they wanted to remain with the brand however; I contacted many of the franchisee network who stated they do not want to remain with the brand. I also contacted many of the company shops. They expect they will be unemployed within 1 to 2 weeks.
No matter what Mr Georges says; Midas is not in good shape. The brand and systems have been ignored by the franchisor for a number of years. The franchise financial model is a disaster and needs to be demolished and rebuilt from the ground up. If franchising isn't based on the success of the franchisees then it will eventually fail because of franchising reputation. This is the Midas outcome.
To re-design the Midas financial model will be costly for a new owner but if it isn't 'attacked' then the trouble at Midas will continue with a new owner.
Midas advertising since 2000 has taken a 'sharp decline'; franchisees attribute this to a failure to spend from 'their advertising fund'. Rebuilding the public awareness of this brand will take years and a large advertising budget.
Rebuilding the franchise financial model and rebuilding the Midas brand might sound simple enough; but it will require investors with very deep pockets and a long-term agenda.
This administrator has been simply 'puffing' to conceal that the fire sale has been completed with the 'best offer' coming from Fletcher and LCW - and they are short-term investors.
The Midas saga seems destined to continue. And more franchising victims will fall and with these investors we will probably see another administration of Midas in the future.
The more things change; the more they stay the same.
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