Public Discussion on David Reid Homes Franchise

I’ve been approached by a large group of David Reid Homes franchisees that allege the system is a disaster here in Australia as the franchisor expands into the US market.  David Reid Homes Crumble

There seems to be no argument that the homes themselves are a brilliant product.  But the Return On Investment appears to be a joke and the promised support is said to be non-existent.  As you can imagine this is not a low cost entry franchise and my contacts to date would have to be considered to be astute business investors.  The information already received suggests that the glitter of franchising a great product was confused with making money?

David Reid Homes has built a reputation that has earned building awards across the UK, New Zealand and Australia.  However; reports of growing numbers of David Reid franchise collapses are not difficult to find.

One of the offshoots to franchise collapse in the building industry is that the poor little folk sub-contractors always get screwed.  Builder Goes Bust

David Reid Homes is now looking for a new agent to operate its Hervey Bay business.

Donamic Enterprises director Mick Picton says the company went into voluntary administration because of a lack of support from David Reid Homes. Subbies Fuming

David Reid Homes franchise collapses and those on the verge are not limited to Queensland or Australia for that matter with research turning up similar disasters as far afield as New Zealand.  South Auckland Franchise Collapses

Home investors, contractors and franchisees appear to be suffering in great numbers while David Reid Homes expands its operation.  This seems to be just another franchise catastrophe that governments can and do ignore.  

David Reid

David Reid was still at the helm when we became Franchisees. A large number of misrepresenatations (including how well the existing franchisees were doing) came out of his mouth.

Posted by Guest on October 13th, 2009

Re: DRH

You are not helping here.  David Reid Homes says it isn’t responsible for the sale of David Reid Homes franchises and while that doesn’t quite make any sense at all I think it only fair to find someone, anyone, who can explain how DRH isn’t responsible for DRH.

This is serious stuff; it isn’t just franchisees that get burned.  When they collapse they suck the guts out of home investors and subcontractors and the newsagents and suppliers they all feed so I suggest some objectivity here.  If you follow the IP paper trail thought it leads all the way to David Reid Homes?  Am I the only one confused?

I’ll type this real slow so the Australian Rudd gubbmnt people get a little look in.  When systems like DRH collapse they suck the guts out of home investors and subcontractors and the newsagents and suppliers they all feed.

Now if I was a patient at the Fred Hollows Foundation I might have missed the 'ole Google search results that indicate that this has been many times a wonderful example of how franchise scams produce some heavy duty fallout for everyday folk that din know siht about franchising.  An ifin dey looks real close dey will see some franchisees jus a little p****d off.  

I believe that the basic attribute of mankind is to look after each other – the late and great Fred Hollows.

And who can forget …..

It wasn’t me - DRH

And now you're telling me David Reid misrepresented this disaster?  You are not helping here.  Where is Dave when you need him?

Posted by Ray Borradale on October 13th, 2009

Im Confused All I know is

Im Confused All I know is that the ageement we signed was with David Reid Homes.

There is a lot of buck passing in the company, no one is responsible for anything, no one answered ours and other franchisees emails, all reasons why we left apart from the fact we were given bogus figures etc. We complained to the ACC and the Franchise council neither one was really interested. We are just concerned that potential Franchisees are allowed to talk to Franchisees that have left the system ( we were told there were none) untrue.

I am grateful to this blog and when I researched David Reid Homes I found nothing negative on the company at all. Just that they were among BRW's fastest growing franchises etc, all this gave them lots of kudos.

If anyone is considering becomming a franchisee there are building approval checks - you can do to see how many houses are really built a year and look at the ASIC website to see how many people actually have registered the name and are no longer trading and above all don't be intimidated into not contacting previous Franchisees

Posted by Guest on October 14th, 2009

David Reid leaves franchisees with nothing but losses

David Reid is a super salesman and nothing else. He sucks everyone in with his promise of support and a successful system he developed. In reality, the system he developed almost went broke in New Zealand, and he was extremely lucky that some partners bought him out, and they quickly exited him. He still retains a %age of sales through his Cook Islands tax haven, which he uses spectacularly to ward off any potential legal battle.

He refused to return deposits paid by various Territory Franchisees in his foray into and failed David Reid Investments model in Australia. He unfairly sacked 2 Master Franchisees (one was his partner in David Reid Homes Australia).

Get involved in business with David Reid at your peril. He is all smoke and mirrors.

Posted by Ex-DRH Franchisee on January 28th, 2010

DRH - A Super Effort

Can someone bring me up to speed on where the David Reid franchise [office] numbers are now?

At this Australian DRH website the video suggests there are 23 offices. I’m not going to look further but I suggest you guys do and would refer you to THIS. The information I reviewed some time back suggested this was not even close.

It does not take a super
effort and in fact my original complaint consisted of, from memory, 2 paragraphs in an email with a few links and 2 attachments.

The supreme efforts of the ACCC in that instance actually brought about virtually a surrender in getting franchisee fresh meat and, for a time, they totally focused on sharing the joy with existing franchisees.  It was truly a coincidence that not long afterwards the franchisor backer took the scam into administration.  It was heart breaking ....

Posted by Ray Borradale on January 28th, 2010

What a load of crap.

I have just come across this site and I am disheartened by how inaccurate peoples opinions are. These sites attract only those that have failed. The Melbourne East office and the Perth office are the exception. What stands those offices apart from the failures is that the failures expected to be lead by the nose, have clients brought to their door and everything done for them. The Melbourne East and Perth offices continue to thrive because they do what all businesses must do and that is hire good staff/sales people and follow a business model.
A franchise system is basically a good idea, marketing system or product that is then offered to others to replicate.
Support was their for them to use, they just had to want to use it. Allot refused to have the right people come in and set up their systems. The majority just failed to use all the systems in place and by the time a problem was realised it was to late due to the inaccuracy of the franchisee's use of the systems.
Allot of failures did not understand basic accountancy. When I started my business I took all the courses I could in understanding this basic skill.

No franchise system that I have ever looked at in Australia gives you these skills you have to go and get them.

I have seen builders operate out of the back of a ute and still make sales and build houses, why because they go out and get them not sit in their office and wait.

The best thing that has happened is the removal of the last two directors of DRH Australia.
Though one was a great person the other person lacked the skills to deal with franchisee's and he was more focused on computer systems rather than helping franchisee's.
His direction was if they get into trouble let them get out of it.

That attitude has now gone and things are starting to brighten up.
Do not let people who have been incompetent cloud the facts.
This is a good business if run correctly by the business owners.
Remember, failures complain successful people quietly enjoy their success.

Posted by Guest on October 30th, 2009

Yes, you would be right ..

that was a load of crap.

You may be prepared to forgive for the sake of hopefully having something worth something but that does not appear to be where this is heading.  You may see a bright light appearing back from the east.  You did mention that the Australian master franchisees failed the franchisees.  You did not mention to what degree they failed franchisees and to what degree the man with his name on the brand was responsible for the misrepresentation.

How many did you build in your first year?  Did you meet the claims
that were made to you? Don't try and tell us fibs now unless you are
prepared to 'come out'. How many headlines have you read of DRH
collapses? How many franchisees are left?

Unfortunatley I have probably read much more about this scam than you and I have also read the most recent 'network' smoke and mirrors. There is evidence.  If he pulls you out of the poo it will only be because he wants desperately to get back on a plane to the States.

You represent the gullible that are the masses in franchising.  Good luck to you but I will be surprised if you don't come back here and whine when it hits the fan.

Posted by Ray Borradale on October 30th, 2009

info

Ray, I have info for you.re DRH. What number can I ring you on

Posted by Guest on November 1st, 2009

DRH & others

I'll send you a number.   ozfranchising@hotmail.com

Last week I had discussions with a number of people who were going to send me information regarding another matter.  One person only has so far responded.

Given the type of media we were discussing I was silly enough to expect more ............

 

Posted by Ray Borradale on November 1st, 2009

info on Davd Reid Homes

Thanks for the email address.I will be in touch soon

Posted by Guest on November 6th, 2009

The only reason the Melbourne

The only reason the Melbourne East Franchise is surviving is because they have deep pockets. They funded their first showhome out of their own pockets, they have managed to secure around 8 contracts this year, they have been operating for 3 years and they are not even close to breaking even.
Perth is an amalgamation of two franchises because they were smart enough to see that they were not going to make it on their own. They also have the benefit of the mining boom still ticking along well enough to keep the high end market off life support in the West, unlike on the East Coast.

Also I think both these franchisees have background and contacts in the building industry. Something that was specifically not required by DR when hawking his scam, and probably the single biggest cause of failure in Australia.

Posted by Guest on November 8th, 2009

When a particular program produces financial failure amongst

its practitioners in a  business segment where competent participants usually make money, there are specifically identifiable reasons for this different result.

Successful participants in the business have their way of doing business. The failing participant system requires that its constituents do business in  some different manner that produces an unfavorable result.

Rather than genrealize, it might be useful to identify the specific points of differentiation regarding this company that bring about the comparatively unfavorable results. Are they requiring procurement of materials and equipment from tied in sources and deriving an extraneous revenue stream from this that causes the franchisees to pay more for their purchases than independents/others in the same businerss would normally pay? That is one example of specific points of differentiation. Another would tend to be the cost of a franchise relationship that competing builders do not have to carry.

These and other specifically enumerated points of differentiation go far beyond the generalizations. A good investigative reporter might start interviewing the failed franchisees and screening their administration proceeding filings to dig out the causes for the failures.

Posted by RichardSolomon on November 8th, 2009

It all goes out

It seems to me that this franchise model involves a lot of money going out in the first 1 to 2 years and virtually none coming in for the same period.

That is the biggie. It seems they were led to believe that they would have almost immediate cash flow.

It would be very interesting to determine exactly what costs were experienced that contributed to failure if they were unexpected costs. Although the information provided by Guest suggests they did not need much help to fail with no revenue coming in what else was missing from disclosure and the sales pitch?

Posted by BOB on November 8th, 2009

It is the ridiculous timing plus other absurd negatives that

have produced the reputational issues that qualify this company as a FranWhack.

I know that DRH's lawyers have recently sent out threatening letters claiming libel and slander because people used the term FranWhack when speaking of them. I have read some of them. But they are a FranWhack, and if they want to sue someone over that, they can damn well start with suing me. I originated the term FranWhack. I defined the  term FranWhack. What a FranWhack is can be found by clicking on www.Franwack.com . It fits! And I am extremely easy to find! It's getting to be like Cuppy's and Java Joe's all over again.

You can't cover up being a sonofabitch by having your lawyers threaten people.

Anyone threatened by them with a lawsuit can count on my availability as an expert witness.

Posted by RichardSolomon on November 9th, 2009

David Reid leaves franchisees with nothing but losses

David Reid is a super salesman and nothing else. He sucks everyone in with his promise of support and a successful system he developed. In reality, the system he developed almost went broke in New Zealand, and he was extremely lucky that some partners bought him out, and they quickly exited him. He still retains a %age of sales through his Cook Islands tax haven, which he uses spectacularly to ward off any potential legal battle.

He refused to return deposits paid by various Territory Franchisees in his foray into and failed David Reid Investments model in Australia. He unfairly sacked 2 Master Franchisees (one was his partner in David Reid Homes Australia).

Get involved in business with David Reid at your peril. He is all smoke and mirrors.

Posted by Ex-DRH Franchisee on January 28th, 2010

David Reid has fooled you.

Tim, you were totally sold by David Reid, and looked up to him and were totally fooled by him. David Reid ripped off all the parties involved in the failed venture David Reid Investments, and failed to repay any paid deposits made by the Territory Franchisees. Keep supporting David Reid, but he is taking you for a ride.

Posted by Guest on January 28th, 2010

Latest in DRH Saga

David Reid has breached his Australian Master Franchisor and taken them to court to recover lost data.

Two years ago David Reid sold his interest in DRH Australia to his largest franchisee. Since then he has sat back (having relocated back to NZ) and watched as the two directors of DRH Australia have run the business into insolvency. On the way, around 19 of 23 franchisees have closed, gone broke, or been breached. Keep in mind that everyone committed at least $350k to be involved, and some have put in excess of $1m.

Understandably pissed off, the DRH Australia directors moved data and created havoc with the DRH systems as they were shown the door, to the point that franchisees have not been able to access critical accounting and systems data for over a month. Keep in mind that although these two incompetents have destroyed the business, they also were conned by out of a truckload of cash by DR.

David Reid has recovered a lot of the data through court action and has now graciously offered to sue the previous directors, on behalf of the 2 or 3 remaining franchisees, on the condition that any money recovered is retained by David Reid and used for marketing.

Presumably to help him sell more franchises.

It looks to me that David Reid has taken churning to a new level. Not only is he trying to churn grass roots franchises, it looks as though he will probably try to churn Sub-franchises and the Master Franchise. DRH has quite a record in Australia, having sent the Master Franchisee to the wall. With State level franchisees, who paid at least $1m, struggling with little royalties flowing through, and no prospect of selling any further franchises at the original extortionate price of $200k. So they have little prospect of recovering their investment either, unless they can sell more franchises. But to sell more franchises they now have to move to the dark side and knowingly sell a failed system to the next poor bastard. It will be interesting to see what happens next.

As testament to DR sales skills, he has re-employed two previous employees, one who is probably too dumb to know any better, and one who is vastly experienced in the industry and knows that the system is flawed.

David Reid is trying to blame everyone else for the failure of his system in Australia but himself. But the fact is he started selling franchises in Australia before he had built a business.

He created the illusion of a business by selling showhomes to friends as investments with above average rental returns. Unfortunately these rental returns were being funded by the poor franchisee who built the home (just another overhead). So as soon as the showhome was completed the clock was ticking as to whether the business could generate enough sales to cover the now massive overheads. By this stage your typical franchisee would have a large office (required before franchise opens), two cars, a construction manager at $70k plus, a sales person at $30-50k plus.

In the design and build industry it takes a minimum of 12 months from when a client walks in the door until a contract is signed, let alone building commencing and funds coming in. And clients don't start walking in the door until you have a showhome. It takes at least a year to design and build a showhome. So doing the simple maths, unless you budgeted on two years from commencement to receiving your first construction payments from clients, they were doomed from the outset. How many franchisees buy a business with an expectation of two years before they will start generating revenue. Not many i would suggest. And i would also suggest that DR would not have sold many franchises if he had been upfront with that little gem. In fact, quite to the contrary, every existing past or present franchisee in Australia was told that they only needed $150k in working capital! Is this guy good or what?

Of course DR told prospective franchisees that he had a bank of investors waiting to buy showhomes, so franchisees spent anywhere from 20-50k having homes designed and plans prepared only to find that there were no investors. But of course that was not DR's fault. He was happy in NZ, or off to the US or UK selling more franchises.

Dave Reid's only real claim to fame was the arguable success of DRH in NZ. I say arguable, because he is no longer a part of the NZ business. He was bought out by his partner due to concerns over the ethics (or lack of) DR showed in setting up the Australian business.

Showing the self conviction of many of his ilk, he has now taken the business to the USA claiming that it is a successful franchise system. Surely there must be some laws against this both in Australia and the United States.

In any case, if you see an add for a DRH franchise, just smile knowingly, secure in the knowledge that you will not be the next poor bastard to give him money.

Posted by Guest on November 8th, 2009

DRH Creditors Dumped Amidst Trust Issues?

This whole saga of DRH has become a tangled web indeed.  The master franchisee - sub franchisor - [Stephens] blames the Franchisor [Reid] and visa versa with franchisees saying that both are responsible for issues previously published here.  Every complaint directed at DRH is seemingly directed at Stephens and some at Reid with David Reid saying he was not responsible for David Reid Homes at the time. Stephens is apparently pursuing action against unfair termination.

Non-payments are overflowing and then there was the takeover of the DRH web site directing traffic here to this discussion at BMM.  Then there is the documented financial model supposedly created by Reid but where Stephens was apparently not supposed to present it to franchisees because under a basic examination there is a problem with it. The one in my hands doesn’t work but Stephens had provided it anyway.

And law suits abound with threats of others at different stages. Then there are the overseas considerations referred to in comments here and/or in media involving the UK, New Zealand and the US. Did I mention the emails telling me DRH are wonderful and others with a very different opinion.

NOW there is the suggestion that David Reid advised existing franchisees, after Stephens was terminated as Australian master, to not pay Stephens and have Reid hold the money in trust even though the contracts are apparently with Stephens.  As previously mentioned; suppliers and creditors have been hollering and you can't blame them if they haven't been paid.

Creditors Chase ex-DRH Franchisor

I can’t make that much sense out of this lot and there are even more confusing allegations and versions of interactions where I have been asked to hold different pieces of information in confidence by different players.  My wife watches ‘Bold and the Beautiful’ so I might ask her.

Posted by Ray Borradale on February 1st, 2010

Dubai More Franchise Advetising, more lies

http://gulfnews.com/business/general/franchising-to-revive-gcc-fortunes…

"We wouldn't expect to be building a home for less than half a million pounds," Pick said.

In order to obtain a lic-ence to operate under the David Reid Homes brand in the UAE, it would cost a potential franchisee $150,000, Pick said.

"We'd expect the franchise holder to get that money back at least in their very first construction, after that they make [a] profit."

They will never get that back in their first construction at 4% supposed profit especially as it has taken at least two years of high overheads to get that first construction.

Posted by Guest on March 2nd, 2010

DRH Ireland

David Reid is a superb bullshitter. Unfortunately he has recruited honourable men who have misled people because they have been let down by the promises of David Greid. The people that built his business in NZ and the likes of his partner Roy Baker in Australia have been shafted. If he does that to the people he knows twenty years he is not going going to worry about shafting someone he has just met. For the record there is no builds in Ireland or the UK. A "franchisee" is building a showhome near London. No customer builds at all.Why? Because David Gried puts all his money in a tax haven rather than into his business. Feel free to contact me if you want any more information. I am already involved in a lawsuit to get to this fraudster. My next step is a blog and so on....

Posted by Guest on April 19th, 2010

How many DRH

How many DRH franchisees were presented with rediculous time frames to reach profitability?  How many never got close before they were inundated with unservicable debt?  Nice homes though ....

I could ask a whole lot of other questions but that might point to my sources. Ok; one more ... how many suppliers were burnt?       One more ..... how many clients?  

Nah ... this stuff isn't the business of government.

Posted by Ray Borradale on April 20th, 2010

Ray, As you are the moderator

Ray,
As you are the moderator of this site and seem to have some idea of what you are talking about, contact me privately and I will give you some goods that I would expect to see put David Gried out of business once and for all. Feel free to interview me on Skype. I have nothing to hide. It may not help the people that have lost money but as we say in Ireland, 'what does not kill you makes you stronger". Behind the David Reid bullshit there is a business model that can work. Unfortunately the greedy bastard sucks the life out of the business financially before it even gets off the ground.

Posted by David Reid (Greid) Ireland on April 21st, 2010

I'm not the moderator

I am the moderated and give poor Mr BMM a heartache every now and again. Contact me at ozfranchising@hotmail.com

Posted by Ray Borradale on April 22nd, 2010

David Reid Uk Limited

Hi
Very interested in your potential lawsuit I also have lost money at the hands of these people and would be interested in sharing views as to potential of recovering these losses which I believe were obtained under false pretences

Posted by Guest on October 11th, 2011

just touching base

Hi,
Have not visited thhis site in a while so only jyst saw this message.
How's life?

on June 15th, 2014

Reido Fleeces the Arabs!!!

David Reid is now selling his 'expertise' for $2m. I bet he will be staying well away from Kuwait in a couple of years time!

http://www.zawya.com/Story.cfm/sidZAWYA20100428103635#commentsZAWYA2010…

Posted by Guest on April 30th, 2010

David Reid reels in the Arabs

What is wrong with people? Surely this artist can not get away with it again.

Posted by Guest on April 30th, 2010

Fleecing Arabs my well be his last hurrah. One of the many

things I really like about my Arab friends is that they have long memories and are man enough to handle a problem directly rather than waste years in a "legal" process paying lawyers to chase phantoms whose money cannot be found even when you win. They are not that stupid.

Mr Reid should do some research on "hazuk basham". It is a wonderful remedy and produces redress much faster and less expensively than anything ay lawyer ever thought of.

Posted by RichardSolomon on April 30th, 2010

Tim, Dave, Abdul and $2m

My understanding of the typical Middle Eastern deal is that Dave would have to put up $1m and Abdul will be watching every penny of his $1m. Dave won’t be removing 10c from Kuwait until Abdul decides Abdul is happy.

Let’s put this into perspective; in Kuwaiti terms $2m might buy the dingy on the back of my yacht or the toilet in my guest house.

Dave will be looking for more money soon and he’ll find out how tight a fish can be if he thinks Abdul is going to fork out anymore without something tangible to hold onto.

If Dave screws up he will forfeit his lot and Abdul won’t lose a penny. If Dave hangs around and whines Abdul’s second cousin will put him in a place that makes Guantanamo Bay look like a resort.

I’m not surprised Tim Groser is involved. This $2m deal will have doubled NZ Trade. New Zealand politicians are some of the cheapest on the planet but to be fair; they get so little opportunity.

But NZ won’t get a penny out of this.  Dave will probably run.  Abdul will probably have lunch.

Posted by Ray Borradale on April 30th, 2010

I see you're a conman

I see you're a conman too!

Only put on your website what will benefit your argument.

And you complain about Reid.

Plus I notice you haven't solicited his opinion.

Obviously you like a one sided argument.... you must have one glass eye!

Must also have a fetish for siding with the "underdog".

Just can't work out if the dog has bitten anyone first!!

Posted by Guest on June 6th, 2010

That’s a bit cruel

I have a rather fragile personality and would have much preferred ‘ahole’.

David Reid came here and left.  David Reid exchanged emails with me and disappeared. You obviously can’t change the model or the sales pitch that has been the basis of DRH. Unless you can produce something worthwhile to contradict that and the fallout I think its time you changed hands and I definatley won't be offering any further asistance.

Posted by Ray Borradale on June 6th, 2010

WHAT A LOAD OF BS!!!!!!

It has been interesting following these narratives...
You are aware, that anyone who is prepared to take on a franchise, or any other business opportunity, should do their due diligence before signing on the dotted line, regardless of how attractive the proposition is that is put before them.... Common sense?
If you are going to take on a field of expertise, in which you have none, you had better be damn sure you know what you're doing first, or have the people around you who do..... Again common sense!

Many of the people who took on David Reid Homes franchises, did so based on the NZ scenario, which has been working quite well. Unfortunately those people had no construction experience. Further, in many cases they did not follow the model, nor did they take the advice given to them by people who were in a position to know, or appointed to assist them. In the end they went down. Each for a different reason, but each in their own way responsible for their own demise.

Regardless of how good a "Salesman" you think David Reid is, at the end of the day, as with all franchises, if you don't follow the model, or, as in the real world of business, if you do things contrary to good business practice, if you entertain new business without following the correct procedure as dictated by law, or enter into business dealings at the wrong price, regardless of your good intentions.... you will ultimately fail.

How you handle that failure depends on whether you are prepared to accept the folly as being of your own doing, or, according to the comments which you purported were made to you by the disgruntled franchisees, point the finger at David Reid, when in reality they should simply be looking in the mirror.

I believe the franchises that are still running are doing so successfully despite the difficult climate.
The only problem with the David Reid Homes franchise system is that the majority of the original Australia franchisees lacked the reality of real world building experience, and that included its then DRH Australia overseers. That was David Reid's mistake, and I believe one he should rectify with new franchisees.

Posted by Guest on June 7th, 2010

A flood of good advice

Most of what you state cannot be argued against. Everyone and especially franchisees have a responsibility to ensure effective due diligence before they sign a contract and that includes whether they are a fit for the industry, for business, for franchising and for the particular franchise they are considering.

But where was the franchisor when all this poor franchisee selection was going on? The sales material presented to the prospective franchisees came straight from the franchisor including the bloody hilarious projections.

Its not unusual to ‘sell’ first generation franchises to anyone with the money while the system is ‘developed’. Some [most] franchises never develop and the first generation failures flow into the second and third and so on.

I absolutely disagree on many of the compliance issues you refer to as being cause for the demise of Australian DRH franchisees and as you suggest, that was partly the result of a lousy Australian master franchisee who didn’t support; didn’t actually do much at all. DRH made a mistake there but he was following the DRH franchising model. There has been no evidence to suggest that the DRH model has been ‘developed’.

I could give you some specific examples and let those be tied to specific franchisees and I think that’s what you are after but I ain’t that stoopid.

You ‘believe the franchisees that are still running are doing so successfully despite the difficult climate.’  Now that is great news even though it goes against the recent flood of emails.

Apart from that this is going to be a very tough year for small business.  In the building industry last year was a shocker. This year you had better be damn good at what you do and how you maintain your business through a considered analysis of a changing and very bloody tight lender market mostly due to an incompetant first term government that has borrowed most of what would have been availble to stimulate small business. But your fool PM has to cover multi-billion dollar blunders while blowing any residual consumer confidence. And now you get the double whammy to consumer confidence with a federal election just around the corner.

Throw that in with a franchisee financial model that don’t work and typical franchisee contractual obligations and you have a hell of a problem.  Perhaps your's is a cash business and good luck to you. The government is wasting the tax dollar anyway and your DRH royalty won't be missed ... much.

You keep your chin up and forget about the past DRH failures and the now struggling franchisees I hear from. From those DRH franchisees let me pass on their thanks for reigniting and keeping this thread going.  It has been a pleasure working with you. But I really must run; I have more important things to do.

Posted by Ray Borradale on June 7th, 2010

They call me speedy

One thing about some people that fail in business, especially first timers; they can be very smart people and still fail. Even professionals such as lawyers and doctors and even footballers with managers can fall for incompetent advice and make rash decisions.

In franchising that advice is replaced with a very competent sales pitch and a delivered promise of riches.

That doesn’t lessen the culpability of franchisees in their own demise but it makes the franchisor complicit; en masse, and usually deliberately so.  Franchisors have been shedding responsibility for FranWhacks for half of the last century.

I took one look at the DRH projections and nearly fell out of my chair. Not just because it failed the ‘common sense’ business test of what is achievable. Mostly because smart people signed up.  How many Aussie franchisees are left now?

Posted by Ray Borradale on June 7th, 2010

Are you a) David Reid b) a Territory Director

This is a Franchise, there is supposed to be support and advice, a lot of the Franchisees were infact business people. You obviously don't want you potential next victims to read this site and take notice. Afterall you get you $200,000 - if they go bust you get another franchisee and another $200,00.

The NZ senario was what were were sold as being the Australian senario.

There is not one original franchisee remaining - there has been 100% failure - is that on there advertising or in the prospectus. There cannot be many franchises with this amount of failure. The whole Franchise agreement was full of faulsehoods. Hopefully the ACCC has investigated this.

Thanks to this website - you can now find unbiased due dilligence - but before there just wasn't any.

The franchisee we were all taken to see, (who has since gone bankrupt) told us how well he was doing. Looking back, he seemed obliged to do so.

When according to the franchise code of conduct you are given figures etc of what is supposed to be an actuall trading business- you take a bit on board that they are following legal regulations.

This website is great for providing people advice - and talking about due dilligence, any potential franchisees please do it and email some of us.....

Posted by peter M on June 8th, 2010

RE WHAT A LOAD OF BS!!!!!! by Guest

What model - there is no model to follow with David Reid - you were on your own, and regarding your no building experience argument, David Reid specifically didn't want anyone with previous experience. There claim was " that you it is not easier to teach a builder to be a business man"

Posted by Guest on June 8th, 2010

How does he do it?

I can believe this man David Reid is still at large, he is by far the biggest bull------- I have ever come across, he has an apprentice in the UK called Martin Pick who is not far behind Reid in conning people, Pick has also taken many £1000's of innocents in the UK and is still at it - please be careful, he has a silver toungue!
And he is still taking money from people, he has left a trail of victims behind him and he is still at it!
He really should be stopped.

Posted by Guest on June 15th, 2010

The Australians, The British and now the Arabs!

David Reid, Martin Pick, wanted for fleecing people, these men really are a double act, they can both talk the talk but there is no walk!
Martin Pick has taken well over 1 million pounds from unsuspecting franchisees and so called territory directors over recent years, how many houses has he built = 0. How many customers has he generated for his franchisees = 0, what are his franchises doing = NOTHING! How does he sleep at night?
Buyer beware

Posted by Guest on June 15th, 2010

For Those who bought an Aussie franchie - watch this

http://www.youtube.com/watch?v=LcgSJTUELmc

Try not to laugh too hard!!! PS they only pay $69,000 up front with $17,000 of that being used to advertise and help your business, and you can work from home!!!!!! No overheads ,and you have to hear the profit projections. Gosh I must buy one.

Posted by Guest on June 16th, 2010

Here We Go Again!

Posted by Guest on December 14th, 2010

Here we Go Again. The DRH Refurbishment

I am and ex DRH franchisor who lost everything do to the lack of support from all parties of DRH head office before DR sold it to Rus and when Rus took it over. December last year Ken Beissel rang me to discuss what went wrong and how he would be able to make DRH better. Wanted to know why my franchise went down which I told him lack of support, false projections given to us and the understatement of the require capital. Ken also advised that he had been head hunted to change the ways of the past and to make the system work better. This new role out doesnt do anything for all the people that have lost everything to date which includes both the ex-franchisors, clients, suppliers and subcontractors which I stated to Ken, I asked "will the new DRH repair the damage done to the ex-franchise finacilaly and personally..." he advised that he couldnt but he did state ..."that with the new role out it would be different as DR has relised now that the system in NZ was no the right system for Australia." Lot a help that is for the ones that have lost everything.

Posted by Guest on April 4th, 2011

In Defense of David Reid Homes

I just received the email below from John Harris of Building Selection regarding David Reid Homes. I am posting it for Mr. Harris.

A word of note: I would encourage all readers that it isn't necessary to write letters to the editor if you want to post something. All are free to post and comment in Blue MauMau's public forums and article comments. - Mr. Blue MauMau, editor


Hi Editor,

I googled David Reid Homes today to find a particular Home that was built on the sunshine coast. I was surprised to see the bankruptcy as the third google hit and find the story and links amazingly one sided. That no one has taken the time to address them is also surprising. Ray clearly is the man in the seat and I note his blog is well constructed and his purpose means well.

May I share my experience?

I met David Reid and Roy Baker some 6 years ago when there were 3 franchisees in Australia. Having owned and operated a number of building selection centres and hosted, presented, created new home and other functions / workshops / seminars aimed at giving consumers an ideal process, I felt their model matched the ideal. I have also worked for hundreds of companies in the Building Industry including the two major Building Associations, The Landscape Association the Kitchen and Bathroom Designers Institute, Archicentre and the Building Designers Association. There is little mention of financial control methods and mechanisms in these organisations. Yet the building industry remains a cornerstone of the economy and Franchising works well.

The comment that the DRH franchisees got no support is a total furphy. I attended almost every function the company presented over a 5 year period including 2 international, one National conference and numerous regional conferences. These were all designed to make the businesses better. A host or successful people presented to share the basics of success. The operations manager continually assisted Franchisees, they had a quoting and estimating division to ensure margins were met and also offered national supply deals to ensure Franchisees got the best possible price on any item required.

The company continually tried to get their Franchisees to pay attention to their creditors and debtors’ and I have numerous examples where builders were ticking over millions yet not focusing on collections even when their regional mangers ( Territory Directors ) alerted them to this issue. The company even installed a system that tracked and traced every single item from initial contact with a prospective contact. This system clearly identified every cost centre going into a project and allowed the Franchisee to know their exact financial status at the press of a button. Some refused to use it and said they knew better. Most of the franchisees had management experience and all they needed to do was to market to clients and treat them like they needed to be treated. The high ticket big margin almost ensured that anyone could be successful. That some were not, is not a reflection of the DRH system.

The article talks about sub contractors being owed money. It is always the trades who also do not have tight credit control with their builders, that get left being owed money. This is NOT a reflection of the DRH franchise system.

The best franchise in the world is as good as it’s people. The best system allows for complete understanding of one’s business whether juicing carrots of frying chicken. That existed with David Reid Homes but the knowledge is not as important as acting on the knowledge. Only the respective Franchisees have the power to act on the knowledge. The best example was the building board closing down a DRH Franchisee even though he had $7 Mill under contract and another $7 Mill in the pipeline and they foreclosed on him despite assurances they were happy with his financials. I am sure the court case will show he was solvent.

The Franchisees that currently continue to trade are winning awards not just on their quality homes but trade in difficult markets heavily influenced by GFC yet continue to flourish.

Maybe it’s time to do a story on them and why they continue to succeed and flourish? Maybe ask them what the level of support was? With interest the Perth and Melbourne offices also have business coaches ON TOP of all the DRH systems to ensure they really do well. MBA WA best new builder of the year in 2010?? DRH. Master builders Vic multiple award nominee 09 / 2010 DRH. Your story alludes that the homes built are indeed high quality, collecting money from the client is obviously one very important item.

I write this reply with no influence or input from David Reid Homes but have CCed their operations manager in as it seems grossly unfair to leave comments like this on the web with NO other input from any one except regional newspaper reporting that presents one side of the case.

Sincerely yours

John Harris
Business Network Director

on May 30th, 2011

My Comment

I saw the forum page only, yesterday when I wrote the reply.

You have pasted it to a thread that I had not seen previously and have spent the last 4 hours reading the comments.

For those that feel aggrieved or are aggrieved I am sure justice will prevail within the framework of corporate law. The man commenting, Mr Solomon, looks and sounds like a good bloke to have on side too!

I was only replying to the claim that Franchisees got no support and this was not the case. Territory Directors including one here who has posted, BEGGED franchisees to pay attention to their financials. Yes it was a new model based around what was learned in NZ with OZ being a bigger country...but that does not alter the facts. A good product delivered well, with good marketing where you give people what they want and make a good margin is a recipe for success. I hope that the existing Franchisees continue to make a success of their businesses.

For those that have lost their money I feel very sorry for them and know many of them by name. I amongst others tried to share knowledge and train people to do things the right way. No amount of comments on blogs makes up for financial ruin and my heart aches for the real human cost of business failure.

John Harris

Posted by John Harris on May 30th, 2011

Really ?

Hey John,
you must be looking for your old job back with DRH as National Training Manager. Good luck with that.

All the "support" you were exposed to was of a sales nature. The back end systems were shocking in terms of costing and accounts management. Databuild had no provision for managing a business, only managing a project. As for the estimating, DRH referred you to an independant estimator - not their own staff. It was all based on "best guess".

You can talk it up all you want, the backend systems were poor, faulty and inconsistent. The model changed so much in such a short period of time that the systems were always being ironed out. They were never tried and true systems. They were experiments. And franchisees were the guinea pigs.

Talk. Talk. Talk. That's all there ever really was. So much talk, and so little substance. For the sake of future participants (customers, franchisees, subbies and so on) I hope DRH never get's back on it's feet. The real problems at the core of the business have never been acknowledged, will therefore never be addressed, and history - as they say - is doomed to repeat itself.

5 years ago, a franchise sold for 250k. Now, you can sign up for free. Even head office know the value of their franchises today.

The Perth franchise survives on the back of the WA boom. Melbourne are surviving due to their deep pockets and capacity to keep tipping dollars into their leaky business.

When even the national director has to rebrand his own franchise to something other than DRH just to try and survive (while he is still an owner of DRH Australia) then you know things are not as you described them. You can validate that at http://www.avantgardehomes.com.au

Posted by TJ Bickel on June 2nd, 2011

Reply 1.

Well Hi TJ Bickel. I trust you are not a Taxi Driver too? If so will warn Jodie to keep an eye out for you.

I do not remember you being an active person involved in David Reid Homes under this name, whilst I was the National Sales Trainer.

Perhaps I can address your points as you list them.

My role as incorrectly stated was as sales trainer. This has only recently expired and may be re invigorated now that there are 15 new Franchisees.

As I don't know you and assume you may or may not know me, I state the obvious. You have no idea what I was exposed to whilst in the companies employ. Perhaps this may assist.
I am widely regarded as a database sales expert having been involved in Computer tracking for some 28 years. NOT just in sales but how to really track a client. Salesforce is ONE Tool for a business and like all computer programs it is garbage in, garbage out. I spent a considerable time with each Franchisee trying to get their staff to honestly input their client base and their likelihood of completing. Sales IS the basis of business. Anyone can build a home. Some of the offices and their franchisees point blank refused to keep their computer system and their sales info up to date. I guess that attitude reflected on their financial controls too?

I worked with Donna and advised Russ and Roy on which system to go to, having to vigorously assess three options for controlling sales leads...sales leads that within the same program, became projects, projects which showed profitability, time zones, work flows, and communication. What part of that is failing? What part was accepted, embraced and adhered too in any office was often the trigger point to realisation of their state of affairs.
Yes systems continue to change and improve NOT just in this company or industry but every company and every industry. Systems have to reflect the hear and now not the past and be set in stone.

Having spent a fair amount of time at DRH head Office I have seen with my owwn eyes the Estimators and spent a fair amount of time with both of them discussing the links to sales from the estimating process and their guide to best practise. As I don't know who you are I can only guess that more time spent with Dean and the team may have helped you get the costings right at your end. But Estimating is only one part of a project it is the BIG picture like any other business that needs adhering to.

The process of building a DRH home remain the reasons I was involved. The CONSUMER is king no matter whether you work for Henley, Alcock, Salsbury, NuSteel, Hotondo, GJ, Cavalier. Luxury homes are a profitable business and make money for the companies who build them with tight controls and known cost inputs. THAT system existed in DRH.

The Perth Franchise flourishes due to Kims professionalism and ability to relate well to very discerning and demanding clients. Boom or no Boom you still gotta build trust and confidence in a client. They do that well and as MBA new builder of the year guess this proves they can BUILD a good home too?
Melbourne does well because the Lads have built a formidable team. They have taken on a business coach and we all expect that Mr Ruffolo will drive them to greater success.

You know where I am and I am always up for a chat about why any system fails. Talk talk talk is a good thing in business...comprehension, understanding and application of what is being said is pretty important too.

You may know I train both HIA MBA members and work with 5 other industry bodies to continually raise the standard of construction, building and the experience for clients. To my know knowledge there is no Neil Jenman in the new home space and my input was always based on getting the process right for the consumer.

I currently work with a DRH Franchisee who is eyes wide open, yet still bought the Franchise ( they are NOT FREE ). He knows why he bought the franchise and the reason remains constant for most builders and business people who buy Franchises in the building industry. If you work it, it will work.

Again I do not know your name and yes Business is based on money and paying bills. BUT success is the transfer of feelings and emotions and luxury home construction is heavily based on this. The DRH system STILL works and will continue to be a great way for people to get what they want on budget and on time. That is THE system.

I can hear your pain and a dash of anger and hope that you find your success in some venture as soon as possible.

respectfully yours
John Harris

Posted by John Harris on June 21st, 2011

I like your plannet Jon does

I like your plannet Jon does it closely revolve ours?
I never met you at a David Reid event, they couldn't even answer the simplest question about building Why?, because they didn't know anything about it, they didn't help at all, all they cared about is your money,most of the franchisees has already operated businesses and know too well about creditors etc thank you, the figures they gave alongside the fact that as franchisees you thought you were protected by law and that those figures had to be acurate based on a two year period, not made up as it transpired.
We phoned head office for help, phone calls werent returned. So I suggest politely that you are talking out of ignorance or the new chappy is worried about potential franchisees reading the blog and is trying to counter act it. Just look at asic and find out how many franchisees David Reid has got through, becuse the agreement we got which is by law supposed to state how many franchisees have exited stated NONE, again not legal. No other input from anyone leaving comments, HAVE YOU READ THIS WEB SITE. I am sure you have CC'd the operations manager I am sure you know him well

Posted by Guest on June 4th, 2011

My Planet

Giving feedback to people who post anonymously is a little challenging but I can understand your desire to remain anon if you were a failed Franchisee.

I will address your points. However remember it is a Franchise we are talking about. Colonel Sanders was a terrific sales person, had a good recipe and a great brand. People still failed in that business model. They are still failing, McDonalds closes restaurants, Franchisees try to cut corners and re invent wheels even in the BEST franchise. Human nature almost guarantees that people will FAIL in business according to their own strengths and weaknesses.

Please allow me to address your points one by one.

My planet is serving more people individually who are planning homes than any other single individual in Australia for the last 14 years. My planet has invested some $4 million dollars assessing, analysing, teaching, training, hosting workshops, seminars and private one on one conversations with hundreds and hundreds of people in 4 states of Australia. Both people planning homes and the companies planning to build them. My planet is an award winning service provider to the industry bodies. My planet is as a judge for quality construction and aspects of the building industry. My planet is a family based FRANCHISE who appreciates that whilst the master franchisee may know a bit about what he /. she is doing, I have to adapt and adopt to local market conditions. I do not care what figures or maths they show me I HAVE TO BE profitable. It's a pretty simple business rule and it is ENTIRELY up to me to make this happen. Any support I get is a bonus.

As I was involved with DRH from the time they had three offices till they time they had 2 ( a 5 year period ) it is a shame we never met. Perhaps my input could have assisted you to be a success?

Who couldn't answer the simplest request? I was only the sales trainer and know pretty much every aspect of construction....even the BCA sets out some pretty easy guides and HIA & MBA run courses and give their time freely to members on a daily basis across EVERY element of construction. Surely you did not expect to ask or get building advice from Donna? Roy and Russ would never let the sun go down without addressing major issues either from what I saw.

I still have every DRH document I was ever involved in, including the Franchise sales forecasts. I remember distinctly:- set up your office, find an investor to build a showhome, make 1-2 sales year 1. make 4-7 sales year two, 10+ year three and build teams as you grow. Any sales projections or forecasts HAVE to be seen as just that. Every market in Australia flexes and changes and a Franchisee must flex with it. We know Mackay is a great place today, but a little carbon tax could kill it, as a current example.

I don't base decisions on what ASIC says. I also don't believe everything I read and Government websites present the cold hard facts I am sure. I don't become involved with Franchises based upon their past successes or failures. I think due diligence is very important when buying a Franchise and the most recent DRH Franchisee STILL bought the name! Does that make them stupid, ignorant or self determined based on the websites and mandatory disclosure?

Without knowing your personal story I cannot comment on the points you make about head office answering your calls. They did not have caller ID on the switch and they always answered my calls? I trained the reception staff as well and NOT answering calls was never addressed. I am sure that as the company went through it's tough times it would not have been pleasant. I cannot apologise, only sympathise and empathise.

I met the new MD / CEO 8 years ago and have not spoken or written to him since then. I have certainly NOT CCed him in on anything I have expressed on this excellent blog.

I appreciate and respect your desire to remain annon.

You know where I am and can always call to discuss. Like I said ..I was with the company for 5 years and had a LOT to do with the coal face, being dealing with clients. NO CLIENTS, NO BUSINESS.

The ultimate system and the reason I was involved in DRH, was the client system. I have never seen it matched or bettered and the experience on my Planet says it is still a superior process for the client and allows margin for the builder. The rest is just admin and money management. With interest I have three accountants working for the 4 companies I am involved in and they charged me nearly $90K last year. I do what I do well and leave the rest and pay professionals to do what they do whilst having a good understanding of their systems and my responsibilities BUT I DO NOT do that work.

I hope you remain focused on your next venture and make a great success of it.

I know of 4 other Franchises that seek people to follow their system. Have a look at PIzza Capers and The Best Of. I know both the owners of these companies and if luxury homes is no good, then maybe business support or quality luxury take away food is the answer. We can't all make great building companies but I think Perth and Melbourne have proved it can be done and will continue to succeed as the days go by....as long as the economy remains almost confident.

Sincerely yours
John Harris

Posted by John Harris on June 21st, 2011

It was actually Roy and Russ

It was actually Roy and Russ who wouldn't reply to mine and several other franchisees requests for help, just the usualy David Reid " Heads in the sand" approach

Interesting to have a name for the person who penned the fradulent franchise sales figures documents which were according to the franchise code of conduct supposed to be an accurate representation of an existing franchise (two year operating figures) not a finger in the air forecast.

Asic dosent actually "say" anything, it just shows how many franchisees David Reid has gone through and how many have been placed into administration including the aforementioned Russ Stevenson , So much for your advice!!!

Google David Reid world wide - oddly very similar stories.

Yes Mcdonalds have failures but so far David Reid has 100% loss of Franchisees since I was involved and yes i am intouch with a lot of them and yes they have all lost their life savings, true due dilligence people

Posted by Guest on July 13th, 2011

David Reid In The Supreme Court

I will be fighting the scumbag David Reid in the Supreme Court at somepoint in 2012 for the return of over $3m that was paid for a business dressed up with false accounting and representations that were misleading. Although the evidence is over whelming and compounded by the fact Reid effectively financed people into the business there are no guarantee's that any monies will be recovered. If you are a ex-franchisee that has been burnt by this scam then I am very sorry for what you have been through. My own family have faced a similar experience (which will no doubt give a lot of posters on this site some comfort) so I have complete empathy for anyone that has lost money and regret ever becoming involved with this scam.

If you would like to have your day in court and give evidence against this scumbag let me know, at present we have around 20 witnesses although not everyone was a franchisee. Any money recovered will be split amoungst the franchisee's as a percentage of their losses. I will not be taking a cent as have no interest in the money, I just what to stop this lowlife ever operating in Australia again. Raising the standard my arse!

russdstephens@gmail.com

Posted by Russ Stephens on October 27th, 2011

Open Letter To Craig Graug and the David Reid Homes Franchisees

Craig

I called Brent Vincent as you suggested to find out what he meant by me ‘f*cking you over’. I can’t imagine this statement popped up on its own so let’s just revisit the facts.

After just 3 months of running David Reid Homes Brisbane South you were running out of cash, you did not have a building licence, project manager, display home, staff or premises. I could see you were going to be bankrupt in no time and allowed you to become a shareholder and director in my company which had staff, display home, premises and obviously a building licence.

I not only allowed you to run the company (foolishly) I paid you in excess of $100k a year out of my own pocket and gave you all the perks, car, phone etc. When the company required more cash you reneged on your promise to inject your share as you could no longer borrow the money. I ended up putting all addition cash into the company to keep it afloat and pay everyone’s wages including your own. Meanwhile, I never took a cent out of the company either for the work I performed, rent on the 2 display homes I built or the office premises you worked from that I also owned.

You contributed very little yet took high wages from me each week, when things became dire you refused to help and jumped ship resigning as a director and leaving me to clear up the mess you left behind. By doing this you managed to avoid the fate of most other franchise owners that were conned by the smoke and mirrors that camouflaged the David Reid Homes Scam.

May I suggest you call Brent & Kelly Vincent on 0422 204 010 and let them know the truth. The truth is, whatever you paid the scumbag David Reid you effectively got back from me. Out of everyone, you have little to complain about.

Regards

Russ Stephens

Posted by Russ Stephens on October 30th, 2011