Collusion allegation: AUS bank and franchisor

September 18, 2008

In a Smart Company article by James Thomson called MP renews calls for investigations into mistreatment of Bakers Delight franchisee, he quotes:

NSW parliamentarian Joanna Gash has renewed calls for the Australian Federal Police to launch an investigation into accusations Bakers Delight and ANZ bank colluded to put a franchisee out of business.

Quoting emails between the franchisor and the bank, Gash alleges:

On Monday, Gash revisited the case in Parliament, producing emails from Bakers Delight chief financial officer Richard Taylor and ANZ executives that she says shows “plans had been conspired to terminate Ms de Leeuw’s franchise well ahead of time”.

The bank and franchisor deny all the allegations.

This is the first public AUS public allegation of the key franchisor:franchise banker relationship that I identified and wrote about in a 2005 paper for Industry Canada called Franchising Opportunism [free download].

The Royal Canadian Mounted Police did a 10 month investigation of a related predatory franchise lending matter. [free download: Mounties investigate ‘predatory lending’, Ottawa Citizen, March 25, 2006]

And Mr. Oudovikine is accusing the bank of transferring the loans to Country Style without his authorization before he had a chance to obtain a business plan and other financial details from Country Style.

Mr. Oudovikine says his case shows how big banks, franchisors and franchise brokers team up to take advantage of franchisees, many of whom are recent immigrants like him.

“It’s predatory lending. (CIBC) didn’t do any of the due diligence they should have done,” says Mr. Oudovikine, who sent the Citizen e-mails confirming the RCMP investigation. An RCMP official said the police force doesn’t confirm or deny investigation.

And the Canadian bank’s reaction?

Mr. Oudovikine says he has repeatedly contacted senior CIBC officials and executives about the loan dispute, to little effect. He alleges that CIBC breached the Canada Small Business Financing Act regulations that require lenders to conduct due diligence on borrowers, including their ability to repay loans.

Homicidal McTurkey spotted in AUS

September 16, 2008

“Let’s not let turkeys kill the goose that laid the golden eggs.”

An interesting quote from John O’Brien, Chairman of the Franchise Council of Australia, NFC in a Smart Company article called: Franchise Council hits back at critics.

It seems Australia’s democratic process (ie. citizens speaking to politicians, members’ raising constituents’ concerns within parliament, Hansard records, governments asking House/Senate committees to look into areas of potential legislation, Joint Committees asking for citizens to contribute, yaddayaddayadda) has AUS franchise industry’s self-proclaimed “peak body”, a little miffed:

The Franchise Council of Australia has urged members to “push back” against claims of franchisor abuse aired in Federal Parliament last week.

A number of MPs, including NSW member Joanna Gash, told Parliament last week of allegations of churning, bullying and intimidation by franchisors. On top of this, a Federal Parliamentary inquiry into franchising was flooded by submissions from disgruntled franchisees.

It appears that Mr. O’Brien is sensitive to any lack of confidence in Australia’s franchise industry:

“If you are as annoyed as I am at these continuing smears against franchising, I urge you to email or write to the committee handling the inquiry right away,” he writes.

“Let’s not let turkeys kill the goose that laid the golden eggs.”

It was unclear to me who Mr. O’Brien was calling a turkey (bird brain?). Each or all of the following:

  1. Mrs. Joanna Gash MP, (duly elected in 1996 then re-elected in 1998, 2001, 2004 and 2007 by the fine people of the Electoral Division, Gilmore NSW),
  2. the other 7 MPs who have joined her in demanding immediate parliamentary action to curb franchisor opportunism (see Franchising at a crossroads),
  3. the Parliamentary Joint Committee on Corporations and Financial Services or
  4. the clearly diabolically obsessed mastermind, the thuggish: Deanne de Leeuw.

In any case, Big Franchising is always more than willing to “hit back” to get their way.

  • As any good fascist knows, democracy is the last refuge for losers.

Oz FCA franchisor and bank Linked in a Conspiracy?

September 2, 2008

In yesterday’s House of Representatives, Australian member of parliament Joanna Nash (Lib, Gilmore) read the following statement into the record:

In closing I would like to read into the record three succinct extracts from emails in regard to Baker’s Delight, and these can be produced.

The first is from Richard Taylor, Chief Financial Officer of Bakers Delight, to Simon Brookhouse, the Victorian and Tasmanian franchise manager for the ANZ Bank, dated 22 February 2005 in regard to Ms Deanne DeLeeuw who was still an active franchisee at the time. It read:

The South Coast bakeries group heads closer and closer to oblivion.
Is that not evidence that suggests plans had been conspired to terminate Ms DeLeeuw’s franchise well ahead of time?

The second email is from Jurgen Schnabel, Senior Manager of the ANZ Bank, in an email dated 10 March 2005. He wrote:
… we will accept whatever Bakers Delight decides to give us from the sale of Kiama and Vincentia, without question.
Does this not constitute some degree of collusion towards the premature but planned demise of this franchisee?

And finally:
… we have to consider the greater relationship with Bakers Delight given our overall exposure to this group within PM.
That was in an email from Simon Brookhouse of the ANZ Bank dated 10 March 2005. This was when the ANZ agreed to accept a nil return from Bakers Delight for the Shellharbour franchise.

These allegations have not been proven in a court of law.

  • Baker’s Delight is a member of the Franchise Council of Australia, FCA.
  • ANZ Bank is a member of the Franchise Council of Australia, FCA.

There is a very close relationship between franchisors and lending institutions in Canada (see Big Franchising, Red Flags: Predatory franchise lending, Suing a Bank (2)).

Oz national Franchise Inquiry

July 7, 2008

Deanne de Leeuw has been a very effective advocate for the problems that afflict Australian franchise investors. Her efforts should be commended and supported by everyone because franchise law is truly an international affair.

Similarly, deserves everyone’s appreciation, as well. Without focusing efforts and co-operating, franchisees will never be able to utilize the information that is available which can be used to counteract the overwhelming economic advantage of the adversary.

God is not on the side of the big battalions, but on the side of the best shot. Voltaire.

Blue MauMau is an important resource for those wishing to increase their knowledge about franchising. Deanne posts there to keep North American readers informed. I would encourage every national group to do this. If you want help, talk to those who have decades of experience.

The national inquiry notice was posted on Blue MauMau recently: Australian Government Announces Inquiry into Franchising. This is the entire posting.

On 25 June 2008 the Australian Federal Parliament Joint Standing Committee on Corporations and Financial Services resolved to inquire into the Franchising Code of Conduct and related matters.

This follows the recent State inquiries held in Western Australia and South Australia.

The terms of reference are:

The Committee is to inquire and report on the operation of the Franchising Code of Conduct, and to identify, where justified, improvements to the Code, with particular reference to:

1. the nature of the franchising industry, including the rights of both franchisors and franchisees;

2. whether an obligation for franchisors, franchisees and prospective franchisees to act in good faith should be explicitly incorporated into the Code (having regard to its presence as an element in paragraph 51AC(4)(k) of the Trade Practices Act 1974);

3. interaction between the Code and Part IVA and Part V Division 1 of the Trade Practices Act 1974, particularly with regard to the obligations in section 51AC of the Act;

4. the operation of the dispute resolution provisions under Part 4 of the Code; and

5. any other related matters.

The Committee invites submissions by 12 September 2008. The Committee will report by 1 December 2008.

Please send submissions to or by post to –

Committee Secretary
Parliamentary Joint Committee on Corporations and Financial Services Department of the Senate
PO Box 6100 Parliament House
Canberra ACT 2600

Emailed submissions should include full name, address and phone contact details so that they can be verified.

For further information please contact the committee secretary on (Australia) 02 6277 3583 or at

Oz McLaw is important because this is the first national legislative push since the formation of the Blue MauMau Web 2.0 community. The world’s resource [both sides] will be looking down under and applying whatever pressure they can to forward their interests.

Political Childlike Thinking: Some people believe that simply telling their story on paper or in person to a politician is enough to get an effective law [ie. a lack of knowledge is the problem and the truth will, by itself, win out]

  • It isn’t. It never has been. And it never will be where modern politics is a brokering of competing interests.

The disciplines of social science such as political science and law are about power as much as physics is about numbers.

Politicians and regulators know infinitely more than you know and will still do nothing, even after the blood runs out of the media reports. 40 years of North American experience proves it. Trying to shame or out-muscle Big Franchising is a fool’s game.

Better Risk Assessment: The solution is the development of an educational tool that would digitize the knowledge of a 20-year franchise law expert inside an expert system software program.

The reaction of the franchise bar proves that this approach will solve the abuses by accurately showing the breadth and depth of business risks of investing in a franchise.

If the risks were accurately revealed to you before you signed:

Who but a fool would sign a contract that gives the franchisor a License to Lie, Cheat & Steal ?

Benefit: Over 1,500 documents [so far], from around the world which have been indexed to teach. A franchising Google.

Cost: Free to anyone who wants it.

Interested? Give me your physical address and I’ll mail you a CD with the Access 2000 file [30 mb]. Want to write some code to take this onto the web for everyone?: drop me a line. Let’s Wiki.

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