100 NZ Green Acres franchisees want Government help

September 2, 2008

In another New Zealand Herald article by Lincoln Tan (Victims of scam want Government help) the aggrieved former franchisees:

About 100 franchisees are seeking financial assistance to help them bring Green Acres to court – which is estimated to cost about $140,000 – after Commerce Minister Lianne Dalziel said at a meeting on Sunday that it had “declined all the demands for compensation” and claimed Keith Lapham was an independent business owner, and not one of its employees.

There was no immediate indication that aid would be forthcoming although the Minister meeting with the former franchisees is a good sign.

Ms Dalziel said the Serious Fraud Office, which is investigating the case, would be completing its investigations soon, and a decision on whether to press charges was about two weeks away.

These actions also involve a request to the lender to void their loan obligations:

Lawyers for the defrauded franchisees issued a letter of demand to Green Acres asking for the return of the money paid to Mr Lapham, and for loans for the purchases of the bogus businesses made through the company’s financing arm, FBL Finance, to be nullified.

Mr. Tyrone Pilacan, an immigrant from the Philippines, is quoted as saying he had recently lost his job and was struggling to meet the $800 monthly repayment to the bank.

Kiwi scams touch all classes of immigrants

August 23, 2008

The latest New Zealand Herald article on Blue Chip by Maria Slade [Immigrant banker put $1.7m in Blue Chip] is interesting for at least three reasons.

One, it points to a specific truth about fraud: all levels of class, education, access to financial counselling and sophistication are vulnerable:

  • 2,000 mostly seniors living on a fixed income and a millionaire British investment banker (Blue Chip) or
  • dozens of barely literate Indian and Chinese arrivals with Green Acres and Green Power franchises.


A British investment banker who came to New Zealand for a better lifestyle invested $1.7 million in 19 apartments through Blue Chip. Now Neil and Michelle Hickman are pinning their hopes on court action to recover some of their losses.

Mr Hickman gave up his career as a successful investment banker and moved his family to New Zealand two years ago, intending to live off his wealth.

Two, immigrants are considered prime protein by some franchise systems. New arrivals who invest large sums are often given special treatment [some expected; some not].

  • Several franchisors aggressively market their systems overseas to potential new immigrants using their government’s investor programs as a proven successful fraud technique: a badge of authority.

And three, for perhaps the most understated comment to date from a deeply betrayed person whose wife and three children are living in rented quarters while he goes back to work in Britain to make ends meet:

“Talk about a bad year,” Mr Hickman said.

More Kiwi Franchise Fraud

February 27, 2008

20080225-green-power-nz.jpgMigrants cry foul over new franchise deal, Lincoln Tan

Green Power’s locked and unstaffed Birkenhead headquarters. Photo / Paul Estcourt

Police are investigating an alleged scam in which people, mainly Chinese immigrants, claim to have been sold non-existent franchise businesses.

It is believed as many as 30 people may have been conned in the latest case, involving commercial cleaning franchise company Green Power.

The Herald has spoken to six Chinese immigrants who each paid $20,000 or more to Green Power for their franchises, which guaranteed a weekly income of $1000.

Only a franchisor association could believe that registering systems and franchisees, mandatory mediation and voluntary disclosure is going to redeem their reputation.

It’s not that I mind corporations asking for what they want: That’s their job. Don’t get me wrong. I would do the same.

What makes even a fool despair is the regularity that governments “drop their drawers”, no matter how short-sighted and reckless the consequences.

Investigating the bank (2)

February 25, 2008

Ottawa Citizen logo

Franchises are often financed with government guaranteed loan programs. The bankers, sales agents (aka “franchisor associates”) & franchisors have a very organized way of dealing with unsuspecting franchise investors.

In March 2006, the Ottawa Citizen newspaper published an article called: Mounties investigate ‘predatory lending’. This is the first public mention of a specific example of what I had defined to Industry Canada as Predatory Franchise Lending.

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.

The Ottawa Citizen has also published Bank springs another privacy leak on May 14, 2005.

Mr. McLeod said CIBC is also investigating the loan granted to Mr. Oudovikine to start the franchise. But he said it is standard practice to make such loans payable to the franchisor, and noted that bank loan documents make that clear.

But Country Style chief executive Patrick Gibbons said he’s never heard of such a practice. He was unaware of any dispute over Mr. Oudovikine’s loan.

“A loan agreement is business between the franchisee and the lending party, period,” he said.

Two bank drafts made payable to the franchisor of +$230,000 in loans plus +$80,000 owner’s equity but with no current account signing officer’s signature?

So it goes in franchising.

%d bloggers like this: