Aust Post franchisees stamped out

AUSTRALIA Post has been embroiled in the parliamentary inquiry into the troubled franchise sector with one franchisee claiming he was left destitute by his investment.

AUSTRALIA Post has been embroiled in the parliamentary inquiry into the troubled franchise sector with one franchisee claiming he was left destitute after the government-owned corporation decided to close its franchise network.

Robert Rippin told a hearing by the Parliamentary Joint Committee on Corporations and Financial Services in Brisbane yesterday that he initially wanted to sell the business back to Australia Post when his wife died in 2011 but was told he would receive nothing back.

“I was told to keep running the business for the 10 year period of the agreement or hand it back for nothing,” said Mr Rippin, who owned a post office on the outskirts of Adelaide.

Later when the postal giant decided to close the franchise network it initially offered him $300,000 for the business he had bought for $490,000. He also had paid $1.8 million in franchising fees while running the shop from 2007-2015.

It eventually bought it back for $490,000 plus another small payment. Mr Rippin said that following the death of his wife, Australia Post had changed the franchising agreement to reduce commission fees, equating to a loss of $140,000.

“I have been left financially ruined, with no home and no super,” said Mr Rippin. “I would have expected better of a government-owned corporation.”

Another Australia Post franchisee John Christensen, who ran an Australia Postshop at Coorparoo until 2011, said he initially bought the business because he was told Australia Post was privatising more than 100 corporate post offices to build a large franchise network. It was seen as a safe and secure business model supported by the financial strength of Australia Post.

Mr Christensen said Australia Post did not disclose that it had a binding enterprise bargaining agreement with postal unions to only open 20 franchise stores.

It announced in 2014 it was planning to end all franchise agreements. He said the business was profitable and he would have continued operating it if he was allowed to.

“They mismanaged the business model and the franchisees suffered,” he said. He said there was a need for greater transparency in franchise agreements.

He and other former Australia Post franchisees wanted to take legal action against the company for their losses but could not afford it.

An Australia Post spokesman said it honoured all contractual terms in its franchise agreements with franchisees. It said the provision within the enterprise agreement with unions did not restrict Australia Post on the size of its franchise network which was to be achieved through a combination of the conversion of existing corporate outlets, conversion of licensed outlets and the establishment of new sites.

Originally published as Aust Post franchisees stamped out