Mortgage Choice is Facing a Revolt from Disgruntled Franchisees

One of the country's biggest mortgage brokers, Mortgage Choice, is in damage control as it faces an uprising from its franchisees on the back of a business model that is pushing many into financial ruin, depression and cutting corners on arranging loans.

The pressure on franchisees to increase monthly lending coupled with a reduction in their trailing commissions were forcing franchisees to leave with nothing or press vulnerable consumers to increase their borrowings.

Almost half the franchisees (173) were looking into setting up a legal fund to fight for their businesses. The fall out was immediate. The share price dropped and the business capitulated by changing the model to offer fairer terms and gave assistance to struggling firms.

The 7:30 episode showed the deep emotional damage franchisees have suffered from. Our investigation involved extensive research and confidential informants who took great personal risks to help make this story possible.

Adele Ferguson's investigation drew on interviews with dozens of current and former Mortgage Choice franchisees, internal documents, and analysis of the company's business model — finding that the structure of the franchise agreement made it almost impossible for many franchisees to operate profitably while meeting their obligations to clients.

The investigation was part of a broader body of work examining the franchise sector in Australia — work that had begun with the 7-Eleven investigation and that contributed to legislative changes strengthening protections for franchisees.