Money Mortgage Choice shares slump as it overhauls franchisee pay model

08:07  12 july  2018
08:07  12 july  2018 Source:   msn.com

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However recently appointed chief executive Susan Mitchell has conceded that the company's remuneration model needs an overhaul . Mortgage Choice shares plunged 21.7 per cent on Tuesday after a joint investigation by Fairfax Media and the ABC reported that its franchisees were

Share " Mortgage Choice offered me something that no other franchise business in the industry could – a strong brand, broad franchisee support, marketing support, lead generation and a strong culture of compliance.

Mortgage Choice chief executive Susan Mitchell acknowledged the broker needed to offer franchisees more competitive pay.© Mortgage Choice Mortgage Choice chief executive Susan Mitchell acknowledged the broker needed to offer franchisees more competitive pay.

Mortgage Choice is vowing to lift the share of revenue it pays to franchisee mortgage brokers,  in an overhaul of its remuneration model that will inflict a $30 million one-off hit on its full-year profit.

The listed mortgage broker, which had faced an internal uprising from franchisees over its business model, as revealed by Fairfax Media, on Thursday revealed the details of a new method for splitting commission revenue between the corporate entity and its army of franchisee mortgage brokers.

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Personalized evaluation model . Your Tasks as a New Franchisee . A great sense of accomplishment comes with finding your perfect franchise opportunity and signing on the dotted line. I will not be asked by anyone at FranChoice to pay anything whatsoever for any services.

However recently appointed chief executive Susan Mitchell has conceded that the company's remuneration model needs an overhaul . Mortgage Choice shares plunged 21.7 per cent on Tuesday after a joint investigation by Fairfax Media and the ABC reported that its franchisees were

Under the changes, which it will offer to franchisees from next month, Mortgage Choice said the average commission payout rate would lift from 65 per cent today to 74 per cent, according to its modelling.

Most of the increase would come from changes in the trail commissions it would pass on to mortgage brokers, it said, pointing to a structure whereby franchisees could receive commissions based on either their new lending, or existing loans they had written.

Mortgage Choice said it would fund some of the increased payout by launching a program to cut its cost base by about 10 per cent.

Mortgage Choice shares were down 4.5 per cent, at $1.37 in early trade.

It said the changes would result in a one-off, non-cash hit to its net profit after tax for the full year of $30 million.

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Allows you to pay 1/12 of your annual property taxes and homeowners insurance with your mortgage payment each month. We had a great experience with both of our refinance transactions. Nations Choice offered competitive rates.

At 1130 AEDT, its shares were down 99 cents, or 22.5 per cent, at .41. RFG denied it was not supporting its franchisees . The company is also reviewing its entire business to see if "our franchise model remains appropriate for a retail market which remains challenging".

Full-year profits, which it will deliver next month, were expected to be between $23.2 and $23.4 million, and next' year's profit is projected to fall to $16.5 million under the changes.

Chief executive Susan Mitchell on Thursday morning informed the market of the changes on an investor teleconference.

“These changes are the product of extensive consultation with broker franchisees and the  recognition we needed to rebalance our service provision with more competitive remuneration,” said Ms Mitchell, who was appointed to the role in April," Ms Mitchell said.

“Franchisees will have access to the same core services, just delivered in a more  efficient way. At the same time, we are investing in a new broker platform that will improve broker  productivity and enhance their service levels to customers."

More to come

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