Kiwibank fights for branches

The Business Herald understands that disgruntled franchisees are also unhappy about being kept out of the loop in negotiations between Kiwibank and the NZ Post Franchise Association, which they do not see as representative. Kiwibank spokesman Bruce Thompson said the bank was now negotiating with individual franchisees after reaching agreement with the association.

The New Zealand Herald
January 31, 2001

Kiwibank fights for branches
Kevin Taylor

Half the South Island's independent NZ Post franchisees are unhappy with the deal Kiwibank is offering to open branches in their stores.

Act MP Rodney Hide says 19 of the island's 38 independent franchisees want a better deal before agreeing to host a branch.

As well, only three of the 11 South Island Books & More franchises want a branch of the Government-backed bank, he said.

Franchisees think the 53c fee offered by Kiwibank for each transaction is too low.

Mr. Hide said yesterday that banking sources had told him the cost of each teller transaction at other banks was $5.

The director of the banking studies centre at Massey University, David Tripe, said that while he thought $5 was a bit high, Kiwibank's 53c fee was unrealistic and "far too low".

"It's certainly nearer $5 than 53c."

Mr. Hide yesterday released a memo revealing that the South Island's independent franchisees are now
organising themselves to try to obtain a better deal from NZ Post.

The memo was sent to other franchises by Christchurch NZ Post franchise holder Keith Elliott and follows another leaked memo this month from the Books & More franchise advisory panel expressing similar concerns.

Mr. Elliott refused to comment yesterday. Other franchisees the Business Herald has spoken to have been reluctant to talk in the past few weeks for fear of upsetting NZ Post.

The memo from the Books & More advisory panel said operating as a Kiwibank branch would be financially risky and the 53c transaction fee was too low.

Mr. Elliott's memo said Books & More had created an opportunity for independent franchisees in the South Island.

"NZ Post must now be willing to listen to reason with regard to calls from franchisees for improvements to its offer.

"They will probably not, of course, admit to this, and we expect them to stonewall with the 'all is well' and 'everyone else thinks it's OK' and try to push the contract through."

The memo said franchisees needed pro-active negotiators to deal with NZ Post. It also needed to be shown there was widespread support for the franchisees' view.

The Business Herald understands that disgruntled franchisees are also unhappy about being kept out of the loop in negotiations between Kiwibank and the NZ Post Franchise Association, which they do not see as representative.

Kiwibank spokesman Bruce Thompson said the bank was now negotiating with individual franchisees after reaching agreement with the association.

He was confidant franchisees would react differently once Kiwibank had shown it was offering a "robust" business case.

But Mr. Thompson refused to reveal how many franchises had signed so far. Negotiations would take up to another two months.

The difficulty for Kiwibank was that each business case was different, so the bank did not have an answer to franchisee concerns.

Asked for his response to claims that banking transactions cost closer to $5 than 53c, Mr. Thompson said banks only did banking transactions, while Kiwibank would be putting a banking service into an existing shop where overheads already existed.

The first Kiwibank branches will open in Hawkes Bay and Palmerston North next month, but none will be franchises.

Of NZ Post's 300 outlets, 170 are franchises. Kiwibank wants to open a branch at each outlet.

Mr. Tripe said that without franchise support a 130-branch network would make Kiwibank about equal to National Bank and far smaller than WestpacTrust in terms of branch numbers.

"Is that then going to provide the social solution that the bank has intended to provide?"

Mr. Hide said Kiwibank had resorted to bullying and political spin in the face of the franchisee concern.

nzherald.co.nz/kiwibank


Brought to you by WikidFranchise.org

Risks: Intimidation, Franchisee association, independent, Franchisee revolt, Franchisee advisory group (lap-dog), New Zealand, 20020131 Kiwibank

Unless otherwise stated, the content of this page is licensed under Creative Commons Attribution-ShareAlike 3.0 License