Kiwibank sweetener has catch

The franchise revolt has appeared to endanger one of the bank's biggest selling points - lots of branches nationwide. NZ Post wants a Kiwibank at every post outlet nationwide, but of the 300 post outlets 170 are franchises. Documents leaked by the Act party revealed many were unhappy with the deal offered.

The New Zealand Herald
March 12, 2002

Kiwibank sweetener has catch

NZ Post has sweetened the deal for its franchises to become a Kiwibank branch, but imposed a deadline of only weeks for them to accept.

Kiwibank has been under fire as some franchises refuse to sign because of uncertainties, including a 53c fee per transaction which they say is too low.

The franchise revolt has appeared to endanger one of the bank's biggest selling points - lots of branches nationwide.

NZ Post wants a Kiwibank at every post outlet nationwide, but of the 300 post outlets 170 are franchises. Documents leaked by the Act party revealed many were unhappy with the deal offered.

Post chief executive Elmar Toime announced the revised offer yesterday. He said franchises were told of it by mail yesterday morning.

The new offer is that NZ Post will pay the cost of fitting out shops to include a Kiwibank branch, costing the state-owned enterprise up to $2.125 million. The spending would not affect the bank's business case.

NZ Post had been offering a five-year interest-free loan of up to $12,500 a franchise to pay for the fit-out.

Toime said the latest offer was open for only "a few weeks". As it was tied to the opportunity for NZ Post to capture the benefits of a continuous rollout of bank branches it could not be open indefinitely.

Toime denied that NZ Post was putting undue pressure on franchises and said nothing would happen if they still refused.

They could choose later to have a branch, but the economics of sending out a team to fit out their shop would have to be considered, Toime said.

He said the deadline had no specific date. "It's certainly not to be playing any pressure to them.

"There are real advantages if we can open all the Post Shops, all the franchise outlets, in the same geographic area at the same time."

Act MP Rodney Hide, who has waged a campaign against Kiwibank, said the revised offer showed NZ Post was now desperately behind schedule with the bank's introduction.

Last week, NZ Post and Kiwibank executives conceded to the finance and expenditure select committee that they would now get something over 200 branches instead of 300.

Toime told the Business Herald yesterday that a "significant" number had signed, although he would not reveal how many.

Hide said the new offer would not help much as the franchisees' concern was the operating cost of the new bank, not the capital cost.

"More than 100 small businesses are vitally worried that Kiwibank will badly affect their business bottom line," he said.

"It's nuts that hardware stores, bookshops and chemists are suddenly expected to become bankers. Kiwibank is a political bank, not a commercial proposition."

Hide said franchisees, reluctant to speak to the media, felt pressed to agree to the bank with the threat that they would lose their franchise if they did not.

At the select committee meeting Toime was silent on the fate of franchises not wanting Kiwibank, saying it was "an impossible question to answer" and he could not comment on the post network's future shape.

nzherald.co.nz/kiwibank


Risks: Sincerity, Termination threats, Franchisee revolt, Canada, 20020312 Kiwibank sweetener

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