Company admits "moral responsibility" after $3m rip-off

"There is a real issue around the integrity of the franchise industry." Ms Dalziel said she would consider tightening franchise laws.

The New Zealand Herald
January 8, 2008

Company admits ""moral responsibility"" after $3m rip-off

Green Acres said it has a moral responsibility to the victims of a $3 million fraud carried out by a franchisee and will offer a "rescue package".

About 200 people bought non-existent ironing franchises from a former representative of the Green Acres home maintenance company, Keith Lapham, who is reported to be in hiding.

The Serious Fraud Office is investigating the scam, although it says its inquiry could take time because of the number of people involved.

The victims, mostly Indian and Chinese immigrants, each paid up to $25,000 for the bogus franchises and they want their money back.

They have formed a group called Franchise Watch.

Green Acres chief executive Andrew Chisholm told Radio NZ it was a "reasonably serious and elaborate fraud".

But he said it was carried out by an independent franchisee, not an employee or the company itself.

"Green Acres right from day one has fronted up, we've fronted up to the people involved. We've held meetings with them together, we've held one on one meetings with them … we're the ones who went straight to the police and went straight to the Serious Fraud Office."

This issue was becoming a "political football", he said.

Green Acres was not offering to pay out money to the victims as the company had received no money from them, but it has come up with a "rescue package".

He would not go into details of the package before sitting down with the people involved, he said.

"Many people borrowed money to purchase the franchises and are now experiencing pressure from their lenders - banks and finance companies - as a result of their non-existent incomes,' said spokesman Ketan Trevidi-Meeraket.

Commerce Minister Lianne Dalziel said she was pleased to hear Green Acres had accepted moral responsibility.

"I think it's fantastic and it's great that they are working on a rescue package, that's what the people were after - ongoing work with ongoing income.

"There is a real issue around the integrity of the franchise industry."

Ms Dalziel said she would consider tightening franchise laws.

" This is a very distressing issue for the victims…it would appear most are migrants, some with limited English, and some have used all their savings to buy into the franchise."

- NZPA


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