Midas loses its touch

The Australian Competition and Consumer Commission decided not to take any action last year after allegations of unconscionable conduct, while several franchisees have taken Midas to both the Federal and Supreme courts. The Australian Securities and Investments Commission was also asked last year by franchisees to investigate the company over concerns about its solvency, but declined to do so.

http://watoday.com.au
December 24, 2008

Midas loses its touch
Chalpat Sonti

EXCLUSIVE Car care company Midas Australia has placed itself into administration, the latest franchisor to bite the dust in the lead-up to Christmas.

The collapse of the controversy-plagued company threatens the investment of former Coles and Brambles boss John Fletcher, who along with Lazard Carnegie Wylie Investment Management bought into the company earlier this year.

Franchisees in the nationwide network received the news this morning, being told corporate recovery specialists Ferrier Hodgson had been appointed as administrators. Midas placed itself into administration.

Ferrier Hodgson, which just eight days ago was appointed administrator for franchise EzyDVD and earlier this year filled the same role for fellow franchisor Kleins, will hold a creditors meeting in Melbourne on January 7. It is seeking buyers for some or all of the business.

Administrator George Georges said he was called in yesterday at the request of Midas' directors. The company had been battling the global credit crisis, and the shrinking differential between LPG and petrol prices had "made a big difference" in the company's attempted push into the LPG market.

Franchisees are uncertain as to where they stand, and some are angry at action taken against fellow Midas franchisees in recent days. It is understood at least one was forced to close his business earlier this week over a debt owed to the company.

While franchisees continue to trade, the outcome for company-owned stores is even more uncertain.

Franchisees were also told today that Midas' majority owner, Tasmanian businessman Philip Bonney, had been removed as the company's chief executive and was replaced by Tim Hickey.

Midas has its roots in the US, being formed there in 1956. It started up in Australia about 20 years later, but the national operation was bought out by Mr Bonney in 2001.

It has been the subject of complaints by franchisees to various authorities.

The Australian Competition and Consumer Commission decided not to take any action last year after allegations of unconscionable conduct, while several franchisees have taken Midas to both the Federal and Supreme courts.

The Australian Securities and Investments Commission was also asked last year by franchisees to investigate the company over concerns about its solvency, but declined to do so.

Midas' website states there are 90 stores nationally, including 11 in WA. However, many of these are actually owned by the company, with just three franchisees in WA and about 30 nationally. There were about 130 Midas stores five years ago.


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Risks: Australian Competition and Consumer Commission, ACCC, Expands too quickly, When the franchisor tanks, so does the franchisee, Franchisor insolvency, Unconscionable conduct, Australia, 20081224 Midas loses

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