Franchisees bolster suit against bank

Best Deal further claimed the bank knew ''a great majority of OMBs in NSW had been unsuccessful in selling, in competition with other financial institutions, the banks' product to customers in NSW market in amounts sufficient to break even and be profitable''.

The Toronto branch opened in August 2006 and closed in November 2008 after losses.

http://www.theage.com.au
March 3, 2012

Franchisees bolster suit against bank
Leonie Lamont

Bank%20of%20Queensland.jpg

FRANCHISEES who are suing the Bank of Queensland for allegedly misleading them about the profitability and viability of operating bank branches in NSW have shored up their case before a trial scheduled to begin next month.

In the NSW Supreme Court, Justice Michael Ball allowed the 10 franchisees, who operated what the bank called owner-manager branches (OMBs), to further amend their case, which accuses the bank of misleading and deceptive conduct, and unconscionable conduct, under the Trade Practices Act.

The bank is defending itself against the charges.

In the most recent court action Best Deal, owner of the Toronto owner-managed branch, claimed the Bank of Queensland misled it before the branch opened, and after.

It said the bank made representations branches could secure $4 million in new lending and deposits each month, although ''the bank knew the great majority of OMBs in NSW had never achieved $4 million per month … the great majority of OMBs in NSW were not breaking even and were not profitable''.

Best Deal further claimed the bank knew ''a great majority of OMBs in NSW had been unsuccessful in selling, in competition with other financial institutions, the banks' product to customers in NSW market in amounts sufficient to break even and be profitable''.

The Toronto branch opened in August 2006 and closed in November 2008 after losses.

Best Deal also alleges the bank acted unconscionably: ''The failure of the bank to disclose was done with the intention of inducing [Best Deal] to enter into the Toronto OMB agency agreement for the benefit of the bank and to the detriment of [Best Deal].''

The franchisees have told the court they could not and did not, except for two months, write loans of $4 million a month. The bank is alleged to have said the $4 million break-even was ''achievable'' within six to 12 months of opening. The trial is expected to last six months.

http://www.theage.com.au/business/franchisees-bolster-suit-against-bank-20120302-1u85c.html


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