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Memo Spells Beginning Of End For Kiwibank

Franchise Memo Spells Beginning Of End For Kiwibank

Thursday 10 Jan 2002

ACT Finance Spokesman MP Rodney Hide said today that the Books and More Franchisee Advisory Panel's advice that franchisees decline to become banking outlets was a huge setback to Jim Anderton's plans to launch KiwiBank.

"Officials told Jim Anderton that the Bank was a dog, but he pushed on regardless. It now looks like the bank isn't even going to get off the ground.

"NZ Post is promising 300 outlets with the roll-out from February to May. One hundred and seventy of these are franchisees. NZ Post is promising only to pay them 53 cents for each KiwiBank transaction. Yet the franchisees are expected to pay for half the costs of the renovations, lose valuable retail space, provide the staff and cover all overheads. They believe that they will each lose thousands of dollars, even if NZ Post's rosy forecasts prove true.

"NZ Post franchisees now get paid $1.03 a transaction from the Taranaki Savings Bank without the headache of having to providing full banking services. The franchisees are vital to NZ Post's flawed banking model because they give NZ Post the geographical reach, seven-day services and extended hours.

"NZ Post spin doctor Bruce Thompson said just this week that just a handful of franchisees were disgruntled. His comments show just how out-of-touch NZ Post must be.

"The memo from the Books and More Franchisee Advisory Panel was sent out to Books and More Franchisees today. It states:

'Our collective response is that we consider 53 cents per transaction far too low, that the financial model is not robust enough and that there are too many unknowns, which can only have a negative financial outcome. We asked Mary to send the proposal back to Post but we have since learned that this offer was final and not negotiable.

As things stand at present the Members of the Books and More Advisory Panel have decided not to provide banking services either Full Banking or Transactional Banking in their own stores. We feel that there are too many unresolved issues and a lack of quality information for which to base a responsible commercial decision. From what we have seen to date we believe that the only option that is level headed is to decline Banking in our own stores and take a wait and see approach and we are quite prepared to `miss out' on the introductory offer from NZ Post if it does not stand in the future.'

"There are 36 Books and More stores. I have been rung by many franchises outside of the Books and More chain who tell me they too are very concerned about the negative effect KiwiBank could have on their businesses. They have complained too of NZ Post's bully-boy tactics and the lack of care and concern of the Bank's author Jim Anderton.

"KiwiBank is in serious trouble. Helen Clark should put a stop to Jim Anderton's madness before even more damage is done to successful New Zealand business and to the taxpayer's pocket.

ENDS


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