Kiwibank deal 'financially risky'

By KEVIN TAYLOR

A NZ Post franchise revolt is gathering pace after a body representing 34 Books and More stores said operating as a Kiwibank branch would be financially risky for them.

The Books and More franchisee advisory panel sent a memo to the stores yesterday saying the 53c transaction fee offered by Kiwibank was far too low.

The memo also revealed that the fee was non-negotiable.

Kiwibank aims to open its first branches next month and wants to have one at all of NZ Post's more than 300 outlets.

But about 170 of the branches are franchises, and Act MP Rodney Hide has claimed that many do not support the bank because they will not be paid enough.

He said yesterday that Kiwibank was now "absolutely buggered" because NZ Post had always cited the participation of the franchisees as vital.

In the Business Herald yesterday, Kiwibank and the NZ Post Franchise Association disputed his claims, saying only one or two franchisees were concerned about the bank's offer.

But franchisees contacted the Herald to say Kiwibank and the association were not correct.

The leaked Books and More memo also supported Mr Hide's claims and caught Kiwibank by surprise.

Kiwibank spokesman Bruce Thompson said that in negotiations with Books and More and individual franchisees, the feedback had been supportive.

"But it's clear more work needs to be done."

He said Kiwibank was surprised at both the level of concern and the way it was being expressed, especially since the memo had been sent to the stores and the media, but not to the bank.

He said the transaction fee was "fairly critical" to the bank's business plan, but was only one part of a complex set of arrangements with franchisees.

Mr Thompson said Kiwibank did not believe the issues were hurdles to the bank starting up.

The Books and More memo said the 53c transaction fee was far too low, the financial model proposed was not strong enough and there were too many unknowns which could only have a "negative financial outcome".

In contrast to the 53c Kiwibank transaction fee, franchisees got $1.03 for each Taranaki Savings Bank transaction.

"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," said the memo.

"We feel that there are too many unresolved issues and a lack of quality information [on] which to base a responsible commercial decision."

But the memo applauded NZ Post for studying ways to replace lost revenue, caused in part by declining mail volumes.

Some independent NZ Post franchisees spoken to by the Herald yesterday criticised the comments of Kiwibank and the NZ Post Franchise Association.

One Auckland franchisee said anything from half to three-quarters of franchisees were unhappy.

A central North Island franchisee said franchisees had strong feelings about the deal.

He knew of 40 to 50 stores which did not want the bank because it would not pay.

He said NZ Post had put pressure on franchisees and used bullying tactics - such as verbally threatening to cut off their franchise or to set up another down the road.

A Christchurch franchisee said 10 of the 15 NZ Post franchises in the city had "serious misgivings" about the bank proposal.

The current deal would mean his business would lose money.

"We want it to work but we want to be paid for what we do ... It was presented to us as a fait accompli."

nzherald.co.nz/kiwibank