Powered by MOMENTUM MEDIA
realestatebusiness logo
Subscribe to our newsletter SIGN UP

Ray White fires back after scathing ‘poor conduct and exploitative’ franchising report

15 March 2019 Tim Neary

Nothing irks Ray White managing director Dan White more than people suggesting that Ray White is in the business of selling franchises, he has said in the wake of yesterday’s release of the scathing parliamentary inquiry report on the franchising sector.

Instead, Mr White said the Ray White Group is the business of providing leadership to its members.

He said this is the only way to enable them to chase their potential, build a business and provide for themselves and their families. 

“Trying to put each business owner in a straightjacket conflicts with the inherent purpose of the franchise concept, and serves the business owner poorly,” Mr White said.  

Advertisement
Advertisement

“Of course, we are part of an industry that can be very tough at times, and there cannot, nor can there ever, be any guarantee of financial success for either franchisor or franchisee.

“The underlying premise of Ray White is that mutual success will come from support and freedom, not control or inequity.”

Ray White is acknowledged as the largest real estate franchise network in Australia, with more than 700 small business owners and 13,000 members.

Mr White is the fourth-generation leader of the family-owned and led group.

He said the “stories and commentary” emerging from the inquiry have been surprising.

“While we are still digesting the report which calls for greater enforcement powers, we want to make it clear that not all franchised groups operate under the same paradigm — Ray White is a world away from the general perception of a franchise model that appears to have been generated by this enquiry.

“My family is the custodian of what has been and will be created. No one really owns it, except in the most literal of senses. 

“As custodians, our duty is to provide an environment for current and future generations of Ray White members to thrive and make a wonderful contribution to their families, customers and communities.”

Mr White said he sees Ray White Group’s role as being a partner to its franchisees, particularly around fees and costs.

“On average, we invest more money and time in the first two years of a new franchise agreement than we receive in revenue, and feel very comfortable taking a long-term view on shared success and profitability.

“Ray White looks to use its scale to effectively bulk buy, allowing our offices access to products and services at a fraction of the cost they would otherwise. By limiting overheads, we know our businesses have a better chance to thrive.”

He said the same applies to when an agreement ends.

“If we’ve exhausted every other option and someone wants to leave our group, we won’t take their premises or their database, their phone numbers or their digital footprint and we won’t enforce a restraint of trade. We will always seek to find an amicable ending for both parties.”

The report was compiled by the Parliamentary Joint Committee on Corporations and Financial Services.

According to REB sister publication My Business, the committee was overwhelmingly critical of the existing regulatory framework for the franchise industry, calling it out for not stopping “systemic poor conduct and exploitative behaviour”.

“The evidence presented to [this] committee during this inquiry indicates that the extent of poor corporate governance in some areas of franchising is comparable to that in the financial services sector,” it said in the final report.

“The actions of certain franchisors have caused enormous reputational damage to the sector. This needs to be rectified for the benefit of the entire franchising industry.”

Ray White fires back after scathing ‘poor conduct and exploitative’ franchising report
dan white reb
lawyersweekly logo
FROM THE WEB
Recommended by Spike Native Network
Do you have an industry update?
REAL ESTATE BUSINESS NEWSLETTER
Ensure you never miss an issue of the Real Estate Business Bulletin. Enter your email to receive the latest real estate advice and tools to help you sell.