The Midas Australia saga continues although it is rapidly nearing a finale. The victims are too numerous and now that escape from the clutches of Mr. Philip Bonney is too difficult due to the inability to sell a Midas shop, Franchisees are confronting the Franchisor en masse.
The American counterpart came into Australia and developed a franchising system that was corruptible, left its system in the hands of the morally weak and washed their hands of any moral responsibility. Does this ring a bell?
6 April
This Response took almost 3 months to produce and clarification of mis-information and intent is bracketed.
TO ALL FRANCHISEES
Dear Franchisee
MFC Letter
The purpose of this letter is to address the identical letters (collectively the letter) (Highlighted to suggest potential litigation - Intimidation.) received from the MFC delegates in February. The letter contends that because at the 2004 conference it was suggested that it was the goal of Midas Asia Pacific Pty Ltd (Midas) to double franchisee store profit by that store profitability is a problem. Midas rejects this contention. (Perhaps Mr. Bonney is not aware that his company store program is projecting a loss in the vicinity of $2M) Many Midas stores across Australia are experiencing good profitability and good growth. (Midas has never performed any analysis of franchisee profitability and refutes Midas figures from 2002 that indicate the Bonney System is unprofitable, therefore, this suggestion has no basis.) A desire to improve profitability does not necessarily mean that there is a problem with profitability.
There were five specific questions raised in the letter;
1. Will Midas accept there is a problem?
As with all businesses in competitive markets, profitability is a constant focus. However, we do not believe that Midas faces any more significant profitability challenges than any other business in the automotive industry, or indeed any retail industry. (Midas franchisees have the highest level of franchisee financial failure of any network within Australia.)
2. Does Midas accept responsibility as a franchisor to provide a SYSTEM which is capable of producing profits acceptable to all stakeholders?
As a franchisor, Midas can only succeed if its franchisees are successful. Midas does not agree that there are any inherent flaws in the Midas system that prevent profitability for its franchisees. (Mr. Bonney confuses the Midas System with the Bonney System. The Midas System is proven to be one of the best in Franchising when those that support and train it understand the concept, however, the Bonney System of increasing and introducing costs for franchisees to generate Bonney System profit while failing to deliver the Franchise promise of Training, Support, Group Purchasing Power and Advertising is one that has and continues to cause declining profit, minimal return on investment and/or franchisee insolvency.)
The degree of each franchisee's success is influenced by many factors, the most important of which are:
adherence to the Midas Car Care System; (Agreed)
the individual franchisee's commitment to and passion for the business; (Agreed but negatively effected by the Franchisors business plan)
a commitment to establishing a relationship of trust with our customers; (Agreed)
adoption of all innovations required by Midas to maximize store success. (Conditionally agreed but negatively effected by the Franchisors obvious insistence that the innovations generally are structured to solely generate increased Franchisor revenue through markup and rebate)
The most common cause of a decline in store profitability is a poor operator who does not embrace the Midas system. (Traditional response from rogue franchisors)
(At this point it should be acknowledged that a successful liar is one that always includes an element of truth [EOT] that cannot be argued against.)
3. In the current environment of ever increasing rents, employment costs, charges from the franchisor, cost of goods and all other operating expense, can the SYSTEM still meet the needs of all parties?
First, we would like to repeat the response to Question 1 the Midas system faces the same challenges that are facing nearly all established retail business. Of course, our customers will expect increased prices for parts and labour over time as the costs of doing business rise in accordance with inflation and other external factors. (An obvious EOT however this does not confront the issue of what Midas should initiate to ensure franchisee profitability or to admit to internal factors and their role in destroying franchisee profitability.)
However, Midas is committed to achieving as much value for our customers as possible, so when appropriate it will continue to set maximum prices for certain products so as to ensure that our customers continue to receive value along with the first class quality of Midas car care they have come to expect. (EOT)
4. For how long does Midas expect the franchise system to operate with the current level of franchisee profitability?
The Midas franchise system has been operating in Australia for 29 years. Midas Asia Pacific Pty Ltd has every expectation, based on information to hand to date, that it will continue to operate into the foreseeable future. (The Midas franchise system has been operating in Australia for 29 years fails to acknowledge that in the last 5 years the level of franchisee financial failure and/or loss exit has increased thirty-fold when compared to the total of the previous 24 years and the level of dispute over the last 5 years is continuous and unprecedented. Based on information to hand to date and foreseeable future are an ominous play on words) Again, Midas does not agree that there is any systemic issue of franchise non-profitability. (Over 80% of Franchisees disagree.)
However, if any particular franchisee has concerns about ongoing profitability of their store (s), then they should approach us for confidential discussion about their franchised business performance and expectations. (Create division and assure the franchisee that he is the only one with problems - typical rogue response and a historical Midas response. If the franchisees expectations are outside what Midas have created as achievable then it is suggested that the franchisee exit and accept whatever loss befalls him.)
5. What value, if any, does Midas place on the system?
Midas places paramount value on the Midas System, the Midas brand and the goodwill associated with it. It will do anything it can to maximize, and protect, the value of this property. (This should keep Midas International at bay.)
Midas has significant experience in its industry in Australia and through its contacts with the many Midas businesses overseas. (Midas Australia have what? They have removed those with experience on moral grounds, the experienced mostly had morals and were either sacked or pushed. There is no experience, they have all gone and been replaced by would be thugs who cost less and do as they are told. Contacts with oversees business have only produced variations on those strategies to blend with the Bonney System of profit.) As a result is in the best position to determine what are the most successful strategies for the business as a whole. Midas will not implement any changes it does not believe in good faith will improve the success of the entire network. (Not even an EOT, Advertising/Marketing Fund failures, profiteering from Batteries and computer maintenance etc have proven that good faith is a flexible concept in the Bonney System.) As a responsible franchisor, it cannot be dictated to by disaffected franchisees or make decisions affecting the entire network based only on their concerns. (In excess of 80%?)
As for the interim measures that need to be implemented immediately Midas rejects them categorically, except to say that we always treat our franchisees who are true business partners (in the context of the franchisor/franchisee relationship) with the respect that they deserve. (Given this response the concept of respect is also obviously confused although they deserve' does suggest some versatile and selective wording.)
Finally, while the letters purported to have been sent on behalf of the franchisees listed at the foot of each of the letters, it is of some concern to us that when a number of the named franchisees were contacted as to their support of the letter, their level of support was something less than 100% for all matters raised. (Yes, franchisees were selectively contacted by Mr. Bonney and intimidated. Something less than a 100% is a vague play on words.) Please be assured that as a legally compliant and caring franchisor, Midas will take all steps to address the legitimate concerns of its franchisees on an individual basis. (No EOT here but another attempt to divide, conquer and ridicule.)
However, it is not appropriate to address particular store or individual franchisee concerns on a collective and non-confidential basis. (It is ludicrous to suggest that over 80% of Franchisees have individual franchisee concerns that should be dealt with on an individual basis when previous attempts have been met with false promise, insulting concepts and intimidation. Of course, a confidential basis does allow the Franchisor disproportionate power to influence the challenge of individual franchisees. The statement that franchisees responding as a group to the failure of Midas to address the profit issue is not appropriate, when all else has failed, is actually Mr. Bonney declaring that it too difficult to manipulate an outcome when confronted en masse.)
Yours faithfully,
Philip Bonney
Managing Director
Midas Asia Pacific Pty Ltd.
(Clearly Mr. Bonney has structured this Response to appease the ACCC and Midas International while inferring potential litigation should the challenge continue. The Call to Arms that is following this Response by Mr. Bonney will ensure that he reflects once again on his ability to underestimate his victims.)
Perry
Melbourne
Australia
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