Article 3 in a series of 5 Articles
Our franchise contract with Elders Financial Planning (EFP) was for five years, to be renewed for a further five years in September 2012. From the outset in 2007 it became obvious that the contract we signed was presented in a deceptive manner.
Our cash flow was dependent upon a share of income from the business – with the remainder going to EFP – and secondly, promised subsidies in various forms. Without these subsidies we could not conduct our business. However, GST was deducted from our share of income and the subsidies we received were but a shadow of those promised. While we were focused on assisting our clients weather the unfolding Global Financial Crises we were being starved of income flow.
The issue of the promised subsidies became a focal point in our Court Hearing in January 2013.
Throughout the next four years we felt greater pressure and stress through out battle with EFP than we did with the Global Financial Crises. It was a constant back and forth, eventuating in mediation through an industry body that was a charade. Given the ongoing financial machinations of EFP it became clear we were slowly going broke and we were under immense pressure to change our manner of financial planning.
Against this background, requests were made to us by EFP beginning March 2012 to submit our application for renewal of contract for a further five years.
There was of course zero possibility of us signing up for another 5 years of unconscionable behaviour from EFP. As we showed no sign of submitting an application, so the pressure built. Firstly, there was the “sweetener”: EFP invited us to move from our existing office into an upstairs office owned by EFP on the south side of town; a much smaller office with no lift, no disability access but with free rent. I am on record as saying “The only way EFP will get me into that office is by dragging my dead body across the bridge and up those stairs.”
Our relationship with EFP became fully toxic when John’s financial planning license was first suspended and consequently cancelled in May 2012. It was a clumsy bullying tactic based on trumped up charges of non-compliance, as they sought unsuccessfully to bring us to heal. These were desperate measures, which for EFP produced a desperate outcome.
The issue of denying cancelling John’s Adviser license became the second focal point of our Court Hearing.
The EFP was desperate to ensure our business remained within the franchise. It represented fifty percent approximately of the entire franchise and to have us not continue would be a major disaster for them. We never understood why they took the path of hammering us into submission. Well, in truth we did understand. It was the nature of the EFP to demand and control. They never understood us, nor our business, nor our clients. They were after the money.
There was a further issue simmering throughout the entire franchise: what would the franchisees own when the contract expired after 10 years? In 2007 we were given the understanding of 60/40: Sixty percent of income and forty percent ownership. But nowhere was this written in the contract. As the first 5 years come to a close and looking at a renewal of 5 years, there were murmurings among the troops and rising concern that no clarification was coming from the Top. When finally the question was put directly to the CEO, the answer came back that each franchisee would need to obtain their own legal advice concerning exit from the franchise and ownership issues. That brought the simmering to a sudden boil. It caused a boil-over for John and I.
In a Directions hearing in October 2012, the presiding Judge addressed this matter quite bluntly. He found it very strange that two people could work for so long in a business, building it up and increasing its asset value only to have no eventual share in that. He had never heard of such a business arrangement.
The action of EFP against John was like a wrecking ball upon our business. Coupled with the realization that EFP had no intention of allowing us an eventual share in the business we had built up over years, we were left with only one option, to exit the franchise and establish our own business.
We were able to exercise this option because in the previous year EFP’s legal department offered us a second “open” license to provide financial advice, that is a license not subject to the franchise conditions. We were very surprised – amazed really – that this new license was offered to us. For EFP it was a subterfuge of growth: showing apparent growth in their business albeit with the same people and the same office but under a different name. For us it was a protection against a possible future scenario where EFP sought to shut us down.
So it was that in August 2012 Clear Waters Financial Planning became a reality, a month before we were supposed to renew our franchise contract with EFP. As they say in the movies, all hell then broke loose.
When the EFP learned of our impending departure from the franchise they sent the lorry to remove client files and computers from our office.
And submit us to a trial in the High Court in Adelaide.
The story of our Court Hearing in January 2013 is carried in the fourth article.
With respect to the emergence of Clear Waters Financial Planning in such fractious conditions, there are two photos of particular significance, both taken in 2014, both depicting the second birthday of Clear Waters Financial Planning.
The first was taken in September during our in-office celebration, with John and I acting up humorously in front of the special cake made by Remy.
The photo is a symbol of our victory against enormous adversity, against seeming impossible odds in a David and Goliath struggle. Legally the victory would not have been possible without our barrister who, within the first couple of minutes of our initial phone conversation with him, understood clearly the nature and origin of our struggle. He, in a sense, held our hands and guided us successfully through the legal forest fraught with many gremlins. Financially it would not have been possible without the incredible, no-hesitation support from two local businessmen who believed in us, without whose help we would not be been able to go to court. Morally it would not have been possible without the total support of the people who steadfastly stood with us: firstly, our spouses and our staff, then also clients who refused to accept the ownership the Crocodile Company claimed over them.
But ultimately it was John and I who had to stand in the trench or upon the rampart – whatever the best metaphor – and refuse the domination of the franchise company who sought to oust us. In mind fantasy I recall the fiery acclamation of Gandalf in his battle with Balrog in the depths of Moria: “You shall not pass!”
To allow EFP to overcome us would have brought chaos and tragedy to our lives. We would have lost our homes and material assets, our superannuation assets were already spent in the early days of our defence, as was the investments of our spouses and sons.
I used lay awake at night thinking of what would happen not only to us as individuals, but to our business. Meaning, the clients with whom we had built relationships over many years and who depended upon us. Their lives would be scattered upon the winds as the advisers co-opted by EFP fished among their files for selling opportunities. We held EFP in utter distain for their mercenary attitude toward clients and their shallow understanding of financial planning.
My previous life in the Philippines was in large part, that of an advocate for those who had no voice or whose voice was not heard, either by the state, the military and oftentimes by the church. Here in Australia, we had to advocate for ourselves.
There was no gloating in our September celebration. It was pure joy and relief.
The October photo was taken outside the Clear Waters office in North Rockhampton, a great celebration with our clients and business partners. It shows John and I with Roy Clarke, our oldest client at 89 years whom we invited to cut the Birthday Cake. Roy is no longer with us having passed away in 2017 aged 92, but our reunion with him and our celebration of his long life was a symbol of our full re-connection with our clients and friends following the court case.
There was no gloating in our October celebration. It was joy at recovering our relationships with people.
