Mortgage Choice shares have tumbled more than 20 per cent after the home loan broker became the latest firm to face accusations of mistreating franchisees.
Fairfax Media and the ABC have reported that Mortgage Choice franchisees could launch legal action against the company over its remuneration structure.
Mortgage Choice has said it is consulting franchisees over a new remuneration model, but has not given details other than to say it will be implemented in August.
Shares in Mortgage Choice shed about a quarter of their value in the first 20 minutes of trade on Tuesday, and at 1410 AEST had recovered slightly, though were still down 41 cents, or 21.7 per cent, at $1.48.
ASX-listed Retail Food Group and Domino’s have also suffered following accusations they have leaned too heavily on franchisees, while Caltex, 7Eleven and Oporto operator Craveable Brands have been similarly criticised.
Fairfax Media and the ABC reported that almost half Mortgage Choice franchisees are considering setting up a fund to support legal action against the firm.
The investigation contends that a harsh business model pushes franchisees to cut corners, write inflated loans and sometimes commit fraud.
Mortgage Choice said it was still finalising details of its new remuneration and would offset any financial impact by cutting costs.
Chief executive Susan Mitchell said the new structure was crucial to the health of the company.
“These changes are designed to support the long-term sustainable growth of Mortgage Choice, increase franchisee remuneration and attract new high-quality franchisees to our network,” Ms Mitchell said.