The Bank of Queensland (ASX:BOQ) is heading for a potential legal battle with franchisees over its decision to buy back branches at what owner-managers claim are unfair prices.
The bank's sudden shift in strategy, moving away from its two-decade-old franchise model, has sparked frustration among branch operators, some of whom are exploring legal options.
The lender has set aside $125 million to reacquire 114 franchised branches by March 2024. However, branch owners argue the initial offers undervalue the businesses.
BDO, an advisory firm, has reached out to the owner-managers, offering support to secure better buyout terms.
In April, the Bank of Queensland announced plans to expand the franchise model, with the goal of having 90% of its branches operated by owner-managers by 2026.
The abrupt reversal of this strategy, first discussed in May and finalised by the board in August, has deepened tensions. Many franchisees feel blindsided by the decision.
Owner-managers, who operate on a revenue-sharing model with BOQ, met with bank executives last week in Sydney to discuss their buyout offers but left dissatisfied.
They have since been warned by BOQ that speaking to the media could result in their franchise agreements being terminated.
The bank’s CEO, Patrick Allaway, defended the move, citing rising costs and declining margins as unsustainable under the current model.
The bank has faced additional pressure from increased competition and regulatory scrutiny, including enforceable undertakings from AUSTRAC and the Australian Prudential Regulation Authority.