Failed Bank of Queensland franchisee loses case against bank

A failed Bank of Queensland franchisee who claimed the BoQ misrepresented his chances of success and failed to provide his franchise with adequate support has lost his Federal Court case against the bank.

The case, bought by former franchisee Leicester Ramsey and his wife Kim, was seen as a crucial test case for BoQ, which is facing a number of claims from former franchisees who claim the bank misled them about expected rates of return.

The Ramseys, through their company Astram Financial Services, claimed that when signing their franchise agreement BoQ representatives had provided assurances that the branch could achieve monthly turnover of $4 million after being in operation for a year.

Leicester Ramsey told the Court that at his first meeting with a BoQ representative “Garry Allsopp said if you do $4 million per month which is achievable with the size of mortgages in New South Wales, you will cover your operational expenses and borrowings and give a good return on investment.”

The $4 million-a-month figure was then made part of a business plan drawn up by Ramsey and his business partner. The business plan also projected turnover would hit $6 million in the franchise’s second year and $8 million in the third year.

However, Justice Robert Buchanan dismissed the claim that Allsopp’s statements did not amount to a representation that could be relied upon.

“Whatever was said by Mr Allsopp at this meeting it lacked the necessary quality of a representation made in trade and commerce upon which Mr Ramsey could later rely as any form of assurance,” the judge wrote.

“At no time was an assurance given that the franchise they proposed to establish, whether at Campbelltown or anywhere else, would succeed in achieving the target volume of lending or that the franchise model would necessarily deliver such a result.

“On the contrary, both explicitly and by necessary inference, the Bank indicated that this was a matter for assessment by them. Naturally, one may impute to the Bank a view that the target was achievable but that is a very different thing from concluding that any assurance to that effect was given or even that a prediction to that effect was made.”

The judge also dismissed claims from Ramsey that BoQ had failed to deliver on promised marketing and advertising campaign.

“The applicants cannot sustain the suggestion that some form of promise was made or assurance given about an advertising or marketing campaign which would be necessarily related to the circumstances or interests of a franchise wherever it might be established which is, as Campbelltown had not even been selected, the way it must be put by them.”

And in a particularly cutting comment, Justice Buchanan said it wouldn’t have made a difference to the franchisee in any case.

“There is no evidence that a general marketing campaign would have had any influence on the performance of the Campbelltown branch… Mr Ramsey gave evidence that he organised and paid for local advertising [and] there was no evidence, even of an anecdotal kind, that it had any particular effect on the volume of new business.”

BoQ released a short statement confirming that “the plaintiff’s claims were all dismissed and BOQ’s counter-claims were upheld”.