Australia Post’s franchising hopes shattered as ‘secret agreement’ places it in the Federal Court

Australia Post is in a battle with a former franchisee, John Christensen, in the Federal Court tomorrow over an agreement the company had with the Communications, Electrical and Plumbing Union of Australia to limit their number of franchises.

In 2006, Australia Post announced plans to convert 150 branches into franchises within four to five years, but today there are only 29 privately operated stores.

The Australian Consumer and Competition Commission received complaints by industry bodies such as the CEPU, Post Office Agents Association and the Consumers’ Association of Western Australia following the decision to turn some branches into franchises for reasons relating to the wages of employees, productivity and price increases.

Despite publicly announcing plans for 150 franchises, Australia Post had an agreement with the CEPU to limit the number of stores to 20.

The Australian reported this morning opposition industrial relations spokesman Eric Abetz had been contacted by “at least half a dozen” Australia Post franchisees expressing concerns the agency had never provided a “sufficiently cogent explanation” as to why they were not proceeding with the franchise model and saying they were unfairly treated.

Jim Metcher, spokesperson for CEPU, told SmartCompany an agreement had been made between the parties, but it was no longer in effect.

“We had an agreement about the number of outlets at one stage a couple of enterprise bargaining agreements ago. It was regarding the number of franchises in place, I think it was about 20, but this no longer exists,” he says.

Metcher says from his understanding the agreement was no longer necessary because the model was not financially viable.

“The reason why it hasn’t continued on to existing agreements is we’re no longer seeking to pursue Australia Post over their franchises.

“Our understanding is they are no longer pursuing a franchise model because it wasn’t financially beneficial. The only franchise outlets currently in place were the ones created back at the time because of obvious contractual agreements,” he says.

Christensen, who signed up as a franchisee in 2007 in the Brisbane suburb of Coorparoo, was allegedly unaware of Australia Post’s agreement with CEPU.

Christensen told The Australian he was informed out of the blue two days before Christmas in 2010 his store was to be closed.

“I had plans to buy two or three over the years and on sell them in the future.

“But now they’ve effectively scrapped the whole thing, no one wants to go near them. There’s no market there and the franchises are next to worthless,” Christensen says.

An Australia Post spokesperson told SmartCompany they were unable to comment on the agreement with the CEPU because of the court proceedings, but spokeswoman Jane McMillan was quoted in The Australian as saying the rollout had been “paused” because of changes within the retail environment and postal industry.