Embattled franchise car care chain Midas Australia has attracted two big names to its share register.
Lazard Carnegie Wylie Investment Management and former Coles Myer chief executive John Fletcher have invested in the 90-store car care chain, owned by chief executive Philip Bonney.
Fletcher, who was chief executive of Brambles before he joined Coles Myer, has become the company’s chairman and a representative of Lazard Carnegie Wylie, which has investments in financial services, civil engineering, self-storage and medical health. He has also joined the board.
In his announcement, chief executive Phillip Bonney said: “With the support and breadth of experience of our two new shareholders, the Midas Group is now well positioned to implement an aggressive growth strategy for the Australian market.”
Bonney has been seeking investors or a possible sale of the business for many months. Two rumoured deals, including one to sell to John Pearson, the owner of Tyrecorp, fell over before it was finalised.
The Midas franchise chain has been mired in controversy for years with several franchisees and former franchisees making allegations of unconscionable and misleading and deceptive conduct against the franchisor (Bonney). ACCC investigations, at the behest of disgruntled franchisees, have not resulted in any legal action against the company, which has always denied the allegations.
Last October about 45 Midas car care franchisees met at the Mercure Hotel at Sydney Airport to discuss their concerns about the future of the franchise system.
At the time, the organiser told SmartCompany.com.au that the Midas franchise business had changed significantly – what was once a business selling high gross profit products now sells low gross profit products, but the franchise model has not changed.
The franchises are no longer as profitable and the franchisees are struggling to pay royalties to the franchisor Midas Australia.