Count Financial is planning to raise its annual franchisee membership fee as a way of reducing its level of non-performing franchisees.
Managing director Barry Lambert said Count is considering raising the annual fee from a current $7,000 to “probably $10,000”.
Speaking to Money Management after announcing a record net profit for the year to June 30, Lambert said the fee increase would be a message to “our non-producing members to get serious about their relationship with Count or get out”.
The current member fee, which was itself increased from $4,500 five years ago, has enabled Count to “get rid of some of the members down at the bottom by making it uncommercial to afford the fees”.
Lambert emphasised however that Count’s performance-based annual fees are structured so that “most of our members who are serious about the Count relationship pay no annual fee”.
He said this is evident in a 3 per cent decrease in fee-based income in 2005-06 over 2004-05 as a result of “more and more of our members, and it’s now into the hundreds, actually having paid no annual fee”.
Non-payment of the annual member fee is the first level of rebate offered to members in Count’s performance-based fee structure, Lambert said.
The second level is a cash rebate, which starts at $10,000 and rises in $10,000 multiples, while all members get equity options if they increase their business by 12.5 per cent per annum.
Raising the membership fee is part of a broader plan by Count to expand franchisee numbers, notably through its CountPlus vehicle, during 2006-07 after cutting back last year.
The plan is intended to enable Count to maintain the double-digit earnings growth it has achieved nearly every year since listing in 2000.
Lambert said yesterday that strong investment markets and cost cutting within the group had helped to increase net profit by 53 per cent ($6.07) to a record $17.6 million for 2005-06, on revenue of $106.53 million (up 26 per cent).
Lambert also announced that current chief operating officer Marianne Perkovic would become chief executive of Count Financial, effective from August 21, this year.
Perkovic said the profit results were “largely on track with expectations”.
“We certainly had strong first-half results and again in the second-half of this year, which is when we get a lot of our tax planning business and superannuation contributions coming in.
“We expected at least 30 per cent growth, and that’s what we told the market, and we’re very transparent in keeping them informed.”
Perkovic added that much of Count’s future growth is expected to come from its new wealth creation integration arm, CountPlus.
“Over the next year, we’ll continue to look at strengthening our franchisees and then our key focus is going to be on growing CountPlus, and trying to extract some value back into the Count model,” she said.
