Mortgage Choice is introducing a more competitive remuneration model for its franchisees. The news comes as the loans business is under scrutiny in the media for operating a business model that franchisees claim is failing them.

A joint investigation by Fairfax and ABC’s 7.30 program reveals that up to 173 franchisees are reviewing the option of legal action if there is no change to the Mortgage Choice model.

Franchisees reportedly spoke to the media outlets complaining of struggling businesses and lack of attention from the franchisor.

According to Michael Fraser of Franchise Redress, a support business for disaffected franchisees, the model is unfair.

“When you look at the business model it seems they’re taking a lot more than a normal franchise system would and it treats franchisees like they’re a sales person and have to sell, sell, sell for a tiny reward,” Fraser said.

Fairfax reports that in the GFC the loans franchisor introduced a performance based model to give the business room to manage the economic challenges. However that model is still in place, and requires franchisees to meet a new loans monthly target of $1.5m in order to achieve higher commission levels.

Revenue from the trail commission is included in this.

Mortgage Choice issued a statement to the ASX announcing a revised model, which it says follows consultation with franchisees. Any increase in the average payout rate to franchisees will be offset by operational efficiencies and the company promises investment in new technology will boost franchisee productivity and the customer experience.

In a second statement, Mortgage Choice said the market has evolved with other business models such as aggregator models that have higher payouts but lower levels of support.

“We acknowledge that the balance between services offered and the remuneration needs adjusting to encourage franchisees to invest in their businesses.”

Mortgage Choice said the collaborative process to update the model began months ago and franchisees have submitted different remuneration structures for consideration.

The model will be shared at a series of state_based franchisee workshops and the business expects to introduce this model in August 2018

“These changes are designed to support the long term sustainable growth of Mortgage Choice, increase franchisee remuneration and attract new high_quality franchisees to our network,” said Susan Mitchell, chief executive officer of Mortgage Choice.

Mitchell said delivering customer service was dependent on thriving, growing franchises with the confidence to invest in their business.

The mortgage business also said it has provided personalised assistance on a confidential basis to franchisees who have experienced financial difficulty, suffered health issues or had changes in their family circumstances.