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  1. #1

    Default How do Franchises work?

    My husband and I built with A1 Homes and believed we had a 5 year workmanship guarantee and 10 year structural (well that is what is on the section saying what you get included in the cost back in 2005 - final payment for completion was 2006) But this week have found out they put nails in our hot water cylinder pipes (5 in total) when attaching the cupboards shelves (should have been the stud missed by about 15cms) Anyhow this happened at the end of contract so 2006 just prior to final payment and now (this week) they have finally rusted through and flooded the house / carpet / walls So I rang A1 Homes and I was told by Ross Thomas (owner) that this was the franchises responsibility (since liquidated) when I said how could that be, as everything said A1 homes and was on the web site / brochures and they were a licensed franchise selling on behalf of A1 Homes? He told me to get a lawyer - which seems crazy... Am I missing something here? Is this correct? How does this work?

  2. #2
    Join Date
    Jun 2005
    Location
    Wellington
    Posts
    1,112

    Default

    Simoneg, welcome to the forums.

    I've quoted here the promotion of the A1 guarantee from their website:

    A1 Homefirst Guarantees
    At A1 Homes we've always been proud of our reputation. To endorse our commitment to customer satisfaction, we are now offering our HomeFirst Guarantees on all A1 houses.

    Homefirst 7 Year New Home Guarantee

    Today, people building new homes need to know they are building with people they can trust. Your builder's name and reputation may speak for itself but, unfortunately, in today’s industry it is no longer enough. Sometimes things can and do go wrong.

    At A1 Homes, we believe everyone who chooses to build a new home in New Zealand should have the right to be fully protected should something go wrong. This is why we have chosen to offer a “7 Year Homefirst Guarantee” with all new homes built by an A1 Homes Franchisee.

    Whether you choose a Full Contract or a Transportable dwelling, the Guarantee provides for the loss of deposit or non-completion during the construction phase. It also provides for major structural defects in regards to both materials and workmanship for 7 years, from the date of possession, including full defects for the first 2 years. This Homefirst Guarantee is underwritten by a totally independent third party.

    Further benefit to the new home owner is that this guarantee can be transferred once, should the house be sold. The Guarantee stays with the house and not the original owner; this in itself adds value to the new home.


    Homefirst Kitset Guarantee

    The Homefirst Kitset Guarantee ensures that from the time you pay your initial deposit with an A1 Homes Franchisee all funds are 100% safe. Irrespective of what happens you are guaranteed delivery of your Kitset package, from the plans to the last materials required to complete your new home. As with the Homefirst New Home Guarantee, we believe all potential new home buyers should have the best protection available when it comes to the security of their investment. This provides total peace of mind that your money is safe.

    This guarantee offer is subject to application and written acceptance to you by the underwriter.


    "Rest assured you're in safe hands!"
    Ross & Lea Thomas
    A1 Homes NZ Ltd
    With this wording, it appears there are two types of guarantees: the New Home Guarantee that applies if you purchase and build the home through a franchisee, or the kitset guarantee where your deposit is protected.

    Unfortunately this is often not something covered by house & contents insurance, as there is commonly a clause that excludes damage caused directly or indirectly by faulty workmanship.

    Your guarantee wording may well be different if it was from 2005, but from the looks of this promotion the guarantee appears to be provided by the Franchisor (the system owner) rather than the franchisee (the individual business operator). Work through the specific wording of the guarantee with a fine tooth comb, and if you feel you still have a case then consulting your lawyer may still be the best option.

  3. #3
    Join Date
    Oct 2006
    Posts
    368

    Default

    Ross Thomas is the Master Franchisor. He sells individual territories to Business people who have their own limited liability company (franchisee).

    The Franchisee then pays the Franchisor a portion of their sales as a Royalty fee. the Franchisee then has the right to use the A1 name, plans etc.

    It is the Franchisee who has been liquidated. It is not Ross Thomas' responsibility if the Limited Liabililty Franchisee's company has been liquidated. It is a totally different company to his own. (although it is his problem because he has to deal with problems such as yours and a "bad name" for his company)

    It is the same as if you built with an "one man band" builder who then goes into liquidation.

    The Franchisees operate under the A1 banner but they are individual businesses. It is the same as GJ Gardner, Jennian, Peter Ray Homes, and others which I can't think of right now.

    Ross Thomas personally paid out 100s of 1000s of dollars to finish homes in the Nelson region when the Franchisee went out of business. It was not his responsibility to do so, but he did anyway. But he can't be held responsible for everything a liquidated franchisee did while they were in business.

    Pay to get it fixed and count yourself lucky you have a house to live in that you have paid for. Plenty of contractors are out of pocket many 100,000's of dollars. If you are in the Nelson region the house you are living in has probably had work done on it that Griffiths Construction has not paid for - even though you did pay for it.

    I believe the Guarantee off the website is a new Guarantee and was brought in when franchisees went into liquidation. It is between the individual franchisee and yourself - nothing to do with the Master Franchisor.

    Ross Thomas is passionate about his business and the A1 business model is good. They have great plans and are a good quality product. Its unfortunate that a couple of individuals who can't run a business have sullied the A1 name.

  4. #4
    Join Date
    Jun 2005
    Location
    Auckland
    Posts
    3,936

    Default

    Great summary Rueben.

    Although unfortunate I guess they got off lightly.

  5. #5
    Join Date
    Oct 2003
    Posts
    3,578

    Default

    Was the builder also a Master Builder as they have their own fund for payouts.

  6. #6

    Default

    Hmmm, interesting replies - I guess it comes down to doing the right thing... I know that when we verbally queried the fact this wasnt a "master builder" guarantee and we did ask what happens if you went into liquidation - I was assured that A1 Homes had been round a long time and would always cover us and told that a master builders guarantee was not as good as a A1 guarantee... so I guess I am disapointed to find out this is NOT the case... Personally I believe every person signing with a franchise model should query this prior to signing up (& unlike me - get it in writing the responses not only from the franchisee but the owner!) - at least then you would know what you were actually getting prior to payment. I dont have any sympathy by the way for someone buying a going concern without researching what they were buying - so sorry cant be sympathetic to Ross Thomas.

  7. #7
    Join Date
    Jun 2004
    Posts
    10,427

    Default

    Go to Fair Go and see if a little bad press will change th mind of Ross Thomas. Or just say you are going to FairGo.

  8. #8
    Join Date
    Nov 2007
    Posts
    1,067

    Default

    You first need to find out if in fact you have the guarantee.
    The franchise would have had to fill out an aplication and send a cheque for the premium. You need to find out who was underwriting the guarantee. Who is Home First? Is it Contractors Bonding Ltd? they are the longest established company offering these types of guarantees.
    If it is them, and you do have the guarantee, (you should have got a certificate of guarantee) then you need to make a claim. Get in touch with them and find out how.

    If you don't have the guarantee but did pay for it then your Lawyer or Fair-Go is probably your best bet to expose this.

    If you don't have the guarantee, and A1 is unwilling to help same applies. Was the franchisee a Master Builder as someone else has asked? if so make contact with Master Builders to make a claim.
    Last edited by outspoken; 11-08-2008 at 12:07 PM.

  9. #9
    Join Date
    Oct 2003
    Posts
    3,578

    Default

    Quote Originally Posted by simoneg View Post
    I know that when we verbally queried the fact this wasnt a "master builder" guarantee and we did ask what happens if you went into liquidation - I was assured that A1 Homes had been round a long time and would always cover us and told that a master builders guarantee was not as good as a A1 guarantee...
    Was this from your discussions with Ross. If so, claim he gave you a verbal guarantee based on the strength of the master franchisor!

  10. #10
    Join Date
    Oct 2006
    Posts
    368

    Default

    Quote Originally Posted by simoneg View Post
    . I dont have any sympathy by the way for someone buying a going concern without researching what they were buying - so sorry cant be sympathetic to Ross Thomas.
    Hmmm - I don't think you understand what I've explained. Ross Thomas didn't buy a going concern, - he sold a franchise to someone who then couldn't or didn't run the business correctly.

    Are you in Nelson? IF so - the fact is that Steve Griffiths is the main and sole reason for your problem. Blaming Ross Thomas is not the answer - neither is going to Fair Go. Do you honestly think he hasn't been threatened with this before? He has no financial or moral responsibility to help you. If he helped you - whats stopping every single other person with a beef against Steve Griffiths going to Ross for the money?

    Chalk it up to experience - things could be alot worse.


 

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