Ray White axes branch amid phoenixing claims

Former directors of the service company remain principals of the now-terminated franchise. (ABC News)

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A fortnight ago, the real estate giant Ray White was doing its best to distance itself from one of its own franchises in Sydney's Eastern Suburbs.

Now it has cut Ray White Randwick loose.

The case hit the headlines when an ABC investigation revealed that the franchise had liquidated a service company used to pay staff and other businesses costs.
Some experts described the liquidation as an apparent case of phoenixing, where a company is liquidated and another company takes its place but free of debts.
Ray White's chairman, Brian White, spoke to the ABC about his decision to take the famous name away from the franchise's three principals.
"Well we have terminated the relationship we had with that independent business. The franchise has now been formally terminated," he said.

"The relationship between a franchisor and a franchisee is highly regulated, and there's very specific conditions and a number of those were in breach.


"The key, in a group such as ours, [is] the relationship of all people within each business - that's the owner, the salespeople, the property managers, the back office staff, receptionists, people doing the loan market et cetera. It's enormous teamwork and there has to be a lot of trust in how those relationships are going to prosper and take that business forward.
"I came to the conclusion that there'd just been a complete breach of faith in how those relationships were handled."

However, a fortnight ago, Mr White said he had confidence in the principal, in the majority shareholder.
"Since then I've had the opportunity of meeting a lot of people," Mr White said.
"I put my phone number out into the market, I went to the office itself and wrote my mobile number up on their noticeboard. Information was also given that I'd be happy to speak with people.
"Since then I've met something like half a dozen people who used to be employed by the business. I've heard their stories and that led to that decision.

"The staff continued on, and one of the - well, the key priority is to have our staff, present and past, properly paid or to receive their entitlements. And I've had a number of calls from existing staff thanking me for the efforts that I took and the results that were achieved.
"So there's no evidence that we have that the business was giving poor service to its clients, or there was malpractice in the way that the public were being treated.

"It purely became the way that people within that business ended up - the fact that, as I said, there was a breakdown in faith between all parties."
The former franchisees declined the ABC's offer of an interview and instead issued a statement.