Harvey Norman franchisees who have claimed to ChannelNews that they are often “bullied” by Harvey Norman head office management, have taken to using What’s App to communicate with each other, fearing a backlash from head office management, following the placing into administration of the franchisee who operated Harvey Norman’s most profitable store operation.
Last month Alan Stephenson, the multimillionaire operator of the Harvey Norman Commercial operation in NSW which was described as the ‘most profitable’ last month was sacked and the franchisee business Druin Pty Ltd placed into receivership with the assets rolled over into Harvey Norman with “No questions asked or information revealed to suppliers” claim observers.
This set off a chain of events that has seen some Harvey Norman staff charged with theft; it’s also left franchisees worried about audits of their stock levels and payments back to head office, after forensic auditors discovered massive discrepancies in stock and the cashflow of the business.
Two franchisees who have contacted ChannelNews claim that franchisees “Have no control whatsoever over a Harvey Norman franchisee operation, franchisees have taken to using What’s App to communicate. Head office staff who don’t want to be caught out with an email trail are also using What’s App”.
“We are bullied by head office, told what to do and we have no real say in the running of a Ha”. An NSW franchisee claimed.
One Queensland based franchisee said, “I have had senior Harvey Norman executives of the business screaming at me, threatening me, the individual is well known among franchisees for his bullying and intimidation of franchisees”.
ChannelNews knows the name of this executive, he like Stephenson, has worked for Harvey Norman for several decades.
According to franchisees who have approached ChannelNews there are two types of franchisees those who are in “The boys club” and run established Harvey Norman store operations and “The rest”.
“What’s shocked management is that one of the Boys Club, Alan Stephenson who was a close mate of Gerry Harvey has been caught out running a questionable operation”.
“This has sent shock waves through the business as he was well and truly in the Harvey Norman club” one franchisee who does not want to be named said.
They added “Harvey Norman management look after the elite club” they added.
ChannelNews knows of a case when Harvey Norman management reemployed a long-time franchisee who was accused of sexual harassment at a franchisee Xmas party in Queensland.
The franchisee left the store which is among the top stores in the Australian operation only to be reemployed at another Queensland franchisee store sometime later.
Claims that franchisees have no say in the operations of a Harvey Norman franchisee operation and that “All roads lead back to head office” as one franchisee claimed.
This appears to have been confirmed recently with the collapse of Druin Pty Ltd.
When a normal administration operation is implemented the assets, or the business are often offered for sale with creditors notified and assets listed.
In the case of Harvey Norman NSW, Harvey Norman head office entities were immediately granted security interest over the assets of Druin Pty Ltd.
There was no administration with the receiver Adam Shepard who handled the questionable Big Un collapse handing the assets over to Harvey Norman management.
Insiders claim that on average a Harvey Norman franchisee can earn between $250,000 to $395,000 with those running élite’ franchisee stores taking out over $1,000,000.
Franchisees who don’t perform can earn a lot less or be dumped by HR head office management.
Back in 2018 a Harvey Norman franchisee was bailed out at a cost of almost $8 million this raised questions about the independence of franchisees, now questions are being asked as to whether Harvey Norman management will bail out suppliers to Harvey Norman Commercial NSW.
Back in 2018, Harvey Norman described the $7.8 million in “tactical support” to restructure one of its franchisees. This was the first time Harvey Norman, which started disclosing the value of tactical support in 2012, had singled out help for an individual franchisee.
The handout accounted for most of the $10.5 million increase in tactical support during the year and contributed to a 7 per cent fall in earnings from Australian franchise operations to $292 million in the Company’s financial filings.
The franchisee was Mac1, an Apple reseller and service provider once owned by collapsed electronics company Dick Smith Holdings.
Like the Harvey Norman Commercial saga in NSW, Mac1 Corporate was not placed into external administration and there is no evidence of capital raisings or restructuring.
Instead Harvey Norman quietly paid debts owed to suppliers and merged Mac1 with another Harvey Norman franchisee, The School Locker which operates today on school campuses.