Sarah
Welcome to the podcast, Matt. Great to have you with us today. Can you start off by telling us about the Aussie brand and why is such an iconic business?

Matt
Well, firstly, Sarah, thanks for having me. It’s great to join you today. And yeah, I’d love to talk about why the brand is so iconic. And it’s not just the brand per se. I mean, John Simon, who founded the business, his voice, the phrase will save you. They’re all iconic and they’ve been around for 30 years and people still mimic John saying that even today. So it’s really, I think those things are iconic in themselves, but…

I think the reason why it’s iconic is the reason why John started the business in the first place. And that was really to provide customers with an alternative that I just didn’t have anymore and to save them because they were paying very high margins for home loans. They weren’t given options. They didn’t have really any genuine alternatives. So the customer, the consumer saw John as a savior, so to speak. And that allowed us to take off really, really quickly. And I think,

The business has stuck to the core principles over time and I think that also helps make something and someone and a brand iconic.

Sarah
And it’s interesting that the brand has moved beyond John. I mean, sometimes the two things are so aligned that it becomes inseparable, but the business has managed to take off beyond that kind of personal.

Matt
Yeah and that was intentional about sort of probably about 15 years into the business there was an intentional direction, directional change to move away from John so we weren’t you know 100 % relying on John and that allowed us to take the business in a number of different directions but if you look at the size of the business today you know starting with John and James his nephew out at Penrith at the time in 92. Within a very short period of time it was 500 brokers around the country and then today we’ve got 220 franchises and over 1100 brokers around the country.

Sarah
And Aussie, I think, has just been ranked as the top brokerage in the industry based on, yeah, fantastic, congratulations. I think that’s based on 2023 results. So what do you think is that’s allowed the brand to succeed, to come out on top? And yeah, that is my first question. What is it that you do?

Matt
Our customers, first and foremost, and we’ve helped over a million customers over the course of our journey. And, you know, the business is so feedback from customers is ultimately the first and main factor when you win awards like this, because if you’re not getting good feedback from customers, then frankly, you don’t deserve it. But that’s not really an award worth getting.

Secondly, it is the successful business model that we have at Lendi Group, which is the broader business that we have, that Aussie fits within at the moment. We’ve got a multi-brand, multi-channel strategy. Our franchises are good business models. We’ve maintained a real focus in terms of what our core value proposition is for our retail franchises. But at the same time, we’ve seen some significant changes both in the market, in the industry, customer behaviour.

And so I think we’ve demonstrated that we’ve been able to adapt to those over the last few years and FY23 in particular. And I think those factors put us in good stead to win that award.

Sarah
What does the ranking mean for franchisees in the network?

Matt
Number one it’s credibility. You know like I think our franchisees’ experience and we have a fairly decent average tenure of our franchises so experience counts for a lot with customers and it’s particularly the biggest financial decision that they’re ever going to make in their life buying a home. But the number one ranking is important. You know like it demonstrates strength, it demonstrates as I said credibility and it allows our franchisees to promote their businesses not only to other customers, but to referrers and to their local communities.

Sarah
Can you just explain the difference between franchisees and brokers? May not be clear for everyone.

Matt
Yeah, sure. Yeah, absolutely. So we have, I’ll talk a bit about the journey. Maybe that might help sort of piece that together. But John started the business as a mobile business, right? So at the time in 92 when he started it, if you wanted a home loan, you had to go cap in hand to the bank and hope that the bank manager would be gracious enough to give you a loan. And John went overseas, saw a model over there that was really taking off and brought it back where it was a non-bank lender and he set up a mobile business where the broker actually went out to the customers’ homes. So that just turned the whole dynamic on its head, changed that dynamic of going and hoping the bank manager would approve you to having someone in trying to get your business and then the customer getting other options. So that mobile business worked really, really well.

But in about 2005, we realised that there was an opportunity to try and establish businesses within retail centres, within retail strips to cater to people who wanted to go into a place of business. They wanted the mobile option, but they also wanted to go into a place of business for their home loan needs. And then they could go back and back and back again. And so we set up our first franchise in 2005 up here in Sunnybank in Queensland. And that really started to take off. So at the end of the day, our franchisees are still mortgage brokers.

They go and see customers, but they also have the ability to build a scale business and have three, four, five, six mobile brokers working out of their stores. We still have the mobile business today that represents about probably 30 % of our volume, but the retail business represents 70%. They have their own defined territory, referral territory and they get company-generated leads and appointments from that territory into their business but they also have a very very strong focus on that self-generation ingraining themselves in their local communities and building their business, building that scale business.

Sarah
What’s the key then to scaling the business? Because that’s obviously very important at corporate level, but also at franchisee level.

Matt
Yeah, it’s really a really good question and I think sometimes people think they want to scale but really they don’t and that’s why we still have these mobile options, these single operator options for those people. You’ve got to have the right mindset first and foremost, you’ve got to have a growth mindset because that is the key and often you’re not just born with that mindset, that mindset is an output of your thinking and and you’re strategising and you’re business planning.

And once you go through that process, and that’s what we help our franchisees do and our candidates do as well. Once you get to that point and you go, yeah, I do have a growth mindset. The second key is aligning yourself to a business that has a growth mindset too. Because if there’s not that match, then there’s going to be real tension between franchisee and franchisor or business partners.

So aligning yourself to a business that has a growth mindset, not just about distribution points, but also internal growth of the individual businesses within that franchise system. Because I think far too often franchise systems, they think too much about more and more and more distribution points. And whilst that is an important part of the business strategy, the internal growth and then the multi-site growth that franchisees can get, that is what really propels the overall business’s growth. So you’ve got to align yourself to a business that has that. The third part I should say is scaling requires the automation of, you know, replicable processes and tasks. If you’re not doing that, if you’re scaling but your workload is scaling at the same level, well, you’re not really scaling, right? You’re just…getting less hours in the day getting more frustrated. You don’t have a work -life balance It really hasn’t amounted to a thing.

So you’ve got to make sure that your your growth curve if you’re scaling. It’s all it’s like the old alligator jaws, you know, your growth is here, but your costs in you and yet and your processes are going sort of downwards and that is true scaling and that is where where again aligning yourself with a franchise or that has that mindset has that capability internally and has the technology to do that that’s where you actually achieve that growth.

Sarah
So in terms of kind of recruiting, I mean, obviously in terms of Aussie growing, the brand is twofold. It’s existing, as you’ve talked here, it’s existing franchisees taking on, it’s extra franchisees, it’s franchisees scaling their own business, but obviously you’re wanting to bring in kind of new blood into the business. So what tips have you got for perhaps other franchisors in terms of establishing an effective recruitment process? What have you found has been an effective way to bring in the right people?

Matt
Yeah, this might sound strange. At Lendi Group, we’ve got a philosophy that we use to hire in general, but also in franchising and brokers and that’s, you know, is this person a ‘hell yeah’? Right? Do we look at each other and go, is this person a ‘hell yeah’? And that is not about saying, if someone’s not a ‘hell yeah’, then we’re not proceeding or we’re not going to put them in a franchise.

Having that ‘hell yeah’ philosophy puts pressure on us to go, what does a ‘hell yeah’ mean? What is the role, like when, for a role to be absolutely firing, what is that? Because what does that look like? Because then we have to try and, you know, match that to a person or an individual. And that individual might not be there right now. And a ‘hell yeah’ is much about going, this person has absolutely massive potential to be that ‘hell yeah’ persona that we want, that we know will be successful in that particular role.

So when we look at franchise, when we’re recruiting for new franchisees, you know, first, we know that that’s a self-employed opportunity. We know that there’s a sales element. We know that you have to be good with people. So, you know, first things first, if you’ve got experience in sales, if you’ve got experience being self-employed in our industry, if you’ve got experience in the mortgage industry, we get a seat at the table to talk through the franchise proposition and for us to go through that with you in more detail.

We’re extremely transparent and we make sure that we’re transparent upfront in terms of what are the costs involved coming in, what’s your current capital position, what is your level of expertise and experience and how does that match the day-to-day requirements of being an Aussie franchisee.

And then we have that sort of, I guess, belly-to-belly discussions and interactions and then once we’re comfortable that this person is definitely worth us pursuing this further, we then start to get into the technical elements of the investigative process.

So we look at the cash flow models. We have cash flow models for our franchise, for our candidates to go through. And, you know, that punches in all the revenue streams that we’re able to generate as a franchisee. We go through, you know, all the P&L. So we look at a P&L from an existing franchisee and we try and match that to where the candidate is looking. And then we do a low, medium and high cash, or we do three low, medium and high cash flows so that we are not just,you know, trying to shoot the lights out.

Often candidates when they come in for franchises want to, you know, take over the world and that’s good because they’re enthusiastic and they’re aspirational and that’s what we’re looking for in a way. But we’re also really intentional about making sure that we’re realistic about the progression, first year, second year, third year, fourth year, fifth year. So we have five-year cash flows, which actually spit out a P&L for each of those years and then…it gives the candidate a really good picture of not only what they can achieve, but what they need to focus on in that critical first 12 months.

Sarah
Is there anything that, is there a myth about Aussie kind of mortgage brokers? Is there something that people come in and always expect to be the case and find is not true?

Matt
That’s a really good question. I think I look at, I’ve been with the business for 17 years, and I’ve been in the mortgage industry but franchising within mortgage industry 25. And I understand and I know the franchise and we are a franchise business. First and foremost, our franchisees are part of the franchise sector. And then what we do is mortgage broken, we’re part of that the financial services industry. But you know we follow the same principles as any franchise system which is you know we’ve got to provide brand system and support you know they’re the three fundamentals of any franchise system that you’re going to go into and so I think there’s a myth that number one it’s not a true franchise it’s a mobile broking business and you’re a mortgage broker and you may you know it’s not really set up like a traditional franchise system.

But you know I think to myth bust, we are a franchise, we have five by five franchise agreements, you know, we can play with the franchising code of conduct. We have defined territories. And we have, you know, a really robust support network and support system for our franchisees. So I think the first myth that I’d like to bust in regards to that is that it’s, you know, that we are true franchise business.

The second is, you know, that I think people that understand the in terms of buying into a franchise business, if you compare us to a QSR franchise, for example, we actually don’t have a relatively high gross profit margin compared to those business. We don’t have stock on shelves. We don’t have inventory. We have revenue. We have effectively the cost of the rent of the retail store, which can range anywhere from 50 to 150 depending on the size and location of that particular site.

We have relatively inexpensive fit-outs compared to sort of the big again, QSR or other big franchise businesses, but we are retail strip. And so, you know, we’re franchises, you know, have that high gross gross profit margin. You’re in your nice Aussie polo every day. You’re in an air-conditioned office. You know, our stores are set up. We’ve got a store of the future project where our stores are designed to try and capture new customers and keep them within our ecosystem and give them a really good in-store experience, but also one that transitions into when they leave and when they’re at home.

So I think the Aussie franchise is something that we get a lot of people that have come from sort of relatively senior positions within their respective fields or industries and they come in and they look at our business and we take them around to an Aussie franchise and they go, wow, so this is where they operate every day. Yes. And I think if they’re looking at other franchise systems, they go, well, I can be sitting in this office as opposed to maybe having up to my elbows in a kitchen or a grease pit.

And they all make good money. I’m not saying anything against any other franchise system because there’s some amazing franchise systems out there and amazing franchisees. But we believe that we’ve got one for people that want a professional environment, for people that are really good with people and not just in the initial transaction, but good at maintaining a long-term relationship with their customers. It’s a great business.

Sarah
So how do you encourage the exchange of frank and useful feedback across the network? Because that obviously helps to bolster growth and high performance.

Matt
Yep, it’s trust. Like I can’t emphasise another word highly enough. Like without trust, you don’t get genuine feedback from the franchisees and the brokers. And without trust, they don’t feel like they’re getting fed or that the information coming to them is genuine. So, you know, we have to ensure that trust is there first and foremost. And we have a broker survey that we do every quarter or franchisee surveys that we do every quarter, and we get those as they’re anonymous, we get those feedback results and then we review them and then come up with action plans and disseminate those back out into the field through our regional sales managers.

We’ve got structures within each state with regional sales managers, we’ve got state managers, channel heads that work with our franchisees. We have quarterly business planning meetings, so we make sure that we’re not overstepping the market. These people are self-employed, right, it’s their businesses, but they’re part of a franchise system. So we want to make sure that we are helping them as much as possible and that builds trust, like that connection with that, that we call them retail business consultants is really important.

And then further than that we’ve got our Aussie franchise council, our AFC. So the AFC has been around for, you know, as long as we’ve had franchises since 2005 and we have eight delegates, two delegates from each state around the country. They meet face-to-face quarterly, but they also have a monthly check-in and and and where we’ve got a really good rhythm with that I’ve seen in terms of it’s not just about presenting to them.

We’ve really intentional to making sure that they are included in key projects that we are we are sort of thinking about all that are in train at the moment And we’re getting that real genuine feedback from them on behalf of the broader network and then I think the other thing we have the Lendi group has a quarterly planning process where we get everyone from within the business head office together and prioritise the key initiatives and the key business BAU initiatives that are required in that quarter. And we also involve our franchisees in that process as well.

Sarah
So it sounds as if trust is kind of a key element of the culture at Aussie. How else would you describe the culture?

Matt
Correct. Correct.

Culture is a really interesting question. Without trust you don’t have culture and I think equally if you’re trying to push a culture or you’re trying to articulate your culture to someone within your business, we don’t really have a culture. Culture to me is an output of all the things that you do as a business to connect with people, your authenticity in terms of what and how you do things, your…

availability and your desire to listen to feedback honestly and provide that responses honestly. So I think the culture is something that you have to be intentional about. As soon as you take your eye off culture, it will have a negative impact really, really quickly. We’ve had a merge. We’ve merged with another business called Lendi about two and a half years ago. And so we not only had to move the culture, but we’ve had a merge the key elements of the business, Aussie being the big scale business, you know, bricks and mortar had been around for many, many years and Lendi, the tech company. So conceptually, it was a good merge of two businesses that brought very, very different but powerful elements to the merger, but there were different cultures. And so that’s been a really important journey to align those cultures.

And again, it’s also been a very intentional one to align those cultures. But ultimately, at its core, the culture has to be about mutual trust. It has to be about going into interactions and situations, assuming that the other person has the right intention. I think as soon as that stops happening, then you start to get that mistrust.

Sarah
So you’re part of a bigger business now. You’ve obviously got the Lendi side. You’ve got mortgage brokers in retail stores. What are the expansion plans now as Aussie kind of heads into 2024 and beyond?

Matt
Yeah, I think it’s really important that the last year and a half has been our digital transformation period. So we’ve, on the Aussie side, we replaced the old Aussie system with a new system called Platform that Lendi had already established with their brokers and that platform had led to a real increase in productivity. Platform was a dual interface, is a dual interface with the customer, allows the customer and the broker to sort of work together throughout the process in terms of the fact-find, the product selection right through to the application.

So it’s a really cool thing for broker and franchise and really, a really important thing to connect the two. So that digital transformation has occurred and there was a big big play in that last year. So I feel like now in 2024 we’re really geared up to grow the business. I mentioned it before it’s not just about additional sort of footprint, it’s also about the growth within the businesses.

So we’ve currently got 220 stores around the country. We’ve got 30 more priority greenfield territories that will get us to 250 and would like to achieve that over the next two years. And then we’ve also got a number of store sales. We don’t have a lot of store sales. Most of our franchisees come in, they get in there five by five and then they renew again. But we also have some store sales that…that we’d like to bring in some people and those store sales are often from people that have been with the business 20, 25 years and then they’re ready to move on so we can inject, as you said before, inject some new blood into that particular territory or state.

So our growth plans are about number one, leveraging the platform internally within the business to grow single store operations, to grow their productivity levels and then also to grow some multi-sites. We’ve got a number of multi-site operations at the moment. We’ve got one in Queensland, he’s just opened his fourth store and he’s now effectively the CEO of his business. So he doesn’t write loans anymore. He has got brokers and franchise managers in each of those stores. So he’s the CEO of his business and we’d love to have more CEOs of our business, of their businesses, I should say. And then the next element would be that distribution point out to 250 stores. We currently have about two, just under sort of three stores, three brokers per store. We really want to get to four to five brokers per store as well.

Sarah
Well, it sounds like there’s lots of potential and exciting times ahead. So good luck with all that and we’ll follow the progress with interest. Thank you, Matt.

Matt
Thanks, Sarah.