Your Franchise Is Gone. So Who Gets the Money?

By Sean Goldsmith

An A$29.62 million RAMS settlement proposal raises questions about who receives ongoing commissions after a franchise agreement ends.

A$29.62 million is an extraordinary amount of money to have tied up in a dispute involving just 15 former franchisees. What's particularly interesting about the RAMS case in Australia is that part of the disagreement concerns commissions on mortgages arranged before the franchise agreements were terminated.

The franchisees had already done the work of finding customers and arranging home loans. Those mortgages could continue generating commission for years, even though the operators were no longer trading under the RAMS name. The former franchisees challenged the withholding of part of that income, alongside the circumstances in which their agreements had been ended.

In September 2026, the parties reached a proposed settlement worth A$29.62 million, without RAMS admitting wrongdoing. The dispute raises a concern that extends well beyond mortgage broking. When someone spends years building a franchise, how much of the future income they've generated can they count on keeping when the relationship with the franchisor ends?

The Attraction of Income That Keeps Coming

Mortgage broking has an advantage that many other franchise businesses don't enjoy. A restaurant needs to keep selling meals and a salon needs customers booking appointments, whereas a mortgage broker may continue receiving payments from loans arranged several years earlier.

These payments, known as trail commissions, are generally linked to mortgages that remain active. For an established operator, they can provide regular income alongside commissions from new lending.

It's easy to see why that would appeal to someone buying a franchise. Building a customer portfolio takes time, but the prospect of receiving income from previous work can make the effort worthwhile.

The complication comes from the agreements behind those payments. The franchisee may have found the customer and arranged the mortgage, but the commission arrangements also involve the lender and the franchise business. Who receives the money, and under what circumstances, is determined by those contracts.

For anyone buying an established mortgage franchise, understanding those arrangements is every bit as important as knowing how many customers the business has.

How the RAMS Dispute Developed

The disagreement began after RAMS terminated approximately 20 franchise agreements following a review of loan documentation. RAMS maintained that it had exited operators who failed to meet contractual standards, while former franchisees challenged the decisions and alleged breaches of contractual and statutory duties of good faith.

Part of the dispute concerned the withholding of 25% of certain trail commissions following termination. Fifteen former franchisees became involved in the class action, which eventually led to the settlement proposal announced in September 2026.

The proposed amount was A$29,624,397.67. Approximately A$7.78 million related to withheld commissions, including GST, with another A$1.04 million in interest. The remaining A$20.80 million was allocated as an additional settlement payment.

The proposal also included arrangements for offers to buy out the former franchisees' future trail commission entitlements.

Those are substantial figures, particularly when you consider that the operators were no longer trading under the RAMS brand. They illustrate how much financial value can remain attached to loans arranged during the life of a franchise.

The agreement was proposed without an admission of liability. The headline amount also doesn't represent what each former franchisee would necessarily receive, as legal expenses, litigation funding charges and other approved deductions would affect individual distributions.

RAMS Was Facing Other Difficulties

The dispute took place during a difficult period for the wider RAMS business. In August 2024, Westpac announced that RAMS would stop accepting new home-loan applications, bringing an end to new lending under the brand.

The business also faced separate regulatory proceedings concerning compliance failures. In October 2025, the Federal Court ordered RAMS to pay a A$20 million penalty, and Westpac subsequently completed the sale of the RAMS residential mortgage portfolio in August 2026.

These developments were separate from the former franchisees' allegations, but they are relevant to anyone considering a financial-services franchise. A local operator may spend years developing customer relationships and building commission income, yet decisions about lending arrangements, compliance and the future of the brand are often made elsewhere.

That dependence is part of the arrangement when joining an established financial-services network. The franchisee benefits from the brand and its systems, while accepting that some important commercial decisions remain outside their control.

What Are You Actually Buying?

If I were considering the purchase of an established mortgage franchise, the existing commission income would be one of the first things I'd examine. A business receiving regular payments from previously arranged loans could be attractive, especially if that income helps cover expenses while new customers are being found.

I'd also want to know exactly what happens to those payments when the business changes hands.

Can the new owner receive the existing trail commissions? Are there circumstances in which the franchisor can reduce or withhold them? What happens if the franchise agreement expires, and is there a recognised method for valuing future commission income when the owner decides to retire?

The answers could make a considerable difference to what the business is worth. Two mortgage franchises might report similar annual income, but their values could be quite different if one has transferable commission rights and the other doesn't.

It's an issue that also deserves attention in insurance and other financial-service franchises where customers generate recurring payments. The money may continue arriving for years, but that doesn't automatically mean the person who originally brought in the customer will always be entitled to receive it.

The Exit Terms Matter More Than You Think

Most people buying a franchise understandably concentrate on the opening costs, expected income and support they'll receive from the franchisor. They're thinking about how to establish the business and make it successful, rather than what might happen when the agreement eventually ends.

I think that's where buyers of recurring-income businesses need to be particularly careful. The termination and transfer provisions can have a direct effect on the value of something they've spent years building.

That doesn't mean mortgage franchising is an unattractive investment. Regular commission income can be a genuine advantage, and an established franchise can provide the systems, lender relationships and support that would be difficult for an independent operator to arrange.

But buyers need to understand which rights they are purchasing and what happens to those rights if circumstances change. A good franchise agreement should give both parties a clear understanding of their responsibilities, including what happens when they eventually go their separate ways.

The RAMS dispute involves an unusually large amount of money, although the underlying concern is one that any franchise owner can appreciate. After years of hard work building a business, you want to know what you're entitled to receive when the time comes to leave it.

What We Can Learn From This

Anyone buying a franchise that earns recurring commissions should have an independent lawyer explain what happens to those payments if the agreement ends or the business is sold. Buyers of existing businesses should establish whether commission rights can be transferred and make sure the purchase price reflects any restrictions. Franchise owners approaching retirement should review those arrangements before negotiating a sale, rather than discovering limitations when a buyer is already interested. The RAMS dispute is a useful reminder that future income can represent a substantial part of a franchise's value, making the terms governing that income worth understanding from the outset.

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