by MTF Finance
last updated 09/12/2020
Locals Backing Locals
by MTF Finance
last updated 09/12/2020
MTF Finance wants community-minded franchisees to help local people and businesses
Glen Strang had three children, two of them under four when he resigned from his regional manager’s job at ASB. ‘I was a classic company guy, apart from a spell playing professional rugby in the UK, so it was what you might call a courageous decision to become a franchisee with MTF Finance,’ he laughs. ‘But it has had a great pay-off – if they’d told me five years ago where I would be now, I wouldn’t have believed it.’
MTF Finance is one of those quiet success stories that few people know about. Founded 50 years ago as Motor Trade Finance, the company originally specialised in making funding available for people buying cars through motor dealers. In 2008, the co-operatively-owned company remodelled itself to create a franchise network sitting alongside the existing dealer network, with franchisees operating from stand-alone offices and able to finance vehicle and other business equipment purchases from dealers, individuals or online sales.
The re-brand to MTF Finance has seen the company become much better known, its blue and yellow logo a familiar sight on buildings, on the cars, bikes and boats pages of TradeMe and on the motorbike of champion racer Avalon Biddle (see panel at end of article).
‘We now have 47 franchisees around the country and room for probably 20 more, with opportunities available in most areas,’ says Glen Todd, the company’s CEO. ‘While the original core of franchisees came from the motor trade background, these days many come from a sales or finance background. What marks them out as different is that they are local people serving local people.’
A local understanding goes a long way
It’s that focus on the local that helps MTF Finance stand out. ‘Most of our business walks through the door,’ says Tim Hintz, whose franchise covers Masterton and Wairarapa. ‘95 percent of our customers sit down with us face-to-face, with no need to make an appointment. The people they see on our poster are the people they meet when they come in the office, and we take time to get to know them and understand their needs.
‘In a community like ours, it’s not just about lending them money – it’s about helping them with budgeting expertise, working out what they can afford to buy and borrow, and not allowing them to get into hardship.’
Tim is an old-school franchisee with a wealth of wonderful stories. He went into the motor trade straight from school, first as a mechanic and then owning a car yard with his father. ‘When we looked at the bottom line every year, we found that the most profitable part of the business was the finance,’ he chuckles. ‘So when MTF Finance started the franchise we took notice, talked to other franchisees and made the decision to sell the yard and focus on the finance instead.
‘It was a good decision; as the finance industry became more regulated, dealer finance became more complicated and all our former competitors became our friends. Now, with so many vehicles changing hands through private sales online, finance has become even more important. I love it when people come to us first to find out what they can borrow – it puts them in a strong position when they go out looking, and we know that they have a budget to work to.’
Faster, better, more personal
Another former banker, Duncan Collins bought into his Rangiora franchise in 2018. ‘I’d always had a strong interest in running my own business, and I was interested because MTF Finance were a long-established company with a good business model. A friend owned an MTF franchise so I had some insight.
‘Coming from a large bank to a smaller outfit, I’ll admit I had some concerns about how good their systems would be. To my surprise, I found they were faster and better than anything I’d had before. To be fair, banks have to offer so many different products and services that it’s hard for them to be across everything all the time, but MTF Finance focuses on three core products and does it very well.’
Those products are credit contracts for finance; payment waiver; and mechanical breakdown insurance. ‘We can also offer a much more personal service than banks – I have 600 customers and I know nearly every one of them personally. They can pop in and see me for a chat and we can pick up pretty much where we left off – it means that if their situation changes, we are able to work things through without stressing them out.’
Relationships backed by systems
Cheryl Renouf agrees. As one of the first MTF Finance franchisees, she’s been serving her local community in Whakatane for 12 years. ‘I started with one part-timer and now have 5 staff,’ she says proudly. ‘MTF Finance has really strong technical systems that enable us to do our job efficiently and get answers to our customers in a very short space of time. It’s also important to keep up with the ever-changing regulations and compliance around finance, and we have a very strong back-up from the support office to help us do that.
‘But at the end of the day, it all comes down to the relationship you build with the people around you. My business succeeds not just because it provides a much-needed service from a trusted brand, but because I have lived and participated in this community for years. A lot of our business is walk-in or word-of-mouth – we don’t have an 0800 number, we are real people you can walk in and talk to.
‘I take the approach that we’re not just here to assist you when you buy your first car – we’re here to assist you throughout your life. When you need a family car, when you want a boat, when you need the mid-life crisis Harley – we’re here for that, too.’ And, increasingly, MTF Finance can help small businesses with finance for generators, workshop hoists and all sorts of mobile equipment. ‘That’s a whole new market we’ve barely touched,’ says Cheryl.
Better lending decisions
CEO Glen Todd says that Glen Strang, Tim, Duncan and Cheryl exemplify the MTF Finance franchise by being deeply embedded in their local communities and caring deeply about their customers. ‘Relationship building is a key part of being a successful franchisee which is why, while the banks are closing branches around the country, we are opening more.
‘It also enables franchisees to make better lending decisions. When a potential customer walks in, we provide all the systems they need to collect data, do an assessment of the customer and make recommendations as to the level of risk they present and the rate that is appropriate. The franchisee is also trained in talking to people, asking questions, and doing checks so they can form their own perception. As long as the required loan falls within the system parameters, they are then able to make up their own mind whether to proceed or not. The result is that our arrears performance is among the best in the industry.’
It helps that MTF Finance franchisees are also shareholders in the franchisor company, ensuring that it’s in everybody’s interests that all franchisees are well-trained, professional and successful. ‘They have equity in the company to support lending, and receive an annual dividend in addition to their own earnings – which can be considerable,’ Glen explains.
‘The average size of a franchisee’s ledger is around $12 million, once established. For a new site, ingoings vary considerably depending on territory and office fit-out, but can be in the $250,000 - $500,000 range. In return, you can get a very good return indeed on your investment.’
In some cases, new franchisees may also be able to go into a joint venture with an existing franchisee in part or all of their territory. ‘That enables a new franchisee to start with a smaller investment and build their experience slowly, and an existing franchisee to have a clear exit strategy for retirement,’ says Glen.
Plug and play
Looking back on his early days as a franchisee, Glen Strang describes the MTF Finance franchise as like a gigantic plug and play machine. ‘There’s a formal structure around your induction that teaches you all the systems and processes, then you plug into a whole network of support, IT and software that enables you to see a snapshot of your whole business in an instant and drill deep into the data.
‘It gives you the ability to manage your business well and to benchmark against others, so you are never left wondering how you are doing and where you could do better. Then you have the support of the franchise and all the other franchisees, too, each of whom has a stake in your success – it really is a very effective model.’
The last word goes to Duncan Collins in Rangiora. After two years as a franchisee, what advice would he have for anyone looking at the opportunity?
‘Honestly? I’d say “Go for it!” It’s been life-changing for me, and I have no regrets whatsoever!’
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One of the ways MTF Finance has raised its profile in recent years is through its partnership with top athlete Avalon Biddle, the former New Zealand Grand Prix winner and twice FIM European Women’s Cup Champion. In 2019, Avalon raced and beat the boys to become New Zealand Supersport 600cc Champion.
But in keeping with MTF Finance’s community involvement focus, the partnership isn’t just about putting the brand on the bike. Avalon turns up under the MTF umbrella at events across the country, meeting fans, sharing stories and leading rider training sessions that help keep riders safe.
‘Avalon is a fantastic advocate for MTF Finance,’ says Glen Todd. ‘We’ve worked with her for a long time. And she has put in the work to meet our franchisees, understand what they do and work in with their businesses. Like us, she’s all about building relationships: she’s extremely good at events, enjoys meeting our customers, putting the kids on her bike and posing for photos with them.’
Tim Hintz is a fan. ‘Avalon? How lovely is she? We struck gold when we got her on board. We had a rider day here recently and it was a once-in-a-lifetime experience for many people – they’ll all have gone out and spread the word afterwards. She’s a real role model, and so approachable.’
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