CFF founder sends message to brokers

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The founder of CFF Bank is expressing his company’s dedication to brokers less than 24 hours after it was announced Home Trust will acquire the bank.

“Our partnership with Home Capital strengthens our ability to deliver on this promise to our Canadian First Financial Centre owners and provides a stable foundation for CFF Bank to continue to grow,” Karl Straky, founder and chief commercial officer of CFF Bank told MortgageBrokerNews.ca. “Integrating distribution with manufacturing along with shared ownership continues to be a core vision for Canadian First.”

The bank will continue to operate its broker-affiliated service centres, with the goal of helping brokers strengthen customer relationships by allowing them to offer more than just mortgages.

“By doing more, our owners create deeper and longer lasting relationships with their customers, which builds value in their core businesses,” Straky said.
Home Capital announced Monday that its subsidiary, Home Trust, will acquire CFF Bank. The purchase price is estimated at $15 million and is for all outstanding common shares in the bank.

Under the acquisition, Home Trust will attempt to build relationships with the current 37 Canadian First Financial Centres. The commission structure for those brokers will not be changed, according to Gerald Soloway, CEO of Home Trust.

Soloway also said he doesn’t expect the acquisition to have any effect on brokers outside of those 37 who currently operate CFF Centres.

However, according to Straky, additional service centres could be added in the future.

“Integrating distribution with manufacturing along with shared ownership continues to be a core vision for Canadian First,” Straky said. “As we have done in the past, we will continue to seek out manufacturing ownership opportunities in financial services where it makes strategic sense and adds value to our shareholders.”
  • Anthony on 2015-08-11 4:19:53 PM

    Home capital needs growth their stock has been crushed this should help

  • Mr. Truth on 2015-08-11 4:21:59 PM

    I love how people like Karl Straky try to spin everything to a positive news! They raised almost $50 million, lost most of the money because they spent too much money and now they are trying to position it as this is a good deal for shareholders!

    Why do always try to sell and never tell the truth?

  • Kev on 2015-08-11 4:40:58 PM

    Hmmm... this should prove to be interesting as I do not believe that CFF will be able to offer banking services with this sale. I can’t see OFSI giving them the green light, and I can’t see Home Trust doing it through only one channel in the broker community given that it would ostracize the other brokerage brands.

    That really only leaves CFF to offer mortgage brokerage services which should be even more of a challenge. Almost every single CFF branch is owned by someone who belongs to another brand – the majority of them DLC. Those franchise contracts would be quite explicit in their terms and if any one of those offices was to offer mortgage services through the CFF business they would be in breach of their franchise agreement. I can’t see DLC allowing that to happen as it would directly take revenues out of their pocket and diminish the brand.

    Essentially CFF could be seen as inducing breach of contract and interference with the running of the business, which opens them up to a lawsuit from any of the brands where their franchise purchased a CFF. Given that at least one brokerage brand in Canada is owned by a powerhouse international corporation, CFF is going to have to tread very carefully on what is surely very thin ice.

    If I was a CFF owner, who purchased exclusively to offer banking services, I would not be a happy camper right now. In fact, I would be asking for my franchise fee and all costs associated with the business back. Under franchise law they are required to provide specified services as outlined in their franchise contract, if they are not able to do that – the franchisee has a material right to terminate that contract and seek compensation.

    Good luck CFF, I think you are going to need it.

  • Kev on 2015-08-11 4:41:16 PM

    Hmmm... this should prove to be interesting as I do not believe that CFF will be able to offer banking services with this sale. I can’t see OFSI giving them the green light, and I can’t see Home Trust doing it through only one channel in the broker community given that it would ostracize the other brokerage brands.

    That really only leaves CFF to offer mortgage brokerage services which should be even more of a challenge. Almost every single CFF branch is owned by someone who belongs to another brand – the majority of them DLC. Those franchise contracts would be quite explicit in their terms and if any one of those offices was to offer mortgage services through the CFF business they would be in breach of their franchise agreement. I can’t see DLC allowing that to happen as it would directly take revenues out of their pocket and diminish the brand.

    Essentially CFF could be seen as inducing breach of contract and interference with the running of the business, which opens them up to a lawsuit from any of the brands where their franchise purchased a CFF. Given that at least one brokerage brand in Canada is owned by a powerhouse international corporation, CFF is going to have to tread very carefully on what is surely very thin ice.

    If I was a CFF owner, who purchased exclusively to offer banking services, I would not be a happy camper right now. In fact, I would be asking for my franchise fee and all costs associated with the business back. Under franchise law they are required to provide specified services as outlined in their franchise contract, if they are not able to do that – the franchisee has a material right to terminate that contract and seek compensation.

    Good luck CFF, I think you are going to need it.

  • Legal disclosure on 2015-08-11 7:15:31 PM

    CFF franchise owner? We're you disclosed properly as per the Authur Wishart act and other legislation. See below.

    http://www.cfa.ca/advocacy/franchise-legislation/

  • What a sham(e) on 2015-08-11 7:33:54 PM

    37 brokers were sold a fantastic story of easy riches by buying thier own banking franchise. Now the bank is gone, sold for a song to payoff debt. What do the brokers own now. More stories it seems. buyer beware?

  • okay on 2015-08-11 11:01:05 PM

    Very nice, Kev. Thank you for sharing.

  • real broker on 2015-08-11 11:55:06 PM

    I see it is a short cut for Home Trust getting its banking license. We should start buying more Home Capital stocks.

  • Matt on 2015-08-12 9:46:26 AM

    Good points Gary, Sorry I mean Kev.

  • Alberta bound on 2015-08-12 11:07:42 AM

    So how much money will investors get back?

  • okay on 2015-08-12 1:57:41 PM

    Mr. Truth, that's because they CAN. They can feed you mercilessly and indiscriminately with the garbage all day long. People are too busy chasing the next mortgage payment with no time to sort out through details to find the truth. It's easier to turn the TV on and there you go. You get all what you need to wake up in the morning ready for next chase again with sentiment of building more and more, combined with level of financial illiteracy, they can ride you on like a donkey with no saddle. This is yet another copy of Con administration thinking that we all must be incompetent fools. And the last thing we have those politically correct we must worry about that are prepared to bully you for different opinions or pull you by your hair to the border (i've read in the past) or ridicule you/ridicule themselves for their own ignorance. It is a beautiful world out there!

  • Responsible on 2015-08-21 4:03:38 PM

    Someone should ask about who is responsible for selling new centers when they knew they were selling. Who's idea was that?

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