Business stories of interest this week

Business stories from the past week, compiled by Jason Maywald:

1) Lottoland considering high court challenge

Lottoland will consider a High Court challenge if legislation to ban betting on overseas lotteries passes federal parliament.

The Gibraltar-based company is fighting for survival in Australia after the Turnbull Government announced plans to ban its product, known as “synthetic lotteries”.

“With 700,000 customers in Australia, we’re going to continue to fight this,” Lottoland chief executive Luke Brill told reporters in Canberra on Monday.

Legislation banning Lottoland’s business model is due to be debated in the House of Representatives on Wednesday.


2) The little telco taking on Optus

Ehab Abdou isn’t afraid of taking on telecommunications giant Optus.

Since starting his business in 1995, the founder of TeleChoice has already salvaged it twice and so is unperturbed by the legal battle he has started against Optus in the Victorian Supreme Court.

TeleChoice is a mobile virtual network operator that sells mobile plans and phones almost entirely online. It operates out of a small office in Melbourne with a staff of 14 and a contract for call centre staff in the Philippines, a far cry from the 500 staff and 160 stores TeleChoice once had.


3) Reece group in $1.9b purchase of US firm Morsco Inc

The chief executive of Australia’s largest plumbing and bathroom products company, ASX-listed Reece Group, says the $1.9 billion acquisition of MORSCO in the US is a “transformational opportunity” that will drive returns for the next generation of shareholders.

Reece on Monday announced that it would acquire MORSCO, which operates 171 commercial and residential plumbing showrooms across 16 states in the southern parts of the US, in a deal that will double the size of the normally conservative Melbourne-based company.


4) Red Rooster, Oporto, Chicken Treat franchise on verge of collapse

Oporto, Red Rooster and Chicken Treat shops across Australia are on the verge of closing their doors due to the parent company’s unfair business practices, it has been claimed.

In a submission to a Senate inquiry into the operation and effectiveness of the Franchising Code of Conduct, a group of chicken shop franchisees say their businesses were in distress due to the “poor business model” imposed by the parent company Craveable Brands.

The Franchisee Association of Craveable said the high costs of the franchises had led to stores closing down, including Red Rooster outlets in the Sydney suburbs of Mt Pritchard and Parklea.

“There are many more on the verge of bankruptcy,” the group said. “The business model needs to be questioned and rectified prior to more franchisees becoming bankrupt.”


5) ‘Branson got the same deal as a Bondi dentist’

Israel-founded equity crowdfunding platform OurCrowd has become one of the biggest sources of offshore venture capital for Australian investors, revealing it just surpassed $1 billion under management, globally with more than 20 per cent or $200 million coming from Australian investors.

OurCrowd, which has achieved 20 exits from company investments since launching in 2012 and currently backs 150 start-ups and scale-ups including one in Australia, allows wholesale investors to back those companies with a minimum investment of $10,000.

Since it launched in Australia in 2014 it has picked up 2000 accredited investors locally out of a global crowd of 25,000. It takes a minimum 5 per cent stake alongside its “crowd” of individual wholesale investors, whom it gathers into special purpose vehicles acting like a single investor in each investee company.