I have been asked to look at another contract offered by Hubbed to a newsagent considering the Connect Lite product. The contract I have seen is version 6. The last one I saw was version 3.
While the ANF, the national newsagent association, should provide independent assessment and commentary on the Hubbed offer, it is unable to do so given its 5% shareholding in the Hubbed business and other apparent commercial ties with Hubbed. VANA and NANA, the Victorian and NSW/ACT state newsagent associations respectively, do not currently recommend Hubbed to their members.
While the latest version of the Hubbed contract addresses some of the questions I have raised, questions do remain:
- Territory. Hubbed has no restrictions on who they can sign to offer the service.
- Separate agreements. There is no one agreement to cover all matters, costs and obligations related to Hubbed. I see this as a considerable problem.
- Equipment. Newsagents must obtain the equipment Hubbed requires from Hubbed unless some other agreement is reached. The Hubbed Contract is provided with a Finance application form for Northern Finance but there is no indication as to the terms of the finance agreement. Newsagents are only given access to the “Final Leasing Agreement” once they return an executed Hubbed Contract. Why are not all agreements completed at the same time and why do they not all run for the same term?
- Financial Services. Newsagents taking on Hubbed are directed to use Moneytech Services to be able to use Hubbed. The Moneytech is a third agreement that is apparently required.
- Sales target. The Contract and associated schedule 1 are less than clear on sales targets.
- Insurance. Newsagents need to take out insurance for parcels and equipment.
- Responsibilities of the agent. Newsagents have to erect signs if required by Hubbed – there does not appear to be an opportunity to negotiate on this. The price you charge is set by Hubbed and you cannot vary it. You have to notify the sale of your business 60 days in advance. You have to give 60 days notice if you plan to move your shop.
- Termination. While Hubbed or the agent can terminate the agreement at 90 days noticeI am told newsagents cannot terminate the equipment finance agreement.
- Financial guarantee. Part of the Hubbed agreement requires newsagents to provide a financial guarantee to the Hubbed Financial Partner.
- POS computer. Newsagents must provide access to a POS capable of connecting to the Hubbed control PC (schedule 1) but there is no explanation in the contract or elsewhere as to what this actually is.
Now I’ll turn to the business case for Connect Lite. The Connect Lite services are listed in the contract (Schedule 3) as gift cards, parcels and bill payment. We have gift cards today and we can access parcels without cost. The only new service here is bill payment and from where I sit I see very little upside in Connect Lite from Hubbed – certainly not enough upside to set aside space in-store, relinquish control over key aspects of my business and commit $7 a day.
Schedule 3 lists parcel services but newsagents can access these today at no cost through the industry owned N Parcel and Parcel Point. Schedule 3 also lists advertising services. I can’t see any value in this for the newsagency business.
The decision faced by newsagents for Connect Lite is in excess of $7,500. This is how newsagents have to approach it – as a $7,500 decision. Will you make three or four times this back? Will you make more from the space and time allocation from this investment than you could by being a retailer and bringing in new products to drive more retail traffic to your business.
The folks at Hubbed and the ANF will probably say that I am against their offer and am talking down their plan to help newsagents. The Hubbed offer as being put to newsagents today is incomplete. There is insufficient information with which to make an informed decision about its appropriateness for a newsagency. The ANF conflict is profound. The Hubbed business model as currently pitched is flawed.
I remain concerned at the apparent lack of due diligence undertaken by the ANF and its Directors both into the Hubbed commercial offer to newsagents and the viability to the typical newsagency business of the Hubbed services and the underlying cost of offering these.
Newsagents could achieve a considerably better return by investing in their business as retailers and not as agents.
As I have noted previously, I’d like to see a public debate to test the business model and the newsagent contractual arrangements at the core of the model. If Hubbed is as good as the ANF Hubbed partnership says it is then it would emerge from the debate in a stronger position. I would appreciate an opportunity to be proven wrong on this.