Life Resolutions sold psychologists a dream, then liquidated around them

Life Resolutions, a psychology franchise founded in 2001 by Mary Magalotti and Jodie Brenton, sold practitioners a package: head office would handle all marketing, referrals and bookings while psychologists 'watch the cash roll in'. The website promised a '100 per cent success rate' and a guaranteed minimum income of $120,000 in the first year. Dozens borrowed heavily to buy in — $55,000 for a franchise, $260,000 to be a master franchisor recruiting others at $55,000 a head — often securing the loans against their family homes.

The economics never worked for the franchisees: the head company charged up to 17 per cent commission per session, billed $357.50 per five hours of 'marketing effort', and paid psychologists $88 a session while collecting client cash it was slow to pass on. Psychologist Nihal Kucuk borrowed $260,000 as an area representative on a promise she would 'definitely' repay quickly; she says she never received a dollar. In October 2018 came Magalotti's voicemail: the company was in liquidation, 'the money you invested is gone. I don't hate you, and I hope you don't hate me.'

The liquidation was engineered in the month before the voicemail. Brenton created a new company on August 30, Magalotti resigned as director the next day, and on September 10 the old entities sold $125,000 of assets to it, which assumed only the $301,000 of secured bank debt — leaving roughly $2 million of unsecured debt, owed mostly to psychologists, in the shell. The franchise agreements moved to another new company. Both liquidators found possible insolvent trading dating back to June 2017; no creditor gets a dividend.

More than 30 psychologists financially damaged, some facing home repossession; LRA alone owed $2.3M to 40+ creditors, including the founders' own trust.

The revenue model fed on sign-up fees rather than successful clinics, so recruitment pressure always outran client delivery.

Income guarantees on the website — once $120,000, later $85,000 — were used to sell loans secured on family homes.

As cash ran out, the company collected client payments and did not remit psychologists' $88-per-session earnings.

Weeks before liquidation, assets and franchise agreements were shifted to new entities that kept trading on the same brand.

A franchise that earns from recruit fees rather than the service has no reason for its promise to come true — audit who actually gets paid.

The new companies kept operating the Life Resolutions brand and kept recruiting — months after liquidation, Magalotti emailed an inexperienced intern offering an 'area representative' spot for a $275,000 fee. June Staunton sued Magalotti for misleading or deceptive conduct; the founders denied all allegations, saying 'no level of income was guaranteed' and calling the liquidation a restructure. Franchisees complained to ASIC, which declined to act; liquidators found recovery claims not worth funding, so creditors — mostly the psychologists — receive nothing.