The franchisee remuneration model Mortgage Choice introduced last year has had a big negative impact on the company's earnings. A fall in franchise numbers and loan settlements have contributed to a 40 per cent fall in earnings. The new deal included an increase in the proportion of the commission going to brokers and a "best monthly outcome" approach to paying trails. The increase in the payout to brokers under the new model was A$6.8 million in 2018/19.The change also involved a restructure of the franchise network, which included a buyback of books and the merging of a number of franchises. This was responsible, in part, for a decline in the network from 449 franchises in July last year to 391 at June 30.Mortgage Choice settled home loans worth $9.4 billion during the financial year - a drop of 18 per cent from the previous year. This resulted in a $10.8 million reduction in commissions.The value of the loan book fell 0.5 per cent to $54.3 billion.The fall in settlements was considerably in excess of the decline in new housing finance approval in 2018/19."While significantly impacting our performance, these initiatives were necessary to ensure we can compete and grow sustainably by attracting new franchisees to the network," the company said in its financial report.The impact of the introduction of the new remuneration model was compounded by low franchise recruitment - an effect of the uncertainty created by the royal commission recommendation about broker remuneration.The company reported net profit of $13.7 million, compared with $4.2 million in 2017/18.After adjustments for model changes, cash earnings were $14 million - down 40 per cent from $23.4 million the previous year.The company targeted a reduction in expenses, which were cut by 17 per cent.The average upfront commission rate paid by lenders was 66 basis points - unchanged from the previous year. The average trail was 18 bps.Financial planning contributed just $21,000 to cash earnings, which is down from $383,000 the previous year. The financial planning franchise network fell from 36 to 33.