Tough times for ex-franchisees

21 January, 2011

Former First Quench franchisees have enjoyed mixed fortunes since the business collapsed, the solicitor handling their case has told OLN.

Blake Lapthorn has finished dealing with administrator KPMG on behalf of a group of about 50 franchisees and has nearly completed dealings with some of their new landlords.

The first action taken by solicitors following the collapse of First Quench was ending the franchise agreement, which released the franchisees from their covenants, said Martin Logan, an assistant solicitor at Blake Lapthorn.

KPMG offered to sell the leases of the franchised shops for £10,000 plus VAT. A few franchisees were able to find the money to buy these so they could continue trading as independents in their formerly franchised shops, but most could not raise the funding to do so.

The administrator then offered to surrender the leases they couldn’t sell to the landlords – some of whom agreed deals with the franchisees to allow them to continue trading, while other franchisees were asked to leave.

Those who did continue trading did not necessarily fare much better than those who lost their sites, said Logan.

“Unfortunately, some have supermarket competitors selling at cheap rates – and a lot of those have gone under,” he said. “Some have, however, come out the other end better. I think those that are trading OK are quite pleased to have moved on from First Quench.

“It was an organisation intended to support them but that was difficult because of the troubles it was in,” Logan added. “It is a situation where a big organisation gets in trouble and very little good comes out of it, unfortunately.” One former Threshers franchisee who went solo following the First Quench collapse has closed his store in Dorset after just seven months. Alan Davies launched Hop in the Great Vine in Bridport last May, after more than three years running the store as a Threshers branch. He said local competition has made the shop unviable, especially since the opening of a nearby Spar store.

“We are closing mostly because of the Spar shop,” he told the Bridport News. “The economic climate hasn’t helped.

“It is not the fact we couldn’t compete, because our prices were cheaper. When the supermarket was shut we would get busy. But if people wanted cheese and tea and coffee and milk while they were in there they picked up the rest too. People’s shopping habits have changed. People like to get everything in one go.”




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