Pizza franchise firm falls into administration
THE company once overseeing brands including the New York Slice pizza chain and Mexican fast-food outlets has plunged into administration, amid a festering lawsuit and complaints about the Brisbane-based franchise operation.
Administrators from GM Insolvency were appointed on Wednesday to Franchise Retail Brands, which owes more than $500,000. Shareholders who invested almost $5.3 million could face losses.
"It took me four years to build this business and six months (for them) to kill it," said Todd McGregor, who sold his New York Slice franchise operation to Franchise Retail last year.
Franchise Retail started in 2016, pledging to help in areas that small businesses struggle, such as in marketing or legal work.
The aim was to oversee brands including New York Slice, Hombre Mexican Cantina and 1582 Coffee, and had once even planned on absorbing cake-and-coffee chain Shingle Inn.
Bruce Dwyer, a Franchise Retail director only appointed last month, said he hoped creditors would accept a deed of company arrangement to let it trade out of the current difficulties.
"We're still hoping that we can save the company. There are really good people there and a very good coffee roaster,'' Mr Dwyer said.
GM Insolvency principal Ginette Muller said creditors included professional firms and landlords.
The company had employed about 10 staff until recently and four-company owned New York Slice stores have been shut. Ms Muller said investigations would continue.
Franchise Retail had been under pressure. Queensland Supreme Court records show it was seeking to set aside a statutory demand for money from a company run by Mr McGregor, who had built up the chain from two pizza stores to 14 in a four-year stint before the sale to Franchise Retail.
Mr McGregor, still a franchisee of two stores in Brisbane's Fortitude Valley, told The Courier-Mail that Franchise Retail had still owed money from the acquisition. The deal had involved some upfront cash, some deferred payments and equity, he said.
Mr McGregor declined to specify the amount owed. But he said there were "others that have option deeds that are owed money as well".
He said Franchise Retail had a high turnover of key personnel, and criticised spending.
Official accounts showed $2.5 million in wages, he said. "You're burning cash at that rate. It's crazy," he said.
This was spent before Franchise Retail had embarked on its long-touted but never completed $20 million stockmarket float, he said.
Mr McGregor also said the Australian Securities and Investments Commission should investigate.
Franchisees are still running, although some of the Mexican outlets having gone to a new franchise operation.