Fast food chain Hungry Jack’s and one of its former franchisees are locked in a court battle over the failure of the Wangaratta franchise store in 2009.
Hungry Jack’s is suing Toni Collins for $721,000 over her failed franchise, but Collins has also lodged a countersuit suing Hungry Jack’s for $350,000 for “unconscionable and unfair conduct”.
According to The Age,Collins alleges she was misled by the burger giant, with the store failing to provide her with adequate training and support.
The first day of proceedings began yesterday in the County Court of Victoria, where a series of emails were presented by Collins’ lawyer, Dan Christie, demonstrating how the chain allegedly knew she would fail.
Hungry Jack’s founder Jack Cowin allegedly said in an email “what on Earth are we doing giving a franchise to a 29-year-old single woman?”
Former Hungry Jack’s chief executive Tim Tighe also wrote at the time that the “deal with Toni is far more attractive for us”, a statement which Christie argued demonstrated senior executives knew Collins would fail.
The court heard yesterday Hungry Jack’s policies state Collins should have been given six months of training before running the fast food restaurant, but when the store opened she had only received three weeks.
When Collins made a decision to take on the franchise in early 2009, the court also heard she had been called from a holiday in Queensland to a meeting in Sydney where she was made to decide on the spot.
The Age reports Collins was allegedly not permitted to consult her lawyer, accountant or family members.
After only nine months of business, Collins was evicted from the Hungry Jack’s restaurant in October 2009.
Hungry Jack’s is yet to present its case. SmartCompany contacted Hungry Jack’s for comment, but received no response prior to publication.
Franchise Advisory Centre director Jason Gehrke told SmartCompany litigation is generally a last resort in franchise disputes.
“I’m unaware if they’ve attempted mediation, but that’s always the first preference to resolve a dispute,” he says.
“Litigation is time consuming, costly and polarises the parties, whereas mediation brings the parties together and can product an outcome quickly.”
Gehrke says choosing the right franchisee can be hard for new franchisors, but as the business grows the process should become easier.
“As systems mature and the franchisor develops a better knowledge and skills basis, their sophistication in recruiting franchises generally increases,” he says.
“When you have experience recruiting franchisees you tend to identify the characteristics which lead them to success versus failure.”
Gehrke says age shouldn’t exempt a person from being a franchisee, but generally people are between 30 and 55.
“Young franchisees are the exception, not the norm… but that doesn’t mean people outside the general age bracket are unsuited.
“Sometimes youth can lack experience, but in a franchise network that can possibly be compensated for by the quality of the systems and support.”
Gehrke says finding the right franchisee is an “inexact science”, but there are methods which help.
“Franchisors should do a regression analysis of existing franchisees or store managers in the network to identify the qualities and attributes which exemplify high performance and to identify the qualities which are consistent with poor performers,” he says.
“They need to build a process of information gathering to identify the right qualities in new candidates. But there also needs to be rigorous cross-checking of information provided as well, because… the candidate could just present themselves in a manner they think the franchisor wants to see.”