Finance

Nick Xenophon calls on ASIC to investigate Wendy’s, claims the chain put profits ahead of franchisees

Broede Carmody /

South Australian Senator Nick Xenophon has claimed the owners of ice cream and hot dog chain Wendy’s have put its profits ahead of franchisees in a scathing parliamentary speech.

Speaking before the Senate on Tuesday, Xenophon called on the Australian Securities and Investments Commission to investigate Wendy’s owner Stanley Tan.

Tan’s business, Singapore-based Global Food Retail Group, bought Wendy’s in 2014 and placed the food franchise under the control of a company called Supertreats Australia.

The ice cream chain’s previous operating company, Wendy’s Supa Sundaes, was placed into voluntary administration in July last year.

SmartCompany has previously reported more than 100 Wendy’s stores have either collapsed or been taken over by management in the past nine years.

In Tuesday’s speech, Xenophon claimed that when Tan bought Wendy’s he said there would be more support and better returns for franchisees.

“But it seems the only thing Mr Tan had in mind was better profits for his companies,” Xenophon said.

“That came at the expense of the franchisees, who trusted him to keep their businesses going. This trust would soon be betrayed by a series of cold, calculating moves that would destroy the livelihoods of so many small family businesses.”

Xenophon likened Tan’s behaviour to that of a “corporate cannibal” and claimed a “trail of creditors exceeding $30 million” have been left behind following the collapse of Wendy’s Supa Sundaes.

“This appeared to be part of a calculated strategy to avoid the implications that would have come with liquidation rather than voluntary administration,” Xenophon said.

The South Australian Senator also questioned whether Tan has paid his fair share of tax in Australia.

“I call on Mr Stanley Tan to come back to Australia, to face his creditors, to look his victims in the eye and to be accountable for his actions,” Xenophon said.

“I hope that our regulators, ASIC, the ACCC and the ATO, can ensure the full weight of the law is applied against Mr Tan and the companies he has controlled for the chaos and mayhem he has caused to so many.”

Wendy’s denies allegations

A spokesperson for Wendy’s told SmartCompany the chain denies the allegations made by Senator Xenophon.

“The statements made in Parliament are grossly inaccurate and we have invited Mr Xenophon to contact us to clarify the inaccuracies,” the spokesperson said.

“Wendy’s or Stanley Tan are not planning on making any further comment without giving Mr Xenophon an opportunity to do so.”

SmartCompany contacted ASIC, however, a spokesperson for the regulator declined to comment.

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Broede Carmody

Broede Carmody is a former senior reporter at SmartCompany. Previously, he was a co-editor of RMIT University's student magazine Catalyst.

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  • Eddy

    Tip of the iceberg . 7 eleven , Wendys, and many other franchise companies interest ( not all of them) are only 1 , grab the big chunk of money at the start, and let the franchisee copped all the issues and losses .

  • Jason Bertalli

    With these discussions, often the “devil is in the detail”. There is inherent risk in owning either a franchised or non-franchised business. If the franchisor is guilty of inappropriate behavior, Australia has one of the strongest codes of conduct to remedy this. If it is the operator running a non-sustainable business, then moving the responsibility up the chain will not do anybody favors. Again, facts often trump sensationalist commentary, but don’t make good headlines!

    • Larry Cross

      As you well know, almost NO Franchisors have been prosecuted for breaches of the Cods Of Conduct, and those that have received a tiny fine and slap on the wrist. I owned a Wendys and lost over $100k when tan sent it into administration, he put the few profitable Wendys under a new company and franchise agreement, then set the rest of us adrift into administration, he is a corporate raider, after the intellectual property of wendys, his aim is to have 500 store in china, he cares little about Australia. He will escape, scott free, I have to sell my house Jason.

      • Viv Williams

        Hi Larry I have sent you a pm it may be in your other folder.

        • Larry Cross

          Hi, i did not get the pm, cheers

      • Hudson

        Larry, I know how physically, emotionally and financially exhausting running a Wendy’s franchise is. Sadly you are one of many who have been lied to and ripped off. Best of luck

        • Larry Cross

          Thanks Hudson, hope you did better than me. Cheers.

      • Kim Licovski

        I lost over $300,000, when I was closed down Larry. I had a store that could have made money if my rent was reasonable. However I made nothing much and lost the lot.

        • Larry Cross

          I’m sorry Kim, I hope you are ok. Yes, the rental agreements Wendys made were ridiculous and made making a profit almost impossible.