Wendy’s Supa Sundaes, the former master franchisor of the ice cream and hot dog chain, has been placed in voluntary administration.
Wendy’s franchisees were notified of the move by the chain’s head office in a letter on July 1.
Martin Lewis and Tim Mableson from Ferrier Hodgson has been appointed to manage the voluntary administration and the first meeting of creditors will be held in Adelaide on July 14.
Wendy’s stores in Australia have been operated by Singapore-based Supatreats Australia Pty Ltd since 2014, and in the letter seen by SmartCompany, the company told franchisees the appointment of administrators would not affect their stores.
“The decision to place the company into voluntary administration was taken because the company was unable to resolve a range of legacy issues which arose under previous management and ownership and because it had recently come to the attention of the current management of the company that its business has been severely compromised and the integrity of the Wendy’s brand was under threat,” the company said in the letter.
Wendy’s head office told franchisees their franchise agreements will continue with Supatreats Australia. The company said it has appointed MiLease to help franchisees manage their leases with respective landlords.
However, according to the Daily Telegraph a small number of Wendy’s stores will be forced to close as they have not yet reached an agreement with Supatreats to continue to trade under the Wendy’s brand.
Administrator Martin Lewis said in a statement Wendy’s Supa Sundaes is no longer licensed to use Wendys intellectual property and will therefore cease to operate.
In the same statement, Ferrier Hodgson said it has been advised Supatreats Australia “will be working with franchisees and landlords to restructure the business and resolve the current situation”.
Wendy’s Supa Sundaes was established in South Australia in 1979.
The appointment of administrators to the company comes after a period of ongoing tensions between the company and its franchisees, many of whom have spoken to SmartCompany about the financial trouble their businesses have encountered.
As recently as this week, one Wendy’s franchisee told SmartCompany Wendy’s had failed in its duty of care, one day after being locked out of his store by his shopping centre landlord.
As SmartCompany previously reported, 116 Wendy’s stores have either collapsed or been taken over by management over the past eight years. By late 2014, Victorian stores were being advertised with an asking price as low as $59,000.
Former Wendy’s franchisees have told SmartCompany they had had store locks changed during a dispute with the company and received letters stating their contracts with the company would not be renewed after speaking out. Another franchisee claimed Wendy’s repossessed all his stock, fittings and equipment without paying him any compensation after failing to renegotiate a lease.
The incidents appear to have taken place between 2006 and 2014, when Wendy’s was owned by Malaysian private equity group Navis Capital and before Supatreats purchased the business.