A franchisee of collapsed grocery delivery business Aussie Farmers Direct says his family are “not going to get anything” back after spending $130,000 to buy franchises from the company, which he now says should never have been franchised in the first place.
Nigel Brooke operated four “runs”, or grocery franchises, in areas around Sydney’s Parramatta. He told SmartCompany his wife was on the phone to the bank yesterday morning to discuss a planned sale of their franchises when he received an email informing him that Aussie Farmers Direct was to cease trading immediately after falling into voluntary administration.
“We had a sale ready to go … it was shocking, because that morning she was on the phone to the bank, we were about to have the sale. It’s changed everything.”
Brooke says the pair initially invested $90,000 in buying an Aussie Farmers Direct franchise five years ago, but over the years tough selling conditions meant he and his wife decided to buy three more grocery runs, with other franchisees looking to exit by offering their operations at low prices.
Ultimately the couple invested $130,000, he says, but “we bought them [the additional franchises] to survive. We survived because we were throwing money away,” he says.
“We feel we’ve been let down from the start.”
He observes it was difficult to make the business model work, and that there were no big swells of new customers coming on board, even with the addition of new grocery runs. He says the number of customers he had when he started on one grocery route five years ago is about the same number he had this year, even though the couple had bought additional franchises.
Brooke says he had an offer on the table to sell his franchises for $70,000, but the brakes were put on this with the sudden news yesterday that administrators had stopped Aussie Farmers Direct from trading.
He says franchisees are owed four weeks’ pay, and he is personally owed between $10,000 and $11,000. His delivery driver has been on the phone, asking for a pay cheque.
“This business should have never been franchised, that’s the biggest regret. It’s a real disappointment to me,” he says.
On Monday, administrators at KordaMentha said around 100 franchisees would be affected by the decision to cease operations after Aussie Farmers Direct failed to secure a buyer or complete a recapitalisation of the business.
On its Facebook page, the company said it was “hugely disappointing that it had come to this”, while thousands of customers mourned the death of the food delivery service. Staff and franchisees also weighed in, some furious that they were only told about the fate of the business yesterday.
Brooke says having asked administrators about making a claim for money owed to him, he believes it’s unlikely his family will see any cash from the collapsed business.
“Yesterday I asked the question, and they reckon ‘next to nothing’,” he claims.
He is unsure what his next steps will be, but says he remains concerned for other franchisees, as he believes many had taken out loans in order to buy into the Aussie Farmers Direct franchise model.
“There will be worse people than me. We don’t have any money owing now,” he says.
“But there’s no voice for the franchisee in this situation.”
Know more about this story? Email [email protected]
You can help us (and help yourself)
Small and medium businesses and startups have never needed credible, independent journalism and information more than now.
That’s our job at SmartCompany: to keep you informed with the news, interviews and analysis you need to manage your way through this unprecedented crisis.
Now, there’s a way you can help us keep doing this: by becoming a SmartCompany supporter.
Even a small contribution will help us to keep doing the journalism that keeps Australia’s entrepreneurs informed.