Franchising, Retail

“Let down from the start”: Aussie Farmers Direct franchisee speaks out after spending $130,000 to buy grocery franchises

Emma Koehn /

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] 

NOW READ: As Retail Food Group prepares to close hundreds of stores, is the reputation of franchising dead?

Advertisement
Emma Koehn

Emma Koehn is SmartCompany's senior journalist.

We Recommend

FROM AROUND THE WEB

  • MP

    This is such a sad story.
    Not only do I hate seeing good business go under, but I hate it when its franchisees as well who have smaller control. I was willing to invest $700k into an organic food business but my wife said NO. I think it will work and is working really well, though the issue is a few years later when the fad wears off, what happens then?
    Everything I said to my wife we should do, if I didnt listen to her and just did it, I would be a multi millionaire – however after seeing this, she is most prob right with this one.

    I just hope that the administrators dont take everything and are able to give back to the poor families who most probable have invested their whole lives into this.

  • MP

    This is such a sad story.
    Not only do I hate seeing good business go under, but I hate it when its franchisees as well who have smaller control. I was willing to invest $700k into an organic food business but my wife said NO. I think it will work and is working really well, though the issue is a few years later when the fad wears off, what happens then?
    Everything I said to my wife we should do, if I didnt listen to her and just did it, I would be a multi millionaire – however after seeing this, she is most prob right with this one.

    I just hope that the administrators dont take everything and are able to give back to the poor families who most probable have invested their whole lives into this.

  • bezbox

    So the crux of the story here is that Nigel is upset that a clearly failing business model, one where he purchased the last 3 runs for a total cost less than half of the 1st run, folded before he could foist it off to some poor unsuspecting person who wouldn’t have seen a day of operation. Classic example of thinking of yourself only! I may feel for someone else with a different story but not this guy.

    • Nigel

      Beezbox, I am Nigel you talk of. Your opinion of me for thinking of myself is rather funny as I was selling to not put my wife through the pain of doing deliveries as she has a full time job.
      The run still made good money and the sale price was what someone was prepared to pay.
      I was hit by a car and could no longer work as i cannot drive.
      But you know the story better than me right!!

      • bezbox

        Nope – don’t know your story because it isn’t consistent. For example, your For Sale ads for the runs say the delivery driver did all deliveries, but above you are saying your wife was doing them.

  • Tan

    No small margin brick and mortar businesses can survive in Australia,
    even Ebay business is getting tougher with so much competitions against Aliexpress etc and tax office looking at them now . the only way this small margin business to survive is to use a franchise model by robbing customers with upfront $100k fees and sell the franschise brand to an investment companies just like what those franchise bosses Did to RFG