A former Coffee Club franchise is taking the company to court claiming it set him up to fail.
Jeremy Swift ran the Gold Coast outlet for 15 years and wants more than a million dollars compensation.
He’s claiming the situation forced him to close the business because of high rents and refurbishment costs that have left him broke.
Mr Swift told The Courier-Mail that he is taking his case to the Federal Court.
He is alleging The Coffee Club breached the Franchising Code, in addition to misleading and deceptive conduct.
“I just do not want this to happen to any other small business person,” Mr Swift told The Courier-Mail.
“I have a wife and two daughters but have been financially ruined.
I have had to sell our house to keep the business going but have now walked away.”
Rent relief ‘fell on deaf ears’
Mr Swift said he ended up paying 19 per cent of his turnover in rent.
The Coffee Club agreed to make a profit, rent had to be no more than 14 per cent.
“I have sent numerous emails over the years to Coffee Club regarding the need for rental relief but this has fallen on deaf ears,” he said.
Over-inflated refurbishment costs
Mr Swift also accused The Coffee Club of attempting to enforce over-inflated refurbishment costs on the business through the use of its own contractors.
And to make matters worse, the company opened another outlet in the same shopping centre eight years ago which Mr Swift claims severely impacted his turnover.
The Coffee Club denies claims
The Courier-Mail reports that Minor DKL Food Group, which operates The Coffee Club chain, has denied Mr Swift’s claims.
It argues the rent represented fair market value.
“Given the turnover of The Coffee Club Robina at the time of the lease renewal, the landlord QIC would not have agreed to a rent discount,” it said.
Minor denied the opening of a second store in the same centre had affected Mr Swift’s sales.
Franchising has sent many people broke
Industrial advocate Miles Heffernan from IR Claims said franchising had sent many small business people broke.
“Sadly, there is an ever-growing list of people who have lost everything by having a go at franchising,” he said.
“Certainly, some brands are better than others, but it is a reminder to always seek expert advice before investing in a business and risking the lot.”
The Courier-Mail reports that in the past 14 months, more than half a dozen Coffee Clubs have closed.
All have failed to compete in a crowded market.
If you need professional franchising advice, we can help.
Call our team at Industrial Relations Claims today on
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