Besieged franchise brand manager Allied Brands has been dealt another blow, revealing that its Cookie Man franchise has been placed in liquidation following a winding up order lodged in the New South Wales Supreme Court by a creditor.
But while the company has told the Australian Securities Exchange that the appointment of the liquidator was due to an “administration oversight”, sources suggest the problem is far more serious.
Sources suggest some suppliers have stopped supplying franchisees with goods needed in the day-to-day running of the stores, and email correspondence from a disgruntled Cookie Man supplier to Allied Brands chief Sean Corbin that has been obtained by SmartCompany suggest a number of creditors are still waiting on payment.
Corbin was contacted for comment this morning but was not available prior to publication.
Peter Hillig of accounting firm Smith Hancock has been appointed as the liquidator of the company.
While he was unable to be contacted this morning, he told Franchising that Allied Brands had failed to attend the hearing where the winding up order was made.
“I’m in discussions with the key stakeholders, and it’s been agreed the best action is the sale of Cookie Man as a going concern. So it is very much business as usual while I go about finding a suitable purchaser.”
Cookie Man has around 50 outlets, 46 of which are franchised and four of which are company-owned. Allied Brands closed two of these during 2009-10 and is set to close the other two in the coming months.
Allied Brands revealed late last week that it had no idea Cookie Man was on the verge of being wound up.
“This situation had occurred due to an administration oversight and neither the board nor senior management had knowledge of this winding up application prior to the appointment.”
The company said it attempted to negotiate with the liquidator to stop any action regarding the chain, but was unsuccessful.
Allied has tried to play down the Cookie Man situation, saying it is “not material to the overall financial result of the company” because it accounts for less than 10% of group profit and 10% of total revenue.
However, Allied situation’s look’s increasingly grim.
It has closed its Awesome Entertainment business, it is trying to sell its Awesome Water and Villa & Hut businesses and is locked in a dispute with the US owners of the Baskin Robbins chain, which threatened to terminate Allied’s Australian master franchise last month.
Allied’s latest update to the ASX ominously notes the company remains in negotiations with its lenders and its auditors are yet to sign off on last year’s accounts.
“The company reaffirms that it is in discussions with its financiers with regard the future as a going concern of the group.”
Franz Madlener’s attempt to buy back the Villa & Hut chain through a management buyout appear to have hit a snag, with negotiations likely to have been slowed by the problems at Baskin Robbins and Cookie Man.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
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