A consortium led by former Video Ezy chief executive Daryl McCormack has purchased fast food franchise Souvlaki Hut, just days after the chain was placed in the hands of administrators.
Souvlaki Hut confirmed this morning the consortium, lead by McCormack, have purchased the company from administrators BDO. Other investors include Souvlaki Hut regional director Costa Astrinakis, business consultant Danny Keep and a family of private investors. Former Midas chief Sophie Black has also been named as chief executive.
McCormack was previously chief executive of Video Ezy but left the company in 2004, replaced by Stephen Johnston. He is currently the largest Video Ezy franchisee in Australia with 15 stores.
McCormack says he will now focus on talks with existing franchisees and conduct a review of the business.
“For an initial period of up to six months we’re just going to take stock of where we are, look at where we want to improve and possibly expand. We’ll need to do what fits in well with our franchisees,” he says.
“We’ll speak to the other franchisees and then see how they want to have things done. We’ll listen to that, and then we will determine what things need to be done.”
The sale comes after previous owners Bill and John Fotiadis placed the company in administration last week due to financial troubles and threats of litigation from disgruntled franchisees.
The decision also comes after Franchised Food Company chief executive Stan Gordon said he would be talking with administrators about a possible sale. Gordon could not be reached for comment this morning before publication.
Souvlaki Hut could not provide any further details, but is expected to release a statement this afternoon.
BDO administrator Laurie Fitzgerald, who was appointed last week, told SmartCompany the two directors faced financial difficulties, along with threats of litigation.
“Over the past two months, the directors became aware of some financial pressures due to potential claims against them, and the general tightening of economic conditions in the retail market which has made business more difficult,” he said.
“Primarily lower sales… and there have been some disgruntled franchises, who probably haven’t been getting the attention they should have been getting. But by and large, the franchisees are still with us, keen to do business, and I’m going to be in daily contact with them.”
A source also told SmartCompany that Souvlaki Hut appeared to have trouble with its store infrastructure. The company has over 50 locations across the country, with former owners Bill and John Fotiadis previously hoping to expand into Western Australia over the next few years.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
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