Villa & Hut chain sold to Allied Brands for $2.8 million

Café and giftwear chain Villa & Hut is set to be acquired by listed company Allied Brands, which owns and operates the Baskin & Robbins, Cookie Man chain and Kenny’s Cardilogy franchise chains.

Allied Brands will pay $1 million for the chain and assume $1.8 million of debt, taking the total price to $2.8 million.

Villa & Hut, which has built its brand around its eco-friendly range of products, has 16 stores and plans for another six outlets in the 2009-10 year. Allied Brands says the chain will have earnings of around $1.5 million in 2009-10.

Peter Graham, managing director of Allied Brands, says Villa & Hut had been on his company’s radar for some time.

“It operates in the same space that our Cookie Man business operates in and we’d be looking for opportunities that we can seamlessly integrate.”

Cookie Man’s sales are divided evenly between food, coffee and gifts, and the Villa & Hut purchase will allow Allied Brands to expand its coffee roasting and food production facilities.

The founders of Villa & Hut, Franz Madlener and Jacky Roberts started the business in 1999. The company appeared on the SmartCompany 50 in 2008, with revenue of $11 million.

Graham says the founders will remain the business.

“We make sure that the founders are an integral part of the business going ahead. Usually the businesses that we’ve bought are businesses where the founders have taken it to a certain stage and they just need that financial push to take it to the next stage.”

Allied Brands expects to complete due diligence on the deal on June 4 and complete the transaction by June 30.

Commenting on the wider franchise sector, Graham says Allied Brands is already seeing strong growth in inquires from poetnial franchisees as unemployment rises.

“People then refocus on buying their own business again and we’ve found that there’s a potential reservoir of franchisees out there.”