Villa & Hut franchisees are “safe” says Franz Madlener

Villa & Hut franchisees are finally in a “safe haven”, according to company founder Franz Madlener, who has accepted an offer from Melbourne’s Pausewang family to save the brand.

Villa & Hut franchisees were facing an uncertain fate after franchisor Allied Brands, former owner of the chain, was placed in voluntary administration in October last year.

According to Madlener, he received strong interest from a number of prominent retailers keen to recapitalise and grow the chain, eventually deciding to accept an offer from the Pausewang family.

Madlener described the deal as the best outcome for the chain’s 21 remaining franchisees.

Pausewang patriarch Peter Pausewang is well-known for resurrecting brands such as Eastcoast Fashion, Fletcher Jones and Pelaco, and starting chains including Provisional Home Living and Smiggle.

The company set up by the Pausewang family to buy the Villa & Hut assets, called V&H International, has also acquired the franchise debtor ledger of Villa & Hut, which means the franchisees will no longer need to deal with Allied Brands and its liquidators.

“Really, it’s totally out of Allied Brands’ [control] now. That ship has sunk and this is a very, very safe haven for franchises,” Madlener says.

Madlener says there are three priorities with regard to rebuilding the Villa & Hut brand:

• Re-establish the brand in the consumer’s mind.
• Resume product innovation in the business.
• Provide franchisees with one-on-one assistance in light of this traumatic period.

He says all of the franchisees have met with various people in the consortium and are excited about future prospects.

In addition to rebuilding the brand, the company will also examine expansion options locally and overseas.

Madlener will remain at Villa & Hut as a consultant but the Pausewang family has appointed its own general manager to the chain as Madlener is still facing the possibility of personal bankruptcy.

In what he describes as a “fatal mistake”, Madlener failed to withdraw a series of personal guarantees, which he made for Villa & Hut debts, when he sold the business to Allied Brands last year.

As a result, he is now facing legal action from a number of debtors.

“I never thought in a million years that a company like Allied Brands would ever fall over. I never thought [the guarantees] would be an issue,” he says.