News

Franchise disagreement

by
September 16, 2017

NOT HAPPY: Former Go Sushi franchisee David Dai claims he is owed thousands.

The Shepparton Go Sushi shop on Maude St is up and trading again.

A Shepparton franchisee claims he is thousands of dollars out of pocket after his business was taken over.

David Dai invested thousands of dollars and countless hours to grow his Shepparton Go Sushi franchise in Maude St into a healthy business.

But his dreams came crashing down when Go Sushi’s franchisor sent security guards to kick him out of his shop.

The extended disagreement between Mr Dai and Go Sushi franchisor Nicola Mills started to go sour after he took a look at how the parent company was spending its money.

As part of the franchise agreement four per cent of takings had to be paid to franchisees towards marketing for the Go Sushi brand.

Except, he claims the money was being taken and franchisees were not seeing the benefits of the money.

‘‘It was a lot of money each year,’’ Mr Dai said.

‘‘They were taking money from the marketing fund and spending it where they shouldn’t be spending.’’

He claims he sought answers from the franchisor, but he had not been given the information.

It was not the only complaint he had with the Go Sushi company, which he claimed offered little to no support in helping its franchisees, despite taking thousands in fees.

He claimed that the initial training in how to make sushi was substandard, leading him to learn how to make sushi without the help of head office.

After discussions with other Go Sushi franchisees, he decided to stop paying the marketing fee until he received information about how the marketing money was being spent.

‘‘We want answers but they are not giving them to us,’’ he said.

This quickly escalated the disagreement, with the head office forcing Mr Dai out of his franchise at the start of August.

He claimed security guards put glue in the locks to keep him out, and that he has been unable to take back thousands of dollars worth of equipment which was in the store during the forceful takeover.

His lawyer Jules Marra specialises in franchise law and said that Mr Dai’s problems were similar to other Go Sushi franchisees across Australia.

Legally, he said it was difficult for Mr Dai to fight back because of the huge costs in legal fees and the contract he had signed.

‘‘She’s got the lease, she takes over the shop and she gets the benefit of the equipment that David has paid for,’’ Mr Marra said.

‘‘She is relying on the benefit that most people do not want to go to court.’’

However, Sydney-based franchisor Nicola Mills told a different story when asked about the allegations from Mr Dai.

She claimed she was ‘‘extremely patient’’ with him after he refused to pay outgoing fees to the landlord of the Shepparton shop for 12 months.

After ongoing non-payment of fees, and pressure from the landlord, she said she had needed to terminate the franchise agreement.

‘‘It’s not something we wanted to do, but we were left with no choice,’’ she said.

She claimed that rather than seeking to take over the Shepparton shop, the takeover had cost her thousands of dollars in fees, flights and accommodation to keep the shop running.

The Maude St shop is up and trading again, under her management, but she said this was not an ideal situation.

‘‘Maybe we’ll have another local from Shepparton interested in taking it over,’’ she said.

She disputed any claims that marketing money was not spent properly, and said that audited marketing reports were provided to Mr Dai.

When asked about claims of not paying outgoings to the landlord, Mr Dai did not deny the accusation, but said that there were complications from not being sent invoices as a change of management at the centre.

Mr Dai wants to recover $150000 from Ms Mills on money he invested on shop fit outs and shop fittings and equipment, as well as money he spent into the marketing fund.

Ms Mills is convinced the disagreement was a straight case of Mr Dai not paying his fees.

The disagreement could continue to be very costly for both sides, with mediation set for Friday estimated to cost several thousand dollars.

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