Franchise brand manager Franchised Food Company has claimed victory over what it described as a “rogue” franchisee who attempted to rebrand their three ice-cream stores just weeks after their franchise agreement ended.
Former Cold Rock franchisees Paul Bailey and Tammy Hawkins-Bailey decided not to renew their rights to run three Cold Rock Ice Creamery outlets in the Townsville area in late April.
On May 3, the pair released a press statement announcing that the Cold Rock signage had been painted black and they were putting “knowledge and experience into creating a new model of ice-creamery known as IF iCECREAM FACTORY” that would operate from the three former Cold Rock stores.
“Fans of the mix-in craze will be glad to know that IF iCECREAM FACTORY will not do away with the option to add fruits, nuts and sweets to their ice-cream,” Bailey-Hawkins said.
“Rather, we will be taking the customisation concept to the next level by giving customers even more opportunity to let their imaginations run wild when tailoring their ice-cream creations.”
However, FFCo launched court action against Bailey and Hawkins-Bailey, seeking an injunction to prevent them trading under the new brand.
But the stores were shut down and three weeks later the company that owned them was placed in the hands of administrator Bill Buckby from insolvency firm KordaMentha’s Townsville office.
FFCo chief Stan Gordon told SmartCompany this morning that under the pair’s franchisee agreement there are conditions restricting them from using the intellectual property of the franchise in a new business.
“If you sign a franchise agreement you have certain rights and obligations,” he says.
“We have to protect the brand for the existing franchisees. If you didn’t do that franchising as a concept would fall apart.”
“Clearly what the guys tried to do was copy the brand and it didn’t work.”
Gordon claims Cold Rock was not in any dispute with the franchisees prior to their decision not to renew the franchisee agreement and was surprised three months of mediation failed to resolve the issue.
“I think they were very ill-advised. When we went to mediation some of their mediators were aggressive as hell. They wanted to get to court as quickly as possible.”
Attempts to contact Paul Bailey and Tammy Hawkins-Bailey via their press representative were unsuccessful.
But Bill Buckby of KordaMentha says the legal fight appears to have drained the company.
“The company spent a lot of money in legal fees and battling the action and consequently got to the point where they were going to be insolvent or likely to be insolvent.”
“We’ve started a sale campaign to try to sell the assets in situ in each of the stores and we’re trying to keep the landlords on side to try and get a sale away.”
Stan Gordon says he started talks with administrators with a view to regaining controlling of the three stores and rebranding them.
“If we take it on as a going concern at least there will be some recovery for creditors.”
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.
