Franchise chain Cookie Man has been rescued from liquidation, with former rival Mrs. Fields acquiring the brand in a deal announced this morning.
Cookie Corporation, with owns the Australian master franchise for Mrs. Fields, will buy the business and tip it into a new subsidiary called Cookie Man Australia. The Cookie Man chain has 43 stores, which are supplied cookies from a manufacturing plant and warehouse in Sydney.
Cookie Corporation will continue to separately operate the Mrs. Fields chain, which has 27 stores. Managing director Andrew Benefield says Mrs, Fields will continue to import its trademark cookies from the United States, although Mrs. Fields will have some access to the Cookie Man manufacturing facility and warehouse, allowing it to develop new products for the Australian market.
Benefield has also brought former Cookie Man owner Peter Elligett on board as general manager of the Cookie Man business, a move Benefield says will be “very popular with Cookie Man franchisees”.
Benefield told SmartCompany the two brands can co-exist in the marketplace as separate entities.
“Mrs. Fields is a premium brand with a very specific, soft-baked cookie where Cookie Man has always been popular with kids and senior citizens – it’s a very different market.”
Cookie Man was formerly owned by collapsed franchise brand manager Allied Brands, but was placed into liquidation in October after a winding up order was lodged with the NSW Supreme Court over a debt of $70,000.
Incredibly, Allied Brands reported to the Australian Securities Exchange that it did not know about the winding up hearing until after it happened, and was therefore unrepresented in court.
Despite the liquidation, there was strong interest in the business, including offers from an Indian company and the Franchised Food Co, which has a brand portfolio including Cold Rock Ice Creamery and Pretzel World.
Cookie Corporation did not have the highest bid and was originally turned away by the liquidator. But when the Indian bid fell through, Benefield and his team were perfectly placed.
“We weren’t the most successful bidder, but when it came to the crunch we were the ones that could complete,” he says.
“We knew what the value was, we knew what the strategy was and we stuck to it.”
Benefield says the deal has been welcomed by Cookie Man franchisees, who have been through a difficult few months. He says his management team plans to let the Cookie Man franchises get through Christmas before making talking to them about possible changes.
“The thing that sticks out the most, not to be critical here, is just getting them refocused on operational standards. I think if we can lay out a plan…and re-energise them and tidy up the stores, then that passion and energy will naturally return.”
Law firm Norton Rose advised Cookie Corporation in its negotiations with liquidator Peter Hillig.
Hillig says employees with receive their full entitlements, and the secured creditor will receive all other proceeds from the sale. There will be no return for unsecured 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.
