A mediation between Wendys and a former franchisee turned sour yesterday as the ice cream chain locked MPs out of the negotiations.
Former Wendys franchisee Peter Coventry is claiming over $1 million from Wendys and alleges the locks were changed on the two Wendys stores in Alice Springs he was operating and the stores “churned”.
Coventry invited MP Peter Abetz, Senator Nick Xenophon and Peter Strong, the executive director of the Council of Small Business of Australia, to the mediation yesterday so they could witness the way Wendys conducted itself.
Abetz told SmartCompany as the mediation was about to begin the in-house counsel for Wendys, who was heading up the negotiating team for the franchisor, refused to allow the trio to witness the mediation, even though they all agreed to sign a confidentiality agreement.
“This clearly indicates the franchisor had a lot to hide,” Abetz says.
“Too many franchisees have lost everything by buying Wendys franchises.”
Abetz is urging anyone considering purchasing a Wendys ice cream franchise to speak to the Wendys Franchisee Coalition before proceeding.
“I have known Peter for five years, he has been the one batting for the Wendys franchisees, they have obviously targeted him, I’ve seen the correspondence, it is unbelievable the way he has conducted himself.
I would have thought the arrogance of Wendys to not allow Nick Xenophon and myself to sit in on the mediation, the only thing they had to hide was their tactics in how they bully their franchisees in the mediation,” Abetz said.
Two of the government’s election promises were to introduce an obligation for franchisees and franchisors to act in good faith with one another and to introduce penalties for breaching the Franchising Code of Conduct.
So far the government has not yet acted to amend the Franchising Code of Conduct, nor introduced legislation to introduce penalties for breaches of the code.
“I hope that this case highlights to the federal government the urgency of introducing these changes,” Abetz said.
“Until these changes are introduced families will continue to be destroyed with impunity, because most franchisees simply do not have the financial resources to sue the franchisor.”
Strong recently met with representatives of the Federal Minister for Small Business, Bruce Billson, and was advised that the changes were “close”.
He told SmartCompany it was disappointing to be locked out of the mediation.
“It sums up the approach of that particular franchisor; there’s not a lot of good faith going on there.”
Coventry says he is unable to discuss what happened during yesterday’s mediation due to confidentiality agreements but can confirm “it has ended with no result”.
He says he will “continue the fight” and will be forced to litigate against Wendys.
“Wendys have done the wrong thing; they’ve acted in bad faith and continued with their myth that they are running a profitable business for franchisees. People should look on Gumtree and the internet to see for themselves how many Wendys stores are for sales because franchisees are desperate to sell and get out,” he says.
Wendys chief executive Rob McKay said in a statement that Wendys was “disgusted” with Abetz’s criticism and warned the MP was damaging the businesses of 220 mum and dad franchisees around Australia by attacking the Wendys brand for his own political purposes.
McKay said Abetz, Xenophon and Strong were excluded from the mediation process because the appropriate notice was not provided to Wendys.
“Wendys respects the confidentiality surrounding the mediation even if it is clear that others do not,” he said.
McKay said following the establishment of the “so-called” Wendys Franchise Coalition, Wendys engaged in a lengthy mediation process which formally resolved the matters between the parties.
“Wendys has also worked through a review process with the ACCC and consulted with the South Australian office of the Small Business Commissioner – both of whom found no fault with Wendys and the Wendys system.”
Cara Waters is a former SmartCompany editor. Previously, Cara was a senior reporter for the Financial Times’ website and worked for The Sunday Times in London.
