Court action threatened

"Our aim is to sit down with the new franchisor and achieve an exit from the franchise for the entire network. "We take the view that we should not have to pay anything for this, and if the franchisor is unwilling to talk, we will sue him in the courts."

The Journal
November 10, 2006

Court action threatened
Graeme King

Franchise holders in the collapsed Furniture Express business are threatening court action to free themselves from their contracts.

A month after the business - formerly Durham Pine - plunged into administration for the second time, its franchisees are crying foul over the company's declining fortunes hurting their businesses.

The franchisees were already angry about what they claim was a lack of service - and profile - provided by the previous management.

But now administrators PricewaterhouseCoopers have sold the franchise contracts previously held by Furniture Express to a new company called Cobco 808 set up in Halifax, West Yorkshire.

The franchisees say this company does not have the infrastructure or experience to operate the franchises to best effect - yet they are still obliged to continue on the same terms as when Durham Pine was a nationwide, £65m turnover business with a well known brand.

Franchisees must pay 5% of turnover, plus VAT, to the franchisor for the right to use the DP branding and access its expertise.

But now London law firm Field Fisher Waterhouse is representing all 18 franchisees as they bid to be released from their contracts. And the firm has organised for all those franchisees to withhold their 5% fees from Cobco 808 and instead pay them into an independent bank account, pending the dispute being resolved.

Graeme Payne, the solicitor dealing with the case, said: "Our aim is to sit down with the new franchisor and achieve an exit from the franchise for the entire network.

"We take the view that we should not have to pay anything for this, and if the franchisor is unwilling to talk, we will sue him in the courts."

One of the affected franchisees, who did not wish to be named, said: "Previously, when people signed up to become Durham Pine franchisees, we were dealing with the largest pine retailer in the UK, and there was a well established brand name going back to 1984.

"There were 70 stores in all, within the company, and as franchises, and we were getting reasonable discounts from suppliers. But that is not so now."

And rebranding to DP Furniture Express from Durham Pine, with a perceived shift downmarket, had also harmed the franchises.

The franchisees say they made an offer to buy themselves out of their contracts earlier this autumn, before Furniture Express entered administration, but this was rejected.

Then once the company was in administration, the franchisees again tried to free themselves, but this failed too, and they subsequently heard PwC had struck a deal with Cobco 808.

The Halifax company was only formed last month. It is run by furniture wholesaler Mohammed Saeed from Leeds, who operates two other companies called KLS Furniture Stores and The Italian Furniture Company in Halifax, which between them generate sales of £3.2m.

Mr Saeed was said to be on holiday yesterday and nobody else from Cobco 808 was prepared to comment.

A spokeswoman for PwC in Leeds said the franchisees were offered the opportunity to buy their franchises but both their initial offer and a revised offer were too low. Cobco 808 then made an offer which the administrators accepted. The spokeswoman said they had a legal obligation to maximise returns for Furniture Express creditors.


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