Ice-cream dream turns to tragedy

Danny Evans took the first steps towards building a future for his sons Josh and Luke yesterday with a trip to Centrelink and another to the bank as he attempts to pay off a $500,000 mortgage without a job. His wife, Therese, 48, died of a suspected heart attack on the weekend after enduring months of financial pressure associated with their Wendy’s ice-cream franchise.

http://www.theherald.com.au
August 17, 2010

Ice-cream dream turns to tragedy
Neil Goffet

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TRAGEDY: The memorial for Therese Evans at the franchise.

Danny Evans took the first steps towards building a future for his sons Josh and Luke yesterday with a trip to Centrelink and another to the bank as he attempts to pay off a $500,000 mortgage without a job.

His wife, Therese, 48, died of a suspected heart attack on the weekend after enduring months of financial pressure associated with their Wendy’s ice-cream franchise.

Mr Evans and his wife were locked out of their Wendy’s ice-cream franchise in Singleton’s Gowrie Street Mall last week because they owed the company $7000.

Mr Evans said his wife was under enormous pressure from the couple’s financial predicament that he believed was caused by a combination of ignorance on their part and a franchise model that was designed to fail.

‘‘Yes I do think they [Wendy’s] are to blame,’’ Mr Evans said.

‘‘But my wife and I have to take some blame as well because ignorance is not an excuse.

‘‘The stress of it all was too much for us, but the model of how this franchise is supposed to run is unrealistic.

‘‘My wife was under a huge amount of stress, but I have to take some of the blame for that as well because she wanted to do the books and I just left it to her and probably should have taken more of an interest in how we were going.’’

The couple had drawn down $200,000 against their own home and $300,000 against Mrs Evans’s mother’s home to finance franchises in Singleton and Cessnock.

They pulled out of the Cessnock franchise in June this year which caused angst between the Evans and Wendy’s.

The franchising industry is under constant pressure for what many former franchise owners have described as ‘‘unconscionable conduct’’.

‘‘This is an endemic problem in Australia at the moment,’’ National Federation of Independent Business president John Farrell said.

‘‘The profitability of churning these franchises from one owner to another is five to 10 times greater than letting them be successful.’’

Wendy’s chief executive Rob McKay responded to the Newcastle Herald via email, and said Wendy’s was ‘‘deeply saddened’ to hear the news.

‘‘Wendy’s decision to withdraw the franchise agreement with the Evans two weeks ago was an action of last resort,’’ the statement said.

‘‘It followed more than 12months of discussions over the performance of their two stores, and numerous offers of assistance, which were repeatedly refused.’’

Singleton residents had placed a memorial photo of Mrs Evans and flowers out the front of the ice-cream shop, and Mr McKay said it was temporarily closed.

http://www.theherald.com.au/news/local/news/general/icecream-dream-turns-to-tragedy/1914571.aspx


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Risks: 1st generation of investors knowingly sacrificed, 30 different programs of kickbacks, shelf allowances and inside money, Belief in a Just World (BJW): people deserve their fate, Blame the victim (Just-world effect), Blame themselves, Business model had never created adequate investor returns, Call for franchise law, Can't afford to sue, Cannon fodder, Churning (serial reselling), Death, Dispute resolution, Encroachment (too many outlets put in territory), Franchisee abandons their investment, Franchisor takes back high-volume store, Fraud victims changed deeply and often not for the better, Good faith, fair dealing, Gouging on supplies, Health consequences, Must buy only through franchisor (tied buying), Only 3 ways out: resell to next loser, independence & be sued or abandon and go bankrupt, Opportunism: contract creates powers which are used to strip investor value during relationship, Opportunism: self-interest with deceit, Predatory franchising makes more money selling than operating system, Private equity, Renewal of contract denied, Stores shuttered, Strong back and weak mind, Successful for the middleman, System designed to fail for franchisees, Unconscionable conduct, Unilateral changes in business model drive franchisees' profits down, Unproven business model, War of attrition, Australia, 20100817 Icecream dream

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