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*The above articles reflect the law at the date on which they were written. Since that time the law may have changed. No reliance should therefore be placed on any statements or opinions in the articles without first checking that they represent the current state of the law.


The sandwich van war


Turn off the oven and forget that Sunday roast. Today sees the launch of British Sandwich Week, an event to celebrate the nation's real favourite lunchtime food. But instead of enjoying the festivities, one sandwich retailer is in a pitched battle with its franchisees.


 


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STUFFED:

Benjys' sales have surged


Benjys is suing 12 of its mobile franchisees, claiming they have failed to sell enough of its produce and have instead been selling other suppliers' stock from from their Benjys-branded vans. It has accused others of fraud and has instigated a police investigation.

But the 'vanchisees' are fighting back. They claim that they were subject to strong-arm selling when they bought their franchises, received little support and were sold Benjys products at inflated rates.

They also maintain that the Benjys' business model was based on unrealistic profit forecasts and now they plan to counter-sue.

The sandwich industry is booming. Britons eat about two billion sandwiches each year. And Ollie Aworinde had high hopes of getting a slice of this hungry market when he invested in a Benjys van franchise in November 2004.

Little did he realise that he would end up being sued for £300,000 and being arrested on suspicion of fraud. Aworinde, 38, from Crouch End, north London, bought eight territories in west London for £80,000 plus VAT and started trading in January 2005.

But he claims that, despite his best efforts, he struggled to make sales and was further hampered when Benjys started changing products at short notice and raising prices for stock. 'The turnover margin was supposed to be 45%, but immediately I was running at a loss,' he said.

Last January, he joined with 32 current and former franchisees and approached franchise solicitor David Bigmore. A29-page letter was delivered to Benjys Group and Benjys Delivered, the van operation that delivers sandwiches to offices, at the beginning of last month, outlining the franchisees' grievances and demanding confidential business figures.

Aworinde and a number of other franchisees also claim that Benjys failed to follow proper financial rules when taking money through direct debits from their bank accounts and contacted their banks to claim the funds back.

Matters came to a head for Aworinde last week. He was arrested and questioned on suspicion of effecting a bank transfer by deceit, but was released without charge.

He said: 'A direct debit indemnity claim is a civil matter. It's just an attempt to single me out and intimidate me and other franchisees into backing down.'

Ian Rickwood, Benjys chief executive, refused to comment on Aworinde's case but said: 'The very recent actions of this isolated group appear to have now ceased, following actions by Benjys' lawyers. The matter has been reported to the Fraud Squad of the City of London Police, which is investigating.

'The proceedings involve, but are not against, a number of banks, which have been co-operating with orders made by the High Court.'

A spokesman for City Police said: 'I can confirm that we are investigating an alleged fraud at a franchisor. One man has been arrested and is currently on bail pending further investigation.'

Benjys has 68 retail sites, largely in the South-East and Midlands, and three years ago launched its 'vanchise' operation, Benjys Delivered. Franchisees receive a specially designed van to sell the chain's sandwiches, hot snacks and coffees to workplaces on designated routes.

The Benjamin family opened the first Benjys shop in Islington, north London, in 1989. Eleven years later the current chief executive, Ian Rickwood, bought out the group with backing from venture capital group ECI. It has 116 vans on the road, 82 of them franchises, but Benjys claims that there is the potential for up to 2,000 vehicles across the UK.

On its website it boasts that 'no other franchise in the UK is growing as quickly' as its vanchise operation. But one franchising expert questioned such rapid growth. 'I am a little wary of franchises that try to grow too quickly,' she said. 'It is far wiser to develop more slowly and ensure that the business is sustainable.'

Other industry experts suggest that, while Benjys' low-cost sandwiches are popular in London where rivals' prices are high, this price advantage may not be so telling as the company expands into different areas.

The British sandwich industry is worth more than £3.5bn a year, vastly outstripping other types of fast food.

Jim Winship, director of the British Sandwich Association, said: 'Consumers are not driven by price when it comes to sandwiches. It is about perceived value for money.'

Benjys Group and Benjys Delivered are both members of the British Franchise Association, but a spokesman for the BFA would not comment directly on Benjys' dispute with its franchisees, though he indicated that the association was monitoring the situation.

'Occasionally, we do receive communication about specific members and then are honour-bound to investigate them,' he said.

Despite its ambitious expansion plans, the sandwich group's latest financial results were disappointing. Accounts for the year to March 2005 show almost £3m worth of losses compared with a pre-tax profit of £263,747 in 2004.