Allied Brands subsidiaries in receivership, loss of Baskin Robbins franchise rights leaves group with few options

Two key subsidiaries of listed franchise brand manager Allied Brands have been placed into receivership after the US owner of the Baskin Robbins brand terminated Allied’s Australian master franchise agreement.

Allied Brands, which has been in a trading halt since September 24, said in a statement to the Australian Securities Exchange that it is “in discussions with its secured creditors and will notify the market as soon as decisions are made regarding the position of the company and its remaining companies”.

However, the loss of the company’s flagship Baskin Robbins chain leaves Allied with few remaining business units and very few options.

In the last 12 months it has closed its Awesome Entertainment business, attempted to sell its Awesome Water business and the Villa & Hut chain, closed several stores in its Kenny’s Cardology stationery chain and watched its Cookie Man chain get placed into liquidation.

Indeed, Allied chief executive Sean Corbin told SmartCompany earlier this month that retaining the Baskin Robbins franchise was crucial to Allied Brands’ survival.

“If we can’t negotiate something with Dunkin’ Brands in the US, it’s going to be very difficult to save the company,” he said on October 7.

Corbin was not available for comment this morning.

Villa & Hut founder Franz Madlener was unable to comment on what is happening inside Allied Brands this morning given the situation remains fluid.

However, he says he is continuing to work with Allied and franchisees in attempt to get his brand back.

US franchise brand manager Dunkin’ Brands, which owns the global rights to the Baskin Robbins name, says it will now provide support directly to Baskin Robbins franchises.

“Dunkin’ Brands is completely committed to the Australian market and believes there is great potential for future growth,” Dunkin’ chief executive Nigel Travis said in a statement.

“We look forward to a seamless transition with Allied Brands and providing our franchisees with a renewed platform for growth.”

It is not known whether Dunkin’s decision is an interim measure, and whether it may look to find another local brand manager in the future.

Franchised Food Company, which owns the Cold Rock Ice Creamery brand, has already attempted to open discussions with Dunkin.

Gordon told SmartCompany this morning he will be looking to set up a meeting with Dunkin’ as quickly as possible.

“I am saddened for the franchisees, and sad for the franchisor too, because it’s never good to see a business fail.”

“But I am over the moon for us, because it creates an opportunity.”

Gordon says he will be trying to set up a meeting with Dunkin’ this weekend, and is prepared to divert from a planned European trip and travel to the US if necessary.

Dunkin’ Brands decision triggered Allied’s major lender, Westpac, to appoint receivers and managers from McGrath Nicol to two Allied Brands subsidiaries – Allied Brands Service and Allied Brands Finance.

Representatives from McGrath Nicol were not available for comment prior to publication.

It has been a grim few months for Allied Brands and its 72 former Baskin Robbins franchisees.

While Allied Brands said in July that the chain had store-on-store growth of 7.2% in 2009-10, and Allied was set to open another 20 stores during this financial year, it became apparent that the company had a litany of problems.

Carins-based franchisee Brian McArty revealed the company had been struggling to pay suppliers since the start of the year, and claimed Allied could only supply 12 of the 31 ice cream flavours Baskin had become famous for.

Then, former store manager Suzi Major, who ran a company-owned Baskin Robbins store, revealed the company was well behind on its superannuation contributions for employers.

And SmartCompany also revealed that the Department of Immigration and Citizenship had taken action against Allied Brands over an immigration rort that saw Korean workers sponsored to come to Australian on 457 visas, only to be put to work in Baskin stores – and in some case purchase those stores.