FAST FOOD chain O’Brien’s Sandwich Bars told franchisees yesterday that businessmen Graeme Beere and Denis Desmond are to invest in the troubled business.
At the same time, it has emerged that there may be a legal question mark over two transactions under which franchises in the UK were transferred to a new company earlier this year.
O’Brien’s founder and chairman Brody Sweeney told franchisees that it had agreed terms with AIL Ltd for new investment in the business, which was placed under High Court protection from its creditors in July.
Mr Beere, who runs the Abrakebabra, Gourmet Burger and Bagel Factory franchises, and Mr Desmond, founder of promoter MCD, are the shareholders in AIL.
Mr Sweeney told franchisees that AIL will take ownership and management control of O’Brien’s in the Republic, while he will continue to be responsible for the business in the UK.
Two O’Brien’s subsidiaries, O’Brien’s Irish Sandwich Bars (UK) and O’Brien’s Irish Sandwich Bars (UK Property) were placed in administration in mid-June.
A new company, O’Brien’s Franchising UK Ltd, took over as the group’s franchisor in the UK from the Irish parent, O’Brien’s Irish Sandwich Bars Ltd, on June 1st.
The Irish parent originally bought the franchise agreements from O’Brien’s Irish Sandwich Bars (UK) last December for £1.19 million (€1.38 million), as part of a group reorganisation.
The deal meant that the UK franchising business, the company’s core activity, was not affected by O’Brien’s Irish Sandwich Bars (UK) being in administration.
However, two lawyers, whose advice was sought separately, have since suggested that the original sale of the franchise rights last December could be void, as the company did not seek the consent of the franchisees.
Their advice states that, if this is the case, then the rights and obligations remain with O’Brien’s Irish Sandwich Bars (UK), one of the companies in administration.
The lawyers add that, if that company had in some way broken the terms of its agreement with the franchisees, they are entitled to terminate their contracts.
The lawyers point out that as O’Brien’s Irish Sandwich Bars UK had a contract with each of its franchisees, their consent should have been sought for the December deal. That is unless a term in the original agreement allowed the company to transfer their contracts to a third party without first seeking their consent. The advice does not suggest that anybody involved broke the law, or acted wrongly or in bad faith.
Mr Sweeney would not comment yesterday on the deal with the company backed by Mr Beere and Mr Desmond, or on the legal situation regarding O’Brien’s Franchising UK and O’Brien’s Irish Sandwich Bars (UK).
The High Court appointed Paul McCann of Grant Thornton examiner to the group’s Irish parent in July. Both that process and the administration of the UK company are ongoing.
The group’s franchised outlets are continuing to trade on both sides of the Irish Sea.
