A NUMBER of O’Briens sandwich bar operators in Britain are considering legal action over a deal involving the transfer of leases at the end of last year.
O’Briens Irish Sandwich Bars Ltd was placed in liquidation this week after efforts to save the business in the Republic failed. Liquidator Paul McCann of Grant Thornton is hoping to sell it as a going concern.
It emerged yesterday that a number of O’Briens British franchisees are considering legal action over a deal that saw UK franchise agreements sold by one of the group’s British subsidiaries back to O’Brien’s Irish Sandwich Bars last December as part of a reorganisation.
The British-registered subsidiary, O’Brien’s Irish Sandwich Bars (UK), and a sister company, have been in administration, and under the protection of the English courts, since mid-June.
Just over two weeks before they were placed in administration, on June 1st, the British franchise agreements were transferred to a new company, O’Brien’s Franchising (UK). The sale of the franchise agreements for €1.4 million in December took place under English law.
The franchisees are disputing whether the contract with O’Brien’s old UK company allowed this in the first place.
They are also querying the appointment of a new master franchise holder for the UK, Strathnevis, which took over from another firm, Parkridge.
Their law firm, Kitson Hutchings, has asked Mr Gunn to investigate the original transfer in December. It is understood that the solicitors have also consulted with a barrister.
It was not clear yesterday if the franchisees are considering taking action against the administrator or against the other group companies involved.
It is understood that the transfer of franchise agreements would be the main target of any court action, but this would not rule out any other issues.
Kitson Hutchings wrote to O’Brien’s chief executive, Brody Sweeney, last month, pointing out that O’Briens Sandwich Bars UK did not inform the franchisees of the plans to transfer the agreements back to the Irish parent in December before the deal went ahead. The lawyers also sought documentary proof of the €1.4 million payment.
The letter also asks for a detailed breakdown of how O’Brien’s marketing support fund, to which franchisees contribute, has been spent over the last four years. The 14 or so franchisees involved have been advised to withhold royalty payments.
Mr Sweeney did not respond to efforts to contact him yesterday.
O’Briens Irish Sandwich Bars was placed in examinership in July, and hopes of a rescue were raised when businessmen Graeme Beere and Denis Desmond agreed to buy the business in the Republic.
However, that deal depended on the High Court agreeing to repudiate a number of leases held by the company over the premises used by its franchisees in the Republic. However, the court refused to do this last week.
Had the sale gone ahead, Mr Sweeney would have kept responsibility for the British business.
