Pie Face rejects ex-franchisee’s bullying claims

Michelle Hammond
Thursday, 10 January 2013

Pie Face has hit back at claims that it doesn’t do enough to support franchisees, after another former franchisee of the chain came forward to criticise the business.

Brendan Wong, who used to own a Pie Face franchise in Westfield’s Bondi Junction Shopping Centre, has accused the company of having a bully mentality.

Wong’s claims come one day after it was revealed a group of Pie Face franchisees are preparing to sue the company for millions of dollars in damages.

Pie Face, which sells pies, sausages rolls, sandwiches and drinks, was founded in 2003 by former investment banker Wayne Homschek and his wife Betty Fong.

Wong opened his store in June 2010, but sold the business a year and a half later. He purchased the business for around $500,000 but sold it for approximately $300,000.

“[In September 2010] they served me with papers saying I was in breach of contract. They do these sorts of audits on you. They were very subjective,” Wong told StartupSmart.

“They were often done by Betty at the time. They’d come around and give you a score to see how you’re performing in various areas of the business.

“The breach of contract came in September… They also had a profit guarantee – ‘We guarantee you will make X amount of profit in a certain year’.

“Once you are served with breach of contract, that becomes null and void.

“They called me in for a meeting… [The issues they raised were] all very generic – cleaning and presentation, and things we didn’t think we were doing particularly wrong.

“[I was accused of things like] fogged up glass and not putting enough products out… It felt very bullying. They got all their staff in.”

According to Pie Face chief marketing officer Ben Macpherson, breaching franchisees is a rare occurrence.

“Pie Face rarely breaches franchisees. I think we’ve breached two franchisees ever,” he says.

“Breaching sounds more ominous than what it really is. Breaching is purely a mechanism for drawing a line in the sand… We don’t cancel their contract and throw them out on the street.

“It is a process of [determining] whether the franchisee will be suited… for the business… The cornerstone is to help franchisees, as much as possible, succeed.”

Macpherson also refutes Wong’s suggestion the company engaged in bullying tactics.

“In Brendan’s case… yes, we have pushed and tried to help him succeed because the last thing we want is for a franchisee to fail,” he says.

“If we weren’t interested in helping him, we would just get him out of the store and move on.”

“The meeting that he refers to is a meeting where each of the relevant people that relates to supporting stores was involved. It goes to underscore how much we actually care.”

Following this meeting, Wong says the company decided he should spend time working with another franchisee in the network in order to improve the performance of his store.

“The outcome was to go up to a store that is well run and do training. I ended up complying with that and paid for a trip up to Brisbane to one of their favoured franchisees,” he says.

“I went up and complied and stayed in a hostel and worked in his store for a week. He was baffled as to why I was there… I was going okay at that stage.

“There was a conversation between myself and Wayne within weeks of opening [my store], with him being quite surprised and congratulatory of how well I was going.”

Wong says the store audits continued when he returned to Sydney, but he only “semi passed”.

“Things didn’t really improve…. [But] early into 2011, I was still adamant I could make this work,” he says.

“I was doing coffee promotions and still working hard every day, but eventually during the year I contacted the salesperson who sold me the business to say, I want out now.”

“I consider myself lucky I was able to sell. It took a number of months… There really wasn’t any [contact with Pie Face following the sale]… I think they were pleased I moved on.”

In addition to the loss incurred when he sold his business, Wong estimates he lost at least another $100,000 in operating costs.

Macpherson says Pie Face can “completely appreciate” why Wong remains upset.

“Obviously he’s going to be upset over not achieving what he hoped to achieve,” he says.

“The guy just wasn’t suitable for running a retail business and we feel for him… It’s a shame but, at the end of the day, not everyone is cut out for running a business.”

“In general, there’s a lot of support that gets provided but we can’t do everything for the franchisee. We can’t literally walk into the store and talk to customers.”