Mum’s revenge for $1m Nando’s betrayal
A Melbourne mum who spent a decade running a $25,000-a-week Nando's store before losing her business worth "more than $1 million" is getting revenge on the South African chain by starting her own competing brand.
Now Christina Woo, 62, who ran the Chevron building Nando's store in St Kilda from 2005 until 2016, wants to take other disgruntled franchisees under the wing of her Capricho Grill - and treat them the right way.
"Some of my friends are the same story," she said.
"It's not good to the franchisees when we worked so hard. I never failed (inspections) when they come in, always coming (to say) to do this and that, buy this and that, I never said no. All the meetings I went to on time, made sure I did the right thing."
Like scores of other former franchisees, Ms Woo was burnt by the peri-peri chicken empire, which demanded she fork out hundreds of thousands of dollars on costly renovations as a condition of extending her license agreement.
Ms Woo initially paid $400,000 for the store but says she had offers from other buyers for more than $1 million. At its peak the store had annual turnover of $1.3 million.
According to Ms Woo, a Nando's manager told her he "can't see any reason not to issue a new license", but when she demanded a commitment in writing that it would be renewed if she went ahead with the renovations, Nando's baulked.
"I said, 'I can borrow the money, go to the bank and show them the letter that I have another 10 years,'" she said. "I asked them, I said, 'You need to let me know if you want me to go ahead.' They didn't tell me until I kept pushing and they said, 'Okay, you come to see us.'"
She went in for a meeting at Nando's head office, where she was told her franchise agreement was not being renewed. "I said, 'Okay, my business is worth more than $1 million. How much will you pay back to me?'," she said. "They said, 'We will think about it.'"
Nando's didn't have to think too hard - Ms Woo received a response before she even made it back to her store, a 10-minute drive away. "They offered $50,000, only for the equipment," she said.
Ms Woo asked her lawyer to send a letter to Nando's work out a better offer - but disturbingly, she claims the company "said they don't want to deal with my lawyer". "At the end, I dealt with them," she said.
The hard-headed Chinese born Australian refused to sign the deed of release for several months - until Nando's agreed to remove a non-compete clause that would have prevented her running any chicken restaurant for two years.
With no other option, she signed the release and accepted the $50,000. "After that, I didn't have anything," she said.
Not long after she took a trip to the US to visit family, who encouraged her to start her own business. "I said, 'I don't know about the recipes, I know the procedure for running the business but I don't know the recipes,'" she said.
But her relatives, some of whom have South American heritage, took her around Florida for a peri-peri sauce tour. "I said, 'Okay, let me try,'" she said.
She connected with a friend in the hotel business, and together the pair created Capricho Grill, which now has locations in Glen Waverley, Swanston Street, Richmond, Port Melbourne and Fawkner - the first former Nando's franchise to join her brand.
She's not the only one to branch out on her own. In Sydney, former Nando's franchisees Mathi Mahendran, 57, and her husband Mahen, 64, recently reopened their North Parramatta store under the new name Kukula's.
Ms Woo, who runs the Glen Waverley store, says turnover is currently about $13,000 to $15,000 per week, nowhere near her Nando's store. "So I need to spend more time to build up my own business," she said.
She adds philosophically, "This door closes, another window opens."
A Nando's spokeswoman said in a statement that "non-compete or restraint clauses are a feature of franchise agreements for most franchise system and not unique to Nando's".
"Nando's purchased the assets of the Chevron business at the end of the franchise agreement term for asset value (i.e. we were not buying the business) so we did not enforce restraint-of-trade clauses," she said.
"The end-of-term letter Ms Woo received specifically advised her that we were not enforcing the restraint-of-trade clauses. Nando's exercised its normal end-of-term rights to acquire the assets of the business at the end of the franchise agreement."
She added, "This right is clearly explained in the franchise agreement and Ms Woo was aware of this at the time of becoming a franchise partner. There is no evidence to suggest the business was worth more than $1 million and there was also no renovation enforced on Ms Woo."
Nando's refuted the claim it did not deal with Ms Woo's lawyer. "In addition, at no time would we have discouraged Ms Woo from seeking independent legal advice and the Deed of Termination was negotiated and agreed prior to all parties signing," the spokeswoman said.
LEGAL ACTION ON THE CARDS
Deepak Shankar, director of law firm Litigation Specialists, has been in discussions with franchisee rights group Franchise Redress about potential legal action.
Mr Shankar said the problem was if a client signed a deed of release, it "makes it hard for them to have a legal argument". "It's essentially another legal hurdle to have the deed of release set aside," he said.
"You can't use the financial pressure argument. This is the whole issue. If they low-ball you at mediation, your next step is to sue them either at District, Federal or Supreme Court, whatever the amount or cause of action."
Mr Shankar said some of the claims by Nando's franchisees would require "quite technical" and expensive legal arguments. "You're talking about things like unfair or unconscionable conduct," he said.
"There are always two sides. It's a bit like when you get a lease. If the landlord doesn't want to extend it it's up to them. In the strict sense I don't think there's a legal argument just because someone didn't renew, but the issue comes in how the timing worked."
In cases where franchisees have forked out for renovations only to have their agreements not renewed, "in a legal argument it's called an estoppel - I make you a promise, you rely on that promise and do something and incur costs, but then I go back on it".
Mr Shankar said the next step was to speak to more franchisees to determine whether there was a cause of action. "They could be single causes of action, but if this is some sort of systematic thing, in terms of a class action you need some sort of commonality between all of the members," he said.