Darwin’s disappearing drive-through set for Supreme Court

By Nick Hall | 05 Jun 2019 View comments

The curious case of Darwin’s disappearing drive-through looks set to hit the Supreme Court, following a bitter franchise dispute.

In August last year, Inside Franchise Business reported that Darwin Muzz Buzz franchisees Kim and Rod Cole had taken drastic measures after communication with the franchisor broke down.

The pair’s decision to remove the building from the location sent shockwaves through the town, as locals reported the café had disappeared overnight.

Despite months of mediation and speculation, the outlet’s whereabouts remain undisclosed.

According to NT News, court documents indicated that the franchisees have “refused to reveal the whereabouts of the building or to make it available” to head office. However, a legal representative for the couple told Inside Franchise Business that the Coles were not legally obligated to do so.

“Here, the franchisee actually owns the building, which is why they are entitled to remove it,” the representative said.

“Whilst there is a right of the franchisor to exercise the right to purchase the building, in this case, they didn’t do so in the timeframe specified in the agreement.”

The representative went on to say that with no clear outcome decided, the matter is destined for trial.

“There has been mediation which has been unsuccessful, so the franchisees are very confident in their position, and they are wanting to take this forward,” they said.

Muzz Buzz allegations

The Cole’s representative revealed that the pair had raised concerns relating to operation early in the arrangement.

With Muzz Buzz head office being located in Perth and the outlet servicing Darwin, geographical complications arose almost immediately.

“This is an example of a franchisor who granted a franchise far from their head office, and was unable to service that franchisee,” they said.

“There were issues with product supply, all the products had to come from Perth, so in many cases they were damaged or past their use-by dates. The franchisees identified there were issues with these arrangements very early on, and after continued complaints no action was taken by the franchisor.”

Compounding the geographical challenges were marketing concerns, the representative went on to explain.

“Because all the marketing was done in Perth, where the franchisor’s head office is based, and the majority of outlets are, a deal was done where the franchisees did not have to pay marketing levies and weren’t going to be charged,” they said.

“The franchisor still charged them for marketing and began direct-debiting the amount and refusing to refund the payments.”

The Coles are accusing Muzz Buzz of overcharging and failing to provide a refund for the marketing levy and initial setup cost, as well as failing to provide a copy of the lease to the franchisee, failing to act in good faith and failing to provide franchisees with an up-to-date disclosure document within 14 days.

“There were multiple issues throughout. It’s just poor management, that’s the explanation,” the representative said.

Trial

While no set date has been scheduled for the Cole’s disappearing drive-through dilemma, their representative confirmed that proceedings would likely commence soon.

“Proceedings are continuing. This matter will more than likely go to trial,” they said.

Muzz Buzz was contacted for comment but at the time of publication had provided no response.