Chris Milton : Independent Journalist & Writer

Recycler Magazine

A class action has been launched against the administrators of Smart Cartridge, MLM Insolvency LLP.

Smart Cartridge entered administration in May 2008 after its backers refused to continue to support franchisees who proved unwilling to honour their financial obligations under the terms of their franchise agreements.

Shortly afterwards the administrators sold the Smart Cartridge assets for £20,000 to Lothian Trading Limited. Both companies are run by Graham Little, who has described the change in ownership as a restructuring.

The defunct company’s assets included the franchises and the action alleges that the administrators could have gained a better price on the open market than the price agreed with Lothian Trading Limited.

MLM Insolvency was unable to comment before we went to press. In an associated development one of the stores has unilaterally withdrawn from its franchise agreement, saying that the franchise model is unsustainable.

Recycler Magazine

Unrest among Cartridge World franchisees could end in a courtroom showdown over how the company has been operated since its introduction into the UK.

The dispute dates back to when the brand was first established in Europe and was focussing upon opening new stores with franchisees tied in to five year contracts.

Since then many have found it difficult to turn a reasonable profit from their business. Some have liquidated assets to make up the shortfall but a number now find they are simply unable to pay Cartridge World the fees it is contractually owed.

The situation is complicated by a number of decisions Cartridge World made during this initial growth period.

These concern the allocation and disbursement of advertising fees collected from the franchisees.
As these decisions have come to light they’ve caused concern among the franchisees and some have reached the conclusion the business wasn’t being run with their best interests in mind.

David Darling used to own the second UK franchise before he was taken to the High Court by Cartridge World in 2005. He said: “The model is flawed for several reasons. We took a lot of money but the only people to make a profit were Cartridge World.” Cartridge World dropped the action and paid costs of £35,000.

In the same year, the Independent Franchise Association (IFA) was established as a body through which franchisees could negotiate collectively with Cartridge World. (more…)

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