NexCen President Calms Franchisees' Fears
NexCen Brands stock plunged 77 percent on Monday after warning that it faced a severe cash “squeeze” and that there was "substantial doubt" that it will remain in business. The firm discovered, during a review of its books, reporting errors and its obligation to pay off $21 million in debt by October. NexCen’s portfolio includes Athlete's Foot (a Bill Blass company), Pretzel Time, Pretzelmaker, Great American Cookies, Shoebox New York, Waverly home furnishings, Marble Slab Creamery and Maggie Moos.
Dull said NexCen out of New York is a multi-divisional company which not only operates Bill Blass clothing and Waverly home furnishings, but also runs its marketing and advertising division and deals with the public markets. But he said he has no visibility to that. "While NexCen is looking at its options in generating capital to cover the balloon payment that is due in October, they are also looking at options on the financing piece to restructure that balloon, so that they will have more time to pay down that note.” He adds, "Our guys in New York are working 21 hours a day to figure out how we get that done." Dull said he is briefed on material changes in the company, but, again states his job is to manage the franchise business.
Because the press has been very harsh and quick to predict the worst, Dull said he immediately started getting phone calls from concerned franchisees. Most questions were from operators wanting to know what NexCen’s financial problems means for them today. He responded saying that it doesn't mean anything, that it is business as usual. "We are still in the business of supporting franchise brands and franchisees, and that's what we are doing. We have our list of initiatives and we are tackling them one-by-one."
But Dull admits the questions about the future are the difficult ones to answer. "We don't have our go-forward strategy in place completely, so its difficult to say to a franchisee what it means. We can't predict the future today."
As to questions about the bankruptcy, he said they answered them as honestly as they could. He told franchisees they don't foresee the company being there, but told them, "If NexCen ends up in bankruptcy, the franchise agreements will still be in place and we'll take it one day at a time."
In response to how the NexCen franchise brands were doing, Dull said, "The cookie guys seem to be very happy. Most are multi-unit operators and being associated with them is a lot of fun." He said they are a very sophisticated, well-organized group of franchisees and do a tremendously good job of operating their units. He said they had made great strides with The Athletes Foot, that they have completely rebranded the company. "We've improved vendor relationships. We work every day to find ways to create better discounts and opportunities with the different manufacturers of shoes we sell. We are growing that brand very quickly in domestic and international markets.
Dull had been with Marble Slab Creamery for 11 years prior to joining NexCen. He feels they have seen tremendous improvements in their marketing campaigns that have resulted in increased sales for many of their franchisees. He said they make sure their franchisees receive the support they need.
"As a whole," he said, "Our franchisees have been very pleased with being a part of NexCen as opposed to where they were previously."
Today Dull sent a letter to all of NexCen's franchisees:
Over the last few days, there have been numerous communications regarding NexCen Brands. In an effort to have clear communication with our franchisees, our legal department has created the attached statement regarding the announcement made by NexCen Brands on Monday. I greatly appreciate the communication that I have had with many of you and I welcome any and all questions that you may have.I would like to reassure you that although we have had negative headlines, the actual situation should have minimal impact on NexCen Franchise Management. We at NexCen Franchise Management remain focused on the franchise business. Our commitment to grow and support our franchise brands goes unchanged.
We will continue to keep you informed of the developments and we greatly appreciate your commitment and hard work in building our franchise brands.
--
Related reading:
