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Log In / Register | Apr 19, 2014

Aussie Samsara Joins Administration Club

Australia GOLD COAST:  Not to be outdone in a string of Australian franchisors being forced into administration, the owners of Samara Furniture and Homewares capitulated to unserviceable debt on May 21.

Samsara before the fall‘Mr Morton said the appointment of administrators had upset the franchises which were not suffering from the same financial burden.'

The Samsara concept is not altogether new to Australian consumers where we have seen a myriad of similar businesses pop up in almost every city and town.  While the Samsara model includes Asian cafes, it typically relies on the importation of exotic Asian furniture and gifts from the ‘cheap and nasty' to unique beauty produced by masterful craftsmen sitting on dirt floors in third world countries.

‘They (the franchises) may join forces and try and do something going forward.

The flip side to that is that there is some concern about insolvent trading issues with the director and they need to be investigated and it needs to be weighed up (whether a DOCA is appropriate).'

Samsara joins a growing list of recent Australian franchisor collapses; Kleenmaid, Midas Car Care, Strathfield, Dare Gallery,  Kliens and EzyDVD.  As investigators at Samsara are reviewing the possibility of insolvent trading, Kleenmaid directors are being investigated following their apparent need to remove company documents ‘through the back door'.   

It has been reported that there will be no investigation of complaints at Midas as the administrator is said to have come to an arrangement whereby company debts associated with the sacked former franchisor will be forfeited.  Insiders have suggested this is a reference to what they deem a 'suspicious' loan to the company.  To date, Ferrier Hodgson [Midas administrators] have not reported on the outcome of the June 1 creditor's meeting where creditors were being prompted to accept approximately $30 for every $1,000 of debt.

While reporting across Australia of franchisor failures has mostly focused on debt to banks, suppliers and customers we have seen little mention of the plight of franchisees who often face consequential and massive loss.  There have been growing calls for greater disclosure, transparency and registration for franchise systems in Australia; however, the Australian government has not been taking calls.

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