Is The Gloria Jeans Owner Insolvent?

The Australian Gloria Jeans franchisor has been ordered to pay a US supplier $12.8M and fulfil its contractual obligations to Western Export Services. But where is the money?

Western Export Services successfully claimed that the Australian franchisor had broken a joint venture agreement. Now WES claims the franchisor is in dire straits.  

The judgment also requires that Jireh honour the original joint venture agreement, which provides ongoing commissions on sales of Gloria Jeans coffee and products to franchisees, worth $1.865 million in the year to June 2010. SMH

Jireh is owned by Gloria Jean's Nabi Saleh and Peter Irvine. Coffee supply to the franchisee network is a lucrative franchisor revenue stream.

Lawyer Ross Koffel, who is representing WES, says the Gloria Jean's empire, which includes thousands of franchises across more than 40 countries, involves a complex web of companies that is proving difficult to unravel.  SmartCompany

The Gloria Jeans links to Hillsong Church and Mercy Ministry have been cause for much criticism over a number of years.

In December, Mr Irvine and fellow Mercy Ministry directors admitted engaging in false, misleading and deceptive conduct following an Australian Competition and Consumer Commission investigation into the practices of the Hillsong-connected organisation. They were required to pay $1050 and apologise to each person affected by Mercy Ministries' conduct, all young women with mental health and drug and alcohol problems. SMH.

Various Hillsong associated charities have benefited from donations collected from Gloria Jeans franchisee sales. It is not clear whether franchisees pay royalty on sales before or after ‘donations’.

After 6 years of litigation now WES must await a Jireh appeal. And then it’s likely that the processes of hide and seek will need to be unravelled. Perhaps Jireh will be looking for donations from Hillsong.

Gloria Jeans is a regular award winner at the Franchise Council of Australia.

Western Export Services Inc v Jireh International Pty Limited [2010]

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