At Franchise New Zealand, we don't usually cover ongoing franchise disputes because we believe that disputes are best resolved through quiet negotiation out of the media spotlight. Our preference is to look back at situations once determined and see what lessons they offer for other franchisees and franchisors.

One of the problems of public disputes is the damage that they often cause to the innocent - the other, non-involved franchisees who trade under the same brand name and whose businesses can suffer. Such is currently the case with Hell Pizza.

A multiple franchisee with Hell Pizza, Matt Blomfield, took the unusual step a few months ago of closing all five of his franchised outlets after differences with TPF Group, who became the master franchisees for Hell New Zealand in 2006. In addition to being a multiple franchisee, Matt Blomfield's company had also been the advertising agency behind many of Hell's edgy marketing campaigns before losing the account last year.

Mr Blomfield's dispute has been much-reported in the press, most recently in the New Zealand Herald . The disgruntled operator reportedly tried to auction one store on TradeMe for a $1 reserve. However, little has been heard from other Hell franchisees. In the interests of balance, we therefore reproduce in full a statement received today from Mark Hughes, a Wellington-based Hell Pizza franchisee who has spoken out on behalf of Hell's Franchise Advisory Council, a body of four franchisees elected by their peers to represent the views of franchisees. The body was introduced by TPF.

Statement from Mark Hughes

‘As a senior franchisee working with the other franchisees I have been authorised to comment on behalf of the Hell Pizza franchise representatives from each region throughout New Zealand in response to recent criticism of the current franchise structure and operation. My comments are as follows:

In a system where everyone is dealt the same hand, in terms of exactly the same franchise structure, and operates in the same business environment, it is ludicrous simply to point to the franchisor (TPF Group) and say they are the problem, they are to blame.

Being self-employed is a difficult business environment and you have to live with it. You are the creator of your own outcomes because the franchise structure provides the same for everyone.

There is a store in Wellington [not that of Mr Hughes - Ed.] where sales are currently 11.2% ahead year-to-year and an Auckland store that has seen a 19% increase in sales on the same week last year. The experience of successful franchisees is that what you put into the business is what you get out. Some franchises are growing, while some are steady, and a few are struggling.

However, everyone is faced with the same situation, both the good and bad. No one gets treated better than any one else. When the franchisor makes a mistake, it affects us all equally, no one is dealt ‘five aces'. Individual results are determined by how you react to the situation. Good franchisees recognise this, rather than sitting back and laying blame.

One Hell Pizza store in Wellington is now the biggest pizza seller in New Zealand, so this debunks the claims that the franchise is struggling. The readers of a community paper have named this store Top Shop for the third year running.

One problem that exists is that when times get tough some individual franchisees stop doing their own marketing, but for the ones that continue their marketing efforts, their figures continue to do well.
The solution lies in how individual franchisees respond to the environment in which we are all operating, rather than pointing the finger at the franchisor.

One thing is for certain, the current franchisor, TPF is much more user-friendly than its predecessor. That is my view as someone who started out sceptical about TPF. I know others who are also more happy with the new franchisor. The franchisor doesn't get everything right, but they accept when they don't, and change.

The franchisor has made mistakes. This is mainly because they tried to do too many things, too quickly, like changes in the distribution system. However, they are now taking more time to ensure it is going to be right, like the point of sales system which will not be rolled out until it is absolutely tested and ready.

In the past year there have been a lot of pressures on franchisees, just as there have been on all food businesses. On food costs, I investigated and found I couldn't get the prices from a local wholesaler that we are getting from Auckland, and now they have the logistics right it's great.

The criticism we are hearing from Matt Blomfield, and perhaps a small group of supporters, is ‘show pony' stuff - it's all about ‘me'. But perhaps they weren't cut out to be in a franchise business in the first place, because it's a system where everyone gets the same 'cards' and you have to get on and make it happen.

Tell me why it is TPF's problem when we are all working off the same base? A franchise is not a licence to print money, you have to work hard.

What we are seeing from Matt Blomfield on TradeMe is showmanship stuff, because there have been offers from within the Hell Pizza franchise for his stores. He has had a number of commercially realistic offers for his stores, yet he is claiming to be willing to sell one for $1.00.

He portrays himself as an astute businessman, but this is the action of a person prepared to bite off his nose to spite his face.

For the critics TPF is an easy target, it is a corporate and the easy story is the small franchisee battles the big guy. By far the majority of us are not like that. We had a great conference last week, and there is great support for the way TPF is operating. They are not perfect, not everything goes right, but they recognise this, and then do something about it.

The franchisor is neither the problem nor the solution. Ultimately, just sitting back and criticising the way one individual is doing is a selfish and self-centred strategy. There is nothing objective or balanced about what Matt Blomfield is reported to have said. Franchisees that I speak to are in disbelief at his comments. In fact, they are disgusted. They cannot understand why some media would lap it up.

Just a year ago Matt was boasting that he has going to kick-butt in terms of his performance compared to that of one of the most successful franchisees.

Matt Blomfield had his chances with the advertising and local store marketing after the change of franchisor, but it was the franchisees, not TPF, who wanted the advertising local store marketing changed because what was being done was neither delivering results nor cost effective. On top of this franchisees were having to deal with customers who were offended by the material the agency produced.

Matt Blomfield's stores were doing well until he lost the advertising and promotional contract, and at that stage he ‘packed his toys'. He closed shops that were making money, and made it very personal.'

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