O'Brien's franchisees urged not to pay rent

O’BRIEN’S SANDWICH Bars Ltd chief executive Brody Sweeney advised franchisees not to pay rent earlier this year in a bid to get landlords to cut their charges.

The company rents most of the properties from which its franchisees operate, and sublets to them on the same terms as those given by its landlords.

This week, the High Court reaffirmed Paul McCann of Grant Thornton as examiner of the company, which owns the O’Brien’s Sandwich Bar franchise. It has a shortfall of €4.1 million, but is hoping to attract new investors.

Earlier this year, as demand dropped in many of its outlets, franchisees sought a reduction in franchise royalty and rents.

The company in turn sought reductions from its landlords. The Irish Times understands that in cases where landlords either refused to cut their charges or to negotiate, Mr Sweeney and the company encouraged franchisees not to pay it rent, which would mean that it could not pay its landlords, in a bid to put pressure on them to reduce rents.

In one e-mail, Mr Sweeney told Kathleen Ryan, the franchisee of an O’Brien’s sandwich bar in Ennis, Co Clare, to withhold rent.

In the e-mail sent last April, Mr Sweeney wrote: “Depending on your view, I would propose withholding rent for the next quarter, to try and make him [the landlord] see sense.”

Ms Ryan, who also has a franchise in Limerick, had been seeking a reduction in both rent and the royalties charged by O’Brien’s Sandwich Bars Ltd for the use of the franchise.

Ms Ryan is one of a number of franchisees who have since become involved in a dispute with the company.

Mr Sweeney and O’Brien’s subsequently advised franchisees to resume paying rent.

When it was placed in examinership on July 9th, nine outlets had run up arrears of €276,000. It was also responsible for €480,000 in rents on 10 stores that had closed. Its other liabilities included a €3.4 million debt to Bank of Ireland.

The company’s business was valued at €15 million in 2000 and was profitable until last year. It has been losing money this year.

Mr Sweeney established O’Brien’s in 1989, and the company took off as the economy began to grow rapidly in the middle of the last decade. It has 220 outlets and a presence in 13 countries.

Its British business was placed in administration earlier this year.

- In a report on Friday, it was stated that health inspectors found cockroaches in an O’Brien’s outlet in the Stephen’s Green centre, in Dublin. We wish to point out that there are two O’Brien’s sandwich bars in the centre, one on the ground floor and the other on the first floor. It was the outlet on the first floor in which the inspectors discovered cockroaches.