Australian franchise Pie Face is in voluntary administration, just weeks after the company suddenly closed a number of outlets in the US.
Franchisees received notification on Friday that the company had appointed Jirsch Sutherland to advise the business as it sought to restructure and refinance.
The company was founded in 2003 by former Wall Street banker Wayne Homschek and by 2012, was valued at nearly $60 million amid talk of an IPO. Homschek talked of 500 stores across Australia. At its peak, the company had nearly 80 franchises across Australia as well as more than a dozen company-owned stores, but over the last few years, a number have closed and a disgruntled Brisbane franchisee launched an $800,000 legal action against Pie Face claiming they were misled over profit projections, which Homschek denied.
But last year the Australian Financial Review obtained leaked documents which showed Pie Face was posting losses on nearly all its company-owned stores in the first quarter of 2012, including $20,000 a month on its George Street outlet in central Sydney, and wanted to sell loss-making stores.
At the time a company spokesperson dismissed it as “incomplete, inaccurate and out of date” information.
Today, Homschek told Fairfax Media that parts of the company were still profitable and he was still looking at an IPO in 2015.
He blamed the cost of leases on three factories after consolidating production to a single site in Sydney’s west for the problems, while a spokesperson for the administrators said the company-owned stores needed restructuring and that Pie Face’s US partner had caused problems.
Pie Face said it was “business as usual” during the review and that the international operations were unaffected.
“The move comes as part of a wider company review, which will see the company focus on supporting the growth of its franchise-operated stores as well as the wholesale business,” Pie Face said in a statement.
Last month the company suddenly closed six of its seven New York outlets, three years after they first opened, despite Homschek announcing plans for 150 stores worldwide by 2015.
— Chris F. (@fnytv) October 15, 2014