More franchising woe as Aussie Farmers Direct goes into administration

Aussie Farmers Direct will close immediately after the food and grocery delivery service was forced into voluntary administration by the dominance of the big supermarkets.

Restructuring firm KordaMentha says about 100 franchisees and 260 employees will be hit by the closure of a company that began 13 years ago by delivering fresh milk, cheese, bread and juice in Victoria.

Administrator Craig Shepard says there is little cash in the company, which had failed in attempts to recapitalise after struggling to compete with the supermarket giants in a tough retail environment exacerbated by low wage growth.

“Unfortunately, it is not possible to continue trading and the business will stop operating immediately,” Shepard said.

He said the businesses’ logistics services will continue to trade and is not affected by the administration.

The company, which appointed KordaMentha as administrator on Monday, had expanded to NSW, Queensland, Western Australia, South Australia and the ACT within five years and was named the fastest growing franchise in Australia.

But Mr Shepard said despite its fast growth, the company struggled to compete with the major supermarkets and the low-cost imported products they sold.

He said most of the company’s debt is held by entities associated with local and overseas investors and there is no significant bank debt.

A creditors’ meeting will be called next week.

This story first appeared on Internet Retailing, ISB’s sister publication

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