Little caesars to retreat from UK

01 January 2000
Little caesars to retreat from UK

Little Caesars, the US takeaway pizza chain, faces a bitter legal battle with its franchisees following its decision to pull out of the UK.

The plans to withdraw became apparent two weeks ago when four outlets in Wimbledon, Surbiton, Harrow and Southampton, which the company owned and operated, were closed down.

At the same time, it terminated the franchise agreements with the owners of its other three outlets in Twickenham, South Norwood and Fareham in Hampshire. The 10-year contracts still had about five years to run.

The three former franchisees are said to be formulating claims, both here and in the USA, for damages on the grounds of misrepresentation and "repudiation of franchise" by the company.

For its part, the company is believed to be preparing to counterclaim for breach of franchise on the grounds that no royalties have been paid by the three outlets for more than two years.

The conflict is the final stage in a series of difficulties since Little Caesar UK was formed in 1985.

Although it is the largest takeaway pizza chain in the world, with 4,700 outlets, at its peak in 1989 the UK operation only had about 18 branches.

Its most recently reported accounts, for the year to December 1992, show the company had net liabilities of about £3.1m, though most of this is likely to have been provided by the US parent company, Little Caesar Enterprises.

Little Caesar UK is now being wound down, and its head office in Wimbledon is expected to be vacated in the next few months. About 40-50 staff will be affected, including those at the now closed company-owned outlets.

According to one former franchisee, Little Caesars' failure to get off the ground in the UK was due to a failure to adapt to the British market.

Robert Christmas, who pulled out of a franchise for an outlet near Southampton in 1990, said the company had failed to provide franchisee support in the form of marketing or practical advice, relying entirely on the strength of its name in the USA as evidence of its potential to succeed here.

He added that the company's reluctance to provide a delivery service (as opposed to takeaway) was partly responsible for its failure to take off.

His views were supported by Tony Kiener, who headed up Little Caesar UK from 1989 to 1990 before leaving to set up rival brand Rocco's (now owned by Gowrings). He said communication between the USA and the UK was poor, and that the product itself was not at fault.

However, another former franchisee said one of the main problems had been the company's inability to buy stores or attract franchisees in the right locations.

Patti Pridnia-Smith, director of Little Caesar UK, was unavailable for comment, and the company's spokesman in Detroit said only that it was re-evaluating its presence in the UK in preparation for a planned expansion worldwide.

Given the company's expansion into countries such as Mexico, Canada and Czechoslovakia, it will probably be a while before Little Caesars turns its attention back to the UK. When it does, it may sign up a master franchisee, a route it is said to have briefly discussed in 1990 with Courage.

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