Franchise row leaves business owners fuming

By Joanne Carroll

Brett Humble had to close Lemongrass House, his spa product shop on Ponsonby Rd. Photo / Janna Dixon
Brett Humble had to close Lemongrass House, his spa product shop on Ponsonby Rd. Photo / Janna Dixon

A franchise broker who convinced business owners they were sitting on gold mines - if they went national - has left a string of unhappy clients who say they spent thousands of dollars with little to show for it.

But Campbell Shorland Spencer, despite being convicted for breaching a ban on being a director earlier this year, says he is the victim and has won a string of cases to make people pay up.

In 2009, Spencer was banned for three years from being a director under section 385 of the Companies Act 1993.

But he was fined $5000 for breaching that order recently after working as a director for his company Base Franchise.

The 40-year-old, who until a month ago was living in a large house in Coatesville, describes himself on the internet as Lord and Sir, despite not holding those titles.

His website says he built a multimillion-dollar organisation, largely overseas.

However, the Herald on Sunday has uncovered at least six business owners who say they signed up to deals with Base Franchise and lost their money after the company failed to deliver on promises.

Lemongrass House, a spa product shop on Ponsonby Rd, has closed since its owner handed over $140,000 to sell the business as a franchise.

Owner Brett Humble said he believed issues first arose with the franchise documents, which seemed to originate from another country.

"He said he would sell and market the franchises. When I ran out of money and couldn't pay, Base Franchise sued me. So I lost not only the money I gave them but my family's investment of $40,000 and my business," he said.

"We had to close because we couldn't sustain the loss."

Humble thought the $5000 fine for operating as a disqualified director was not enough.

Kea Kids Club owner Craig Hansen was also unhappy with Spencer and Base Franchise.

"We paid him what seemed like a horrendous amount of money," he said.

"He gave us documents that were used for another franchise. Part of it even had other companies' names on. It looked like a bad cut-and-paste job."

Hansen refused to pay any more money so Base Franchise took him to court and he was forced to pay tens of thousands of dollars.

Cleancorp owner Yolande Ellis was another who dealt with Base Franchise. "I signed up to pay $60,000 but, when I got to $30,000, I wasn't happy with what I'd seen and I thought 'I'm not paying any more'. I took them to court but I lost the case and wasted more money on legal fees," she said.

She blamed herself for not checking Base Franchise's background.

Another business owner, who declined to be named, said he lost more than $3 million.

"I worked seven days a week for 11 years to build up my own chain of restaurants. Campbell came along and he said I could franchise and make a lot of money. I was sucked right in."

Franchise New Zealand founder Simon Lord said franchise consultants did not need to be registered or qualified.

"It appears that work was done for all those people but documents used were not sufficiently personalised," he said.

Consultants charged between $50,000 and $100,000 to set up franchise businesses.

Franchise Association of New Zealand executive director Graham Billings had received five or six complaints about Base. "This appears to be its modus operandi. It doesn't deliver what's promised but then it sues people for fees agreed and people can't afford to counter claim. The association can do nothing ... it is not a member."

Base Franchise is now taking civil action against U Sell North Shore Ltd for unpaid fees and commissions of $171,200. U Sell did not want to comment while it was before the court.

A former employee of Base Franchise, Stephanie Baas, also had issues. She said she went bankrupt after they sued her for taking clients when she left. "He is very good at making people believe they can make a lot of money through franchising."

When approached for comment, Spencer said he was the victim.

"I have been so ripped off. I have lost everything.

"There's nothing left. I know who you have spoken to and if you write a story based on what they have said I can tell you now you will get it wrong."

- Herald on Sunday

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