Shake Shed & Co in receivership after three-year battle with Wendy's

Former Wendy's Supa Sundaes stores collectively rebranded to Shake Shed & Co. Photo / File

Shake Shed & Co, which was found to have wrongfully formed in breach of Wendy's Supa Sundaes franchise agreements, has been placed into receivership ending a three-year battle with the ice cream chain's owner.

Cone Enterprises, the master franchise owner of 27 mall-based ice cream kiosks, was placed into receivership in February, two months after the court ordered Shake Shed to pay interest on a $5.5 million settlement with Singaporean-based Global Food Retail Group (GFRG), owner of Wendy's.

GFRG launched legal action against Cone Enterprises and its director and former Wendy's Supa Sundaes New Zealand master franchise holder, Chang Xi, in 2018. This came after Xi initiated that the group collectively rebrand Wendy's Supa Sundaes stores to Shake Shed & Co without the permission from the owner.

The relationship breakdown between Xi, the franchisees and the parent company came after GFRG ordered Xi to change suppliers for the 34 Wendy's Supa Sundaes nationwide from a local ice cream company to an Australian one in 2017.

Xi and the local franchisees refused to change suppliers, citing the proposed ice cream supplier as inferior and more expensive.

In 2018, the High Court found that Xi and the franchisees had breached their franchise agreements with GFRG and Shake Shed was ordered to pay $5.5m in damages.

GFRG sought further action to enforce the payment at the end of last year.

Associate Judge Dale Lester ordered that 18 per cent interest be added to the sum from the date of the judgement until payment, tipping all 27 Shake Sheds into receivership.

According to the receivers' first report, Cone Enterprises owed about $7.7 million, including $5.5m to GFRG and $558,000 to Heartland Bank.

Receivers Andrew Grace and Colin Gower of BDO successfully sought a court order protecting the franchisees from liability for rent payments for 22 operators.

The receivers told a judge earlier this month that they were in negotiations with an overseas party interesting in purchasing the Shake Shed group.