The holders of the master franchise for Pizza Hut's delivery services on the Island of Ireland have brought High Court proceedings aimed at preventing Pizza Hut's US-based parent from terminating that agreement.
Q Co Franchising Ireland Ltd, which is owned and run by brothers John and Patrick Cronin, has brought High Court action against Pizza Hut International LLC, with an address in Texas in the US seeking an injunction compelling the parent company to reinstate the franchise agreements that Pizza Hut purportedly terminated earlier this month.
Q Co which has more than 35 Pizza hut delivery franchises all over Ireland, has brought the action because it claims the parent is not entitled to take away the master agreement.
They are also seeking injunctions preventing Pizza Hut from contacting and representing to franchisees of Q Co that the master Franchise agreements have been terminated, or from granting a Pizza hut delivery and carry out master franchise agreement for the Island of Ireland to any other person of company.
Pizza Hut International LLC, represented by Rossa Fanning Bl, argued that Q Co owe his clients €1m and urged the court not to grant the injunctions.
Pizza Hut claims Q Co has breached their agreement on grounds including it has failed to make royalty payments to the parent company, failed to make payments due to Revenue and failed to ensure that all franchisees are complying strictly with the terms and conditions of their franchise agreements.
It is also claimed Q Co maintained false records and submitted false reports to the parent company.
Hugh O'Neill SC for Q Co, which has said there was "no validity" to any of the claims that his client had breached the franchise agreement. Counsel said if the injunction was not granted his clients business would cease and 11 people would lose their jobs.
He told the court the Cronin brothers successfully operated a number of Pizza shops trading under the Godfathers brand.
In 2008 Pizza Hut approached them with a view to buying their business. A joint venture was entered into where the Cronins entered master franchise agreements with Pizza Hut, and that all royalties would be shared 50-50.
Counsel said that Godfathers was rebranded PHQ, which proved to be disastrous after people failed to make a link between it and Pizza Hut.
The brothers sustained financial losses due to this, and it was their claim that Pizza Hut agreed they were entitled to be compensated.
Counsel it was agreed that Pizza Hut would not seek Royalty payments from his clients for a period of 12 months from December 2010 and November of this year, and waived the arrears.
Q Co he added also sought to bring in an investor, and had received a substantial offer from a party willing to put money into the business.
Counsel added that while there had been a winding up petition brought by Revenue against his clients all of Q Co’s tax affairs were now up to date.
In its proceedings Q Co is further seeking a number of orders and declarations from the court including declarations that Pizza Hut's decision to terminate the master franchise agreement entered into by the parties on September 28th last are null and void.
Q Co is also seeking declarations that it had a legitimate expectation that Pizza Hut had waived all arrears of royalties payments prior to 1 December 2010, and had suspended and waived all royalty payments between December 2010 and November 2011 plus damages.
The action, before Mr Justice Michael Hanna, continues next week.