Coffee-shop hopefuls hit as Lavazza roll-out goes cold

Court orders winding-up of firm appointed to steer the venture

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The Independent Online

People who signed up to open Lavazza coffee shops across the UK stand to lose hundreds of thousands of pounds after the company handling the project was  shut down.

Lavazza, Italy’s biggest coffee company and one of the sponsors of the Wimbledon tennis championship, announced plans in January to open up to 400 Lavazza Espression coffee shops across the UK in the next decade, appointing Manchester-based Catalyst Retail to handle the roll-out.

At least 16 franchisees had signed up for the scheme, each paying a refundable fee of around £24,000 to Catalyst Retail.

But franchisees reported a lack of support and communication from the company, with several asking for their deposits back.

Lavazza terminated its master franchise agreement with Catalyst Retail in May, and on Monday the company was ordered to shut by the courts following a winding-up petition brought by six people who are owed money.

Despite this, many of the franchisees appear to have little chance of recovering their cash.

Manjider Singh, who signed up to open a branch in Leeds, said: “All the information that we are getting, we don’t have any hope [of getting money back], the only hope we have is Lavazza itself.”

The master franchise agreement is understood to have been Catalyst Retail’s only major asset.

Emails seen by the Independent on Sunday also indicate that Lavazza will not refund any of the money lost to Catalyst Retail.

Mr Singh said: “[Lavazza] are denying that they are responsible in any way. They are saying it is between us and Catalyst, but in the beginning we only invested because of the name.”

Mr Singh estimates he has spent at least £5,000 on legal fees trying to recover his £24,000.

Martyn Lee, who signed up for the York franchise, argued: “[Lavazza] are trying to distance themselves from the actions they have taken, however we all know that all the materials that sucked us in to paying these deposits were heavily Lavazza branded, and indeed endorsed by Lavazza senior management.”

It is understood that Lavazza plans to roll over franchisee agreements to its yet-to-be named new partner for those still interested in opening a Lavazza Espression store. But for those who do not, there is as yet  no settlement.

Mr Singh said: “The option  we wanted is that we should be able to get our money back.”

Mr Lee said: “Lavazza must face up to the consequences of their failures, and not delegate these consequences to the hardworking individuals who were prepared to plough life savings into the brand.”

In a statement, Lavazza UK said it is “in the process of appointing a new Master Franchisee which the company is hoping to be in a position to announce next month in line with the progression of the legal process”. 

When contacted this week Catalyst Retail was answering the phones as Lavazza Espressions UK, but no one was available for comment.