In their first report, the liquidators’ said “the director has advised that the reason for insolvency is due to a flawed business model and industry restructuring by the head franchisor”.
The report said staff were owed $37,366 in wages and holiday pay.
Inland Revenue is owed $12,290 while unsecured creditors are owed $444,070.
The company has a book value of fixed assets of $297,373, according to the liquidator’s report.
The Herald previously reported that the clinic’s four staff had been told their workplace was closing, but understood the franchise agreement would terminate on August 31.
Frykberg claimed staff were “updated regularly” regarding the closure and were advised as early as April.
However, beauty therapist Behnoosh Bahmanpour said all updates were verbal and through Frykberg, and staff did not get any written letter or email about redundancy from LCNZ Operations.
A dispute ensued around responsibility to pay the outstanding wages of staff.
A Laser Clinics spokesperson told the Herald all Laser Clinics in New Zealand operate under a 50-50 ownership model.
“Under this model, the franchisee is the employer of clinic staff and solely responsible for employees’ entitlements and obligations.”
But Frykberg claims that the Ponsonby clinic “was a victim of the franchise business model”.
In an August 8 email, Frykberg told Laser Clinics he’d need financial assistance to meet final payroll payments, saying “revenue is pretty much non-existent”.
Frykberg further outlined the company’s dire financial situation in an August 27 email to Laser Clinics’ lawyers, the law firm Wynn Williams.
In response, lawyers told Frykberg: “You are obliged to pay the franchisee’s staff whether or not the franchisee is solvent (which it is not)”.
Laser Clinics said it made the decision to terminate the franchise agreement for the Ponsonby branch because of “repeated and material unremedied breaches” by the franchisee.
“Our actions were necessary to protect the wider Laser Clinics network and the integrity of our brand.”
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