Franchisees of controversy-hit sportswear major Rebook India have appealed to the brand’s parent organisation Adidas in Germany for redressal of their grievances, failing which they may move to court.
In a letter to the CEO, Adidas Group, Herbert Hainer dated September 1, of which HT has a copy, the Reebok Franchisee Association has sought his intervention to end the deadlock."We’ve urged the Adidas CEO to intervene, as Reebok India’s new management, which took over five months’ back and promised us lucrative offers, has told all franchisees to shut stores by August 31 or else all the expenses will be recovered from our accounts lying with Reebok," the spokesperson of Delhi Franchisees Association told HT. "If the company fails to come up with an amicable solution, we’ll be compelled to take to legal action."
The problem started when Reebok announced a new business model, based on flat margins on store sales beginning 2013. In a letter, the company said franchisees up to November 30 to liquidate their stock at a ‘Flat 50%’ sale. No minimum guarantee, rent or fixed incentives will be given.
“We’re planning to restructure the business in India and establish a profitable model for both franchisees and Reebok India Company. Of the 900 stores, we estimate that one-third may not transfer over to the new model,” RIC said in a reply mail to HT.
“Reebok said it may purchase the unsold stock at a mutually agreed price — 10% of wholesale price — from us, which will put us in a great loss,” a Delhi-based franchisee owner said.
Apparently, 60% stores in Delhi have refused to move to the new model.
“In metros where rentals are too high, we won’t be able to meet rent and operational expenses with the percentage model,” a Mumbai-based franchisee said.