Nando's franchisees across the country are in open rebellion against head office moves to get them to renovate – or lose their stores for nothing.
Many say they have been quoted hundreds of thousands of dollars to renovate their stores, with head office making franchise renewals conditional on renovations.
![Workers rip out shop fittings at Greensborough Plaza Nando's](/web/20170201184132im_/http://www.smh.com.au/content/dam/images/g/u/1/d/j/x/image.related.articleLeadwide.620x349.gtuh39.png/1485755045792.jpg)
Jayantha "Jay" Warnakula spent almost $400,000 to buy the Nando's restaurant at Greensborough Plaza shopping centre in January 2014.
He spent the days after Christmas ripping out the expensive shop fittings after Nando's refused to renew his three-year franchise licence – because, he claims, he refused to pay nearly a million dollars to renovate the restaurant.
![At least five Melbourne Nando's have shut since 2014, with two more likely to close within the next two years](/web/20170201184132im_/http://www.smh.com.au/content/dam/images/g/u/1/d/k/9/image.related.articleLeadwide.620x349.gtuh39.png/1485755045792.jpg)
The chicken chain is fighting with franchisees across the country over whether it has the power to compel them to renovate their stores. The matter is being fought in the Supreme Court.
At least five Melbourne Nando's have shut since 2014, with two more likely to close within the next two years.
Current and former franchisees have told Fairfax Media that head office is trying to compel them to pay for renovations; if they don't want to pay, the company declines to renew their franchise agreement, forcing them to close.
Mr Warnakula took out a loan to buy the fast-food shop and franchise licence with the expectation he would be able to extend it.
Nando's offered him a five-year franchise extension for around $20,000 – conditional on him paying to renovate the store, emails seen by Fairfax indicate.
The renovation would have cost between $800,000 to $1.2 million.
"I asked the question – how do I recover that money? How many years would it take?" he said.
"I trusted them. They said always we're run as a family and they'll look after me. But they never did."
A Nando's spokeswoman said the company "has not rejected any franchisee candidates, nor have we required any renovation of the Greensborough restaurant since the Franchisee took possession of the business."
"Prior to his approval as a Nando's franchisee, we indicated to Mr Warnakula both verbally and in writing a potential relocation or refurbishment of the Greensborough premises would be required at the end of his franchise and lease agreement."
But Fairfax has seen an email to Mr Warnakula from Nando's offering a five-year extension.
"This pro-rata extension is conditional on the following terms: completion of restaurant refurbishment," the email says.
"If you wish to sell the business, the incoming franchisee must clearly understand that they are purchasing balance of tenure until 14/12/16 and must have the operational and financial capability to relocate/extend the restaurant," a second email says.
Mr Warnakula says he had two willing buyers lined up to buy the store, but both potential deals fell over because Nando's was only willing to grant the buyers extended franchise agreements if they agreed to pay for the renovation.
"I said to them this is wrong. I'm losing my entire investment, and you stopped the opportunity for me to sell it to a buyer, and now you're not giving me anything."
Mr Warnakula is one of dozens of current and former Nando's owners who are closely watching a Supreme Court battle between head office and its largest franchisees.
The battle centres on whether Nando's can enforce a clause in franchise agreements requiring franchisees to pay to upgrade stories when head office "reasonably needs" them to do so.
Nando's says its stores need a consistent look and feel across the network.
Until the battle is resolved – likely in April – franchisees around Australia are refusing head office's demands to renovate.
Husband and wife pair Flavianus Djung and Anni Karatawidjaia claimed in a Supreme Court affidavit in January 2016 that Nando's head office asked them to pay more than $1.1 million to refurbish three restaurants.
When they refused, Nando's used private security guards to seize their stores, they allege.
Mr Djung and Ms Karatawidjaia claim Nando's failed to negotiate the renovations in good faith and acted in an unconscionable manner.
Fairfax has spoken to eight other franchisees who say they were asked to renovate their stores if they wanted their franchise agreements extended.
They were quoted renovation costs between $150,000 and $1 million.
"How long to make it back? Forever. We would not be able to recover that," said one franchisee with less than a year left on his agreement.