A MrBiggs outlet
UAC Plc: franchise business on trial
By Ayodeji Seriki
Like a pack of cards, the success story of the UAC brand, which, for over nine decades has bestridden Nigeria’s market landscapes like a colossus, is currently falling as a result of breach of contract between its leading subsidiaries -the UAC Restaurants, owner of Mr. Bigg’s and its array of franchisees which has now become a subject of litigation. AYODEJI SERIKI examines the scenario.
For over 90 years, through the colonial era and after Nigeria’s independence, UAC Nigeria was a household name as a conglomerate with investments in various sectors of the economy.
Perhaps the most visible brands in the market in the last two decades are Mr. Bigg’s and Gala Sausage. The two brands were the toast of all until recently, when their fortunes started nosediving. Mr. Bigg’s brand, for instance, once boasted of over 170 locations in about 40 cities in the country (which includes a savvy partnership with Mobil to site an outlet at every fueling station), but those buildings today are practically typically empty and quiet. This was a brand that was, at some point, one of the top ten restaurants in the world by customer count. This was a brand that was known for its specialty or signature —meat pie.
The beginning of the end started when the well-known fast-food brand was having challenges competing in the quick-service restaurant business while upholding its motto. Today, Mr. Bigg’s has lost the ‘bigness’ and its fame is steadily sliding into mockery and neglect.
For UAC’s Gala sausage, it’s a success all the way. It has become an on-the-go snack that most Nigerians have come to trust and rely on, especially when hungry and trapped in heavy traffic—a common experience in Lagos and other big cities.
Over the years, there have been several new entrants into the sausage roll market, hence challenging the dominance of UAC’s Gala. Regardless, Gala still enjoys a lot of patronage and goodwill.
A study done by the Journal of Marketing and Consumer Research in 2015 shows that about 41% of street hawkers earn a monthly income of over N200,000 ($547), while the lowest-earning hawkers earn about N20,000 ($55). This is particularly why the story of one Chinedu became fascinating when it was reported that he made N1 million. How did he, in four years, rise from the N20,000 income of the average starter to N1 million?
How Mr. Bigg’s fortune nosedived…
In the early 2000s, when it dawned on UAC Restaurants that it needed all hands-on deck to maintain the leadership position in the Quick Service Restaurant subsector of the food and drink industry, the management adopted a franchise system. Within a few years, with over 20 franchises operating under different corporate names, the strategy became a reference point for others due to its instant success. Thus, UAC Restaurants demonstrated and succeeded like Mobil, Total Energies, and other pacesetting companies in such business arrangements.
Some of the companies that entered the franchise alliance with Mr. Bigg’s include Migfo Nig. Ltd. (Ogwuachukwu), Stone Brands, Gourmet Nig. Ltd., Henz Mgt. (Challenge Store), Kotane Integrated Service Ltd., Lindel Inter. Jubowu & Onipanu stores, Lixonia Festac (but deceased), Straum Integrated, Entourage Nig Ltd., and Pals & Guys (Elelewon PHC). Others are Caxton Joe Nigeria Ltd, Jayze Grill Nig Ltd, Apo, Cohill Nigeria Ltd, Agbor, Lord’s Menu, Morocco, Adesil Nigeria Ltd, Ikoyi, Emmafort Global Service but deceased, Integrity Food, PH, Global Services Ltd, Garki, El-Shaddai Resources Ltd, First Golden Venture, Asokorol Ofelpaco Nig Ltd, Jabi, Dutse, Maraba stores and Atib Nig Ltd.
In a jiffy, Mr. Bigg’s sprang up in all the nooks and crannies of the country. From south-south to south-west, north-central to south-east, down to the core north and the federal capital territory With that feat, analysts were quick to liken Mr. Bigg’s’ market spread to the MTN slogan, ‘anywhere you go.’ Today, it has become history.
Recounting his experience, one of the franchisees, who took the risk in 2008 to invest in the business, said he channeled all his efforts and resources into the venture, and fortune smiled at him until the management of the company truncated the whole contract.
The franchisee, who spoke to THISDAY on the condition of anonymity, said he entered into the business deal to have something to fall back on after retirement. He said, “The first restaurant I opened was successful, and I opened another one. Because it was doing well, I was pouring all my gains back into it on the grounds that when I retired from where I was working, I would have something to fall back on. Within a short period of time, I opened one after the other. This was possible because, as of then, UAC Restaurants had shut down the corporate shop regime for a 100% franchise scheme.”
Altogether, the franchisee said he grew the business to five restaurants. According to him, before he rescued one of the outlets, the product quality was already being terribly affected and sales were dropping.
After taking over, he disclosed that the sales that were already nosediving were revived and jacked up from less than N85,000 per day in the restaurants to about N275, 000 per day.
For this partner and other franchises, the honeymoon ended towards the end of 2013, when a South African company called Famous Brand was brought in to run the entire Mr. Bigg’s chain. Under the new arrangement, the existing Nigerian trade partners automatically became answerable to the newly’married’ South African bride. To the local partners, the South African company came in like a thief in the night because UAC management didn’t prepare their minds before settling for the new overload.
It all started with a terse press statement issued on September 26th, 2013 that UAC Restaurants was going into an alliance with Famous Brand, the brand owner of Debonair Pisa. The Nigerian partners kicked and queried the decision; their complaint fell on deaf ears. By October 1st, 2013, the seven-day deadline given to the existing franchisees to align with the South African company had lapsed, and they were all asked to submit to the authority of the new owner. Sadly, with the new sheriff in charge, business began to suffer for the local operators.
The tragedy of this ugly development was that some franchisees who had taken facilities from the banks could not service their debts, and this led to the untimely deaths of at least three of the businessmen. According to THISDAY findings, the owners of Mr. Bigg’s branches at Festac (husband and wife), Allen Avenue, and Oko Oba Lagos couldn’t survive it. They died one after the other as a result of depression.
All that glitters is not gold…
The phrase ‘all that glitters is not gold’ in the Shakespeare play Merchant of Venice aptly captured the initial experience gained by Famous Brand when it arrived at the market. Perhaps the foreign company thought Mr. Bigg’s restaurant business was a golden pot with already-ripe fruit waiting to be plucked. With such a notion, the promoters of the South Africa’s company came in with high expectations.
The first signal they saw was the nature of the relationship that existed between the local business partners and UAC Restaurants. Firstly, they thought UAC owned the restaurants in totality, including the equipment and the building; they learned on arrival that the franchisees owned the structures. They were shocked when they discovered that the franchisees only got an operating license but owned the equipment and paid the rent for the building they were operating from.
But, of course, they had already dipped their legs in the river. Rather than going back or withdrawing from the business, they thought of cutting costs by changing the products as well as withdrawing some of the existing products. Regrettably, the products withdrawn were the mainstay of the business before they came on board, and this had an adverse effect on sales. The new company’s belief was that the products taken off the market were not in tandem with their orientation. Of course, many of the franchisees, who had started taking instructions from the management of the new owner, kicked off with a letter of complaint written to the board of UAC and the parent company called Famous Brand to order, urging them to return those products. This turned out to be a temporary measure, as other steps taken by the foreign company further damaged the equity of Mr. Bigg’s brand. The rest is history.
Perhaps the management thought the local operators were sabotaging the efforts of the new owner. The new Managing Director at the UAC Restaurant wielded a big stick and threatened to get most of them out of the business. Again, the operators protested through several emails to the management, and the company again apologized to them (the local business owners). But the management of Famous Brand found it extremely difficult to maintain the existing standard of the products. The first product to suffer was the meat pie, which lost its original recipe in the specification handed over to the new owner. For instance, the quantity of beef was reduced from 100 percent to about 30 percent. To worsen the situation, the beef was replaced with something synthetic (TVP). It was not long before members of the public started noticing the changes in taste and odor, and that had a negative effect on the overall rating of the brand.
Tactical Closure of Business…
Meanwhile, according to various documents sighted by our correspondent, UAC Restaurants has been sending letters to the local operators to close down all the factories and all the restaurants since 2019. The company also confronted the businessmen with the fact that they were to remit various millions of naira. At this stage, the franchisees called for verifications and reconciliations of documents and records, including their terms of agreement. That was what led to reviewing correspondences from the contractual inception period to date. UAC Restaurants management has not been forthcoming on this demand.
The closure spree has since remained a continuous exercise until September, 2023 leaving only three franchisees in the business network. Visits to some of the recently shut down Mr. Bigg’s outlets at Ijeshatedo, Bolade-Oshodi (Lagos), Ring Road, Ibadan, Ile-Ife, Port Harcourt, Jos, and Abuja revealed new identities owing to the letters of September 8, 2023, and March 10, 2023, titled Non-Renewal of Franchise Agreement & Notice of Shutdown of Operations and Re: An End to 17 Years Franchise Relationship—Mr. Bigg’s Oshodi, respectively.
According to further investigation, as of the time of writing this story, there is no single Mr. Bigg’s restaurant in the entire North; only one is currently existing in Abuja; less than 10 in the South West, including Lagos; and less than 10 in the South-East and South-South, put together.
However, due to disagreements and loopholes in records, breaches of contracts, and shoddy manners of dismissal, the quick service restaurant company and scores of its former trade partners are currently locking horns in various courts across the country. In Lagos, some of the organizations in court with UAC are: Lixonia Nigeria Ltd., Festac Restaurant, Gourmet Foods Ltd., ICM, Adeola Odeku & PH Mall Stores, Straum Integrated Services Ltd., Broad Street & Marina Stores, Lindel International Ltd., Jibowu & Onipanu stores. Two companies, First Golden Ventures, Asokoro, and Global Services Ltd., Garki, are in court in the FCT, while Henz Management Company, Old Challenge Store, and about three others are in court in the South West.
The litigation is also thick in the South East and South-South, where about six firms are dueling with the mega brand. They include Cohill Ventures Ltd., Agbor Store, Integrity Foods, Azikiwe Rd.-PHC, and Garisson in PHC, Stone Brands International Ltd. (with 15 stores), and Migfo Nigeria Ltd., Ogwuachi-Ukwu, Delta State.
To get the reactions of UAC Restaurants to all the allegations and issues raised by various parties, several efforts were made to reach out to the company through the General Manager, UAC Restaurants, Ufuoma Ogeleka, and the Company Secretary and Legal Services Manager, Omonefe Ajala, who both expressed excitement and promised a well-detailed response to this reporter’s request. For two months, our correspondent exchanged messages with the two managers, but it was a road leading nowhere. They both kept mum till the time this story was published.
