Tattoo chain Celebrity Ink is in the headlines over alleged franchisee lock-outs, unhappy franchisees, and allegations of unpaid tax.
According to the Courier Mail, at least four Celebrity Ink franchisee’s businesses are in voluntary liquidation – three of them with tax debt. The stores have remained open, the masthead reports, either with franchisor staff or new franchisees operating the businesses.
It also reported a number of franchisees had been locked out of their stores over minor breaches.
Responding to these claims, Johnny Cohen founder and CEO of Celebrity Ink, told Franchise Executives he was uncertain how many franchisees were in liquidation.
He gave no details of any lock-outs, commenting “Information relating to new stores, transfers, surrenders and termination of franchises is set out in our Disclosure Document, which we provide in accordance with the Franchising Code of Conduct.”
Cohen denied allegations in the Courier Mail that the franchisor was issuing breach notices for minor breaches, and issuing automatic rises in fees as a result.
He told Franchise Executives, “Celebrity Ink does not send notices to franchisees, triggering a rise in fees because of minor breaches. We highly value our franchisees and understand that there can be challenges in any business operation.
“We always try to understand the franchisee’s situation and provide them with support and guidance when they might be facing such challenges. It is not our intention to breach franchisees for trivial breaches,” Cohen said.
Celebrity Ink CEO denies unpaid debts
He also rejected franchisees claims of poor franchisor support, and ‘ghosting’ franchisees.
“A franchisee/franchisor relationship can deteriorate for multiple reasons. Celebrity Ink has always provided support and guidance to all of its franchisees to the maximum extent possible,” he said.
Some franchisees have resorted to withholding fees in response to what they perceive as lack of franchisor support.
According to the Courier Mail’s report, some franchisees have suggested concerns over Cohen’s personal finances, including a multi-million dollar property on the market for a year, coincided with extra pressure on franchisees.
Cohen’s wife Laddawan, who owns a number of Celebrity Ink businesses, reportedly has a tax debt of $1 million owed (as of 7 October).
Cohen has denied there are any unpaid debts. “This is wholly untrue. All of Celebrity Ink’s debts are paid as and when they fall,” he said.
“Celebrity Ink is a viable business,” he said. “We are currently expanding overseas in regions we never anticipated we would go to. We have a lot of satisfied customers and a lot of prospective franchisees who want to be a part of our journey.”
