17 July 2015 - A group of former franchisees of The Mad Butcher have been quoted in a major Business Herald article today as saying that recent store liquidations are 'the tip of the iceberg'. The franchisor has denied the claim, with Mad Butcher CEO Mike Morton saying, 'Any franchise that has 39 stores will have stores that are struggling and not making money.'

As in many franchises, current franchisees have a confidentiality clause in their agreements which may prevent them talking to media, but the only existing franchisee spoken to for the article says things 'seem to be going all right' in his store.

'Like any business, you have your ups and downs," he says. "But as a group I think we do a good job of competing with the supermarkets.'

The former franchisees says supermarket chains (such as the co-operative franchise Pak'n'Save have become impossible to compete against and that supplier rebates are a source of conflict. Supplier rebates are common in franchising as part of the revenue stream that funds franchise services, as well as the franchisor profit margin (see article).

In 2013, Michael Morton told Franchise New Zealand, ‘This is an unusual franchise in that our franchisees produce the whole product – they don’t just defrost and heat things, or assemble ingredients to order. Each carcase comes in whole and the butcher on site is responsible for breaking it down skilfully into all the right cuts to sell profitably. It’s a high volume, low margin business and it’s vital to get it right. For that reason, most of our franchisees are themselves qualified butchers with practical experience. If you’re a non-butcher, you’d have to have a qualified butcher as manager and that changes the figures. It’s not impossible, but you’d need more capital so you have less debt at the outset.’