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Newcastle Herald
Newcastle Herald
Donna Page

Bubble burst: couple walk away after losing life savings on Sharetea store

Jannat Meghla and Alam Mollah just wanted the sleepless nights to stop.

The constant stress and worry about how they would find the money to pay the bills for their Sharetea franchise at Wallsend was never-ending.

As debts and losses climbed and their life savings disappeared, the couple reached breaking point.

They made the difficult decision this week to walk away, closing their Wallsend Village store and describing partnering with Sharetea as their "worst mistake".

Their $250,000 investment is gone, and they estimate having lost a further $400,000 in operational costs and unpaid wages.

"This is the only way out," Ms Meghla said. "Otherwise, you are trapped in this cycle of working for nothing, and you can never get out as the bills get bigger. We were going backwards, pouring more money in, and we could not do it any longer."

The Newcastle Herald reported last week that the couple is among five current and former franchisees who spoke about their financial hardships after partnering with Sharetea.

Several other former franchisees contacted the Herald this week to detail the money they had lost operating Sharetea stores.

It's a familiar story.

They claim that behind the bubble tea company's franchise model is a system where Sharetea Australia profits from unprofitable franchisees.

More stores in the Sharetea network mean more drink sales, and that results in more fees paid to head office, regardless of whether the stores are profitable.

Several franchisees said they had to work for free to keep their stores open, because there was no money left for wages after paying their bills and Sharetea's fees.

Some lament that when they tried to sell their stores, there were no buyers. Others described themselves as "the lucky ones" who managed to "get out".

Sharetea has rejected suggestions it does not adequately support franchisees, saying the interests of the company "and its franchisees are aligned".

A spokesman said the "vast majority" of its stores were trading profitably, and operating a franchise involved "commercial risk".

Jannat Meghla and Alam Mollah. Picture: Peter Lorimer

Ms Meghla said if franchises fail, then head office can take over the store, sell it to another buyer, or reuse the equipment.

She said the couple initially asked Sharetea to buy back the Wallsend store because the couple believed they had been sold a lemon.

"We were told that the store would do $9000 in sales a week," she said. "We never got anywhere near that. We were later told that it was impossible at the Wallsend site. We now realise it was not the right location for a bubble tea store."

A spokesman for Sharetea said on Thursday that the suggestion that Sharetea does not care if franchisees walk away from their stores or are not supported was "commercially illogical".

He said the company rejects any suggestion that it misleads prospective franchisees regarding business opportunities.

"We are only successful if our franchisees are also successful," he said.

Sharetea said it was notified at the end of last week that the Wallsend franchisee wished to depart.

"They have now abandoned the premises, and we, as the franchisor, are significantly out of pocket," he said.

"However, we are still trying to use all our resources for the franchisee to negotiate the best surrender of the lease with the landlord."

The Wallsend Sharetea store before it closed. Picture: Peter Lorimer

Last week, Ms Meghla wrote to Sharetea Australia founder Anthony Mu, informing him of the couple's decision to vacate the store.

She has not received a response.

In the email, Ms Meghla details the "ongoing financial pressure" and the impact on the couple's "wellbeing", after "exhausting every possible option".

She said repeated attempts to resolve the dispute with Sharetea had failed.

"Continuing further would only create additional financial and personal damage," she wrote.

"I want to make it clear that this decision has not been made lightly. I have invested my time, energy, savings, and years of hard work into this business. I have given everything I could to make it work and lost everything."

Following a series of high-profile franchise scandals, the federal government announced last year a further $7.1 million in funding for the consumer and competition watchdog to increase compliance and enforcement in the sector.

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