IC Group in new franchise-case about price dictations

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Following the recent court decision about price dictation in franchise organizations, a former major franchisee within IC Group has reported the Danish fashion giant to the Danish Competition Authority.

If we ourselves could have controlled our prices by selling goods by 20 or 30 percent off a little earlier, we could have survived,” says Thomas Walsø Christensen.

The declaration was made by a now former franchisee, Walsø Clothing Ltd., which for years has operated five Companys stores on Zealand exclusively with sales of IC Group clothing brands InWear, Matinique, Part Two, Soaked in Luxury, Designers Remix and Tiger of Sweden, reports Berlingske Tidende.

“We were not allowed to cut prices in Companys’ stores outside sales periods or outside the periods of mid season sales. If we set a discount on everything in the store and marketed it outside these periods, then the hammer dropped. We could not run with discounts on selected models. We were, for example, also declined to make an ad with 20 percent of all goods in one of our Companys stores. And it’s not the only time that they have told us that we should not run at a discount. We have evidence that this has been going on for three years, ” Director of Walsø Clothes Thomas Walsø Christensen, tells Berlingske Tidende.

“We lost money every day and was far from reaching the market which we together with IC Companys had estimated was possible. Therefore we would like to run with discounts. If we ourselves could have controlled our prices by selling goods by 20 or 30 percent off a little earlier in the season instead of having to sell them at bargain prices by 50 or 70 percent discount, we would have had liquidity to meet up, and so we could have survived.”

Thomas Walsø Christensen has been a retailer for almost ten years, and currently operates six shoe stores that are part of Danish and international shoe chains.

In the documents to the Danish competition authority, several examples on how the management of IC Companys stops campaign initiatives from Walsø are added.

“It’s new to me. I have neither seen the report or documentation, but if the Competition Authority would take this on, then we’ll decide on the matter, ” says CEO Mads Ryder, IC Group.

“I know nothing of the matter well enough to be able to comment. It is something that is handled by management of Companys, that has now been sold. I’m not informed enough in how we run our franchise, but I know we have strict instructions throughout the organization to comply with the rules and laws that apply in this area , ” Mads Ryder adds to Berlingske Tidende.

He also reveals that Walsø Clothing recently  has accumulated a larger debt balance with IC Group.

”I wonder now why they declare us this the day before they are in bankruptcy court, ” Mads Ryder tells Berlingsked Tidende.

DK Company, who aquired the Companys concept, has through its subsidiary, The Original Group, filed for bankruptcy against Walsø Clothing ApS. The Court has not yet ruled on the bankruptcy petition against the otherwise largely empty company.

‘As regards the timing, we hired a lawyer in connection with the bankruptcy petition in September, and he pointed out that one has a duty to report such things to the competition authorities, “replies Thomas Walsø Christensen.