In November 2005, after 15 months of negotiation, we finally bought out our business partner. We had full control of the three stores; EzyDVD Belconnen, EzyDVD Hyperdome and EzyDVD Paramatta.

When we turned up to Parramatta for the handover we were told that their were no staff rostered for the next few days trade, as all available staff had personal committments to deal with. Fortunately Charly and another of our Canberra staff had gone to Parramatta and could manage the store while more staff were hired. Several of the Parramatta Staff came back to work there for a while, which helped with the transition.

We initialy rented, on short term lease, a unit within walking distance of Westfield Parramatta at $1,800 per week until early January. Charly spent several weeks in Parramatta and, on an ongoing basis various senior staff from Canberra would spend time in Parramatta working with the new staff. We placed Parramatta up for sale in Januay 2006 and it took until May 2006 to sell it.

At the same time (November 2005), the franchised EzyDVD Woden store closed temporarily as the franchisee went into liquidation.

In order to maintain faith with the Customers of the Woden store, Laybys, Customer Orders and associated stock were moved to our Hyperdome store for servicing. We were asked to review the hard copy reports and order the stock required to fulfill the customer orders.

As we were a listed creditor of the EzyDVD Woden store, we were privy to some aspects of the winding up of the franchisee’s company. Once the Woden franchise was placed in liquidation, EzyDVD Pty Ltd took over the lease and purchased the shopfit from the liquidator for $22,000.00 The CFO, MD and one other staff member came to Canberra to sort out the future operation of the EzyDVD Woden store.

It was at this time that EzyDVD Pty Ltd asked us if we would take on the Woden store. We indicated that while we were not in the position to buy the franchise, we would be prepared to help them out. EzyDVD Pty Ltd offered us an agency arrangement that we agreed to in principle, however, no formal agreement was signed.

During the week leading up to 7 December 2005, I spent most of my time setting up the Woden store for its “Grand Re-opening”. During this time I interviewed and hired new staff for Woden as well as looking after the other two Canberra Stores.

The store reopening went quite smoothly and the December sales were OK. The revenue was certainly not in line with either the Hyperdome or Belconnen store however, it was adequate and we put the lower performance down to customer dissatisfaction with the closing of the store for several weeks.

We streamlined our three Canberra operations as much as we could, leveraging resources and reducing expenses in doing so. However, it just was not enough for the Woden operation. In early February 2006, after reviewing the January accounts we became extremely concerned with the continued poor performance of the Woden store and contacted EzyDVD Pty Ltd to discuss the options available to us. We indicated that we would be prepared to terminate our agreement at this point. For various reasons, it took until May 2006 for EzyDVD Pty Ltd to respond to our concerns and that response was an offer for us to purchase the store for $140,000. Not only was this nearly 7 times what they had paid for the store, we had taken on the operational expenses of the store and had already lost money on the endeavour. We disagreed with their predictions for the stores performance and advised that we would be terminating the agency agreement. We gave 2 weeks notice of our intent to hand back the management of the store.

Being aware of the impact that an ill prepared exit from the Woden store could have on our other two stores, we waited for EzyDVD to take ‘control’ of the store again as per the plan that was agreed and documented. To say that this plan, although agreed in writing, did not go smoothly would be an understatement.

With the Parramatta store sold (May 2006) and our exit from the demands of the Woden store, we found that our two existing stores were operating well. By removing the Woden store from the picture, we were able to better focus on the Hyperdome and Belconnen operations and further improve their performance.

In our six months operating the Woden store, it cost us more than $30,000. The majority of this loss was experienced between February and June 2006 whilst we tried to extricate ourselves from the store.

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