Franchisee makes $21m compo claim for Maccas lost to Metro

 

McDonald’s wants the Andrews government to increase its compensation to the fast good giant for the Swanston Street store that was demolished to make way for the city’s new Metro Tunnel.

Mcdonald's – whose Australian franchisees turned over sales of $1.01 billion last year – has launched Supreme Court action to force the state government to pay compensation. The franchisee that ran the store wants more than what the government originally offered – seeking $21.6 million, not the $1.6 million first put on the table – for terminating its Swanston Street business.

The government, after disputing the claim from the franchisee, had last month quadrupled its offer but this $6.7 million offer was not enough for the franchisee, which has taken its fight to the Supreme Court.

The store, which was next to the Young and Jackson pub, was demolished to make way for station entrances to the new Metro Tunnel rail line under central Melbourne.

McDonald’s owned the store, and North West Investments ran it under a franchise agreement.

The store opened in 1984 and with round-the-clock operations became the city’s busiest McDonald’s. It made food sales of $7.2 million in its final year of business.

North West Investments is owned by businessman Ken Turner, who with McDonald’s told the government three years ago that shutting down the multi-level store would mean the loss of 175 jobs. Court documents claim his company should be compensated because it has been “unable to relocate the business to another comparable location”. His claim for $21.6 million includes $19.4 million for “disturbance” to his business – including his planned future sale of the company.