Freshii seeks to reassure spooked investors

MONTREAL • The chairman and chief executive of Freshii Inc. sought to reassure investors about the restaurant chain’s growth after it said earlier this week that it would open fewer locations than expected.

Speaking to an investor conference in Montreal, Matthew Corrin said Wednesday the company could have started a process to terminate its contracts with large franchisees who failed to meet the store opening commitments in their contracts.

However, he says Freshii opted against doing that because the franchisees are doing the right things and the value in the long term is greater if the company continues to support their development.

Corrin says it hurts to miss a store opening, but in his opinion it would be a too short-term view to penalize a franchisee.

“If you recognize the true value is supporting and seeing them through to building their scale and then collecting a royalty in perpetuity, the value creation of that royalty is much greater than the one-time upfront fee that we got at the start of the relationship,” he said.

Freshii shares fell 35 per cent Tuesday after the company lowered its guidance for new store openings and scaled back its longer-term expansion.

They were largely Wednesday.

In its revised outlook, Freshii said it expects between 90 and 95 net new store openings in its 2017 financial year, down from 150 to 160. The company also lowered its longer-term expansion targets and now plans to open between 730 and 760 stores by the end of its 2019 financial year, rather than the 810 to 840 stores previously anticipated. unchanged