Amsterdam-based high-street stores group Hema is embroiled in a dispute with its franchise holders, the Financieele Dagblad reported on Tuesday.

The FD bases its claim on a confidential letter dated 5 July which the troubled retailer sent its independent franchisees, terming the arrangement ‘counter-productive’.  Hema wants to reposition the role of franchise holders within the Hema formula.

Hema is owned by British investment group Lion Capital which has put the retailer up for sale. The most recent potential buyer was Belgian-based Core Equity which had agreed to pay €1bn for the group earlier this year but later pulled out.

The position of the franchisees proved to be a sticking point in negotiations.  Nearly half the 500 Hema stores in the Netherlands are operated under franchise by 96 separate companies. All receive a portion of earnings from Hema’s internet sales within the postcodes in which they operate a Hema franchise.  

Core Equity said these contracts- signed before internet sales were a major factor – made it impossible for Hema to expand profitably.