A bitter wrangle is taking place between Costcutter licensee Murali Gunarajah and head office. Murali is two years into a three-year contract and he argues that he cannot get the store's turnover up beyond £10,000 a week. He says he was told that it was capable of taking £13,000 a week. The smaller turnover, he says, has meant that he sometimes cannot meet his direct debit and that Costcutter is now charging him a penalty of £300 for every debit payment he misses.
When he rang me, he complained of a bad January, with a turnover of just £7,500 a week. He had defaulted on three direct debits leading to charges of £900. On top of this he was also being charged for 'non orders' at the rate of £50 a week, but could not order because he had been put 'on stop'. The penalties, he claimed, had put him into a downward spiral. "The company wants £11,000 straightaway and I cannot afford to pay it. The £300 charges are a rip-off."
Costcutter boss Colin Graves, rather well known for his straight shooting, pulled no punches. "It's our shop and those are our terms and conditions. I paid £150,000 for that business three years ago and we've propped him up for two years. We've already given him three chances. We've leaned over backwards and now I've got my own shop on stop."
However, he did concede that the £50 non-order charges would be dropped but not the £300 penalty fees. "It costs a lot in terms of admin and sending people out to see him. I've sent nearly everyone out to see this guy."
The next step, he added, would be a legal one. "We'll be dealing through our solicitor."
A second retailer, Ramuppillai Sivaalingam, previously introduced to the Costcutter group by Murali, claims that he left the group after he had struggled to meet the minimum order requirements and subsequently had several failed direct debits. He now trades as an independent in London's Kilburn. "It cost me more than £2,000 in charges and I would be happy to go to court with Murali to get these charges back," he said.
Murali and Costcutter were still holding discussions as I reached my deadline for this issue.