Avocet global franchises have a familiar ring

by DOUG COLLIE

Shareholders in 'disruptive technology' group Avocet Natural Capital [ANC] heard this week that plans for a so-called master franchise company to manufacture and sell the Avocet brand in the United States were proceeding.

In a letter sent to his 650 investors Group chairman Martin Frost told them that both ANC Plc and its associate Avocet NC Limited had taken and were taking in new investors.

And Mr Frost added: "Good progress is forthcoming from the Avocet Master Franchise company, Avocet North America Plc. The old AFS Ventures Plc US subsidiaries Avocet Inc. and Avocet Solutions Inc. (formulated by US presidential candidate, Joe Biden) are being de-mothballed. Funding for Avocet North America Plc is in place – partly being provided by the Frost family. Note: master franchise payment of £1 million sterling shall then be sent to Omega Infinite Plc."

The establishment of a franchising system appears to be the key which might bring the Avocet venture financial success and secure global domination for the Berwick-based Group..

It was certainly an important component of a 'highly confidential' Information Memorandum, produced by the Group in November 2018 in a bid to attract investment.

The document sets out in detail how the network of franchises would work, each of them forecast to bring in £20 million to the Avocet coffers via deferred payments.

Here is what the IM told its readers: "Avocet Franchises (Franchises) are at various stages of development, with some still at the concept stage. These franchises will enter into a master franchise agreement with Avocet IP to use, commercialise and share intellectual property in different territories.

"The franchises will be purchased from Avocet IP upon a lease purchase agreement. Additional funding into Avocet IP will be generated from royalties... It is anticipated that the cost per franchise will be at least c. £20 million, to be paid on a deferred basis. Among other things, this franchise agreement entitles the franchise holder (subject to conditions) to receive 7% of the distributed income from Avocet IP, implying a minimum arm’s length valuation of c. £285 million for Avocet IP.

"In total, the Company intends to establish seven franchise companies with different economic territories and economic terms with Avocet IP. These franchise companies are: Avocet Fuel Systems Plc – based in the UK; Avocet Bio Solutions Plc – based in the Republic of Ireland; Avocet Africa – based in Geneva; Avocet Americas – based in Panama; Avocet Middle East – based in Dubai;  Avocet Eastern – based in Islamabad and Singapore; and Avocet India – based in Mumbai.

The memorandum of November 2018 predicted Avocet IP would also set up a 100% owned tax efficient subsidiary, Avocet Licenses Limited. 

Then during 2018 and 2019, it was anticipated that Avocet Licenses would sell master franchises to Avocet Fuel Systems, Avocet Bio Solutions, a franchise in Africa, and a franchise for Pakistan and China for £20 million per franchise. To date there is no indication any of these franchise agreements will be finalised in the near future.

The going was equally tough for a system of franchises outlined by Mr Frost to potential investors in a totally different venture back in 2003 and 2004.

At that time the companies concerned were called Dellex Holdings Ltd. and Dellex Ecosse Ltd. based in Penicuik, Midlothian. Both businesses were eventually dissolved in 2015, never having sold a single franchise.

Dellex was to be involved in "concepts concerning explosive suppression and explosive removal" after experts had apparently developed a range of low cost and low maintenance land mine and explosive removal devices, according to Mr Frost's promotional letter. 

In his pitch to investors Mr Frost wrote: "The strength of Dellex Holdings, as will be the case with the Plc, is the fusion of brilliant yet simple ideas into products that not only does the market place need but can afford. The byword of the company is trust. Trust of the product and trust of the vendor. Dellex products and services will be offered from known and respected ex-servicemen who the customer knows he can trust."

And there was this: "Dellex plans a North American franchise that is largely staffed by retired military explosive engineers and ex CIA staff. The US company will purchase the franchise, have its staff trained within Edinburgh University, and pay Dellex a royalty on all products and services sold. 

"Dellex USA will purchase Dellex products from Dellex licensed manufacturers. Dellex Holdings will thus be the fount of excellence, the catalyst, the bridge between the solution and the problem. 

"Currently, Dellex has such embryo franchises for North America; South Africa; Scandinavia; Russia; Egypt; India; Malaya and Japan. Dellex has an inside track of contacts within the explosive world. Via the effective use of contracts Dellex is thus able to become a world wide player of tremendous depth, expertise, and financial strength within a matter of years. Above all the symbiosis of the Dellex concept provides Dellex with a huge positive cash flow from which to generate new products and services."

The planned product range included 'Dervish' land mine removal units; the ‘Micra’, a unit not only offering mine clearance ability but with advanced robotic attributes relating to bomb clearance and reconnaissance; the ‘Swamp’, the classified name for a water bomb suppression device for use in an aircraft; and the Powder Hall,  an anti terrorist or suicide bomber filter.