Kwik Kopy Geelong will close after 28 years of operation after a buyer could not be found for the business, which was liquidated in May.

Once one of Kwik Kopy’s best performing franchises, the business went into a downward spiral after it was sold for $1.25m by its founder David Deahl to a new operator in 2008, and collapsed in May with debts of more than $1m.

Deahl says he is still owed $700,000 from the sale six years ago. The seven-figure sale price would make the Geelong sale one of the biggest in Australian franchise history.

In a scathing assessment, Deahl, who founded the store in 1986, says the business failed because of chronic mismanagement by new owner John Swift.

“He had no idea how to treat customers or run a business and he alienated clients and sales went through the floor,” he says.

Deahl acknowledges that a competing business, Geelong Printworks, set up by his brother Graham would not have helped Swift’s sales, but says that this company was established two years after Swift took over and the franchise was already in serious decline.

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Kwik Kopy chief executive David Bell says he has been trying to sell the business for six months and after three failed bids he cannot afford to keep it open any longer.

He says the business will now operate out of another yet-to-be-determined store, but attempts to find someone to set up a new Geelong franchise will continue.

“I expected we could keep it running long enough to sell it and I almost got it over the line three times, but now the only way is to run it out of another franchise with a lower cost structure,” he says.

He says the two remaining staff have been made redundant and finishing equipment will be stored at the Fitzroy store and either sold or given to other franchises, or sold on the open market. The store’s digital printers were rented from Fuji Xerox.

Deahl says he hoped the business would be a good nest egg for his retirement and hoped the money from the sale would allow him and his wife to live comfortably, but now expects he will get almost nothing.

“Running a print franchise is a high pressure business and Swift wasn’t prepared for it. All he had to do was keep everything the same but he didn’t even keep the quality control or workflow systems running,” he says.

“I’m really sad to see it go, I put in a lot of work and now there’s nothing left. He took a very profitable business and ruined it in just a few years.”

David Deahl’s brother Graham says he was employed as an adviser for the first year after the sale and it was clear Swift had no idea what he was doing.

“He was also an arrogant person and thought he knew everything about the business, so he couldn’t be advised on how to run a centre properly,” he says.

David Deahl says he is still owed about $700,000 from the sale of the business, while the Australian Tax Office is owed $250,000. Kwik Kopy is thought to be owed more than $70,000 in unpaid royalties.

Deahl says it could have been worse, but many suppliers were dealing only on a cash basis after being ‘burned’ early on.

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The franchise’s troubles under Swift’s ownership began almost immediately, with him very quickly falling behind on repayments to Deahl as early as September 2008 and barely meeting loan repayments to the National Australia Bank (NAB).

Correspondence between Swift, Deahl, NAB and Kwik Kopy details a series of drawn-out repayment renegotiations in 2008-09 as a result of Swift saying he was unable to pay because not enough money was coming into the business.

NAB and Kwik Kopy then attempted to sell the business in 2009 but were ultimately unsuccessful and the franchise continued trading.

According to a pile of demand notices to Swift that Deahl obtained during the liquidation, employee superannuation has not been paid since August 2010, besides a few months in 2013, and Workcover payments are outstanding for at least a year.

Deahl wrote to ASIC in 2009 advising that Swift was almost certainly trading while insolvent, but the regulator chose not to act.

“It would have caused a lot less pain for everyone if he was shut down years ago, but ASIC is a toothless tiger and did nothing,” he says.

“I ask the question as to why directors are not criminally liable for not paying employees' super, after all it is stealing.”

Due to a mis-reading of the report to creditors, a previous version of this article said KW Doggett was owed $50,000. The paper merchant is in fact owed $31.20 and, like many other suppliers, was trading on cash only.

The line in question on the early version of the creditors report actually referred to Kwik Kopy (also beginning with KW) being owed $50,000, which was later updated to $70,000.

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