High street retail group Hema has confirmed that it has cancelled the contracts of the managers of its franchise organisation VAB, in the latest twist in its long-running dispute with franchise holders over internet sales.

The VAB managers between them run 24 Hema franchises but are now threatened with losing their companies, the Financieele Dagblad said on Friday.

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 545 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.  

Hema says the stores should contribute more to the cost of the internet operation, something the franchise owners are refusing to do.

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