This is an old, old, OLD post.
But it HAS been saved already – so read the other stories on this subject!
Let me stress that again for whoever it is keeps digging this one up: THIS IS AN OLD STORY. RED WAS BOUGHT OUT AND IS NOW TRADING PERFECTLY HAPPILY AGAIN. IT WENT BUST AND WAS SAVED OVER 18 MONTHS AGO!
The holding company (LVG – Lansdowne Venture Group) for Red Driving School has gone into administration. This follows weeks of rumours, following the abrupt cessation of Red’s prolific TV advertising.
Someone sent me a link to this document put out by the adminstrators (MCR) – it confirms the fact. There is now a BBC story covering the issue in a little more detail.
The administration is effective from 16 February 2010, although the company is still trading. Most people think of Red as a company which trains people to be driving instructors, but it also operates a national franchise driving school and publishes a magazine. Many ADIs also use its accountancy services under the FBTC banner. It also appears to have been active in software development.
The MCR document explains all this to potential buyers, and says that LVG is structured thus:
Business Overview
The Company’s principal activities are carried out under the RED Brand, under which the Company operates RED Instructor Training, RED Driving School and RED Fleet Training.
The Company also offers accountancy services to driving instructors under the FBTC brand and publishes ADI News, a monthly Driving Instructor industry magazine.
The Company is developing a new software technology called sPyDA, a diary management and bookings system for use within driving schools.
The financial information is interesting. They made a net profit of £1.6m in the 18 months to 31st March 2008, £2.1m in the 6 months to 5th October 2008, and £3.0m in the year to 4th October 2009. However, they made a loss of £2.2m in the 16 weeks to 24th January.
Initially, my personal view is that that looks very fishy ( edit 21/02/2010: but updated information I’ve seen since this post was written explains what has happened ). Where did all the money go, and why such a big loss in such a short time after so much profit?
The BBC quotes MCR – the company acting as administrators – as saying:
“We are confident a buyer will be secured as the most recent financial reports indicate the business has been quite a healthy and profitable operation.” said joint administrator Andrew Stoneman of MCR.
“It only entered administration due to a lack of funding and investment.”
Some idiots out there will be rubbing their hands at this news, but spare a thought for those in the middle of training.
EDIT 19/02/2010: Someone found this page by searching for “red gone bust can I stop my franchise fee”. I really do despair at the way some people think.
Nice try! But Red is still trading. If you stop your franchise payments you will be in breach of contract. If you want out, do it the way you would normally – contact Red, or the administrators, or seek legal advice.
Someone else found the page by searching for “red bankruptcy”. It’s worth pointing out that there is no bankruptcy – even saying they’ve “gone bust” is a bit of editorial licence. The holding company has gone into administration, Red is still trading, and a buyer is likely to be found. Bankruptcy is far more serious.
EDIT 21/02/2010 #1: And Red is already saved by private equity firm, Kelso Place.