Revealed: owner of former WH Smith stores is charging fee to use fictitious ‘family’ brand

The investment company that owns the former WH Smith high street stores is charging the retailer millions of pounds in licence fees for the right to use its widely derided TG Jones name, the Guardian can reveal. Modella Capital – which bought the chain from WH Smith’s parent company last year – on Wednesday blamed weak consumer spending as it laid out a restructuring plan that could shut 150 of its 450 shops . It also said “the forced name change from WH Smith has also negatively impacted consumer awareness”. However, documents seen by the Guardian, showed Modella, which bought the paperclips to books chain for £76m last year , is so far owed £2.9m in royalty fees for use of the fictitious “family” name now used on the former WH Smith stores. The stores were rebranded to TG Jones to distinguish the chain from the WH Smith stores in railway stations, airports and hospitals that are still owned by the original stock market-listed parent company. That arrangement was agreed at the time of the deal. Under the royalty agreement, TG Jones pays 1.03% of net revenues each month to the licence holder, Modella. This could be increased to up to 15% of net revenue if the restructuring plan is agreed. The royalty fees are temporarily being paid into an account controlled by Aurelius, a finance company, after it stepped in to loan TG Jones £25m earlier this month. That arrangement – agreed between Modella and Aurelius – will remain in place until the loan has been paid off. …