PARIS — The Yves Saint Laurent Rive Gauche franchised store on the Champs Elysees shut its doors on Friday.
Its end, however, is only the beginning of litigation between the franchisee — the Jourdan family and private investors — and C. Mendes, the licensed manufacturer and distributor of YSL ready-to-wear, and a few of Saint Laurent's operating companies.
Aysa Jourdan, the store's owner and the wife of the grandson of the late Charles Jourdan, has alleged that the credit, billing and delivery policies of Mendes for the past few seasons essentially forced her out of business. Her stance was backed up by Gerald Ayache, a lawyer who was appointed by Paris's Commercial Court late last year as the representative of the unpaid creditors of the Rive Gauche store.
The creditors include the store's employees, the owner of the store's property and, ironically, Mendes.
Ayache is managing the liquidation of the store's stock and assets. In a court action taken at the end of December, Ayache concluded that Jourdan's store closing and her difficulties with Mendes are related to the house of YSL's strategy dating to the early Nineties to control freestanding stores rather than work with franchisees. The Champs Elysees location was YSL's last franchise in France.
Ayache noted that the lending policies of Mendes toward Jourdan were out of proportion to the size of her business and, as such, were a means through which Mendes could control the activities of the store and benefit from being situated at one of the prime locations in Paris.
"If a creditor continues to issue loans, that means they are interested in the business being able to continue," noted Pascal Anquez, the attorney for Jourdan and her operating company CAJ. Beginning in 1988, and in every year since 1991, Mendes lent money to CAJ, theoretically to help the store stay in business.
Ayache alleges that CAJ systematically paid down debt and that there was never any problem between CAJ and Mendes over the debt repayment. But last spring, in a disagreement over a renewal of credit by MendAs to CAJ, Mendes demanded in a judicial clerk's office that some outstanding debt be repaid, or it would not ship goods.
At the same time, Mendes proposed a system of consignment for the shop.
When agreement between the two parties could not be reached, Mendes said it would not ship fall 1995 goods without a full cash payment.
Separately, a YSL company, Diffusion Rive Gauche, which operated the franchise agreement with the Champs ElysAes store, continued to refuse to ship the lower-priced Variation line to complement sales of the Rive Gauche collection. "Thus, CAJ was confronted with two refusals, explicable only if Mendes' goal was to make the store disappear, or to buy it back for the lowest possible price," attorney Ayache concluded.
CAJ made attempts last summer to repair its relationship with Mendes by asking Paris's Commercial Court to name an ad hoc representative, attorney Henri Chriqui, to help both parties reach a compromise. One of the goals Chriqui set was a paying off of the debt between the parties and renewing a line of credit. Chriqui, however, was only able to get Mendes to ship a part of the fall line.
In the decision to liquidate the store, handed down by Paris's Commercial Court on Feb. 6, a judge concluded that while CAJ had a healthy treasury, it needed 1 million more francs to operate. CAJ was unable to raise this money, and Mendes didn't offer any assistance.
"The conditions demanded by the supplier for the payment of goods prevented the store from continuing its activities," the judge concluded. A decision regarding Ayache's summons is expected sometime this summer.
Meanwhile, Jourdan said she and other CAJ investors plan to sue MendAs, and perhaps some of YSL's operating companies, for between $3 million and $4 million (15 to 20 million francs).
Alain Weber, the attorney representing Mendes, declined to comment on the circumstances surrounding the store's liquidation or on possible countersuits to be filed against Jourdan and CAJ investors.
YSL officials could not be reached for comment Tuesday evening.
"[Mendes and YSL] just don't want to admit that their business is going badly," said Jourdan. "Having four Saint Laurent stores in Paris was just too much."