Mobile World (MWG), landlords in dispute over rent
Mobile World (MWG), landlords in dispute over rent
The relationship between Mobile World and its landlords is faltering as the company single-handedly reduced rent for months, blaming the Covid-19 pandemic, while leasers crying foul.
A Mobile World staff speaks to customers. Photo courtesy of Mobile World |
Thirty two percent of the agreed payment is what landlord Tran Ky Mui in An Nhon Commune in the central province of Binh Dinh got from Mobile World for leasing his building for the September-November period.
The biggest electronics retail chain in the country ascribed the outstanding 68 percent the company being forced to shut down shops due to social distancing measures from July to September.
This is why Mui only received VND24 million ($1,053) out of the total VND75 million.
The unusual decision of the company forced Mui to hire a lawyer to either get his money or the building back so he could lease it to someone else.
"At first I intended to give Mobile World a 50 percent discount. But as they repeatedly send letters with a disrespectful attitude, I decided not to give them a dime of discount."
He was referring to the four letters Mobile World, with 949 outlets of the same name, has been sending to its landlords since June, demanding a discount from the lease, which had stirred up a dispute.
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Tran Ky Mui's building in An Nhon, Binh Dinh, which has been leased to Mobile World. Photo courtesy of Tran Ky Mui |
On June 15, the company requested a 50–100 percent discount for 12 months (until June next year), due to Covid-19 impacts.
Without an agreement from most landlords, the company on July 20 requested to pay 50 percent of fees for the remaining months of the year.
Nearly two weeks later the company said it would not pay any rent for the period of municipal government-mandated closure and would only pay 30 percent for the opening period with restrictions imposed.
This would apply to the first seven months this year and for the remaining time of the contract should a similar circumstance occur, the company added.
In its latest letter on Oct. 6, the company required landlords to respond to its demand before Oct. 25. If not, it would single-handedly impose the requests under force majeure.
These requests have been the source of disagreement between the companies and many landlords.
A landlord in District 12, Ho Chi Minh City, who asked not be identified, said she had not received rent for the past three months, after the company requested a 70–100 percent discount for the period from June to August, which she did not agree to.
Her contract covers 10 years of lease from 2016 to 2026, with an agreed payment of VND88 million a month.
On Oct. 11, she requested the contract be terminated as Mobile World failed to meet its obligations.
The two parties have not been able to resolve the issue.
A spokesperson for Mobile World said the company is in discussion with landlords to negotiate terms.
In the case that landlords do not agree with the discount requests, the company would have to terminate the contract.
"In the process of termination, Mobile World will follow the provisions of the contract to settle most satisfactorily with leasers," the spokesperson said.
Mobile World posted a post-tax profit increase of 12 percent year-on-year to over VND3 trillion in the first eight months.
