Modella Capital, the investment firm that acquired the former WH Smith high street chain last year, is charging the retailer millions in licence fees for using the widely criticised TG Jones name, the Guardian can reveal. The company blamed weak consumer spending and the forced name change as it unveiled a restructuring plan that could shut 150 of its 450 stores.
Royalty Agreement Details
Documents show Modella, which bought the chain for £76m, is owed £2.9m in royalty fees for the fictitious "family" brand. The stores were rebranded to TG Jones to distinguish them from WH Smith outlets in transport hubs still owned by the parent company. Under the agreement, TG Jones pays 1.03% of net revenues monthly, which could rise to 15% if the restructuring is approved.
Fees are temporarily held in an account controlled by Aurelius, which loaned TG Jones £25m, preventing Modella from accessing funds without approval. Once the loan is repaid, Modella will receive payments directly. The outstanding £2.9m may be waived if the restructuring deal is approved, while ongoing fees are capped at 50% until next March.
Financial Struggles and Restructuring
TG Jones has stopped paying business rates and delayed supplier payments to conserve cash. It owes suppliers £4m and deferred £3.4m in business rates, with an £8.4m HMRC payment delayed after an £18.6m loss between September 2025 and March this year. Sales slumped 12% as the rebranding took effect.
The retailer faces acute cashflow pressures due to lost customer loyalty from the WH Smith brand, inflation, and increased national insurance and living wage costs. Eight stores will close immediately, with Modella demanding 100% rent holidays on about 100 more and 75% rent reductions on hundreds of others for a year.
Creditor Concerns
One creditor described the restructuring as "pretty aggressive" and was surprised by the licence fee arrangement. TG Jones warned it may call in administrators if creditors reject the plan. Modella claims the plan is essential for a turnaround, with a £35m investment, but faces skepticism after other Modella-owned chains like Claire's and The Original Factory Shop collapsed.
Creditors will vote on the restructuring in late June, with final court approval sought by 29 June. WH Smith's travel stores remain unaffected.
