Owners of Frank Muller Watchland clashed over company, says Swiss press

Has innovative luxury watchmaker Franck Muller definitely left the fast-growing, influential Swiss watch company that bears his name?

That’s what those in the watch business in Switzerland and the United States are asking, following several Swiss press reports about alleged dissension between Muller and his partner over control of the company, Muller’s alleged departure, and an erroneous report that a prominent watchmaker would replace Muller at the company. One Swiss watch industry Web site has even posted an editorial urging reconciliation between Muller and his business partner, Vartan Sirmakes. However, Vartan told the Geneva, Switzerland, newspaper, Le Temps, on Sept. 25 that the company can continue without Muller and that whether Muller returns to it “depends on him.”

Muller hasn’t been seen at Franck Muller Watchland S.A, outside Geneva, Switzerland, for weeks, and its officers wouldn’t speak with JCK about what Didier Decker, chief financial officer, calls “the dispute between the shareholders of the Company.” A spokesperson for Franck Muller USA told JCK that the Swiss headquarters can “speak on their own behalf,” but that in the United States market, “everything continues as it is; it’s business as usual.” The brand’s North American agent was expected to meet with Sirmakes and Decker in Geneva this week, ostensibly to talk about what’s happening.

Press interviews. While refusing to issue a statement now about Muller, Sirmakes and Decker did speak earlier about the situation with the Swiss press. Those articles—to which Decker referred JCK in answer to questions—say “tensions” for months between the partners led to Muller’s departure. Swiss business publication Cash cited “complete disharmony.” Le Temps called it a “crisis” for the company. The Tribune de Geneve quotes Sirmakes alleging that Muller wants to liquidate the company, which Sirmakes opposes. Another source says Muller allegedly objected to a proposal to sell the business to a leading Parisian department store chain. Press reports say lawyers for both men now are involved.

Sirmakes also was quoted as saying that Roger Dubuis, another innovative Swiss luxury watchmaker, would leave the company he co-founded to join Watchland. However, Dubuis quickly issued a statement denying that report. While he is reducing his management “burden,” he said, he will “continue within Manufacture Roger Dubuis SA [and] be fully associated with [its] bright future.”

Published Swiss reports also claimed Muller and Sirmakes disagreed about company operations regarding its two newest luxury brands, European Company Watch and Pierre Kunz.

Continued growth. Ironically, this situation comes at the same time the company enjoys continued, impressive growth. According the company’s annual report released in August, revenues for 2002 rose 54% and net profit rose 67.57%. There were gains in its main markets in Europe, North America, and the Asia-Pacific area. (Swiss watch companies don’t release revenue or profit figures, but Cash estimates annual consolidated revenues at about $304 million.) The watch firm’s output rose 36.1% in 2003, to 48,678 timepieces.

That growth continues this year, with sales for the first half of 2003 up 15.5% and net profit up 19.3%. The company predicts a full-year 20% gain and double-digit increases for 2004. As reasons for the growth, the Watchland report cited weak competition; its push to open more points of sale; quick response to market demands; the start-up of new brands Pierre Kunz and European Company Watch (ECW); and the ongoing addition of new products like the unique Tourbillon Révolution 2 wristwatch (which operates vertically and horizontally) and a newly-patented diamond cut, unveiled by Muller himself in April, called “Curvex” after one of his watch case designs. The design also is the basis for a new “Curvex Link” jewelry line.

Fast-growing. Muller, a master watchmaker and one-time consultant to Geneva luxury watch dealers and collectors, and Sirmakes, an Armenian Swiss-trained jewelry maker, launched the Muller brand in 1992, billing him as “Master of Complications.” Since then, Muller and his staff have created hundreds of models, much-copied designs, two-dozen “world premiere” complications timepieces, and almost as many patents. In 1995, the fast-growing company bought an estate in Genthod, outside Geneva, put its headquarters and workshops in the manor house, and later added two more two-story buildings for watch production.

In 1998, Muller withdrew from Geneva’s SIHH luxury watch fair (saying too many quartz watches were allowed into the haute horlogerie event) and started his own annual show.

In recent years, Watchland has become a group of high-end brands. In 2001, it acquired ECW (originally started by Muller’s Italian distributor) and two suppliers of luxury watch dials and mechanical parts. In 2002, luxury watchmaker Pierre Kunz (known for automatic retrograde timepieces) was added. By 2002, Franck Muller Watchland employed almost 500 people, and that year produced some 46,600 luxury timepieces, a 90% gain since 2000.

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