Franchise group Allied Brands is set to buy Villa & Hut, a cafe and homewares business, for $1 million.

Added to the acquisition cost is the assumption of debts associated with the business, bringing the total cost to about $2,800,000.

Allied Brands plans to go ahead with a planned roll-out for a further six stores in addition to the 16 outlets in Melbourne, Brisbane, Cairns, Adelaide and Hobart in the 10 year old Villa & Hut chain.

The integrated homeware and cafe brand was founded on eco-friendly, sustainable, organic and fair trade principles. The Kafe business includes six airport outlets operated under franchise to Delaware North Ltd, with others located in shopping centres and DFO outlets.

Allied Brands’ coffee roasting facility at Mt Kuring-Gai in Sydney will take on the production of the 32 tonnes of coffee required by the Villa & Hut chain, doubling the coffee production of the group without increasing overheads.

Villa & Hut will join Kenny’s Cardiology as part of the Allied Brands group. The ability for the group to cost share is proving a benefit; rising prices for raw materials at Cookie man are also offset by cost sharing across the brands.

Peter Graham, managing director of Allied Brands, said the acquisition is consistent with the company’s strategy of purchasing businesses that have strong five-year growth potential, synergies with sibling brands and shareholder value.

The acquisition is expected to be completed by 30 June 2009 and the Allied Brands group will then have about 330 stores and territories operating.