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The Fish and Chip Company is accused of setting up its franchisees for failure.
Sibusiso Makwakwa, a franchiser, says his business has plummeted from a turnover of R180 000 a month to just R45 000 since the franchiser set up a direct competitor just 200m away, though Makwakwa's contract states that no similar franchise would be opened within a 7km radius of his business.
The franchiser apparently did not see anything wrong in that and challenged Makwakwa to take them to court if he believed he had a legal case against them.
The franchiser says Makwakwa knew what he was putting himself up against when he signed a franchise agreement with them in 2011.
"The franchiser has unfairly set me up for failure and acted contrary to the Consumer Protection Act, the Competition Act and Fasa's (Franchise Association of SA) Code of Conduct," Makwakwa claims.
Outlining his problem, Makwakwa says his customers, including those who work at a shopping centre in Dube, Soweto, and used to walk to his franchise "to buy food, no longer do. They now cross the street to support my competitor".
Makwakwa says approaching the franchiser's national operations manager, Greg Stephenson, had not helped.
"He was quick to tell me I signed a legally binding contract, yet he forgets that he too is equally bound by it," he says.
All Makwakwa wants is for the franchiser to remove their branding from the leased place he currently operates from and refund his money. He claims the franchiser did nothing to help him secure the business premises.
"I did my own research and determined the viability of my business and secured my own lease agreement without their help. They only put up their branding. So they must just come and remove it. I will sell something else," he says.
His says he would revive his family business - Toby's Food - which used to sell burgers, chicken, curry and rice and other township fare.
"I was willing to take a risk, but it has cost me dearly. I should have stuck with the tried and tested," he says.
Makwakwa now wants out of the contract. He also wants to be refunded the franchise fees, including the money he paid for equipment they never installed.
He says he bought the franchise from The Fish and Chip Company while it was still under Stelio Nathaneal and paid the full purchase amount of R466 000.
Makwakwa's shop was "set up according to the franchiser's standards, every single item was put in place, and there was an extraction system which was still in a good working order".
"They did not have to install an extraction system, but they still charged me for it," he says. "They are killing my business."
Madelain Roscher, the franchiser's managing director says Makwakwa knew that another franchise was going to be set up in the same vicinity when he signed up with them. Roscher says it did not matter who set up a franchise first.
"Without going into a public debate about the location of the two businesses, it is important to mention that there were extenuating circumstances, which the franchisee was fully aware of before he opened up his own store," says Roscher.
She says they have not infringed Makwakwa's rights in any manner, either through breach of the franchise agreement or otherwise in law. They only heard about Makwakwa's demise through Sowetan.
"It is unfortunate that Makwakwa deemed it necessary to take this matter to the press because he had been invited to discuss his concerns with us directly in an attempt to resolve the issue," Roscher says.
She says since her company, Taste Holdings, had taken over from The Fish and Chip Company in February 2012, they had met Makwakwa to try and resolve any problems he had.
Source: Sowetan via I-Net Bridge
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