SCA blocks Oasis Water's claim on franchisee assets

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The SCA's judgment held that the former franchisees of Oasis Water could retain possession of their water purification equipment and refill tables.

The SCA found that:

• The water purification equipment and refill tables used by the former franchisees are not Oasis Water’s property. Therefore, the SCA held that the clause in the former Franchise Agreements allowing Oasis Water to take these assets free of charge is “unreasonable” under the Consumer Protection Act.
• The water purification equipment and refill tables are not unique and they are widely used in the industry. Some of the former franchisees purchased their water purification equipment and refill tables directly from suppliers, so Oasis Water can also not assert any proprietary technology or trade-secret rights in relation to those assets, namely, the water purification equipment and refill tables.
• The passing off and unlawful competition claims against the former franchisees, now trading within the growing Manzi Water network, were dismissed because, as the SCA held, their use of the Manzi Water name, get-up, or trade mark is not reasonably likely to confuse or deceive the public into thinking that their goods and services emanate from Oasis Water or that there is any association between those goods, services, and the business conducted by Oasis Water.

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• The former franchisees, now trading as Manzi Water, have neither copied nor appropriated any Oasis Water products or business values, nor are they selling Oasis Water as if it were their own product. The SCA indicated that the water being sold is municipal water filtered through a process common to all water shops and water purification businesses, utilising water purification equipment that is freely available on the market from third-party suppliers.
• The Oasis Water Asset Company’s “Water Exchange” concept, including the use of water dispensers and 10 litre bottles, is neither unique nor innovative, as the SCA noted that several competitors of Oasis Water offer a water exchange programme and held that the Oasis Water Asset Company failed to prove passing off or unlawful competition with respect to the former franchisees’ conduct.
• Oasis Water’s remaining bids, namely enforcing a restraint of trade and taking operational control of the outlets involved, would have had “no practical effect”, so the SCA did not grant the interdicts.

However, the SCA confirmed that Oasis Water is indeed entitled to protect its trade marks and other related intellectual property and upheld certain routine post-termination provisions that apply when a franchise agreement ends, requiring former franchisees, amongst others, to:

• Return Oasis Water signage and printed materials.
  
• Cease using confidential manuals and information specific to Oasis Water.