Something fishy about franchise contracts

TWO investors have been struggling to get their money after they decided to cancel their franchise contracts.

Franchiser Emalia de Souza has been giving investors Robbert Magwaza and Nomsa Mkhwanazi the runaround for months.

Magwaza and Mkhwanazi said they had been bullied and lied to by the franchise owner of Old Fashioned Fish and Chips . They had been battling to recover their money from the franchiser.

Magwaza was happy when he finally managed to sell his Fish and Chips franchise, which was operating from the corner of Smith and Nel streets in central Johannesburg. But since October last year he has had to endured endless frustrations trying to recoup R550,000 from De Souza.

The Soweto-born photojournalist said he decided to sell his outlet because he had difficulty doing business in the area during school holidays.

The father of five said he had used his life savings to buy the Fish and Chips franchise.

He said he is now battling to make ends meet and was unable to pay school fees for his three children last Wednesday, while De Souza would not refund him.

Magwaza said De Souza kept his money for a year before she could open his Fish and Chips business in 2008. He said he was not preparedto wait another year to be refunded.

He operated his outlet from December 2009 until October last year.

Since then he had been waiting for a refund from De Souza but all in vain.

"I no longer have the energy to chase Emalia - she has drained me emotionally," he said

"On cancellation of the contract De Souza had to get a commission of R25,000 and deduct R47,614.31, which was the rent I owed the landlord."

The store was sold on October 15 and the agreed figure payable to Magwaza was R550,000.

In December Consumer Line took up the matter with De Souza, who said Magwaza was incapable of administering his finances.

"He asked me to keep his money because he has a gambling problem and was also scared he would misuse it on women," De Souza said.

De Souza admitted that no one had appointed her to administer Magwaza's finances but was adamant the money was in her good hands.

But she contradicted herself when she said she had made an electronic transfer into Magwaza's bank account when she knew she had not. She could not provide proof of transfer when asked to do so.

Magwaza was hopping mad when Consumer Line delivered De Souza response to his demands for a refund.

"I don't know what possesses her to make those malicious remarks about my personal life. She has no knowledge of it," Magwaza said.

"I told you she has no respect for her clients. How can she insult me like that. Who has appointed her to administer my finances in the first place?"

He said what was "supposed to be a straight-forward business deal resulted in her not honouring the interim agreements, and not taking the numerous calls I have made to her".

"I am tired of the humiliation I had to go through in those (De Souza's) offices, having to wait and beg for my money," Magwaza said.

• Another victim of De Souza's, Nomsa Mkhwanazi, saved R100,000 to invest in the fish and chips franchise. But since 2009 she has only had a deposit slip to show for it.

Mkhwanazi, a mother of three, said she wanted to start her business to augment her salary, but now she regrets ever investing it in a fish and chips franchise.

She said she identified her business area and notified De Souza about it, but she did nothing.

"I also found another place in Rustenburg but nothing happened after I notified her of my business sites," Mkhwanazi said..

She decided to cancel her contract after her attempts to get De Souza to act failed.

"Still she would not refund my money. I asked Franchise Association of South Africa for help but they did not help. They only arranged that I should meet the franchiser on my own," she said.

De Souza said she did not know who Mkhwanazi was.

An e-mail sent to her and Vera Valasis of Fasa indicated that the three parties had been communicating.

An e-mail to De Souza read: "After waiting for a year and eight months for developments to take place with regards to you opening my store and several unethical business incidents that I went through with Old Fashioned Fish and Chips, I figured out that it is not worth it for me to pursue business with the franchiser that does not give support to its franchisee.

"I therefore would like to withdraw my application with immediate effect.

"I expect to be reimbursed a full deposit of R100000 plus interest as this money has been generating interest while in your coffers."

Consumer Line also forwarded a copy of this e-mail to De Souza last Thursday. But she had not responded to it at the time of going to press.

On Magwaza's matter, she could only say she did not owe him the money he claimed and undertook to sent the break-down of the payments she made on his behalf, but never did.

Valasis said they would comment once they had contacted their member.