One happy customer

But 20 fish franchise members still not refunded

OLD Fashioned Fish and Chips management has been accused of being selective in refunding their franchises.

Only one of the 21 franchise members who accused the companyof withholding deposits has been refunded.

Nomzamo Ngubane thanks her ancestors that she was refunded her R100000 at last.

Ngubane said she and her siblings raised the money for a family business, with their mother's blessings.

She said she entered into a franchise agreement with Emelia de Sousa in April 2010 and then waited for a suitable outlet .

"I found suitable sites but de Sousa would give them to someone else," she said.

Ngubane said she submitted a letter of cancellation to the franchisor on February 2 and was refunded her money within three days.

"I was refunded my entire R100000 and was not even charged any administration fees like the other franchise members were," Ngubane said.

She said she cancelled the contract because De Sousa failed to provide a trading site even after Absa Bank had sent them a final copy of a signed lease agreement.

"Not only that. I sourced sites but these ended up being offered to other franchisees in the Old Fashioned Fish and Chips system without my knowledge and there were no indication or intention of making another viable trading site in Gauteng availableto me," Ngubane said.

  • Richard Magwaza and Nomsa Mahlangu were the first consumers who claimed that they were battling to get their money back from the the franchisor.

Magwaza sold his franchise for R550,000 in October 2010 and has been battling to get what is due to him.

  • Nomsa Mkhwanazi saved R100,000 to invest in the franchise, but has since 2009 she only had a deposit slip to show for this.
  • Leslie Maistry of Pretoria paid R513,000 but has no franchise running.

Maistry has since set up another fish and chips franchise.

He approached Fish and Chips Company in January and told them about his predicament. The sympathetic owners allowed him to set up a store while he waits for his refund from Old Fashioned Fish and Chips.

"They have set up the shop and are training my staff," Maistry said.

He said his staff would be writing exams on February 22 and his shop would be up and running by February 25.

He said De Sousa had not responded to his demand and also ignored his attorney's letter of demand.

They have now entered a notice to defend summons, which will be served on the franchisor.

  • Tshani Khuba of Vanderbijlpark, Gauteng, has been waiting for his R650,000 after he sold two stores.

His refund has been coming in in dribs and drabs, he said.

  • Thabang Kgare bought a franchise in March 2010 and his store was also not set up as was agreed.

He was repaid R90,000 and had to pay a R10,000 administration fee.

Kgare said when he complained to Franchise Association of South Africa (FASA). Instead of helping they sent him a letter from the franchisor threatening him with legal action.

Part of the letter reads: "Our client will institute legal action against Mr Kare based on defamation and Mrs Emelia de Sousa is considering instituting a criminal claim of crimen injuria and or client will not make any repayment whatsoever."

Clause 9.15 of the FASA Code of Ethics states:

  • Where a franchisor member receives any moneys from any prospective franchisee in contemplation of the conclusion of a franchise agreement, whether at the instance of the franchisor member or the prospective franchisee, negotiations in connection with such contemplated agreement are terminated without an agreement being concluded;
  • The franchisor member shall refund the amount received no later than 30 days after receiving a written request from the prospective franchisee;
  • The franchisor may not retain any part of the amount it has received, save to cover reasonable out-of pocket expenses that it has incurred in contemplation of the conclusion of a franchise agreement;
  • The franchisor shall provide the prospective franchisee with documentary proof of all such expenses.

Though most of the franchisees had to pay R10,000 administration fees, they said they did not receive documentary proof of expenses incurred.

- The Department of Trade and Industry will meet FASA, which will explain why they suspended the franchisor before resolving the problems with the franchisees.

The franchisor and their attorney will also attend the meeting to answer to unfair business practice allegations.

Vera Valasi, an executive director at FASA, has confirmed that Old Fashioned Fish and Chips remains a member, but that their membership has been suspended pending the outcome of their response to various complaints.