Franchisees flounder after fish company goes belly up

Last year, Hoedspruit resident Laura Brown thought her battle to get back her R150 000 franchisee deposit from the owners of Old Fashioned Fish and Chips was over when the high court granted an order in her favour.

But Brown said the sheriff returned empty-handed after trying to execute her judgment. The fish and chip company had written an affidavit claiming it did not own the furniture.

Robert Magwaza obtained a default judgment of R330000 against the business after it sold Magwaza's franchise on his behalf, but it did not pay him. His lawyer approached the sheriff to attach the franchisor's assets only to find they were No300 in the queue.

Hundreds of complainants - creditors of the franchisor and its related companies - are now hoping that several applications to liquidate related businesses can be consolidated into one process to help them get their money back sooner.

Old Fashioned Fish and Chips was founded in 2002 by Emilia de Sousa. Within a decade there were more than 300 franchises countrywide.

But mismanagement - specifically the owners were spending company money to fund their personal lifestyle, according to allegations in court last year - ruined the business.

An assistant at parent company Traditional Brands said on Friday that De Sousa was unavailable to comment.

The firm' s Distribution Centre was placed under liquidation in December by Jurgens Bekker Attorneys on behalf of its client Libertas Boerdery - a former potato supplier who was not paid. It is understood that Traditional Brands was placed in liquidation in January by another law firm.

Now the plan by one of the liquidators is to consolidate these two liquidations with the liquidation of two other related companies - Old Fashioned Fish and Chips, which signed up franchisees, and Chingos Chicken.

Jurgens Bekker Attorneys, representing five complainants, has obtained statements from others, who are not its clients, for repayment of money for franchises they did not receive.

"This was sent to the Hawks for investigation at the end of 2014. So far there is no outcome," said John-Re Wolhuter, an attorney at Jurgens Bekker.

Another client, a fish vendor, has instituted separate criminal proceedings against the directors and managers of the distribution centre after they allegedly tricked him into supplying more product before the liquidation.

They promised payment and handed him predated cheques, which bounced twice. He was paid a small amount via electronic transfer and the company blamed the bank.

The law firm is now assisting complainants to complete claim forms and submit these to the master of the court and liquidators on a pro-bono basis.

Magwaza's lawyer, Sizilizwe Ngcingwana of Ngcingwana Attorneys, is trying to retrieve about R3-million for seven clients.

"We've been trying to trace bank accounts and trying to execute the judgment. It's not an easy thing because the debtor is very evasive," Ngcingwana said.

But for those who did their homework, the writing was on the wall three years ago.

The company's membership of the Franchising Association of South Africa was not renewed after 2011.

Ian Jacobsberg, former chairman of Fasa, said it had contravened the association's code of ethics and failed "to resolve a number of disputes between itself and franchisees".

He said the business was "bringing Fasa and the franchise industry into disrepute".

The National Consumer Commission is understood to be investigating 17 claims totalling about R3-million.