Cell C franchisees up in arms over cancellation

Cellular operator Cell C's "restructuring" of its franchise operation will lead to the closure of "hundreds" of Cell C Connect franchises.

This after Cell C announced it would review its franchise network and that these would be restructured or discontinued "where necessary".

Cell C Connect operates as an independent distributor of Cell C products and contracts through a network of franchises. Franchisees receive commission in return for their direct distribution sales.

But parent company Upliftment Outsourcing has not had its master franchise contract renewed by the network operator.

Cell C Connect CEO John Williams would not confirm how many franchisees would be affected by the contract cancellation, but according to franchisee Shaheed Domingo, the number is "well into the hundreds".

Domingo and 105 other franchisees have been trying to take action against Upliftment Outsourcing for the cancellation of contracts late last year.

Sue Kennedy, Cell C's executive head for sales and distribution, said in a statement that Upliftment Outsourcing's three-year contract had expired in April last year and that the entity was to have ceased its Cell C distribution business in August 2009.

The statement adds that the contract was extended until July 2011 to accommodate Upliftment Outsourcing's franchises.

Initially, franchises were sold under 24-month licences with the option of renewal. Several franchisees confirmed to Business Times that they were never informed of the fact that Upliftment Outsourcing only had a three-year deal with Cell C.

These franchisees are also furious about the cancellation of their contracts last year and the restrictive requirements of the new, interim contract.

This includes a two-year restraint of trade in the telecoms industry, meaning that they will not be able to use their existing customer base in any new business.

Franchises are also not able to use call centres or websites to market their businesses and attract customers any more.

In the meantime, however, CellC Connect and its franchises continue to market through their call centres and websites. Neither CellC nor Cell C Connect would comment on the matter.

In addition, Cell C Connect's website has been taken offline and franchisees report that they no longer receive communications from the master franchiser.

In a brief statement to Business Times Williams dismissed this, but franchisees also point out various other anomalies with their interaction with Upliftment Outsourcing. These include not receiving promised marketing material such as flyers or dummy cellphones for marketing purposes.

Franchises were reportedly sold for R55000 each and neither Cell C nor Upliftment Outsourcing would comment on the distribution of this revenue.

Domingo and his fellow franchisees embarked on legal action against Cell C Connect last year but he says this initiative had to be terminated due to the costs involved.

"Cell C Connect has and always will honour all its contractual obligations to our franchisees and we therefore do not believe that this is a matter for public debate," Williams said.