Johannesburg- The expiry of Bidvest’s exclusive franchise to rent cars and vans under the Budget Car and Van rental brand in southern Africa looms large this week.
The fact that the franchise agreement has not been renewed yet has led to speculation that Bidvest might lose it.
However, Bidvest last week denied this speculation.
The industrial conglomerate did confirm that it was involved in negotiations to renew its initial franchise agreement.
Paulette McGhee, the managing director of Budget Car and Van Rental South Africa – which is part of listed Bidvest’s travel and aviation division, said on Friday that there was “no truth” to speculation that Bidvest had lost the Budget franchise, but confirmed the initial period of the franchise agreement was up for renewal.
“Nothing has been concluded yet and we are still managing the brand for Zodiac Europe, the owners of the Budget brand,” she said.
McGhee confirmed that the franchise agreement would expire this Friday and Bidvest would continue servicing the business “until we can agree on the way forward”. She said obviously the intention and first prize was to reach an agreement on the renewal of the franchise deal.
She could not comment further, because nothing had been concluded yet.
There has been speculation in the market that Bidvest had lost the Budget franchise and an anonymous e-mail sent to Business Report claimed Bidvest intended launching its own Bidvest car rental brand.
CHALLENGES INVOLVED
But it claimed Bidvest would face significant challenges with such a venture, because the group was governed by onerous post termination clauses in their franchise agreement, including being precluded from doing business with any vehicle rental customer they had serviced in the previous 12 months.
McGhee said the allegations made relating to the post-termination were inaccurate and stressed that there were no post-termination consequences to Bidvest, even in the event that it did not renew the Budget franchise agreement with Zodiac.
She confirmed that Bidvest had terminated two sub-franchisee agreements on December 31, both of which operated Budget van and truck rental businesses. There might be some confusion because of the termination of these agreements, she added.
McGhee said that these sub-franchisees were independent and not part of the Bidvest group, and there were no post-termination conditions related to the termination of the agreement with the two sub-franchisees that flowed through to Bidvest.
Established in 1958, the Budget Rent a Car brand is licensed within Europe, the Middle East and Africa to Zodiac Europe, a subsidiary of Avis Budget Europe, the Middle East and Africa.
The anonymous e-mail sent to Business Report further claimed that Zodiac Europe planned to align the Budget brand with the Avis brand as was done in Europe.
Listed distribution group Barloworld owns the rights to Avis in southern Africa.
Keith Rankin, the managing director of Avis Rent-A-Car Southern Africa, confirmed that he was aware of the speculation in the market about the Budget franchise for southern Africa, but it had not signed any agreements to take over the Budget franchise in the region. However, he said that if the Budget franchise became available “we will look at it”.