Woolies in fight with KZN franchise

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Woolworths_dec 10

Independent Newspapers

Woolworths. Photo by Simphiwe Mbokazi

Durban -

Retail giant Woolworths is locked in litigation with one of its franchises, KwaZulu-Natal businessman Haresh Ouderajh, over whether or not he should be allowed to continue trading under its banner at two shops on the North Coast.

Ouderajh, whose company, Dula Investments, has four franchises on the North Coast, accuses the retailer of trying to bully him into relinquishing his businesses when he is entitled to a further five-year extension on his original 10-year franchise agreements.

But Woolworths says he has breached the conditions of the franchises and the shops are being run in a way “which impacts the standards, reputation and integrity of the company”.

Late in 2012, Woolworths sought and was granted a declaratory order in the Cape Town High Court aimed at shutting down Ouderajh’s shop in the upmarket Ballito Lifestyle Centre.

The businessman says he is appealing against that.

And on Wednesday he launched his own urgent application in the Durban High Court, aimed at stopping the retailer from interfering with the running of his franchise in KwaDukuza (Stanger).

In the Western Cape matter, Woolworths said it did not want to extend the franchise agreement with Ouderajh, alleging financial and non-financial breaches of the agreement, including not paying rent on time, late payments for stock, failing to keep premises adequately stocked, and diverting business to his other franchise shop at the Ballito Bay Mall.

Ouderajh blamed all his ills on the company, saying it was adopting an “overly literal approach” to the breach clauses, making them “illusory in the real world” and unworkable.

In her ruling, Deputy Judge President Jeanette Traverso said she was satisfied Woolworths had shown that he was in arrears in vast amounts over a protracted period, and correspondence attached to the papers showed that, by and large, he did not deny this.

As far as the non-financial breaches were concerned, Ouderajh had initially acknowledged them, and undertaken to remedy them, but later denied them.

She said these allegations were beyond dispute because of photographs showing depleted stocks, and there had been numerous customer complaints.

She said his defences were largely “frivolous” and granted the order in favour of Woolworths.

In the matter which came before Durban High Court Judge Graham Lopes on Wednesday, Ouderajh raised many similar issues. He claimed he injected R3 million into the KwaDukuza business, and that under him it had “risen from the ashes”, generating about R15m a year.

He said Woolworths had never expressed any dissatisfaction with that. But in 2010 it had “relentlessly pursued a mission to exert pressure on franchises to sell back at bargain-basement prices”.

He said the retailer wanted to run the shops itself and it looked for any fault in performance to get out of extending its franchise agreements.

“I have not buckled. And this does not rest easy in the eyes of some officials.”

He said he was entitled to a five-year extension on his contract, beginning this week, but earlier this month he had received an e-mail saying this was not going to happen.

The matter will be argued on April 12.

The company has agreed Ouderajh can continue trading until March 30. - The Mercury


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