‘Stick with me and we’ll pull through’

De Sousa frantically casts about to save Old Fashioned Fish and Chips

EMILIA de Sousa, the owner of the Old Fashioned Fish and Chips brand, which is on the brink of liquidation, has devised a plan to keep her company afloat. She is inviting the remaining franchisees to stick with her and participate in a nationwide advertising campaign to “combat negative publicity”.

Last Friday, just days after the Pretoria High Court granted a provisional liquidation order for the Old Fashioned Fish and Chips head office, De Sousa told about 68 franchise owners that it made “perfect economic sense for all the existing store owners to remain associated with the brand”, which was still popular, she claimed.

Her company must show the court by May 12 why the order should not be made final. The application for liquidation was brought by a franchisee who tried to retrieve her R650 000 franchise fee when she did not receive the outlet promised.

De Sousa said store owners were now worried about their ability to continue trading under the brand.

But she maintained that, in spite of problems and unfavourable publicity, “the Old Fashioned Fish and Chips brand is [as] strong and popular with the public as it ever was.”

Her assurances, however, have failed to secure the loyalty of some franchisees who are already in talks with Maxbox, a rival fish and chips chain that targets mid- to lowerincome customers in Gauteng.

Brothers Kevin and Craig Sidler, the founders of Maxbox, claim they have been inundated with requests to join. Their mother was the first Old Fashioned Fish and Chips franchisee, opening her store in Kempton Park in 2006. Soon prospective franchisees approached her and she referred them to De Sousa.

“It was really pumping at the time, there was no competition. Emilia had the concept, we had the buyers,” Craig Sidler said.

But, after about three years, the Sidlers broke away because De Sousa, among other things, allegedly reneged on a verbal agreement to pay them for the branding and menu they helped her design. The Sidlers went on to launch Maxbox.

Kevin Sidler said that at first some Old Fashioned Fish and Chips franchisees bought stock from Pretoriabased Maxbox when the Old Fashioned Fish and Chips distribution centre was liquidated last year. Maxbox has since converted at least five Old Fashioned stores into Maxbox franchises.

Craig Sidler said franchisees were desperate.

“People were phoning us when their distribution crashed. They would rock up in their R500 000 cars to collect stock.”

Old Fashioned Fish and Chips and its associate companies are being liquidated one by one as fed-up suppliers and franchisees have turned to the legal system to hold De Sousa accountable. They have questioned how the authorities could have allowed the company to continue trading unabated despite publicity about the numerous court cases and complaints lodged with the police, and industry and consumer rights bodies, all while De Sousa and her family continued to lead what they called a high-flying lifestyle.

In 2011, the Franchising Association of SA refused to renew Old Fashioned Fish and Chips’ membership because of the many complaints relating to agreements not honoured and alleged broken promises.

The company was launched in 2001 and grew to more than 300 stores but the complaints began surfacing four years ago.

Last year, the National Consumer Commission investigated 18 complaints, totalling R3.33-million, against the company. There had been 21 dating back to 2012.

It had referred the matter to the National Consumer Tribunal and recommended that the police, the Companies and Intellectual Properties Commission, and the SA Revenue Service investigate elements of the company’s conduct.

But Trevor Hattingh, the commission’s spokesman, said: “The recommendations were approved by the commissioner but our legal team is yet to give effect to them.”

He said the provisional liquidation order could change the commission’s course of action in respect of the company.

Last week, De Sousa said some franchisees were not entitled to a refund because they had withheld royalty and marketing fees, refused to take up stores they had expressed an interest in, or had failed to secure leases after the head office had expended “considerable resources”. She said franchisees owed in excess of R45-million in fees.

“The company has become commercially insolvent due to the fact that its revenues . . . were deliberately being sabotaged.”

She plans to enter into nonexclusive user agreements with individual store owners who remain committed to the brand but will charge royalties. She is also proposing a regional and national marketing drive through a new company and will give store owners seats on its board.

Her plan is that she would provide initial funds to kick-start the marketing campaign but store owners will each contribute R2 500 excluding value-added tax monthly.

About 20% of the fee will be used to defray administration costs and “build up prudent reserves”.

De Sousa gave franchisees a deadline of April 7 to indicate whether they will stay on board under the new structure.

De Sousa said: “Stores would continue to be supplied with quality products to ensure that the intellectual property is not tarnished.”