Woolies fran­chise stores plan catches flak

Weekend Argus (Saturday Edition) - - BUSINESS -

THE WOOL­WORTHS Fran­chise As­so­ci­a­tion (WFA) wants the Com­pe­ti­tion Com­mis­sion to make Wool­worths seek the com­mis­sion’s per mis­sion ev­ery time it ac­quires a fran­chise shop as part of its plans to buy out fran­chisees, Busi­ness Re­port said yes­ter­day.

In terms of the Com­pe­ti­tion Act ap­proval must only be sought when the acquired firm has tur nover of more than R80 mil­lion.

A num­ber of fran­chisees have also raised con­cer ns about the low buy­out price.

In a pre­sen­ta­tion to the com­mis­sion last month, WFA sec­re­tary Den­nis Hamer al­leged that Wool­worths would close down a num­ber of the acquired fran­chise stores to the detri­ment of lo­cal com­mu­ni­ties and poorer con­sumers.

These con­sumers re­lied on the com­pany's lay-by pol­icy to pur­chase items, and it would cost them money to travel to Wool­worths out­lets in shop­ping cen­tres.

The buy­out pro­posal had been partly mo­ti­vated by a bid to avoid the im­pli­ca­tions of the Con­sumer Pro­tec­tion Act (CPA), he said.

Ar­ti­cle 14 of the CPA pre­vents sup­pli­ers (Wool­worths) from uni­lat­er­ally end­ing fixedterm con­tracts.

How­ever Wool­worths’ head of fran­chis­ing John Fraser coun­tered that the com­pany de­cided to stop fran­chis­ing be­cause it had be­come in­creas­ingly com­plex and ex­pen­sive to op­er­ate a sep­a­rate fran­chise busi­ness model.

“The in­tro­duc­tion of the CPA was not the rea­son and we are un­aware of any pro­vi­sion in the act that would have a sig­nif­i­cant ef­fect on our fran­chise busi­ness,” he said.

Hamer made a pre­sen­ta­tion to the com­mis­sion af­ter dis­cov­er­ing that in early Novem­ber the com­mis­sion had granted Wool­worths un­con­di­tional ap­proval for the ac­qui­si­tion of the Mid­del­burg clus­ter of five fran­chise stores.

At the time of go­ing to press Wool­worths had not re­sponded to Hamer’s con­tentions re­lat­ing to pos­si­ble clo­sures. – Sapa

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