Plot in paint case thickens

2012-08-04 14:52

In a landmark franchise case judge rules franchiser used a Hartbeespoort store to ‘test’ new branding

A Pretoria man has won a six-year court battle against a paint retailing franchise after the Pretoria High Court ruled that the franchiser had unfairly sold him a store that looked nothing like the well known paint brand’s other outlets.

Former franchisee Musa Modzuka is tomorrow expected to apply to the court for a preferential court date to make his case for the R6.8 million in damages he is seeking from Midas Earthcote Paints, for “serious financial losses” he suffered when his franchise agreement was cancelled.

However, Midas Earthcote Paints’ attorney Mark Nixon, of Mark W Nixon Attorneys, said his client would be filing a notice for leave to appeal within 15 working days of the judgment.

In a ruling handed down by the Pretoria High Court, Judge Tati Makgoka ruled that Midas Earthcote Paints had sold Modzuka branding for the Hartbeespoort outlet he and his late wife Hillary had bought in March 2005, that was not consistent with the franchiser’s other stores.

His was one of only two stores in the country to which the franchiser had applied the new branding.

However, the public were not alerted to the new branding.

Initially, Midas Earthcote Paints lodged a claim against Modzuka for breach of the franchise agreement, which the franchisers terminated in 2006, arguing that he owed a large sum in unpaid stock.

Modzuka then lodged a counterclaim against the paint retailers alleging that the signage and branding of his outlet was so different from that of the brand’s other outlets that customers began questioning whether the paint he was selling was really Earthcote and Midas.

Modzuka said the name, the colour of the signboard and the size of the letters were all different to those of the franchiser’s other stores. He says this caused him to suffer large financial losses.

Franchises are easily recognisable by their uniform branding and this is part of their attraction to those that buy into the model and is often a key reason for their

success.

Added to this, Modzuka’s store was not listed on Earthcote’s website along with its 25 other outlets. His store was also left out of an advert run in a magazine at the time.

Judge Makgoka said it appeared that his store has been “used as a pilot” to test the public’s perception of new-look signage.

However, he noted that the franchiser had acted in good faith as the signage had been changed because of the development of the franchise as a business.

Modzuka, who has spent hundreds of thousands of rands defending the six-year case and has since started his own law firm, says he hasn’t completely dismissed the idea of venturing into franchising again.

The Franchise Association of South Africa (Fasa) as well as other franchising experts City Press spoke to said they weren’t aware of any recent cases between franchisees and franchisers which were similar to those concerning Modzuka’s issue of rebranding.

Eugene Honey of Adams and Adams attorneys pointed out that franchisers often don’t make public any intention to rebrand outlets and that rebranding is often carried out on a phase-by-phase basis, linked to the renewal of the franchise agreement.

He advised franchisees to conduct a thorough investigation of the franchiser and to ensure that franchisers have a disclosure document in place in compliance with the Consumer Protection Act, before they sign any franchise agreement.

Join the conversation!

24.com encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

We reserve editorial discretion to decide what will be published.
Read our comments policy for guidelines on contributions.

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
0 comments
Comments have been closed for this article.

Inside News24

 
/News

Book flights

Compare, Book, Fly

Traffic Alerts
There are new stories on the homepage. Click here to see them.
 
English
Afrikaans
isiZulu

Hello 

Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.


Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire 24.com network.

Settings

Location Settings

News24 allows you to edit the display of certain components based on a location. If you wish to personalise the page based on your preferences, please select a location for each component and click "Submit" in order for the changes to take affect.




Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.