Franchisee paints a grim picture

2011-11-05 11:39

A Pretoria man is suing a paint-retailing franchise for almost R7 million, alleging that he was sold a store that looked nothing like the well-known paint brand’s other outlets.

This, he says in his court papers, caused him to suffer “serious financial losses”.

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

But Musa Modzuka claims that the signage and branding on the Hartebeespoort outlet he and his late wife, Hillary, bought in March 2005 from Earthcote Franchising Company – which was later changed to Midas Earthcote Paints after a merger between Midas and Earthcote – was so different from that of the brand’s other outlets that customers began questioning whether the paint he was selling was genuine.

However, the paints franchise denies that he was given unfavourable treatment during what it says was a regular rebranding exercise, and says it was purely coincidental that Modzuka’s store was one of the first to undergo rebranding.

In the latest phase of their five-year legal tussle, Modzuka and Midas Earthcote Paints are due to appear in the North Gauteng High Court tomorrow.

Modzuka is claiming R6 870 000 from the franchisor, including the costs he incurred setting up the franchise and a calculation for loss of income over the remaining four years of his five-year franchise agreement.

“Before we bought the franchise business, we were taken on a tour to visit some of the franchise businesses operating in the Cape Town area. The stores we visited had original Earthcote signage,” said Modzuka.

He said he was told by the franchisor at the time that the merger between Midas and Earthcote Paints had resulted in a lack of uniform branding in such areas as colours, logos, letter type and presentation.

“All they said is that we are changing the brand and that we will also be changing it in other stores,” said Modzuka, who added that the franchisor terminated his franchise agreement in 2006 after he intimated that he wanted out.

He claims his court action isn’t an opportunistic one, as he had plans when he bought the franchise store to buy others and expand across North West.

“I didn’t come there to try my luck. I had a vision,” he said.

He was puzzled as to why he, the only black franchisee of Midas Earthcote’s 32 franchises at the time he bought the store, was given different branding.

“I wouldn’t like to play the race card, but maybe because I am the only black, that is their reason,” he said.

Last year he said the franchisor’s attorneys had attempted to make a settlement of R600 000, which he refused.

But Midas Earthcote Paints’ attorney, Mark Nixon of Mark W Nixon Attorneys, denied making the settlement offer and maintained it was Modzuka’s legal representatives who had in fact made the offer. He said that they had last month made a new settlement offer of R450 000.

Nixon also denied Modzuka’s claim of racism and pointed out that Midas Earthcote Paints had at least two other black franchisees.

He said that the franchisor had terminated the franchise agreement in 2006 after Modzuka had continually gone into arrears on his stock, sundry and set-up costs – with at least R200 000 owing in his account at the time of cancellation.

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