Mugg & Bean says it is shocked at the actions of a franchise owner in East London who posted a picture of one of his children on Facebook wearing black face paint, alongside an apparent caption saying he was "using his children to apply for business grants".
Images of the post have been circulating on social media since Friday, with many accusing the father of four of racism.
The post, which has since been removed from the man's timeline, shows one of his children wearing black face paint with a caption reading: "Using my kids to apply for business grants. Hope we come right".
News24 has decided not to show the image to protect the identity of the child.
In a statement, Mugg & Bean's marketing manager, Deeolan Govender, said the man would be held accountable for his actions.
"We are immediately taking the necessary steps to address this with the appropriate action."
Govender said the management of the Mugg & Bean brand was shocked and did not condone the actions.
Although the franchise owner claimed his intentions have been misunderstood, the Mugg & Bean brand found it "inexcusable that anyone can claim to be ignorant of the meaning of the image and its damaging effects", he added.
"While we fully appreciate the financial burden and emotional stress placed on all South Africans during this pandemic, this behaviour is unacceptable and will not be tolerated," said Govender.
The post came a day after President Cyril Ramaphosa announced a budget allocation of R200 billion for a loan guarantee scheme to help enterprises suffering a negative impact due to the Covid-19 crisis.
The man owns a number of other businesses, including two hotels and a guest lodge.
Called for comment, the man would not confirm or deny posting the picture and caption.
Referring News24 to his lawyer and an explanation posted on social media, he said: "This is not racism, sir. Sir, I'm desperately saddened. Deeply sorry anyone is offended [sic]."
The man's lawyer, Shaun Mathie of Drake Flemmer & Orsmond Attorneys, declined to comment.
"[Our client] has indeed referred the matter to our firm but unfortunately, we have no further comment at this stage."
In other screenshots of social media posts, the man and his wife said their child had been "playing", and there was no racist intent around the post. The man offered an apology. They also said his account had been "hacked".
The man and his legal team did not elaborate on this when asked for comment.
The EFF in the Eastern Cape, meanwhile, threatened to open a criminal case and call for his businesses to be shut down.
EFF provincial chairperson Yazini Tetyana said he could not wait for the lockdown to be lifted so he could mobilise the party's members to boycott all his businesses.
"I just spoke to the leadership of the EFF in Buffalo City region to discuss the next cause of action. We will open a case against him with the belief that he had violated the Promotion of Equality and Prevention of Unfair Discrimination Act No 4 of 2000."
Tetyana added racism had no place in the Eastern Cape and in the country, saying the man had refused to accept the current dispensation.
"He doesn't belong to our world, this is dehumanising".
Others on social media have also called on people to boycott the man's businesses.
*Note: News24 is not naming the man to protect the identity of his child as required by the South African Press Code.