When a franchisor sought a number of court orders to enforce a franchise agreement against a franchisee whose agreement had been cancelled, the franchisor succeeded in some of its claims on the facts. The franchisor failed to enforce a term in the franchise agreement according to which, on termination for whatsoever reason, the equipment, fittings and accessories in possession of the franchisee could only be sold to an existing franchisee approved buyer or to the franchisor itself. According to another clause, the franchisor could obtain the equipment free of charge on termination.
The clauses were held ambiguous because they contradicted each other. Secondly, the clause was unenforceable under the Consumer Protection Act. The CPA includes a “franchisee in terms of a franchise agreement” as a “consumer”. Section 48(1) provides that a supplier must not conclude an agreement to supply goods or services on terms that are unfair, unreasonable or unjust; or require a consumer to assume any obligation on such terms. The terms of the agreement were held to be plainly unreasonable and unjust insofar as the franchisor could acquire the system and components free of charge. The claim failed.
Van den Berg Water (Pty) Ltd v Oasis Water (Pty) Ltd [2025] ZASCA 8 (4 July 2025)