This is the third of four of the company’s five main businesses that are battling liquidation applications from angry franchisees and suppliers who claim to have been taken for a ride.
The business has been trading since 2001 with close to 400 franchisees, according to court papers, but it is believed that the number of stores has dwindled to fewer than 250 because of mismanagement.
The court this week granted Emilia De Sousa, the owner of Old Fashioned Fish and Chips, and her children, who are directors, as well as other interested parties leave until May 12 to show why the liquidation order should not be made final. This came after the provisional liquidation was granted, which is to ensure that the company’s assets are preserved before a winding-up order is made final.
The applicant, Rumarch Investment Holdings, owned by Charmaine Pather, turned to the court after Pather could not obtain a refund of about R650000 in franchisee fees for a store in East London that she was promised but did not receive in 2013.
The court heard that Pather, who already owned an Old Fashioned Fish and Chips store in Queenstown, could not access the East London shop because De Sousa’s company had not honoured rental obligations with Growthpoint Properties.
The Old Fashioned Fish and Chips franchising company claimed that Pather was not entitled to a refund because the cooling-off period of 10 days in the agreement that was signed in 2012 had lapsed.
But Judge Winston Msimeki noted that in 2013 the company promised to refund Pather if she did not want a store in Port Elizabeth instead. It also reneged on a promise to refund Pather in September last year.
De Sousa this week blamed her former son-in-law, Paul Mendonca, for causing Old Fashioned Fish and Chips’s financial downfall by, among other things, stealing “millions of rands” and stock.
She also accused him of trying, along with a former franchisee, to persuade other franchisees to cancel their franchise agreements. She claimed he had bad-mouthed De Sousa and her family and as a result had harmed her company’s brand.
De Sousa said she had done everything in her power to keep the company trading and save the brand. “It has been under extremely difficult circumstances that the distribution centre went under provisional liquidation.”
Mendonca denied the allegations about stolen money, saying that a KPMG audit of the distribution centre had been undertaken. “These things were dealt with in the audit and there was zero that I had taken.” He also denied teaming up with a former franchisee, saying he did not know who that person was and that he had stuck to his year’s restraint of trade.
The distribution centre, which has been provisionally liquidated in a separate matter, was managed independently by Mendonca, who left the business last year after a falling out following the collapse of his marriage to Nicol, De Sousa’s daughter.
In court, the franchisor’s case was peppered with incongruities, among them the submission of irrelevant financial information to support its argument that it was solvent.
In a scathing judgment on Wednesday, Msimeki said the franchisor company had incorrectly attached the financial statements for its distribution centre to prove it was solvent and had paid its debts.
The franchisor then tried to pass an auditor’s letter through court, but the judge said this was “unhelpful”.
“There is just nothing further to demonstrate that the respondent is solvent and that its assets exceed its liabilities. Failure to produce the correct documents by the respondent speaks volumes,” the judge said.
Audrey Engelbrecht, an attorney at Hills Incorporated, which is also assisting people to claim against De Sousa’s company, said joint liquidators would be appointed in the next few weeks.