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CaseLaw
CaseLaw, Attorney
Category: South Africa Law
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Experience:  BCom (UCT) LLB (UCT)
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I bought a franchise from a franchisor. I have been negotiating

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I bought a franchise from a franchisor. I have been negotiating the sale of my franchise with a potential buyer, and we have agreed on a price and are due to sign the offer to purchase. The Franchisor has now decided that I have to pay R50k to them as a fee for facilitating the sale. At no time have they been involved in the negotiations and there is nothing about this levy in my franchise agreement. The price has been agreed between myself and the buyer and the Franchisor has informed me after the fact. At no time did the Franchisor advise me verbally or in writing. Had I known about this levy, I would have worked it into my selling price. Where do I stand as far as the CPA goes? Can I fight this. I do not have the resources to go to court and employ lawyers etc.
Submitted: 1 year ago.
Category: South Africa Law
Expert:  CaseLaw replied 1 year ago.
Hi there,

The answer to your question is really simple.

If there is no provision in the franchise agreement which entitles the franchisor to charge you a R50k fee, then they can't. Also, if they never facilitated the sale, then what is the charge for?

Does your purchaser have to sign a new franchise agreement with the franchisor if he wants to continue operating?

The CPA does not say anything about this, and it shouldn't either. This is not the sale of goods or services. In fact, your allegation is that the franchisor never even provided a service ...

You need to stick to your guns and say No. They can't force you to pay the R50k "fee".

If there is something more specific that you need clarity on, please continue in this same thread. Let me know if you need more advice!

I hope you found my answer helpful. If you did, PLEASE rate my answer & please leave me positive feedback!

Good luck and best regards,


CaseLaw

Please note: This answer does not create an attorney-client relationship. Please consult a local attorney in person for legal advice. This information is being provided so you can better discuss legal matters with your attorney.
CaseLaw, Attorney
Category: South Africa Law
Satisfied Customers: 914
Experience: BCom (UCT) LLB (UCT)
CaseLaw and other South Africa Law Specialists are ready to help you
Customer: replied 1 year ago.
Hi there, thank you for your reply. The purchaser will have to sign a new agreement. The only thing that the Franchisor did, was put the buyer in touch with me. The Franchisor had a prospectus drawn up by a company specializing in the area, but there was one drawn up when I purchased the franchise and there is the trading history, so in my opinion, it was a waste of time. What are my chances legally if the Franchisor decides to take this to court? They are a big company, and I am in no position to fight them.

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