Finger-lickin’ loss: KFC owners get fried in food safety showdown

Two franchise owners hoping to block KFC from terminating their franchise deals and being closed down over food and safety issues have hit a legal dead end.

The High Court in Gauteng has dismissed an urgent application from Siwelile Fast Foods and T&T Take Away Enterprises.

Both companies aimed to stop KFC from issuing notices of termination and to make KFC to see them as “ordinary franchisees”.

KFC had presented them with a notice of default as they had not complied with the stipulations of the franchise agreement.

Default notices were issued because the two companies failed to comply with food and safety standards.

The applicants, in a franchise relationship with KFC dating back to 1992 and 2004 respectfully, argued that this notice of default, issued on August 19, was “unfounded” and that any non-compliance “have been remedied, and some do not have any basis”.

They also challenged a September 16 termination agreement, which they described as an ultimatum to sell their businesses or face termination.

Judge Yacoob, however, said the applicants had failed to make a compelling case and that they had not been transparent.

“By not disclosing to the court in the founding affidavit what happened between August 19 and September 16…  the applicants have not played open cards with the court.

The court noted that franchise agreements give KFC the right to enforce compliance, particularly on issues related to “food safety and public safety,” and that the company has an interest in ensuring its outlets are run properly, given its reputation.

In the ruling, the judge also said, “the concept of contractual freedom is still one of the fundamental principles of contract in South African law”.

The court noted that “nobody can be forced to remain in a contractual relationship, as long as their exit from that relationship is within what is envisaged by the contract”.

What made the entire issue irrelevant was when, after further submissions, KFC withdrew the default notice but reserved its rights regarding the alleged non-compliance.

“Taking into account that the notice of default has been withdrawn, and that the respondent may well be entitled to terminate for any other reason, it is reasonable to conclude that the relief sought is moot on the case pleaded by the applicant,” the court said.

In ruling in favour of KFC, the judge said, “it is difficult to imagine what circumstances would have been entitled the applicants to the very broad interdict which they sought,”.

The application was dismissed with costs.

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