Sour taste for franchisees
Taste shares hit six-year low as consumer probe delivers latest blow
Gonzaga’s desire for foreign brands may cost him local ones as franchisees take Taste to the consumer commission
Taste Holdings’ shares wobbled to a six-year low this week, after it emerged that the cash-strapped restaurant group is being probed by the National Consumer Commission after seven franchisees accused Taste of failing to provide enough support. It’s a blow for the group, which has embarked on an ambitious strategy in the past few years of launching blue chip global brands into the SA market — none larger than coffee chain Starbucks and pizza brand Domino’s. Trevor Hattingh, the spokesman for the commission, says the complaints relate to Taste’s 10-year franchise deals, under which it helped franchisees secure business premises by negotiating five-year property leases. The franchisees say that after the five-year leases expired, “the franchisor did not negotiate or assist to negotiate an extension of the leases”. Hattingh says: “The franchisees are then left with no premises to trade from, but are expected to pay monthly franchise fees and royalties.” They have also complained that T...
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