Mr Video could be hit by further litigation – this time from some of its former franchisees who have accused the DVD rental company of ‘grossly unfair business practices’.
Former franchisees based in KwaZulu-Natal claimed that Mr Video had squeezed them out of business by, among other things, forcing them to buy DVDs that were not attractive to the market and threatening them with closure if they refused to do so.
Mr Video also dictates what type of confectionery can be sold in the video outlets.
At least four former franchisees in KwaZulu-Natal have confirmed they were forced to close their shops because they could not pay their debts. Some have lost everything because their assets were attached to settle outstanding debts that ran up to R500 000 for each franchisee. The debts include bank loans and royalty fees.
According to one former franchisee, the franchise agreement has a ‘notarial bond’ clause that allows Mr Video to attach the franchisees’ assets if they are unable to pay the fees stipulated in the agreement…
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