South African fast food chain, Wimpy, is involved in a war of words with its former franchisee, Chris Van Der Merwe, who has accused Wimpy of allowing other franchise holders in Namibia to use N$3.4 million in its collective marketing fund in Namibia for personal use.
The Windhoek Observer has seen strongly worded email exchanges between Van Der Merwe and Darren Hele, the CEO of Famous Brands SA, which owns Wimpy, in which the Namibian businessman accused Hele of taking no action against the other franchisee holders who allegedly abused the marketing fund.
In an interview with the Windhoek Observer this week, Hele said the allegations by Van der Merwe are both untrue and unsubstantiated.
“Despite numerous engagements with him, total transparency, in which we have shared strategic confidential company information, an independent audit and an internal investigation, Mr Van der Merwe continues to reject the facts of the matter,” Hele said, adding that the allegation are entirely fictitious.
He said Van der Merwe does not work for the marketing fund and therefore was not legally entitled to access information regarding the fund, its bank statements or any other similar information.
“As a result, he is not in possession of all the pertinent information and consequently his deductions are incorrect. Our internal investigation and the audits conducted by an independent company in South Africa and a separate independent company in Namibia found no irregularities,” Hele said.
In one of the emails seen by the Windhoek Observer, Van der Merwe told Hele that even though the Memorandums of Agreement between Famous Brands SA and the Namibian Master Licensees do not make provision for the Master Licensees to take any money from the marketing fund for personal use, bank statements confirm that the fund was being used as a personal cash cow.
“In total, an amount of N$ 3,4 million was illegitimately transferred from the bank accounts of the marketing fund to either the business accounts of the Master Licensees or their personal bank accounts in the period 01 November 2015 up to 07 July 2018,” he stated.
He alleged that the single biggest illegitimate transfer, amounting to N$213,972 was transferred to the bank account of one franchisee holder from the marketing fund.
He claimed that the misuse of the fund has been going on since 2005.
Van der Merwe claimed to have written numerous letters to Famous Brands SA since 2008 in an attempt to bring an end to the alleged malpractices, but to no avail.
“I even travelled to Johannesburg several times in order to meet with Famous Brands regarding the extended malpractices within Wimpy Namibia, but to no avail. The last meeting was with you,” he wrote to Hele while accusing him of defending franchisee holders who have been misusing the marketing fund.
He said the Memorandums of Agreement between Famous Brands SA and the Namibian Master Licensees give clear guidelines on the relationship between the two parties, as well as many other key issues.
One of the core principles of all the agreements between Famous Brands SA and the Master Licensees is that the Licensee (ML) and the Licensor (Famous Brands SA) shall jointly administer the marketing fund.
“The said amount of N$ 3.4 million excludes the vast amounts of money from the marketing fund which the Master Licensees used (illegitimately) to pay for their business and personal expenses like rent, overseas holidays, and the salaries of managers, various guesthouses and others.”
Hele explained that broadly speaking, the marketing fund is a ring fenced fund used in a transparent manner for the collective benefit of the Wimpy franchisees that are represented in a specific market.“The Wimpy Namibian marketing fund in question is subject to voluntary oversight from the Wimpy National franchise forum and is audited every year by a local Namibian auditor. In terms of our license agreement, we review the activities of the License holder on an ongoing basis and have done so historically,” he said.
There are 11 Wimpy outlets in Namibia.
“It is regrettable that Mr Van der Merwe continues to seek publicity in the media for his ill-founded campaign. We have been courteous throughout our interactions with him and treated his claims seriously. We have employed extensive resources to ensure his allegations were fully investigated and deemed to be unfounded.”
Hele said Van Der Merwe previously owned two Wimpy franchises.