Good morning,

I have a franchise agreement which details that our Franchisor will provide us the systems, procedures and knowhow in order that we run our business.

There are various systems we use, the main system is our ordering and Point of sale system "DX system". There is an additional add on system for online ordering, which we had been paying extra for to a third party. In the same way we have other third party systems. We have a verbal agreement with the Online ordering party not to pay for online orders, which he has confirmed on e-mail. He had been searching for reasons to default from his side of the deal. He billed us last month and claimed we had not kept to our side of the deal, by not carrying out an instruction. We are not in agreement with him.

Our Franchisor has placed a monthly registration block on our "DX system" and wont register our system unless we pay the third party for the account for online orders. This seems like extortion as we cannot run our business effectively with the lock down in place. 

Can our Franchisor hold the system ransome if we dont pay the third party for their system?

Any legal assistance would be appreciated.

Hi there Heather,

We act for a number of franchise operations in Johannesburg, and what I can tell you is that all of their franchise agreements there is a clause which basically says that if the franchisee fails to pay any third party payment (e.g. rent to the landlord, gas to the gas supplier, PC backup fee to the IT provider to backup the system remotely) then the franchisee will be in breach of the franchise agreement, and it will then let the franchisor cancel the franchise agreement.

I hope that this helps a little... since I see that you haven't actually made a deposit for the question.

Good luck!