Franchise Feud: Pick n Pay's Legal Tussle with Longtime Franchisee Alleging Corporate Raid

A notable saga has unfolded within South Africa's retail sector involving retail giant Pick n Pay and its franchisee, the AJP Group. At the heart of the controversy is John Baladakis, CEO of AJP Group and franchisee who has been entwined with the Pick n Pay brand for over thirty years. Baladakis has levied serious accusations against Pick n Pay, essentially describing the retailer's actions towards his business as a “corporate raid”.

The crux of the conflict stems from a dispute that ignited in 2018. According to Baladakis, the AJP Group, which operates ten supermarkets and nine liquor stores under the Pick n Pay franchise, has accumulated debt exceeding R200 million. This financial predicament, Baladakis argued, is the product of a debatable discounting strategy that Pick n Pay introduced. He claimed this model unjustly emphasized sales volume at the cost of profit margins, subsequently cornering his business into economic hardship and escalating debts.

This assertion places the blame for the group's financial distress firmly at the feet of the retailer's corporate policies. However, Pick n Pay's stance sharply contradicts this outlook. Following a protracted legal struggle, the courts sided with the retailer, dismissing Baladakis’ appeal.

The situation escalated as Pick n Pay moved to file a court application to liquidate Baladakis' franchise businesses. With a hearing set at the Johannesburg High Court, the retailer, voiced through its CEO Sean Summers, has expressed that the step towards liquidation was the last resort after extensive efforts to resolve the matter amicably.

Adding complexity to the feud is a R47 million general notarial bond that Pick n Pay holds over the AJP Group’s assets. Baladakis views this as an execution of power to usurp a business of significant value vastly disproportionate to the debt cited in the bond. In late February 2024, claims Baladakis, Pick n Pay attempted to take over two stores but was thwarted by timely legal intervention from his team.

Brandishing terms such as "draconian," Baladakis has publically vented his frustrations on the approach Pick n Pay has taken, arguing that a sit-down to reach a productive outcome would be more conducive than the current aggressive tactics. The sentiment of over three decades of partnership is echoed in his call for an amicable resolution that honors the long-standing relationship and benefits all parties involved.

Baladakis insists that the goal of the AJP Group remains to continue their business operations and care for their staff while avoiding the mire of legal proceedings. Asserting that a viable solution should be sought, he pleads for the preservation of his enterprise free from the shadows of courtroom battles.

As tensions peak between the two parties, the fate of the AJP Group and its association with Pick n Pay hangs in the balance. The legal outcomes of the impending hearings, and whether a peaceful settlement can be reached, will determine the future of this longstanding South African business endeavor and those whose livelihoods depend on it.