Woolworth’s buy out local franchisees

South African giant retailer store, Woolworths Holdings has made offers to buy out some or all-local franchisees with the intention to take over its stores in Botswana.

Buying out the local, franchisee is part of the Woolworths strategic decision to move away from franchising stores and instead operate corporate stores. Negotiations are at advanced stage as most of the franchisees are waiting for contracts to end in the next three months. This remains a closely guarded secret so much that the local chain-store franchisees managers nor the head office in Cape Town, South Africa are prepared to say much. Efforts to interview franchisee Ishmael Handa were not successful as he was out of the country. While the Botswana Operations manager, David Haggen could not be drawn to discuss the issue. “I have no comment,” was all he said. 

However Woolworths Press office in Cape Town hinted that indeed the giant store has interests in buying out local franchisees and taking over the stores, but preferred to tread carefully so as not to compromise negotiations. In a response to whether it is true Woolworths Holdings is taking over its franchise in Botswana, and what is going to happen to locals who have been holding the franchise for years, the press office’s said: “Woolworths took a strategic decision to move away from franchising stores in September 2010. We have made an offer to franchisees to buy their businesses. However, franchisees are entitled to continue to operate as franchisees until the end of their franchise agreements.” Business commentators say Woolworths Holdings move will highly benefit local customers and give them value for money through quality goods.

Woolworths is said to have taken this decision in order to re-energise its sales, as the stores are allegedly no longer as profitable as they used to be. It is said retail is about making sure that overheads are kept low, stock must be sold within a preferred time or as soon as it is shelved.