Pick n Pay accused of a corporate raid

Pick n Pay

Pick n Pay franchisee John Baladakis is accusing the retailer of a corporate raid and trying to take over their stores.

Baladakis is the chief executive of the AJP Group, which has interests in franchised retail businesses and retail property development.

AJP Group’s franchised retail businesses include liquor stores, clothing stores, supermarkets, and pharmacies within the Pick n Pay franchise.

Baladakis has been a Pick n Pay franchisee for three decades and owns ten supermarkets and nine liquor stores.

He has served on several forums at Pick n Pay as well as on the Pick n Pay CEO’s Advisory Committee. He has been named a Pick n Pay Franchise Legend.

However, in recent years, the relationship between Pick n Pay and Baladakis soured following a dispute over unpaid fees.

The dispute started in 2018 after Baladakis racked up debt of over R200 million. It included money related to stock, franchise fees, and interest.

Baladakis claimed its debt resulted from a flawed discounting model that Pick n Pay implemented in 2018.

He argued that the model prioritised sales volume over profit margins, ultimately leading to financial distress and mounting debt for his business.

However, following a protracted legal battle, the court ruled in favour of Pick n Pay and dismissed Baladakis’ application to appeal the ruling.

On 28 February 2024, Pick n Pay filed a court application to liquidate the Pick n Pay franchise businesses owned by the Baladakis group.

Pick n Pay expects the liquidation application to be heard in the Johannesburg High Court around 12 March.

Pick n Pay CEO Sean Summers said they’ve done everything possible over a protracted period to avoid having to take such drastic action against this franchise group.

John Baladakis hits back

AJP Group CEO John Baladakis

Baladakis told Classic Business with Michael Avery that Pick n Pay is doing a corporate raid on their 30-year-old South African business.

He explained that Pick n Pay has a court order for the defection of their stores, based on a R47 million general notarial bond registered on the business.

The general notarial bond grants Pick n Pay a security right enforceable against the Baladakis group’s Pick n Pay stores.

“They have executed a R47 million general notarial bond order to attach a business worth hundreds of millions,” Baladakis said.

He said on 24 February 2024 that Pick n Pay tried to take over two of the stores which belong to the Baladakis group.

“Luckily, our legal team was quick enough to issue the appeal and stop them from taking over the stores,” he said.

Baladakis called Pick n Pay’s actions draconian. He said sitting down and resolving the situation would be more productive.

“You cannot keep a franchisee in an anti-competitive situation by force. You have to keep us in a franchise agreement by will.”

He said he remained a franchisee because they operate from a place of trust, having been a Pick n Pay franchisee for over 30 years.

“We believed we were part of the Pick n Pay family. We believed we were going to find a mutually acceptable solution.”

He is still hopeful of an amicable solution. “We want to run our business. We want to look after our staff. We just want to trade and grow our business.”

“We don’t want to sit with legal arguments, courts, and appeals. We just want to trade,” Baladakis said.

“If Pick n Pay and us can find a good solution, then why shouldn’t we?”