Pick n Pay has had enough – files to liquidate franchisee

Pick n Pay has emerged victorious in a legal battle against long-standing franchisee John Baladakis, who owes the retailer over R220 million.

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

This move came after the franchisees’ continued accumulation of overdue debt, which has reached R224 million. 

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, the court sided with Pick n Pay, saying some of Baladakis’ arguments were unsubstantiated and weak. 

Last week, the Johannesburg High Court ruled in favour of Pick n Pay in an urgent application against the Baladakis group to perfect its security over their 10 supermarkets and 9 liquor stores. 

The Baladakis group immediately applied for leave to appeal the order, which hearing was heard in the High Court. The judge dismissed Baladakis’ application with costs.

Therefore, with the legal path seemingly exhausted, Pick n Pay is seeking to liquidate Baladakis’ franchise businesses. 

This marks the first time in Pick n Pay’s history that they have resorted to such a measure against a franchisee.

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, “We’ve done everything possible over a protracted period of time to avoid having to take such drastic action against this franchise group.” 

“Personally, it is deeply disappointing as I have known the family for some 30 years and have not taken this decision without due consideration.”

“But the truth is that the serious financial situation that the Baladakis finds itself in is a reality. We have many other franchisee groups – some even larger – and individual franchisees who are running profitable and sustainable businesses.”

Summers said the retailer has a duty to act in the best interests of all parties, including its franchisees and the Pick n Pay Group.

The CEO said Pick n Pay was left with no other options than to seek to liquidate the franchises, given that the Baladakis Group has “made it clear that they will continue to frustrate the process” 

He explained that this would expose Pick n Pay to an ever-increasing debt for which the Baladakis Group is making no payment currently.

“We will always follow due legal process, and we never intended to have this play out in the public domain. The facts will become apparent with time – we have nothing to hide,” Summers said.

“We have an exceptional family of franchisees who are profitable, loyal, hardworking and a credit to the group. We believe we have done all we can to try and avoid this action with the Baladakis Group, but we are now at the end of the road.”