You Build the Franchise for 22 Years. Then What Do You Actually Own?

By Tam Goldsmith

A 22-year Sasol franchise relationship ended in court, raising difficult questions about goodwill, renewal and what a franchisee actually owns.

A South African Sasol franchisee spent more than two decades operating the same fuel business before its agreement came to an end. The resulting High Court fight raises an uncomfortable question about goodwill, property and what a long-serving franchisee actually has left when the contract expires.

Twenty-two years is a long time to build somebody else's brand.

Tabarakh Investments began operating the fuel business now known as Sasol West Village in Krugersdorp in 2002. The original agreement was with Exel before Sasol acquired the franchisor in 2003, and the relationship continued through a series of franchise agreements and renewals.

By the end of 2024, that relationship was finished.

Tabarakh did not believe the matter was quite that simple. It argued that after more than two decades operating the business, it had built valuable goodwill that another operator could eventually benefit from. It valued that goodwill at R3.5 million and turned to arbitration and the High Court as the end of its franchise agreement approached.

The court ultimately rejected Tabarakh's attempt to preserve its position while the arbitration continued. The judgment is worth reading because it exposes something franchise buyers rarely spend enough time thinking about when everybody is still excited about opening the business.

What exactly are you building for yourself?

Twenty-Two Years Did Not Create a Right to Another Five

Tabarakh argued that the long history of renewals had created a reasonable expectation that its franchise relationship would continue. Sasol's evidence painted a different picture.

According to the judgment, Sasol had repeatedly warned Tabarakh that its tenure was approaching its end. The problem was tied partly to the property itself. Sasol did not own the site and its underlying lease with landlord Bluehills Developments was due to expire at the end of 2024.

The franchisee knew this well before the final months of the relationship. The court recorded that Tabarakh had attempted to sell the business several times and that a potential 2021 sale did not proceed after the buyer was told Sasol could not offer a franchise agreement beyond 2024.

The final agreement ran only until December 30, 2024. Sasol continued reminding Tabarakh during 2024 that the date was approaching.

Against that history, the court found that Tabarakh fell well short of establishing a legitimate expectation that the franchise would be renewed.

That is an important distinction. Twenty-two years of operating the same business may feel permanent to the person running it, but commercial familiarity does not necessarily change what the agreement says.

Then There Was the R3.5 Million Question

The more interesting part of the dispute concerns goodwill.

Tabarakh argued that it had spent decades building value in the business and that allowing another operator to take over would effectively allow somebody else to benefit from that work. The franchisee valued its goodwill at R3.5 million and argued that it had not been given a fair opportunity to realise that value through a sale.

Sasol argued that the franchise agreement placed goodwill associated with its trademarks, trading names and intellectual property with Sasol. The court took a more nuanced view than simply saying the franchisee had created nothing of value.

It accepted that it might be too categorical to say Tabarakh had no goodwill at all. The problem was that whatever value existed depended heavily on the franchise agreement that allowed the business to operate as a Sasol franchise in the first place.

Once that agreement expired, the commercial value available to Tabarakh changed dramatically.

For franchisees, that is the part worth thinking about. An operator can spend years employing staff, knowing customers, improving the local business and building relationships while much of the value remains dependent on contractual rights that eventually expire.

The Property Owner Had a Say Too

There was another complication that makes this case particularly useful for anyone looking at fuel, hospitality or other property-dependent franchises.

Sasol was itself a tenant.

When its long lease expired, landlord Bluehills negotiated a new arrangement under which it wanted the right to nominate the next operator, subject to Sasol's approval. Bluehills also planned to refurbish the site.

The outgoing franchisee was therefore only one party in a commercial relationship involving the brand, the operator and the property owner. Each had different rights and different money at stake.

That matters because franchisees sometimes talk about "their location" as though occupying and operating a site creates permanent control over it. In many franchise systems, the property arrangements can be considerably more complicated.

A franchisee considering a long-term investment needs to understand not only when the franchise agreement expires, but when the underlying property rights expire and whether the two dates match.

Waiting Until the Last 18 Days Didn't Help

Tabarakh referred its dispute to arbitration just 18 days before the franchise agreement was due to expire.

The court considered that delay important. It noted that the franchisee had known for years that the agreement was approaching its end and referred to earlier Constitutional Court decisions in which fuel retailers had also waited until shortly before expiry before acting.

Tabarakh had previously tried to sell the business, with Sasol's cooperation, but those attempts had not succeeded. The court concluded that the franchisee had been given ample warning and opportunity to deal with the approaching end of the relationship.

The interim protection was therefore discharged and Tabarakh's application dismissed, with costs incurred after December 31, 2024 awarded to Sasol.

That outcome makes this more useful than a simple story about a large franchisor overpowering a small operator. The judgment does not support that interpretation. Sasol had warned the franchisee repeatedly, the contract had a defined end date and the franchisee knew the underlying property arrangements created a limit on its tenure.

The uncomfortable lesson survives anyway.

Twenty Years Is Long Enough to Forget the Contract Ends

Most people buying a franchise naturally concentrate on getting in. They negotiate funding, study sales, look at territories and calculate how long it might take to recover their investment.

A franchisee who succeeds may then spend ten, fifteen or twenty years building the operation. Employees stay, customers return and the business becomes the owner's main source of income and perhaps their largest personal asset.

That is precisely when the exit provisions become more important.

The Sasol West Village dispute shows why franchisees need to understand how renewal rights, property leases, goodwill and resale rights work long before an agreement reaches its final year. An owner approaching expiry should know what can be sold, how much time remains to sell it and whether the remaining franchise term is long enough for a buyer to justify paying for the goodwill that has been created.

Tabarakh's 22 years did not disappear. They supported a family, employed 16 people and created a business the franchisee believed contained substantial value.

The court's judgment nevertheless shows that longevity alone does not create ownership rights that the contract does not provide.

For franchise investors, that is not an argument against franchising. It is an argument for understanding the exit before spending years building the business.

What We Can Learn From This

Franchisees should review renewal, resale, goodwill and property rights years before their agreements expire, particularly where the franchisor controls the underlying lease. The Sasol West Village judgment shows that a long operating history does not automatically create a right to renewal, especially when the franchisee has been warned about the expiry date and has had opportunities to sell. Franchisors can also learn from the case: clear communication about tenure and renewal reduces the chance that a long relationship ends with completely different expectations on each side. Good franchise relationships can last decades, but both parties should understand from the beginning what happens when the final agreement ends.

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