Almost half of Cash Crusaders' franchisees revolt and start competitor brand

A court ruling against Cash Crusaders on Friday is just the latest in a months-long saga pitting franchisees against the secondhand goods dealer.

It was unsuccessful in a bid to have a group of breakaway franchisees ordered to stay in the company.

They broke away in September 2023, to trade as a rival outfit named 'Cash Xchange'.

While using different signage, they continue to use Cash Crusaders’ payment systems and invoices which could potentially confuse consumers, reports BusinessLIVE.

At the centre of the dispute is Cash Crusaders' discontinuation of the so-called new loan initiation fees which customers had been charged every time they extended their monthly loans.

Along with secondhand goods, the franchiser sells new goods and also offers flexible loans with options to extend these up to 5 times.

The disgruntled franchisees say the change in the fee system was a breach of their franchise agreement and resulted in incurring substantial financial losses.

Before the dispute, Cash Crusaders had 250 outlets across the country, with 145 of these operated by franchisees, BusinessLIVE reports.

The breakaway group makes up more than one third of the franchise footprint, with around 78 franchisees taking part.

It's the first time they've seen something on this scale says Fred Makgato, CEO of the Franchise Association of South Africa (FASA).

"We've had issues coming forward but they didn't materialise to this level because both franchisors and franchisees managed to find common ground."

"We don't know what their issues with Cash Crusaders are (except for what is in media reports), and why those issues weren't brought before us. If they had been, it would have been easy for us to comment on the merits... but we're not empowered now maybe to interpret the terms of the franchise agreement and make a ruling." 

Fred Makgato, CEO - Franchise Association of SA

Makgato says the Association's doors are always open and it offers a mediation service which is run by experts in franchising.

"Parties must understand at all times that franchising is a network, without that network your business cannot survive... If you look at the number here, it is huge and that on its own has the potential to affect the bottom line."

Fred Makgato, CEO - Franchise Association of SA

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