Publications
Partners
- For more financial news, go to the News24 Business front page.
Public Competition Tribunal hearings into the acquisition of beauty salon franchisor Sorbet by Clicks have heard that the pharmacy giant had no interest in spending R105 million on a chain that isn't successful.
Proceedings on Wednesday centred on concerns from franchisees that their customer base may be eroded, including due to Clicks potentially restricting access of franchisees to Sorbet-branded products, or that they will find themselves competing for customers with group that has almost 1 000 stores.
Earlier in May, the Competition Commission recommended the approval, along with conditions, of Clicks' acquisition of the Sorbet franchisor, which oversees about 196 franchised salons, which provide manicures, pedicures, body massages and other services.
Clicks already owned 25% of Sorbet Brands, which holds the intellectual property of the group, and already sells products under the brand. Control of the holding structure would give Clicks its first franchise chain, or salons which operate under the banners of Sorbet, Sorbet Man and Candi & Co, among others.
READ | Clicks eyes all of Sorbet for R105 million in cash
Anton Roets of Nortons, acting for the merging parties, argued on Wednesday that Clicks had no interest in undermining the brand equity of Sorbet, and if it wanted to start offering salon services, it could do so under its own brand. Restricting access of Sorbet products to salons also didn't make much sense, given that Clicks can benefit from the "halo effect" of these products being associated with a salon.
Clicks and Sorbet had different "missions" he said, with Clicks being a pharmacist and retailer, not offering the atmosphere of a salon for those embarking upon a "pampering mission".
Gift cards and vouchers for Sorbet were also generally bought with intention of the recipient receiving treatment, he said, adding: "Clicks doesn't do manicures."
"It is obviously important to Clicks that they buy into a franchise network that is successful. The logic underpinning some of the concerns that have been raised by the franchisees is that Clicks would then act to the detriment to the network. It doesn't make much sense from a commercial perspective, doesn't make sense from an economic perspective," he said.
Conditions made public by the Competition Commission relate to issues including training, localisation, as well as ensuring that within five years of implementation at least half of Salons have at least half ownership by historically disadvantaged persons.
The commission acts as an investigating and enforcement body, with the final say up to the Tribunal.
