A Roman’s Pizza franchisee is gearing up for a court battle in the new year to hold on to his four stores after winning an urgent interdict to stop the franchisor from shutting them down two-and-a-half weeks before Christmas.
Basil Kassimatis runs four Roman’s Pizza restaurants in Johannesburg and once worked as COO at the firm’s head office. However, he has not signed new leases for his four stores, which the firm wants him to do, arguing it can legally terminate his business as he did not comply.
The firm gave him two months’ notice, which ended on December 7, to shut down and remove the branding, warning they would bar his access to the firm’s software.
In court papers, Roman’s Pizza CEO John Nikolakakis says, “Had [Kassimatis] simply signed new five-year agreements the respondent would not have terminated the applicant franchise agreements and no-one would suffer any harm.”
Kassimatis says he has spent R1m on legal fees fighting to keep the stores open and save 38 jobs before Christmas. “We will continue to fight for our employees and their families, at a time when SA can ill afford more unemployment. We also remain committed to our customers, and the communities we serve.”
He says he has been involved in protracted negotiations with Roman’s Pizza and Nikolakakis over the status of his stores’ franchise agreements. He disputes the claim that he needs new leases.
At the heart of the dispute is whether Kassimatis needs to pay franchise royalties for the use of the brand. Royalties from stores are one way for franchise businesses to earn an income.
Kassimatis argues he had an agreement with Arthur Nikolakakis, father of John and the founder of the business, not to have to pay royalties. Arthur Nikolakakis is related to Kassimatis’ wife.
Kassimatis owns stores in Kempton Park, Edenvale, Meadowdale and Alberton. His initial five-year contracts from 2015 and 2016 exempted the stores from paying royalties due to an agreement with Arthur Nikolakakis.
He continues not to pay royalties on the understanding that a clause in the contracts states that if the lease is not renewed, the existing contract remains in place for five years. This would allow his stores to remain open to 2025 and 2026.
Roman’s, however, maintains he owes it R1m in unpaid royalties.
Kassimatis argues in court papers that he recorded the founder on the phone in October telling Kassimatis’ wife he does not need to pay royalties. But the firm’s CEO says in his affidavit that Kassimatis is taking advantage of 81-year-old Arthur Nikolakakis’ age and declining health.
“It is according[ly] clear that Mr Kassimatis and his wife will go to great lengths to derive a financial benefit for themselves to the detriment of my dad and my family.
“My dad is an amazing businessman having built the Roman’s brand from scratch. He has an immense passion for the business and the brand.”
John Nikolakakis told Business Day: “We requested that he [Kassimatis] signs new franchise agreements as per all our franchisees as his previous franchise agreements had expired. The agreements he alleges that he signed in 2021 were signed by him alone and he included material changes that were never discussed or approved by Roman’s Pizza.”
Nikolakakis said Roman’s Pizza derives its income from royalty fees paid for the use of the franchisor’s intellectual property, goodwill and reputation. “It is not uncommon that franchisee agreements are terminated based on nonpayment of royalty fees.”
Kassimatis said the franchise industry needs an overhaul as franchisors have significantly more power than individual stores. “We will continue to operate our franchise stores diligently and in accordance with the law, while advocating for a more just and transparent franchising industry.”
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