Golden Fried Chicken (Pty) Ltd v Sirad Fast Foods CC and Others

The appellant, Golden Fried Chicken (Pty) Ltd, was the franchisor of the Chicken Licken fast-food brand. The first respondent, Sirad Fast Foods CC, was a franchisee under a written franchise agreement concluded in October 1988 for a period of ten years, expiring on 31 October 1998. The agreement allowed for a possible five-year extension, subject to written notice and execution of a new agreement. Sirad failed to give the required notice and no new written agreement was executed. Despite the expiry, the parties continued their relationship as before: Sirad traded as a Chicken Licken outlet, paid royalties, underwent quality control inspections, received supplies, and complied with instructions (including renovations). In August 1999, the appellant informed Sirad that the franchise agreement had expired and instructed it to cease trading as a Chicken Licken outlet. The appellant then sought an interdict to prevent Sirad from using its trademarks.

The appeal was dismissed with costs, and the appellant was not granted the interdict sought against the respondents.

The case is significant for South African contract and franchise law as it confirms that tacit relocation can apply to franchise agreements, not only leases. It clarifies that a tacit relocation constitutes a new contract arising from conduct, and that non-variation and non-waiver clauses in an expired agreement do not bar the conclusion of a new tacit agreement.