A deeply indebted Pick n Pay franchisee has been dealt a decisive legal blow in his battle against the retail giant. Pick n Pay has moved to have the franchisee’s businesses liquidated.

John A Baladakis, a former head of the Franchise Association of SA, has been a Pick n Pay franchisee for three decades and operates 10 supermarkets and nine liquor stores on the East Rand. The stores have an annual turnover of more than R1.5 billion.

Pick n Pay says the group owes it more than R224 million and filed an urgent application with the Johannesburg High Court last week to gain control of the Baladakis stores.

In his defence, Baladakis contended that Pick n Pay’s implementation of a bulk discounting model six years ago put his franchise group in its current situation.

He said the changes in the discounting model Pick n Pay introduced to its franchises in 2018 favoured sales volumes over margins and had caused financial distress and escalating debt in his business. Baladakis told News24 previously he did not think the debt was lawful, so he decided to challenge it.

But the court ruled in favour of Pick n Pay, with the judge referring to some of arguments made in the Baladakis case as “vague”, “frivolous” and “superficial”.

Baladakis then applied for leave to appeal the order, but on Wednesday, a high court judge dismissed the application with costs.

Earlier on Wednesday, Pick n Pay filed a court application for the liquidation of the Pick n Pay franchise businesses owned by Baladakis. It’s the first time in Pick n Pay’s history that it has applied to liquidate a franchise business.

“We’ve done everything possible over a protracted period of time to avoid having to take such drastic action against this franchise group,” said Pick n Pay CEO Sean Summers.

“On a personal level, it is deeply disappointing, as I have known the family for some 30 years and have not taken this decision without due consideration.”

He says the group continued to supply the franchise stores with daily stock, but that Baladakis stopped all payments in the past week.

“[The] truth of the matter is that the serious financial situation that the Baladakis [group] finds itself in is a reality. We have many other franchisee groups – some even larger – and individual franchisees who are running profitable and sustainable businesses.”

According to Summers, the Baladakis group made it clear that it would continue to frustrate the process by continuing to appeal judgments against it.

“We will always follow due legal process, and it was never our intention to have this play out in the public domain. The facts will become apparent with time – we have nothing to hide.”

Pick n Pay expects the liquidation application to be heard in the Johannesburg High Court around 12 March.