MICAREN EXEL FRANCHISE DISCLOSURE DOCUMENT FOR AMA GLUG

GLUG, QUICKFILL AND MEGATOWN FILLINGSTATIONS

Section 1: Background
Micaren Exel Petroleum Wholesaler has been developing Retail Filling Stations
since Exel Petroleum was in its infancy. We contracted various rights and
advantages with Exel and later with Sasol. This has advantages for both entities.
Our philosophy is simple, yet powerful; we focus on low volume sites in which
other Oil Companies have little interest, including Sasol. During the last 10 years
we have built up a wealth of knowledge with regard to all aspects of the fuel
industry, namely wholesale, retail, distribution and site conversion.

1. Why will we succeed with low volume stations while other oil
companies close them?
- Compare the efficiency of smaller companies against the ‘red tape’ of
large international companies.
- In-house operations instead of outsource work contracts. Although we
adhere to SABS 089 and ISO standards for installations, we do not
have in-house specifications that protect our image and liabilities that
the multi national companies enjoy, thereby placing our profitability at
risk.
- The culture of multi national companies with their first world standards
are not in accordance with the typical nature of developing countries.
(The realism of operating in Africa)

During our travels looking for re-branding opportunities (filling stations that oil
companies wish to close) we became aware of a need for developing retail fillings
station in townships. Two problems exist, namely the capital outlay versus the
turnover of low volume filling stations and un-empowered entrepreneurs. This
opportunity has vast potential and a modular filling station has been designed,
which resolves the construction cost for the filling stations. The un-empowerment
problems are two fold, i.e. entrepreneurial skills and financial know-how. The
Franchise concept partly solves these problems.

The Franchise includes the land, forecourt, RCC, staff and management training
as well as financial management systems and controls by means of a centralized
back office system. However, the Franchisee still has to make a substantial
investment in order to use the terms of the Franchise arrangement. A capital
investment of approximately R800 000.00 for the Ama Glug Glug and R1,800
000.00 for the Quickfill (see Franchise Disclosure document for details).

Various financial institutions made funds available to HDSA citizens. A 10%

deposit is required but securities are not necessary, the viability of the project
however is a pre-condition.

Business Partners, a shareholder of Micaren Exel, makes funds available for the
funding of the capital requirements of the Ama Glug Glug / Quickfill Franchise.

1.1 Retail Convenience Centre

The Retail Petroleum Market has been revolutionized in that it no longer is

a “garage”, where you stop and get petrol, but a facility where you can
conveniently:

▪ Get a bite to eat.

▪ Stock up on food essentials for you home.
▪ Draw some cash/make a deposit.
▪ Have your car washed.
▪ Buy a lotto ticket.
▪ Replenish you cellular airtime

Micaren Exel Retail Convenience Centre (‘RCC’) not only offers most of
the above to motorists but also allows for a great business opportunity to
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 individuals on a business format franchise basis. At Micaren we subscribe
to the principle that owner-managed businesses are generally more
successful because they are well managed and operated by committed
hands-on owner-operators.

1.2 The RCC Business Format

The RCC is a location which houses a number of complementary business

units. The main businesses operating at each site are:

▪ A forecourt selling petroleum products.

▪ A convenience store with quick services Mams Food Restaurant.
▪ An automatic teller machine.

Other businesses may also be operated provided they are appropriate for
the market the RCC services. These include but are not limited to:

▪ Car wash
▪ Windscreen repair
▪ Oil Exchange Service

1.3 The RCC Franchise Format

Our franchise philosophy is as follows:

▪ The Exel brand is our very nucleus and is to be represented in

accordance with required formats meeting specified standards.
▪ Through the mutual interdependency of Ama Glug Glug, Quickfill
and Megatown Franchisees of our RCC network we will strive to be
the RCC of choice for the South African motorist.

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 ▪ Standards of operation will be prescribed to ensure the desired
uniformity throughout the RCC network.
▪ The RCC franchise opportunity allows for both Micaren and
Franchisees to be profitable.
▪ Micaren makes the required investment to secure the land and
construct facilities at the site. The Franchisee is responsible for
making an investment to obtain the rights to operate the site for
which an “upfront franchise fee” is required. Further investment by
the Franchisee in the working capital for the RCC and all its
business components is required.

1.4 Do you meet the profile of the desired franchise?

In order for the franchise to be a success, Micaren endeavours to attract

the most suitable candidates. Purchasing a franchise is a very serious
decision and we advise that as a potential Franchisee you assess
whether you are able to make the required commitment. Important
questions you need to ensure you make a sound decision:

▪ Are you, with the support of your family, able to commit to the
responsibilities and demands of managing a business which
operates 24 hours a day for 7 days a week?
▪ Does the potential income that the RCC could generate meet your
personal income requirements?

In our recruitment and selection process we look for the following attributes
and skills in a potential franchisee:

▪ The Franchisee must be an individual who wants to be a successful

businessperson and who understands that it takes hard work and
dedication to be successful.

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 ▪ The Franchisee must be willing and open to being guided by the
franchise system and the franchisor and be committed to comply
with the system.
▪ The Franchisee must be able to devote full time commitment to
managing and operating the franchise.
▪ The Franchisee must accept the responsibility of developing and
managing people who are committed to fulfilling their roles. This
requires sound management and operation of the RCC making it
the customer’s first choice in the respective area of operation.

Whilst all candidates will be considered, we are committed to develop

BEE-owned franchises through various initiatives which have been set up.

Section 2: Franchising General

Franchising has seen its success and failures over the past number of
years. Many of the failures have been a result of a lack of knowledge
about the base principles of franchising which we advise are essential for
you to understand as a potential Franchisee. Equally important is the
understanding and commitment we have at Micaren to being a franchisor.
Make sure you understand and acknowledge these base principles:

▪ What a franchise is.

▪ What it means to be a Franchisee.
▪ What can be expected from a franchisor.
▪ What responsibilities a Franchisee has.
▪ What the risks are a Franchisee faces.

2.1 What is Franchising?

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 Franchising is a business relationship where the franchisor licenses
independent people (Franchisees) the right to market the franchisor’s
products and services, use its intellectual property and use a proven
method of doing business (business system) for a fixed period of time
where both parties benefit financially.

2.2 Who is the Franchisor?

The franchisor is the owner of the brand and business system, which is a
proven business formula including branding, marketing, purchasing power,
expertise, managing and administrating the business. The franchisor, in
this capacity, grants Micaren franchises.

The franchisor has ownership rights to the brand and business system. By
granting third parties the right to benefit from the intellectual property, it
earns a fee. The franchisor requires personal commitment from
Franchisees that they will not damage these assets (intellectual
property) in any way through any wrongdoing. Consequently, there are a
number of obligations a Franchisee needs to accept and comply with to
ensure the integrity of the brand and the business system.

2.3 Why join a Franchise Operation?

PROVEN BUSINESS SYSTEM:

The franchisor has proven and refined the business, and allows
Franchisees to emulate this fine-tuned formula.

SKILLS BASE:
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The franchise organization allows the Franchisee access to the specialized
and highly skilled knowledge of the Head Office management team whilst
his/her independence as a self-employed operator.

ONGOING RESEARCH AND DEVELOPMENT:

The Franchisee has the benefit of Micaren’s continuous research and
development to maximize the full potential of the business, as well as the
benefits of any patents, trademarks, copyrights, trade secrets and secret
processes.

ESTABLISHED BRAND AND TRAINING:

The Franchisee benefits from the franchisor’s already respected and
identifiable brand as well as the extensive training and back up that is
provided. The Franchisee and staff will be trained at the initial stages, and
as new training programs are developed, further training is provided.

CAPITAL INVESTMENT:
In the case of the RCC, Micaren invests significant funds for each RCC to
be set up. It then grants a Franchisee the rights to operate the RCC facility
for a fee. In so doing, Franchisees are able to have access to a
sophisticated modern facility which, on their own, would be beyond most
individual’s financial resources. However, the Franchisee is still required
to make a substantial investment to be allowed access to use the terms of
the franchise arrangement.

INITIAL ASSISTANCE:
The franchisor will also provide assistance with:
▪ Marketing and advertising required, including initial launch of the
business.
▪ Design and layout of the premises.
▪ Incorporation of trade name(s) and trademarks.
▪ Training of staff.
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 ▪ Installation of equipment, fixtures, fittings, etc.
▪ Management, stock control, front and back office systems.
▪ Financial management systems

2.4 Do I face any risks?

Like any business there is no guarantee of success. Franchised

businesses usually have a higher success rate than other independent
businesses because of many of the reasons outlined in this document.
However, franchisees do fail. Some of the reasons are:

▪ Investment of insufficient capital in the business resulting in

excessive borrowing.
▪ Insufficient research on the part of the Franchisee resulting in
unrealistic expectations.
▪ Lack of compliance with the franchised business system.
▪ Lack of commitment, dedication and motivation to the time
requirements of the business i.e. absent owners.
▪ Undesirable business environment.

Section 3: Salient Information on Micaren

Company Names: Micaren Exel Petroleum Wholesaler (Pty) Ltd.

Directors: JF de Bruyn (Managing Director)
A de Bruyn
G Marnewick – Botswana Citizens
JC Marnewick – Botswana Citizens
Business Address: Mams Truck Inn
Schweizer Road, Vryburg
North West Province
Contact Number: Phone – 053-927-6165
Cell – 082 371 6672 (JF de Bruyn)
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 Fax – 053-927-6166
Email – jaapmicaren@mtnloaded.co.za
Postal Address: PO Box 784
VRYBURG, 8600
Registered Address: PO Box 784
VRYBURG, 8600
Bankers: ABSA Bank, Vryburg
Acc. No. – 40-4829-6211
Acc. Holder: Micaren Filling station& Petroleum
Wholesalers
Auditors: Boshoff Visser
Postnet Suite 12
Private Bag X507
KATHU, 8446
Tel – 053-723-1058
Contact person – Louis Fourie
Attorneys: Abel Bester Incorporated
25 De Kock Street, VRYBURG, 8600
Tel – 053-927-5773
Contact person – Me Jakomarié Bester

Micaren Exel Petroleum Wholesaler (Pty) Ltd is a family business,

between the De Bruyn and Marnewick families. The four directors namely:
Jaap de Bruyn, Annes de Bruyn, Gerrie Marnewick and Johan Marnewick
decided to start a business with the sole purpose of growing wealth for the
descendance of the families. The petroleum industry was our preferred
choice to invest in and fortunately at that time an opportunity in the newly
formed Exel Petroleum (Pty) Ltd was present to us.

From the outset we took cognisance of the fact that, if we, as a non refiner
wholesaler of petroleum products, want to build our own brand in retail
filling station business, must structured our company in a way that our
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 dealers will have the comfort that the future existence of Micaren Exel is
covered for.

To reached this goal:

• We entered in a partnership with Business Partners
• The shares in Micaren Exel is held by Trusts
• The Trustees of the Trusts is descendance of the families.
• The Trustees run the day to day business of Micaren Exel.
• The directors are only the founders of the Trusts and will be replaced
as a vacancy on the board of directors arises, by the Trustees of the
different Trusts.
• Micaren Exel is the sole beneficiary of life covering insurance policy of
a substantial amount on the life’s of all the directors (founder
members).

Section 4: Micaren’s Management Team:

4.1 Directors
The four directors of the company are all accomplished businessmen in
their own right.

JF (Jaap) de Bruyn is the managing director of the company and is

responsible for overseeing all activities. Jaap has been in business for
many years and has had involvement in farming, the meat industry and the
building industry. Furthermore, he also has prior filling station experience.
Since his taking over the full management function of the group, growth
and expansion have reached new heights. He is also responsible for
identifying new opportunities and pursues them through negotiation to final
implementation. Jaap is also a qualified land surveyor and involves
himself closely in the construction and development of new sites.

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G (Gerrie) Marnewick is the managing director of the Kgalagadi Wholesale
group of Companies in Botswana. Being a South African and Botswana
citizen, he is accustomed to the culture and business manner of the
Botswana people. He is the driving force of our expansion in that country.
The Kgalagadi Group operates five wholesale businesses in the western
and southern areas of Botswana, as well as a filling station at one of the
wholesalers. Furthermore, the group has recently opened an Exel filling
station on the Trans Kgalagadi highway that is the flagship for Exel
Petroleum Ltd in both South Africa and Botswana. Gerrie assists Jaap in
the management of the group, in so far as it pertains to negotiating
expansions, supplier agreements with Exel Petroleum Ltd and other
strategic matters. He has a degree in geo-hydrology and compiles the
Environmental Impact Assessments (EIA’s) on all new developments
undertaken by the Group.

A (Annes) de Bruyn is civil engineer by occupation and is a Director in the

firm VV Consulting Engineers, operating from Pietersburg and Pretoria.
His involvement in the daily management is limited to certain inputs
regarding expansion and strategy. Apart from the above, he is responsible
for engineering works, plans and layouts regarding new developments.

JC (Johan) Marnewick is also involved in the Kgalagadi Wholesale Group,

but has recently taken over the management of the Exel filling station
mentioned previously. He has a broad business background, from within
the Kgalagadi group, and his managerial inputs are similar to those of
Annes de Bruyn.

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Section 5: Salient Elements of the Franchise Agreement

5.1 Grant of franchise

5.1.1 Micaren Exel grants the Franchisee a non-exclusive license to operate an

RCC at the premises for the duration of the Franchise Agreement, using its
trademarks and intellectual property in accordance with defined standards
of operation and procedures and the terms and conditions of the Franchise
Agreement.

5.2 Duration

5.2.1 The initial term of the Franchise Agreement is 5 (five) years.

5.2.2 The franchisor is entitled to grant the franchise an additional 5 (five) year
term. Whilst the extended period is granted at the discretion of Micaren
such grant, will not be unreasonably withheld. The renewal period is
subject to the entering into the current franchise agreement at the time of
renewal.

5.3 Use of trade name and trademarks

5.3.1 The Franchisee is required to use the trade name and trademarks in all
correspondence, marketing documentation, administrative documents and
any other material. Use of the trade names and marks will be in
accordance with the Manuals.
5.3.2 The Franchisee is not to make any reference to the trade name and
trademarks in the registered names of its legal entities and would where
needed, clearly indicate the registered name of the franchise and that it
operates under licence to Micaren.
5.3.3 The Franchisee will not acquire any rights in the Micaren/Exel trademarks
through usage.

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5.4 Petroleum Products and Convenience Store Supply

5.4.1 Micaren undertakes to supply the Franchisee with its requirements for Exel
Products.
5.4.2 The Franchisee undertakes during the currency of the Franchise
Agreement to purchase exclusively from Micaren its entire requirements
for petroleum products.
5.4.3 Micaren shall sell Exel products to the Franchisee at Sasol Oil’s retail list
price on the date of delivery and should the petroleum industry be
deregulated at any time during the currency of the agreement, at such
ruling price of Micaren, as applicable to the geographic area and class of
business. Further to this, Micaren will not allow any discounts on the ruling
retail price to the Franchisee.
5.4.4 The Franchisee is required to appoint Micaren as its sole supplier of
petroleum and convenience store products so as to ensure the quality of
products and to ensure margins are maintained.

5.5 Equipment and Equipment Maintenance

5.5.1 Micaren shall be responsible for installing and maintaining the storage and
dispensing equipment.
5.5.2 The Franchisee is required to comply, in respect of the storage and
dispensing equipment, with all obligations imposed by the provisions of
relevant Health, Safety and Environmental Legislation and such Health,
Safety and Environmental Standards as may from time to time be
prescribed.
5.5.3 The maintenance of the equipment shall be undertaken by Micaren in
accordance with specified standards and at Micaren’s cost.
5.5.4 The maintenance of equipment listed shall be undertaken by the
Franchisee in accordance with specified standards at the Franchisee’s
cost.

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5.6 Micaren’s Initial Obligations

5.6.1 Micaren shall provide the Franchisee with the premises which are
constructed and equipped in accordance with the Micaren design
requirements. The premises will incorporate equipment, fixtures and
fittings, signage to enable the operation of the RCC with the exception of
certain specified equipment. (Refer par. 8.3 note 3)
5.6.2 Micaren shall disclose the System, make the Know-how and Manual
available to the Franchisee and provide initial training for all purposes
contemplated by the Franchise Agreement.
5.6.3 Micaren undertakes to advise the Franchisee, to the extent that it
considers it necessary and desirable, with the recruitment and selection of
persons who will be employed by the Franchisee.
5.6.4 Micaren shall advise the Franchisee of any equipment not supplied by
Micaren which is required by the Franchisee, to meet its obligations in
terms of the Franchise Agreement and requirements of the Manuals
5.6.5 Micaren shall advise the Franchisee as to the required incorporation of the
trade name and trademarks on vehicles, stationary and uniforms.
5.6.6 Micaren shall advise the Franchisee on the required initial marketing for
the RCC and its component parts. The cost of all initial marketing is the
responsibility of the Franchisee.
5.6.7 Micaren will provide the Franchisee with Manuals specifying certain
policies and procedures the Franchisee is required to adhere to, in the
operation of the RCC.

5.7 Micaren’s Continuing Obligations

5.7.1 Micaren undertakes, on an ongoing basis, to:

▪ Advise the Franchisee of local area marketing and promotional

initiatives it may implement

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 ▪ On a daily base measure the Franchisee’s performance relating to
all functions of operating the business including but not limited to
marketing and selling, merchandising, trading and financial
performance, administration and general operations, product
information, etc.
▪ Review financials and management information to assess the
profitability of the RCC and its component parts.
▪ Make visits to the site and premises on a regular basis.
▪ Advise the Franchisee of any Ancillary Businesses which are
considered by Micaren to be appropriate for the site.
▪ Ensure the continuity of supply of Exel Petroleum products, services
and equipment required by the Franchisee for the proper operation
of the RCC.
▪ Provide the Franchisee with benchmarking information concerning
the operational and financial performance of other franchisees in
similar classes and categories, and
▪ Assist the Franchisee, at the Franchisee’s request, with reasonable
support to resolve problems.

5.7.2 Should Micaren require changes at the site and premises, these shall be
directed by Micaren and the cost thereof borne by Micaren with the
exception of additional Ancillary Businesses in which the Franchisee may
be required to invest.
5.7.3 Should Micaren require upgrades to stationary, and/or staff uniforms, these
shall be directed by Micaren and the cost thereof borne by the Franchisee.

5.8 Franchisee’s Initial Obligations

5.8.1 The Franchisee shall:

▪ Provide adequate finance through a National financial institution

loan for the setup and ongoing operation of the RCC.
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 ▪ Recruit and select staff in accordance with the advice and
suggested procedures outlined in the Manuals provided by Micaren.
▪ Undergo training and ensure management and operational staff
undergo training according to the required standards.
▪ Ensure adequate stock-in-trade for the RCC prior to opening is
procured according to the prescribed stock levels as outlined in the
Manuals.

5.8.2 The Franchisee will co-operate in all respects with Micaren and to the
extent required by Micaren, to ensure the successful and timeous set-up of
the RCC in accordance with Micaren’s specifications.
5.8.3 The Franchisee should ensure all statutory registrations are completed as
listed in the Manuals.
5.8.4 The Franchisee should ensure the necessary deposits are made and
administration completed for the connection of water and lights and
telephone lines.
5.8.5 The Franchisee should plan an initial marketing launch, which Micaren is
required to approve prior to implementation.

5.9 Franchisee’s Continuing Obligations

5.9.1 Marketing and Promotion

The Franchisee is required to:

▪ Marketing and promoting the RCC in the area in which the site is
located in order to advertise and promote the business in the local
area.
▪ Allocating 1% of gross profit to locality marketing and advertising.
Micaren will consult with the Franchisee in terms of the exact nature
of the locality marketing programme. The costs of local area
marketing are the responsibility of the Franchisee. All marketing
materials are to be approved by Micaren.
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 ▪ Participating in national promotions as specified from time to time by
Micaren.

5.9.2 Training and Operational Standards

The Franchisee is required to:

▪ Adhere to the operational standards as required by Micaren and
outlined in the Manuals, which will be updated, from time to time.
▪ Ensure proper management and supervision of the RCC during
trading hours.
▪ Use only trained staff in the conduct of the business and further
ensures that the staffs appearance and conduct meets standards
prescribed by Micaren.
▪ Inspect the site daily to ensure the fuel is uncontaminated and in a
fit state for sale to the public.
▪ Contract with a waste removal contractor for the regular removal of
waste products from the site.
▪ Not store or allow to be stored on the premises any goods or items
which are not directly related to the RCC.
▪ Train and motivate staff to create an environment in which the
highest levels of performance can be maintained.

The Franchisee is further required to:

▪ Maintain the confidentiality of the intellectual property of Micaren.

▪ Adhere to the required trading hours of the RCC.
▪ Use the site only for the purpose of conducting the business the
Franchisee is licensed to operate in terms of the Franchise
Agreement.
▪ Inform Micaren of any change in the financial circumstances of the
Franchisee and/or its shareholders or members in their personal

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 capacities which may detriment the Franchisee’s ability to meet its
obligations in terms of the Franchise Agreement.
▪ Keep the forecourt, convenience store, fixtures, fittings, equipment,
displays and the entire premises in a clean and tidy condition, in a
good state of repair and ensure that the premises are properly lit,
according to specifications, for night time trade.
▪ Act within the bounds of any and all laws and local bye-laws. Not
allow anything to be done on the premises which may prejudice the
licence to trade for the business.
▪ Not entice any members of staff from Micaren or Sasol Oil or other
Franchisees.
▪ Report any fuel leaks to Micaren as soon as identified or suspected.
▪ Not do anything or allow anything which may expose the Franchisee
or Micaren to criminal or civil charges.
▪ Allow Micaren and its representative’s access to the premises at all
reasonable times.
▪ Notify Micaren immediately of any complaint relating to the conduct
of the business by any statutory body or any criminal or civil charge
laid against the Franchisee or the RCC.
▪ Maintain good relations with employees, not to engage in any unfair
labour practises and adhere to all labour laws.
▪ The Franchisee is responsible for all the operational and
management cost to operate the RCC including but not limited to:

o The increase in rates and taxes after the commencement

date.
o All local services required including but not limited to
electricity and water.

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5.9.3 Information management

▪ The Franchisee is obliged to utilise the point of sale and back office
accounting and administration system specified by Micaren.
▪ Franchisee shall be responsible for purchasing the hardware and
software systems and installing these at the premises.
▪ The Franchisee shall be responsible for maintaining the hardware
and software in line with the requirements of Micaren and to ensure
they are in working order.
▪ The costs of all enhancements to the system shall be the
responsibility of Micaren.
▪ The Franchisee shall provide Micaren with information outlining
management and financial information as specified in the Manuals.
▪ The Franchisee shall not do or omit anything which may prevent the
proper functioning of the hardware and software or maintenance
thereof by Micaren or its appointed agents.

5.9.4 Insurance

The Franchisee shall maintain adequate insurance and provide proof of

such to Micaren including but not limited to:
▪ Insurance against fire, theft, robbery, earthquake, explosion, storm,
riot and other short term cover as specified –
▪ Loss of product insurance.
▪ Public liability insurance.
▪ Income protection insurance.
▪ Key man insurance.

5.9.5 Administration and Accounting

The Franchisee is responsible for:

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 ▪ All administration and accounting requirements as specified in the
Manuals.
▪ Preparing monthly management accounts and providing copies
thereof to Micaren with 15 (fifteen) days after the close of the
calendar month to which the management accounts relate.
▪ Providing Micaren with daily financial information on sales, stock
levels and bank reports.

5.10 Ancillary Businesses

5.10.1 Micaren may specify at the time of entering into the Franchise Agreement
the Ancillary Businesses which are to be opened and operated on the
commencement date.
5.10.2 Should Ancillary Businesses be introduced during the term of the
Franchise Agreement then:

▪ The Franchisee shall be obliged to establish the Ancillary Business

on the terms and conditions required by Micaren which shall not be
unreasonable.
▪ The establishment of additional Ancillary Businesses is deemed to
be integral to the brand and market positioning of Micaren and
thereby material to executing the terms and conditions of the
Franchise Agreement.

5.11 Performance Criteria

5.11.1 Performance criteria will be agreed upon with the Franchisee and should
include:

▪ Achieving justified volumes within the 24 months after the Commencement

Date.
▪ Achieving the required annual growth in volumes.
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 ▪ Achieving required gross profit percentage in the convenience store after
shrinking in excess of 25%.
▪ Achieving an annual growth in convenience store turnover in line with
CPIX, and
▪ Agreeing and establishing Ancillary Businesses recommended by Micaren
during the term of the Franchise Agreement.

5.12 Termination

5.12.1 Causes of termination

Micaren shall be entitled to terminate the Franchise Agreement if:

▪ The Franchisee fails to pay any amount due to Micaren and fails to
make payment within 7 (seven) days after receipt of written notice
from Micaren to make payment.
▪ The Franchisee takes any action or omits to take any action or does
anything or permits anything to be done by the Franchisee, its
shareholder/members, its agent or employees and or
representatives which could harm or have a detrimental effect on
Micaren, its reputation and/or any other Franchisees or damage the
franchise network.
▪ The Franchisee fails to meet any of the performance criteria set out
in the Franchise Agreement or agreed upon otherwise.
▪ The Franchisee discloses to any third party any part of the System
or the know-how e.g. manuals, documents, etc in breach of
provisions of the Franchise Agreement.
▪ The Franchisee fails to meet any of its financial obligations in terms
of the Franchise Agreement and fails to remedy its default within 14
(fourteen) days after receipt of written notice calling upon the
Franchisee to meet the outstanding financial obligation in question.

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▪ The Franchisee for any reason whatsoever closes for operation the
whole or in part of the Business or any Ancillary Businesses for a
period of 12 hours or more unless otherwise allowed for by Micaren
in writing or in Manuals.
▪ The Franchisee contravenes any rules or regulations of any relevant
authorities in the conduct of the business and Ancillary Businesses
▪ The Franchisee commits any breach of any of its other obligations
in terms of the Franchise Agreement or fails to operate and manage
the Business and Ancillary Businesses in accordance with the
Systems and standards as set out in the Manuals and the Franchise
Agreement, all of which are deemed to be material, and if such
breach is capable of remedy, the Franchisee fails to remedy within
14 (fourteen) days after receipt of written notice calling upon the
Franchisee to remedy such breach.
▪ A judgement, which has the effect of the Franchisee performing
under the terms and conditions of the Franchise Agreement, taken
against the Franchisee, its shareholders, members or designated
parties which the Franchisee does not satisfy in full within 14
(fourteen) days of such judgement coming to the Franchisee notice
or if the Franchise fails within such period to apply for a rescission
of such judgement or appeal the judgement and thereafter fails to
prosecute such rescission or appeal expeditiously.
▪ The Franchisee, its shareholders, members or designated parties
as the case may be, is convicted of a criminal offence involving
dishonest or commits an act of theft, fraud, misrepresentation,
dishonesty or unethical conduct during the term of the agreement.
▪ The Franchisee, its shareholders and/or members in their individual
capacity commits an act of insolvency or is sequestrated, whether
by final or provisional order or attempts are made to make any
arrangements or composition with its creditors.
▪ The agreement comes to an end by the effusion of time.

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 ▪ There is a change in shareholding or membership which has not
been approved by Micaren in writing.
▪ The Franchisee enters into another agreement for a similar or
competing Franchise business without the necessary approval of
Micaren in writing.
▪ The Franchisee wilfully misrepresents, makes false statements or
withholds trading, financial and other information required in terms
of the Franchise Agreement and the Manuals or requested by
Micaren from time to time, relating to the Business and Ancillary
Businesses.
▪ The Franchisee purchases or allows for resale any brand of fuel
other than the Exel brand supplied by Micaren, from the premises.
▪ The Franchisee purchases products for resale which do not meet
the terms and conditions of the Franchise Agreement and Manuals
without the necessary approval from Micaren in writing.
▪ The responsible/designated party becomes incapacitated or of
unsound mind to effectively operate and manage the business in
accordance with the Manuals and Franchise Agreement.
▪ The designated party is absent from the RCC for a period of 30
(thirty) days or longer without the required written approval from
Micaren in writing.

5.13 Sale of Franchise

5.13.1 The Franchisee shall not cede, assign, sell, transfer, charge or encumber
or deal with any of its rights or delegate any of its obligations under the
Franchise Agreement or sell the Business and/or Ancillary Businesses
without Micaren’s prior written consent, which consent shall not be
unreasonably withheld and then only on condition that certain provisions
are complied with:

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 ▪ That the proposed purchaser shall submit his/her/its offer in writing
both to Micaren and the Franchisee, which offer shall be bona fide
and at arms length.
▪ That the proposed purchaser shall demonstrate to Micaren’s
satisfaction that he/she/it meet the standards and requirements
applied by Micaren in selecting franchisees.
▪ That the proposed purchaser agrees to execute and/or, upon
Micaren’s request all interested parties to execute the then current
standard form of Franchise Agreement and other ancillary
agreements as Micaren may require.
▪ That neither the proposed purchaser or any of its shareholders or
members, if applicable, shall have an interest, whether direct or
indirect, of any nature in an existing business which competes with
that of Micaren

5.13.2 If Micaren does not exercise its first right of refusal, based on the offer
received by the Franchisee, it shall furnish written approval provided the
specified conditions are met. Such approval whether expressed or not,
shall be conditional on the prospective purchaser entering into the
agreements required and shall further be conditional upon the new
Franchise paying Micaren a fee which shall be equivalent to:

▪ If the sale is effected in the First year of the seller’s franchise

agreement – 50% of the gross purchase price.
▪ If the sale is effected in the Second year of the seller’s franchise
agreement – 35% of the gross purchase price.
▪ If the sale is effected in the Third year of the seller’s franchise
agreement, or any time thereafter – 15% of the gross purchase
price.

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 In the above instance, the gross purchase price will be determined as – the
purchase price, excluding wet and dry stock, but including any
consultant fee or agents commission.

5.14 Surety

5.14.1 Micaren require the Franchisee to be a company. The Franchisee agrees

and undertakes that it will ensure that all the directors, shareholders and
members thereof shall simultaneously with the signing of the Franchise
Agreement , also sign the:

(a) Micaren Standard Deed of Surety ship for liability of the Franchisee
in terms of the Franchise Agreement, and
(b) Micaren Standard Credit Application Agreement, and
(c) A debit order authorisation.

5.14.2 The Franchise Agreement shall be binding upon the Franchisee, its heirs,
executor, administrators, assignees, and successors in title of whatsoever
nature, whether by operation of law or otherwise.

Section 6: Certification and Cooling Off Period

Prior to the execution of the Franchise agreement, the franchisor will

ensure that the Franchisee receives:

▪ The Disclosure Document and the Franchise Agreement at least 14

(fourteen) days prior to the signing of the Franchise Agreement or
any other binding document excluding a confidential undertaking.
▪ The booklet “How to Evaluate a Franchise” available from FASA,
and
▪ Copy of the FASA Code of Ethics and Business Practise.

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Section 7: Financial Obligations

7.1 Upfront fees

The Franchisee shall pay Micaren an upfront fee of R including

VAT.

The upfront franchise fee shall be in consideration for:

▪ The license granted to the Franchisee to operate the RCC in terms

of the Franchise Agreement.
▪ Providing the Franchisee with the rights to utilise the specified
Equipment, Premises and other capital items to allow for the
operation of the Business and Ancillary Businesses.
▪ Assistance with the set up of the Business and Ancillary
Businesses.
▪ Access to the intellectual property developed by Micaren through
the provision of Manuals and training of the Franchisee.

7.2 Monthly fees

The Franchisee shall during the term of the Franchise Agreement pay
Micaren, in cash and without deduction or set off, monthly fees for the
Business and Ancillary Businesses in lieu of:

▪ Beneficial use of the equipment, premises and capital equipment.

▪ Beneficial use of the intellectual property.
▪ Rights to benefit from the brand and its reputation.
▪ Right to benefit from the individual property.
▪ Ongoing support provided by Micaren and its representatives.

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The monthly fees are as follows:

▪ 3% of turnover generated from all sales (excluding cellular air time

sales) generated from the convenience store
▪ 6c per lt of the retail margin generated from the sale of petroleum
products.
▪ Fees for ancillary businesses are available on request and relate to
the particular franchise to which the ancillary business relates.

The monthly fee shall be payable 7 days after the end of the calendar
month to which the fees relate.

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