Letter to the editor from Famous Brands Chief Executive, Mr Darren Hele
18 January 2019
The Namibia Economist
Your article refers: “Former Wimpy owner alleges all smells not well in the fast food kitchen”.
Despite my efforts to assure you that the allegations made by Mr van der Merwe regarding the Wimpy Marketing Fund are untrue and unsubstantiated, your article contains numerous false and defamatory statements made by him. It is unfortunate that I was not offered the opportunity to confirm or deny the veracity of these allegations prior to publication of your article, but would appreciate it if you would afford me the courtesy of publishing a correction as soon as possible.
I have responded to each of the allegations in turn:
• The franchise structure in Namibia is “intrusive or detrimental to the profitability of each outlet”. There is no substance to this highly subjective statement. The franchise structure is in line with industry best practice.
• The Marketing Fund is subject to gross irregularities and funds are not employed solely to promote the Wimpy brand in Namibia. These allegations are fallacious. In addition to the annual statutory audit conducted on the Marketing Fund by a local Namibian auditor, a comprehensive independent audit was conducted by a South African audit firm. Both firms produced unqualified audit results. You and he make references to some of our other brand marketing funds of which Mr van der Merwe has no knowledge as he has never had involvement and in some cases there are no such Marketing funds.
• Van der Merwe states he was a co-signatory of the Marketing Fund, a position he claims was never dissolved while he was a franchisee. This is entirely false. Mr van der Merwe was associated to the fund on a voluntary basis only, he was never an office bearer and has no legitimate access to the information related to the funds he refers to.
• Van der Merwe states that the deposits made did not match the number of payments made by franchisees (29 vs 52). As I noted in my original email to you, Mr van der Merwe is not legally entitled to access information regarding any Marketing Funds. This applies to bank statements and other information. As a result, he is not in possession of all the information and his deductions are incorrect. The audit investigated this allegation and found no irregularities.
• Misappropriation and fraudulent behaviour took place, including funds used to settle private business expenses and hotel accommodation. This is entirely fictious. These allegations were investigated and no irregularities were found.
• The Master Licensee took more than N$2.5m out of the fund. Once again this is an example of an incorrect deduction made from incomplete information. Mr van der Merwe is not in possession of all the facts / pertinent information and hence is not in a position to make an informed comment. This statement is outrageous and defamatory.
• Seven Wimpy’s were closed over eight years due to (1) inadequate marketing and advertising or (2) poorly aligned financial ratios as measured against margins (food cost variance). Once again, these statements are untrue and defamatory. The closure of less than one restaurant per year is a lower than normal attrition rate for the food services/franchise industry and are likely due to the weak economy and adverse trading conditions. The closures were not due to the spurious claims made by Mr van der Merwe.
• The price structure was not adhered to and was not applied uniformly to all franchisees. An investigation in this regard revealed no irregularities.
• Van der Merwe was denied the audit report and only received a report based on the audit five years later.
This is not true.
• Northplan did not conduct an audit – they merely did a few spot checks as requested by Famous Brands. The auditors, Northplan were briefed to conduct an audit – with specific focus on certain areas – the audit was a comprehensive one and not merely ‘a few spot checks’ as advised by Mr van der Merwe. In addition, this audit was supported by the annual statutory audit conducted on the Marketing Fund by a local Namibian auditor.
As noted in my original email, despite numerous engagements with him, total transparency (in which we have shared strategic confidential company information), an independent audit and attempts to rationalise with Mr van der Merwe, he continues to reject any reasonable discussion.
It is regrettable that Mr van der Merwe has elected to resort to issuing threats in the media. We have been courteous throughout our interactions with him and treated his claims seriously. We have employed extensive resources to ensure that his allegations were fully investigated and deemed to be unfounded. In this regard I am satisfied that this matter has been concluded.
In the interests of transparency and balanced reporting, I would appreciate you publishing this letter in your publication.
CHIEF EXECUTIVE OFFICER