During arbitration between a franchisor and franchisee, an interim interdict may be employed to enable the parties to continue to conduct their business arrangements until the dispute is settled. However, in certain circumstances the operation of the interdict may be suspended pending an appeal.

The January 2024 high court judgment in Cash Crusaders Franchising (Pty) Ltd v Cash Crusaders Franchisees Listed on Annexure ‘ADP1’ to the Founding Affidavit of Andries Daniel Du Plooy (16453/2023) [2024] ZAWCHC 11 related to a dispute between Cash Crusaders Franchising (Pty) Ltd and franchisees arising from a systemic change by Cash Crusaders of the rules pertaining to pawn transactions. 

The franchisees were not satisfied with this change and proceeded to allege a breach of the franchise agreement by Cash Crusaders, and then purported to terminate the franchise agreement.  

Cash Crusaders approached the high court for relief and the court interdicted the franchisees from cancelling the franchise agreements and further directed them to abide by and comply with their obligations under the respective franchise agreements pending the determination of the dispute between the parties by an arbitrator or a court.

Subsequently, the court had to determine whether the interim interdict that had been granted against the franchisees had the effect of a final judgment. This was important as the franchisees had a pending application for leave to appeal in respect of the interdict and therefore, this would have bearing on the operation of the interdict pending the appeal.

The court considered the following factors in its assessment:

  • The franchise agreements had already been cancelled at the time of the interdict and therefore the effect of the interdict was to restore an earlier state of affairs as opposed to preserving the status quo.
  • The court considered the prejudice that may be suffered by the franchisees if the interim interdict was to be operational pending the outcome of the franchisees’ extended appeal process.
  • The court concluded that the extent of the interdict was invasive and far-reaching and that it would be in the interests of justice for the interdict to be treated as a final decision.

Therefore, the court found that, because the interim interdict had a definitive and final effect, its operation was suspended by the lodgment of the application for leave to appeal by the franchisees.

The key take-away is that although interim interdicts are a powerful tool to regulate the business relationship pending the resolution of a dispute through arbitration; they have their limitations as the operation of the interdict may be suspended pending an appeal in certain instances.