By Brian Hayward

Eastern Cape businessman and sporting personality Paul Trzebiatowsky is at the centre of a legal wrangle over his three once-profitable Woolworths stores, which have been sequestrated and are being liquidated after he fell behind in payments to the giant upmarket chain.

Trzebiatowsky, an optometrist who is high up in multilevel marketing company Amway and was also a big name in watersports, lost all three of his Woolworths franchise stores last month after failing to keep up payments for stock and rent to the chain’s head office.

Woolworths also launched an urgent High Court application last month to have the stores sequestrated and liquidated after Trzebiatowsky was found to have removed stock from one of them, jeopardising his R5-million notarial bond with Absa and Woolworths.

Despite the liquidation, Trzebiatowsky is not personally liable for the funds shortfall, as each franchise was bought using a trust fund. He also placed all three stores into voluntary liquidation before the Woolworths action last month.

Further financial pressure is coming from a judgment against him by the former owners of the three stores, Christopher and Sanette Sam, over R1.5-million still outstanding after they sold Trzebiatowsky the stock and the rights to the three stores in 2008 for R11-million plus legal costs of more than R500000.

But Trzebiatowsky hit back at the upmarket chain, saying Woolworths was the cause of the stores’ downfall.

“Shortly after we bought the Jeffreys Bay store, it relocated to Fountains Mall and was opened with a long-life and frozen foods section, but the low profit margins meant we made a loss,” he said.

“After 16 months, we were running it at a R2-million loss. Woolworths refused to let us close the foods section or change the commission structure, so I decided to stop putting money into the store. After that, the relationship turned sour.”

Trzebiatowsky said he flew to Cape Town to try and work things out with the chain, but they would not budge.

“I didn’t want to continue. We weren’t in breach (of contract) with any of the Port Elizabeth stores,” he said.

Although he has been accused by the chain of removing stock from the Cleary Park store, and selling food which was past its sell-by date in the Jeffreys Bay store to friends and family, Trzebiatowsky said he was within his rights.

“Some of the food went to Cheshire Homes, and the rest we sold at a low cost and used it ourselves. Even the clothing stock was mine to take.”

He said he was about to pay the Sams when Woolworths began demanding money on the loss-making store in Fountains Mall.

“Their (Woolworths’) whole attitude to this issue was ‘stuff you’. They could have gone in more softly and negotiated a private sale, but instead they liquidated and will get far below what they could have,” he said.

The couple said they were considering suing Woolworths for damages.

On March 28, Woolworths Corporate changed the locks and sent in the sheriff of the court to take over the Cleary Park and Govan Mbeki Avenue stores, after taking similar action at the Jeffreys Bay store a week earlier.

“Woolworths franchisees are duly registered companies. In this instance each store has a different company holding the franchise agreement. The relevant franchisee of each store (Trzebiatowsky) did not fully meet its contractual obligations. As a result, Woolworths sought legal recourse in this matter. The stores continue to trade normally,” said Woolworths franchise head Aleem Fakier.

Woolworths sources, who asked not to be named, said the Sams grew the profitability of the three stores while building a strong and loyal staff component after they moved to the region in the late 1990s, with a combined annual turnover for the three of about R38-million and a net profit of more than R4-million a year.

The sources said this changed when the Trzebiatowskys took over and changed the stores’ business model, fired high-ranking staff and instituted Barbara as the buyer for clothing stock even though she had little experience in the field.

The Sams’ legal battle started shortly after the deal went through in 2008, when Trzebiatowsky refused to pay the remainder of the funds. This sparked court arbitration which the Sams won, but they say the experience marred what they hoped would be a “peaceful transition into our new lives”.

The Sams, who at one time owned eight Curves gym franchises around the country and were sought-after business consultants, have called the Eastern Cape home for the past decade after relocating to the city from Johannesburg, where they worked as senior Woolworths executives.

They had planned the sale to be able to emigrate to Perth, Australia.

“What annoyed us most was because we have been in senior management (positions) with Woolworths for much of our lives, we thought we could read people quite comfortably, but this (issue with Trzebiatowsky) is such a slap in our faces,” said Sanette.

The couple left for Perth on Thursday after bidding farewell to friends and family in Johannesburg.

Sanette said she and her husband felt guilty about the sequestration and liquidation of the stores because of the impact on their former staff.

“I feel bad that they have had to go through all this.”

Source: The Herald