Clicks' Commitment to Sorbet's Success Amid Franchisee Concerns

In response to franchisees’ concerns, the pharmacy behemoth Clicks has expressed interest in the success of Sorbet. The ongoing Public Competition Tribunal hearings have shed light on Clicks’ stance, stating that they had no intention of investing R105 million in a failing chain.

The focus of the proceedings on Wednesday was franchisees’ fears that their customer base would be eroded. One source of concern was Clicks’ potential restriction of franchisees’ access to Sorbet-branded products. Another source of concern was the prospect of competing for customers with a conglomerate with nearly 1,000 locations. The Competition Commission recommended in early May that Clicks’ acquisition of the Sorbet franchisor be approved, subject to certain conditions. Sorbet’s franchisor currently oversees approximately 196 franchised salons that provide services such as manicures, pedicures, and body massages, among other things.

Clicks already owned a 25% stake in Sorbet Brands, the group’s intellectual property holder, and was already selling products under the Sorbet brand. Gaining control of the holding structure would mark Clicks’ first foray into the franchise chain industry, with salons operating under brands such as Sorbet, Sorbet Man, and Candi & Co. Clicks had no intention of undermining Sorbet’s brand equity, according to Anton Roets of Nortons, who represented the merging parties. If Clicks wanted to offer salon services, it could do so under its own brand. Furthermore, limiting Sorbet product access in salons seemed illogical because Clicks could benefit from the positive association between these products and a salon environment.

Roets emphasized the differences in “missions” between Clicks and Sorbet, emphasizing that Clicks was primarily a pharmacist and retailer, not focused on providing the pampering environment of a salon. He also mentioned that Sorbet gift cards and vouchers were typically purchased with the intention of the recipient receiving treatment, which Clicks does not provide, such as manicures.

He also argued against franchisees’ concerns, claiming that it would not make commercial or economic sense for Clicks to act against the Sorbet network given its interest in a successful franchise network.

The Competition Commission’s conditions, which are now public, cover a variety of topics, including training, localization, and ensuring that, within five years of implementation, at least half of the salons are owned by historically disadvantaged individuals.

The Competition Commission acts as an investigative and enforcement body, with the Tribunal making the final decision.