A Legal Analysis of Cash Crusaders Franchising (Pty) Ltd v Cash Crusaders Franchisees 2024 (4) SA 141 (WCC)

The Western Cape High Court’s decision in Cash Crusaders Franchising (Pty) Ltd v Cash Crusaders Franchisees 2024 (4) SA 141 (WCC) marked a significant development in the evolving interpretation of Section 18 of the Superior Courts Act 10 of 2013, particularly in the context of execution of orders pending appeal.

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The case, arising from the breakdown of a franchisor-franchisee relationship, hinges on whether an interim interdict enforcing continued compliance with a franchise agreement, after cancellation by franchisees, should be treated as an appealable final order. The court’s refusal to grant execution of the operation of a franchise agreement pending appeal, despite the alleged harm to the franchisor, highlights the court’s evolving approach to balancing procedural fairness, commercial realities, and the principle of finality in interlocutory proceedings.

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Background

The applicant, Cash Crusaders Franchising (Pty) Ltd (“Cash Crusaders”), is a well-established franchisor with over 250 outlets, of which 145 are operated by franchisees. The respondents, referred to collectively as the Franchisees, are a group of franchise operators who represent a significant portion of the Cash Crusaders franchise network.

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The dispute arose after Cash Crusaders’ unilateral changes to the operation of “Suspensive Security Buy (SSB) transactions”. In SSB transactions, customers sell goods to the store with the option to repurchase them later, effectively creating a secured loan-like structure. These transactions enable franchisees to charge initiation fees and interest-like amounts, which constitutes a key revenue stream for franchisees. To that end, the franchisor introduced a system prohibiting the charging of multiple initiation fees on extended loans, in accordance with section 8(4)(a) of the National Credit Act 34 of 2005.

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Dissatisfied, the franchisees alleged breach of contract, threatened cancellation of their Franchise Agreements, and eventually terminated their respective agreements before the dispute was adjudicated. In response, Cash Crusaders launched an urgent application, securing an interim interdict on 3 October 2023 (“the October 2023 order”) which prevented the respondents from cancelling their Franchise Agreements and compelling compliance with the terms thereof pending arbitration proceedings. The dispute was thereafter referred to arbitration.

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Key Legal Principles

At the heart of the dispute lies the interpretation and application of Section 18 of the Superior Courts Act 10 of 2013, which governs the suspension of decisions pending appeal. The relevant subsections are as follows:

• Section 18(1): The operation and execution of a decision, which is the subject of an application for leave to appeal or of a pending appeal, is suspended pending the outcome of the appeal, unless a court, in exceptional circumstances, finds otherwise.
• Section 18(2): Interlocutory orders not having the effect of a final judgment, which is the subject of an application for leave to appeal or an appeal, are not automatically suspended unless a court orders otherwise.
• Section 18(3): To succeed in an application for execution pending appeal, the applicant must, in addition, prove on a balance of probabilities that they will suffer irreparable harm if the order is not enforced, and that the other party will not suffer irreparable harm if enforcement is granted.

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The court drew on common-law and constitutional jurisprudence, including Zweni v Minister of Law and Order and United Democratic Movement v Lebashe Investment Group, to determine the appealability of orders with ostensibly interim form but final effect.

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Analysis

In rejecting the franchisor's application for declaratory and execution relief, the Western Cape High Court emphasised substance over form. Although the October 2023 order was couched as an interim interdict, compelling the franchisees to comply with franchise agreements they had already cancelled, the court held that the order had a final and definitive effect, as it resolved key issues central to the underlying lis, namely, the lawfulness of the franchisees’ cancellations and the alleged breach by Cash Crusaders. These were precisely the matters that were to be ventilated during the arbitration proceedings.

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Judge Lekhuleni held that the order effectively restored a state of affairs that had already been altered through cancellation, and thereby bore features akin to a final determination, notwithstanding its interim form. Moreover, as arbitration proceedings had already commenced, the interdict had the practical effect of compelling specific performance despite the disputed relationship and ongoing proceedings – an indicator of its definitive legal effect.

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On the issue of execution pending appeal, while the court acknowledged the franchisor’s claims of financial distress, reputational harm, and potential insolvency, it found the franchisees potential harm which included being compelled to sell stock they could no longer afford or use under the franchise regime more compelling. Applying Section 18(3) of the Superior Courts Act, the court emphasised that both elements of the statutory harm test ought to be met, and where the losing party stands to suffer irreparable harm, execution must be refused, even if the prevailing party also faces serious consequences.

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Implications for future cases

This judgment offers a decisive reaffirmation that courts look beyond the formal characterisation of relief to assess its substantive legal effect. Even where an interdict is phrased as temporary or time-bound, courts will scrutinise whether it substantively resolves the rights of the parties or creates binding obligations. The decision aligns with the Constitutional Court's liberal approach to appealability in United Democratic Movement v Lebashe Investment Group and may pave the way for more interim orders to be treated as appealable where they produce irreversible consequences.

The judgment refines the threshold for execution pending appeal, making clear that exceptional circumstances alone are not enough and that both harm tests must be satisfied. This creates a more structured and predictable framework, particularly in complex commercial disputes where interim relief often produces enduring effects.

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Conclusion

This case illustrates how interim relief, though formally provisional, may carry significant consequences in commercial litigation. The case sets a high threshold for obtaining execution pending appeal and crystallises the principle that interim orders with final consequences are not immune from appeal. As South African courts continue to grapple with the boundaries of interlocutory relief, this case serves as a significant precedent for both litigants and legal practitioners navigating the intersection of contract enforcement and appellate procedure.

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