Nicola Mawson

A two-year long battle between two bottled water companies continues to go back and forth in the courts, with arguments being made and denied that money was misused by Oasis Water, the largest dedicated water shop network in the country.

The legal proceedings started when Oasis instituted legal action early in 2023 against former Oasis franchisees who allegedly blatantly converted the Oasis outlets into Manzi outlets. A total of 12 different legal cases were instituted by Oasis.

This was followed by former franchisee, MANZI Water, alleging that Oasis had breached its contract over aspects including that Oasis was competing with its own franchises.

Oasis operates what it calls “the largest dedicated water shop network in the country”. It has 88 successful franchisees managing around 400 outlets and bottling facilities nationwide.

Hundreds of pages of court papers have been exchanged between the two parties.

Alfred Challis, CEO of MANZI Water, had previously told Business Report that: “three judges in the High Courts have considered almost identical sets of facts in this regard, and each arrived at different conclusions. However, leave to appeal was granted by all three judges, which underscores the significance of the matter.”

Now, MANZI is arguing that the marketing fund has been misused. After Oasis allegedly failed to provide it with bank statements, MANZI went to the bank holding the marketing account through a legal tactic known as a subpoena duces tecum, or a court order that requires a person or entity to produce documents or other evidence for a trial or hearing.

Having received the statements, MANZI alleged that they show that:

The marketing fund was not used exclusively for marketing purposes, as mandated by the Consumer Protection Act (CPA).
Significant loans were made to associated companies, including entities related to the Franchisor.
Payments for general salaries and unrelated operational expenses were drawn from the fund.
Expenditures on creditors, suppliers, and technical departments fell outside the scope of a Marketing Fund.

A letter from MANZI’s lawyers to Oasis also argued that there were significant periods during which no marketing contributions were deposited or transferred into the designated account, which is alleged included stretches of up to seven months.

“It can only be inferred that your client attempted, in a deliberate and wilful manner, to conceal the CPA-prohibited transactions,” stated the letter, which is in Business Report’s possession.

“This inference is bolstered by your client’s failure to provide the bank statements of the marketing fund bank account during discovery, which necessitated the subpoenas.”

Oasis Water, in a written response to Business Report, however denied these allegations.

“Oasis maintains that the marketing fund was, and continues to be, utilised for its intended purpose. Our franchisees regularly communicate with and provide input to our marketing team, which is incorporated into a national strategy across South Africa,” it said.

“Marketing activities, including financial reconciliations, are reported as part of the standard business process. The marketing fund is subject to an independent audit each year, and a clean audit report has always been issued. These results are made available to franchisees.”

In terms of the other matters that MANZI alleged, Oasis added that there were several matters pending before the Supreme Court of Appeal (SCA), which is set to hear them on March 4.

It said, as a result, it “will refrain from commenting further on these matters until such time as the SCA has handed down its judgment and in the interim, remain committed to allowing the judicial system to follow due process”.

Oasis said it was confident that it will be successful in court.

Regarding the other matters at various high courts across South Africa, Oasis said pleadings and documents were being exchanged and, as a result, MANZI’s allegations – as put to Oasis by Business Report – were “premature and without foundation”.

“Oasis Water will not allow the actions of a few to overshadow the dedication of the many. We continue to support our franchisees, employees, and customers with integrity, ensuring that our business remains a trusted and thriving part of communities across South Africa,” the company stated.

BUSINESS REPORT