KFC South Africa seeking leniency from payment of rent during lockdown

SOUTH AFRICA – KFC-owner Yum! Brands has told landlords in South Africa that the US firm will not be paying rent while outlets are closed during the three-week government-enforced lockdown to contain the coronavirus pandemic.

The decision relates to 48 company-owned outlets in the continent’s most industrialised country, a spokesperson for KFC SA said in e-mailed comments.

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The remaining 1,145 KFC fried-chicken restaurants across Africa are operated by franchisees who are making their own arrangements, she indicated.

One owner of more than 40 KFC shops across four Sub-Saharan Africa countries, Grant Wheatley, said he is in talks with landlords, banks and suppliers about arrangements to cope with the shutdown.

South Africa has ordered all restaurants to close during the period, including delivery services, with reopening scheduled for April 17.

According to a Business Live report, Yum!Brands join retailers around the world in asking landlords for leniency during a period where they will generate little or no revenue, creating a nightmare for banks and real- estate firms.

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This has led to negotiations between local property funds and landlords with large retail tenants to convince them to pay rent for the lockdown period, after some retailers said they were within their legal rights to withhold it.

On March 24 trade & industry minister Ebrahim Patel gazetted exemptions that allow competing landlords, property companies and tenants to work together to reduce rentals or permit rental holidays in response to the lockdown.

The exemptions are designed to relax restrictions on joint agreements that would usually be considered anticompetitive, unlawful and collusive.

This includes a clause that allows tenants to take “reasonable measures” to protect their viability during the lockdown even if in breach of contract.

In this regard other retailers have interpreted this gazette notice as allowing them to lawfully not pay rent.

But commercial property industry bodies such as the SA Property Owners Association (Sapoa) maintain it is illegal to withhold all pay, especially as store assets remain in the malls.

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