When the new Mr Tekkie chain of lifestyle stores opens its first outlet at the end of October, the punchy new blue and orange branding will differ considerably from the green Mr Tekkie logo Reinhard Barnard of Model Sport in Worcester registered for these franchises in 1999. Barnard’s franchises will stop using the Mr Tekkie name in October, when the revamped new chain, owned by AJVH Holdings, starts operating.
Mr Tekkie was originally registered two years before Braam Van Huyssteen founded the Tekkie Town chain in 2001 (his previous stores were Tropica and Sport City). He bought the rights to use the Mr Tekkie name from Barnard earlier this year, and according to the Company and Intellectual Property Commission (CIPC) website, the name was registered in August to a private company with Van Huyssteen, Bernard Mostert and five others as directors.
On Thursday this week (13 September) Pepkor, however, applied for an interdict to prevent the Tekkie Town founders and AJVH Holdings from using the registered Mr Tekkie trademark for stores selling footwear and clothing. “The launch of Mr Tekkie points to an attempt to pass the brand off as being that of Tekkie Town, or as being connected with Tekkie Town,” Pepkor says in a press statement.
Tekkie is a popular name among South African businesses – among the 16 South African trademarks registered with CIPC containing the name are a Joe Tekkie, Tekkie Wear, Burger Tekkie, Tekkie Stop, Tekkie Corner, Ama Tekkie, etc. Interestingly, an unrelated Tekkie Town Worcester was registered by a Terblanche as early as 1996, but it is in the process of being deregistered, according to the CIPC website.
“I believe that Braam and his team will grow Mr Tekkie to its full potential and will realise all the hopes I had for the trademark, which is close to my heart,” says Barnard, who will keep an interest in Mr Tekkie as a supplier and service provider.
Van Huyssteen’s family made an investment to a maximum of R500-m to start the new business, in which more than 100 people will be shareholders. Mr Tekkie will offer clothing, footwear and accessories in vibey, eye-catching store settings (see at the top and below), which will set it apart from footwear chains like Tekkie Town.
On 3 September this year Pepkor CEO Leon Lourens sent a letter (see below) addressed to Dear (Supplier) warning his business partners that he has “an obligation and duty to inform you that we have commenced a court process to enforce restraint of trade provisions against them [a new Mr Tekkie team]”.
Pepkor subsequently instituted court proceedings in the Cape High Court against the former Tekkie Town executives, whom they claim are in breach of a restraint of a trade clause, unlawfully competing with Pepkor Speciality: Fashion and Footwear and that they are undermining the Speciality business.
“Based on supporting documents, affidavits as well as evidence of retrieved deleted emails, it is clear that all the disruptions in respect of the Tekkie Town business over the last couple of months have been part of an orchestrated plan by the former executives,” Lourens said in a statement. This orchestrated plan is to force down the Pepkor share price so that they can buy back Tekkie Town at a discount price, they claim.
But, in the latest Pepkor interim trade update for the nine months until end of June the Speciality: Fashion and Footwear division, run by former Tekkie Town executives Mostert as CEO and Dawie van Niekerk as COO, reported 14% growth (7.4% like-for-like). This includes the four months before Mostert and Van Niekerk were appointed to manage all the stores under this umbrella (including Dunns, John Craig, Refinery, Shoe City, etc.) and Tekkie Town joined the then loss-making division. In comparison, the Pep and Ackermans brands reported sales growth of 7.7% and like-for-like growth of 2.7% during the nine months.
There are several clauses in the contract between Tekkie Town shareholders and Steinhoff that are now the subject of litigation. The Mr Tekkie team maintains that one cannot cherry pick which clauses in a contract to enforce – if they are bound by the restraint of trade in the contract, Pepkor must honour the rest of the contract, for example:
- That Steinhoff would acquire Tekkie Town for an equal swop of share value. But, Steinhoff presented a false statement of share value, which became worthless after the December collapse. They were therefore in effect never paid for the business, former Tekkie Town CEO Mostert told the Moneyweb Show. That is why they applied to the court to cancel the sale of Tekkie Town in a case that is ongoing.
- They were guaranteed employment for five years (three years still remaining). But, earlier this year Van Huyssteen was asked by Pepkor CEO Leon Lourens to vacate his position as head of Star Property, which started the relationship meltdown that culminated in the walkout of 110 employees. He is suing Pepkor for R41-m, which he calculates is the potential loss of earnings for the remaining three years of his contract.
Mostert and Van Niekerk left the company at the end of June, claiming constructive dismissal, because they say the hostile working conditions made it impossible for them to stay. This was after Mostert requested Lourens to address an angry group of employees, intent on resigning earlier in June, to allay their fears about Star/Pepkor’s intents for Tekkie Town – and when he failed, Mostert undertook to try and convince the 40-odd employees to stay. Subsequent action by Star/Pepkor made it impossible to continue working for them, Mostert and Van Niekerk said when they resigned … followed by more than 100 staff members. They are pursuing breach-of-contract claims against Pepkor for those actions, says Mostert.
- It was agreed with Steinhoff and Star’s first CEO Ben la Grange that bonuses would be paid to staff members, should they reach certain targets and reverse the losses previously made by the Speciality division – the disputed earn-out agreement. Star/Pepkor’s response that they are not bound by this agreement with Steinhoff, contributed to the mass walkout of staff members at the end of June.
In the Q2 issue of Sports Trader we published a photo of former Mostert in swimming trunks (above), preparing to do the walk between buildings on the George campus he promised staff members he’d do if they reached the very high targets – which they obviously did. According to unconfirmed reports the Speciality: Fashion and Footwear division grew 21% under the management of Mostert, Van Niekerk and other former Tekkie Town executives.
In July this year Star/Pepkor obtained an interim interdict against the former Tekkie Town executives to prevent them from stealing Tekkie Town data and sabotaging or disrupting the business once they left at the end of June. In lengthy affidavits, backed by expert testimony, the ex-Tekkie Towners refuted the allegations of sabotage, data theft, attempted systems breach, business disruption, etc.
A UCT internet security expert, for example, provided evidence that the alleged data breach was a daily internet occurrence and that the attacks, which occurred worldwide, originated in the US. She also said that the business disruption was probably caused by the inexperience of the manager Pepkor appointed to run the Tekkie Town IT system. The alleged sabotage plot was a prank call, which a gullible Pepkor employee believed because he didn’t realise that the secure Tekkie Town IT system could not be penetrated from a store in a mall – especially not by former employees whose internet administrator passwords and privileges had been revoked as soon as they resigned.
The court accepted the former Tekkie Town version and discharged the allegations of sabotage, business disruption and data theft. The former Tekkie Towners agreed not to use any Star/Pepkor data – except personal information from their emails and data they need in their litigation against Pepkor.
Now, its back to court again, for two new rounds: the restraint of trade order and the use of the Mr Tekkie name.