Report 74 Business Practices Committee4. The investigation |
Officials of the Committee held discussions with several aggrieved franchisees. They experienced similar problems. During discussions with Kilian and Ms Kilian in Houtbay, Kilian told the officials that he marketed the coffee machines while his brother imported the products. At the conclusion of the meeting Kilian was requested to provide the Committee with:
| a) | The latest financial statements of Simply Bellissimo CC. These statements should have included the income statement and balance sheet, and had to be certified by a chartered accountant. The Committee reserved the right to verify these statements by referring to the document sources, such as invoices, order forms, bank statements, cheque books, cash books and all other relevant books of account and documents. |
| b) | Copies of all advertisements placed by Simply Bellissimo since it started business. |
| c) | A written undertaking that he will immediately refrain from placing advertisements quoting exaggerated claims of earnings. |
| d) | A list of the franchises sold by him. This list should have contained the names, addresses and telephone numbers of the franchisees and the amounts paid by each. |
| e) | The import documents of the stock sold and a list of stock on hand. |
The requested documentation was not forthcoming and the officials arranged to have a meeting with the bookkeeper of Kilian. Kilian and Ms Kilian attended this meeting. Simply Bellissimo's did not write up any accounting books. Not even the rudiments of a cash book existed. Officials were handed a number of paid cheques returned by the bank. Kilian was asked to explain some of the expenses paid. He could either "... not remember" or was vague about the details. No supporting documents to authorise the many payments, existed. It appeared that the affairs and funds of the Kilians and Simply Bellissimo were commingled. The financial records were incomplete and in some respects possibly nonexistent. This chaotic state of affairs prevented a conclusive assessment of Simply Bellissimo's financial position.
The bookkeeper drew up a trial balance, but it was inconsequential because of the lack of documentation as set out above. The bookkeeper admitted this. The Kilians were again requested that the financial statements of Simply Bellissimo be certified by a chartered accountant. These statements were not received.
Kilian denied all the allegations made by the franchisees and did not refrain from placing advertisements containing exaggerated claims of earnings. The Committee received an advertisement that appeared in the Rapport that read as follows (directly translated from Afrikaans):
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An official called Kilian because he previously undertook not to sell any more franchises. He said that he did not know that his name appeared in the advertisement in the Rapport and that he did not place the advertisement.
Kilian was repeatedly afforded opportunities to provide evidence that he could meet his promises to the franchisees. Officials, while again in Cape Town on other investigations, again invited Kilian to provide such evidence to refute the allegations by the franchisees. Although he promised to meet the officials, he failed to turn up for the meeting. He was also invited to address the Committee. He failed to do so.