Woolworths today commenced discussions with their South African franchisees about the future of Woolworths local franchise business. After informing franchisees that it would be stopping its local South African franchise business, Woolworths offered to buy all local franchises at fair value. “Our franchisees have made a valuable and significant contribution to the Woolworths business for many years,” said Simon Susman, Chief executive officer of Woolworths. “However, after an extensive strategic review of the franchise business, we have come to the conclusion that it is no longer in the best interests of Woolworths for us to operate a local, franchise business and we will stop franchise operations in South Africa.” Woolworths is offering to buy all local franchise stores at fair value, as Susman explained, “We are committed to an honourable and reasonable settlement with all local franchisees and are offering to buy stores at fair value. This means that despite fixed term franchise contracts, Woolworths will value the businesses as going concerns.” The franchisees and Woolworths have commenced discussions to agree guiding principles for valuation. Once these principles are agreed, Woolworths final offers to buy will be in place until they expire on 30 June 2011. The total value of this investment, if all the offers made to the franchisees were accepted, would not be material. Upon the sale of any franchise business to Woolworths, Woolworths have committed to employing all franchise store managers and staff. Woolworths noted that the key factors in reaching the decision to stop franchising were that it had become increasingly more complex and expensive to operate a separate franchise business model with its own systems and processes. Ends Editor's notes: This decision will not affect Woolworths presence in Engen’s franchises. The international franchise operation, which continues to require local partners, is not affected.

Woolworths today commenced discussions with their South African franchisees about the future of Woolworths local franchise business.