This is how big South Africa’s franchise sector really is
The Franchise Association of South Africa (FASA) believes the country’s franchise sector can play a major role in creating new businesses to grow the stagnant economy.
FASA said that the franchise sector contributes as much as 11.6% to the country’s GDP and employs close to 400,000 people through its 757 franchise systems and their 35,111 franchise outlets.
In view of the National Development Plan’s target of 11 million jobs to be created by 2030 – with 90% of those jobs expected to be created by small and expanding formats – solutions to the employment challenge need to be tackled as a matter of urgency, the association said.
Tony Da Fonseca, FASA’s chairman for 2017/2018, said: “We as the franchise community have the business format expertise to assist in the establishment of new franchises in a variety of sectors, both through our established network of franchises and in those not yet franchised – be it in agriculture, manufacturing or even in government’s social services.
“But we need to mobilise business and industry leaders, government and civil society to play a part in freeing up economic regulations and find creative solutions to allow entrepreneurship to flourish. The focus should move from job creation to the creation of sustainable small businesses. Franchising offers a mechanism to enable this.”
Small businesses are creating two thirds of the jobs in developed countries and a large percentage of those small businesses are through the franchising business format,” noted Vera Valasis, executive director of FASA. “There is no reason why South Africa cannot drive the same growth through franchising that countries such as Brazil, China and India have shown.”
FASA said that in a tight economy, with traditional lenders wanting between 40 – 60% own contribution, funding remains a stumbling block to true transformation.
In 2014, an initiative from the Jobs Fund, and in conjunction with Business Partners, resulted in just under R100 million advanced and more than 600 jobs to be created by the end of 2017.
The second round of an emerging franchisor initiative spearheaded by the Department of Small Business Development’s Micro Franchisor Development Project will see the number of businesses replicated total fifteen by the end of 2018, the organisation said.
“There is no doubt that these projects will go a long way to enhancing the reputation of franchising as an enterprise development mechanism, while playing a valuable role in reviving township economies, creating new businesses, passing on important skills and more importantly, creating much needed jobs,” Da Fonseca said.
Read: How much it costs to open a petrol station franchise in South Africa
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