Growth in diversity and quantity
ALL indications are that franchising in South Africa is expanding at a year-on-year rate of at least 30% to 35%.
While there are no specific data to quantify the growth percentage, Noel O'Connor, outgoing chairman of the Franchise Association of Southern Africa (Fasa), says there have been a tremendous number of conversions to the franchising system which is bringing more activity into the network.
Another notable feature has been diversity of franchise operations - as evidenced, for example, by the growth in convenience stores on driveway forecourts, both suburban and on national highways, which are being developed via the franchise business format.
"Franchising has spilt over into almost every aspect of industry and business," O'Connor observes.
And given the current vagaries of the SA economy, O'Connor - who is also managing director of BJ's Fast Foods - says: "It is very nice for prospective entrepreneurs to know that there is the kind of safety net which is part of what franchising can provide. Franchisees have the larger network which they are able to tap into and access and participate in to a much larger degree than would be possible if they were operating independently on their own.
"Whether it is access to larger marketing funds, or better opportunities to take advantage of changing circumstances and trends, being part of a franchise creates those opportunities."
O'Connor says that from Fasa's point of view, one of the major developments has been the strong linkage with government through the Department of Trade and Industry.
"This has undoubtedly been the biggest and most dramatic development in franchising in the past year. Government has identified franchising as part of a national strategy for the development of small and medium enterprises.
"They are attaching more and more importance to franchising as a means of bringing the emerging entrepreneur into the mainstream of the economy and business.
"And they are seeing the liaison that they are developing with Fasa as a way of fast-tracking that initiative."
O'Connor also gave the welcoming address at the Fasa gala awards evening on Thursday night.
He said: "This past year has seen the continued phenomenal growth in franchising activity which has included the arrival of many overseas franchise operations, which all bodes well for the future of franchising and of Fasa.
"The prestige attached to the Fasa awards for excellence in franchising is a reflection of the popularity and success of franchising throughout the world, where it is emerging as an effective way to conduct and grow successful businesses. South Africa is at a point in its development where it needs to pursue all avenues to stimulate the economy and to encourage growth, particularly in the SMME sector. It is accepted everywhere that the fundamentals of franchising are without equal as a system for getting ordinary people into business successfully."
O'Connor says the sponsorship by Khula Enterprise Financing is "indicative of the Department of Trade and Industry's confirmed and special interest in franchising and the growth of a partnership arrangement with Fasa".
He says the sponsorship of three of South Africa's leading banking institutions - Absa, First National and Standard - is a strong indication of the commitment banks have made to assisting both emerging developers and prospective franchisees "in what they admit is one of the most risk free business ventures available today."