The International Franchise & Entrepreneurs Expo, which took place from the 2 – 4the April 2009 at the Sandton Convention Centre was a huge success and continues to be the biggest franchise expo on the African continent and the most dedicated in developing not only franchising but encouraging small business development and entrepreneurship. |
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| FASA’s 30 years as South Africa’s only franchise association has netted many lessons on how to withstand the economic downturn. Tracking the recessionary periods over the 15 years that the International Franchise Expo has been staged has shown that franchisors need to be consistent with their franchise offering, both in the good times and the bad. In addition to consolidating during these difficult times, franchisors must also prepare themselves for the upswing and remember, there are always people who in times of recession, are spurred on to become entrepreneurial due to retrenchments or retirement and are looking for opportunities to take control of their own futures by starting their own businesses. |
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With a far greater success rate than independent businesses and with 12% of business activity going through the franchise route at present, the potential for increased franchise growth is high and shows like IFE are the ideal platform for prospective franchisees to find out more about this business format that allows you to get into business for yourself but not by yourself.
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| Most of FASA’s franchisor members surveyed on how they were finding the economic slowdown acknowledged tough trading conditions but they all seemed to be weathering the storm, some better than others. Says Kobus Oosthuizen, FASA’s Chairman, “The franchising industry, as the dominant business format as far as SME development is concerned, is continuing to foster its importance in the sustainability and growth of the South African economy. Across the globe small business is recognized as the safety net of any economy and the recent downfall of many massive conglomerates has once again proven that point.” FASA’s Executive Director, Vera Valasis, backs up that theory. “The economy is expected to contract this year but due to the strong and reliable track record of the franchise industry, backed up by the recent franchise results of the Standard Bank Franchise Factor 2008, the franchise sector should fare better than other economic sectors.” |
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| Despite the predictions of a global recession, franchising is the one business sector that seems to be able to weather the storm of economic downturns and indeed, historically has been know to thrive when things slow down. When the market is down, and there is insecurity in the job market, or when retrenchments or retirements happen, people are spurred into being entrepreneurial, fully aware that they have to consider alternative careers. The opportunity of going into business for themselves suddenly becomes feasible and it is here that franchising comes into its own. The combination of determination and a will to succeed from their side, coupled with a sound franchise opportunity, a solid brand and the fact that when times are hard, consumers choose well-known franchise brands over new, untried concepts should see franchising continuing to thrive. |
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All of FASA’s members have reported a surge in franchise enquiries whilst others have had great interest from existing independent operators who want to convert their businesses to a well-known brand. This, according to FASA’s Executive Director Vera Valasis, is further proof of the resilience of the franchise business format to withstand adverse trading conditions. “When jobs are secure, it is human nature for people to become complacent and less entrepreneurial. It has been proved through many recessions globally that during hard times, franchising has seen its most significant growth and those franchisees who take the leap of entrepreneurial faith go on to become highly successful.” |
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The uncertainty that has descended on the global economy is proving to be challenging for many businesses that are having to downsize and retrench staff. For the thousands of people who are at the receiving end of those retrenchments, many in management positions, the prospect of self-employment suddenly becomes a viable option. The Franchise Association of Southern Africa’s International Franchise Expo, which takes place at the Sandton Convention Centre annually is a magnet for people looking to take control of their futures through self-employment. |
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| Whether you are looking to buy a franchise or looking for a business opportunity, the IFE Expo has a wide range on offer – from those in the automotive products & services to opportunities in the building, office and home services – all businesses that are thriving even in this depressed economy as the public opt to ‘repair rather than replace’. The 2009 IFE included companies such as Intella Tread, Battery Doctor, Sparkling Auto and Multiserv. Says Alex Bouwer of Multiserv, “As a lower entry level franchise opportunity we appeal to those wanting an affordable franchise that will do well in these times when people opt to repair their shoes rather than replace them and will also make use of our many other services.” |
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Franchises in the business-to-business sector are also benefitting as companies downsize and opt to out-source services – from printing to personnel to financial and IT services. |
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One franchise company that has launched a new product that should help those in financial difficulties is Cash Converters – the franchise that is involved in the buying and selling of secondhand goods. Says Alex Bouwer of Cash Converters, “Linked in with our stores who buy and sell second hand goods, we are launching our newest product from Australia – the Pay Day Advance - an instant loan against your next pay check.” |
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| Although food franchises and retail franchises report tighter trading conditions, their strong branding is standing them in good stead as cash-strapped consumers gravitate to well-known brands who offer value-for-money and good service. Whilst may of the top brands have reached saturation there are a number of newer franchises that are really going places such as Scooters Pizza, Maxi’s, Captain DoRego’s, Pizza Point, Black Steer, Mochachos Chicken Villages & Roosters. New to franchising and capitalizing on the home-replacement trend is Kanhym Fresh Meat Deli who has recognized the massive potential of moving down the value chain and into the retail sector of the market. Says Philip Smith of Kanhyms “Even though we are experiencing harsh economic times Kanhym believes that the timing is still right to launch this concept. Consumers are eating out less often but are ‘catering’ for themselves at home by inviting family and friends for meals and braai’s. We believe a deli concept such as ours will be well supported.” |
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With the higher success rate of franchising as opposed to independent businesses, there is no question that the banks and funding institutions look more favourably on franchise businesses and at IFE 2009 all the banks, funding institutions, consultants and franchise lawyers were on hand to give expert advice on how to get financing, run a business and be successful.
The response to IFE 2009 from the industry was encouraging, says Nishi Naicker, IFE’s Exhibition Manager. “Whilst there are a number of big brands who have saturated the market or have long lists of potential franchisees, many of the previous year’s exhibitors were back again, riding on the success of IFE and the quality visitors it attracts.” |
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