Get ready for load shedding again – and its crippling effects

It is with dismay that the Franchise Association of South Africa has learnt of the big risk of the return of load shedding predicted for late August or September which will once again have a devastating effect on small businesses.

Just two days ago one of the most well known business-to-business brands in South Africa stated that the brand lost no less than R8m in sales pertaining to just one sector of their business due to load shedding in March this year. Says Vera Valasis, Executive Director of FASA “renewed load shedding could be the proverbial ‘last straw that breaks the camel’s back’. Further loss of economic activity due to renewed load shedding is unaffordable and may push many small franchises to the brink of bankruptcy. The increase in labour costs, electricity, supply of goods, rentals, petrol and many other costs have more than doubled in the last ten years. However sales growth simply fell far short of having doubled over the same period which puts incredible pressure on profitability.”

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Fairness in franchising

fairness-in-franchise

As the business environment gets more difficult due to socio-economic and political influences in South Africa, the question of fairness in franchising has become a hot topic – both locally and internationally. FASA regularly fields complaints from franchisees on the fairness of their contracts in relation to everything from false promises, non-disclosure by the franchisors of failed franchisees, selling of outlets in close proximity of fellow franchisees to excessive supplier costs and marketing contributions and the refund of deposits.

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Benefits of being in franchising

franchising

We asked Vera Valasis, FASA’s Executive Director to give some tips to aspiring franchisors/franchisees – and this is what she advises…

Potential franchisors

  • Not every single business concept or idea is franchisable.
  • Don’t franchise your business unless you have a good financial track record of the performance of the business in a number of different locations and markets i.e. locations in a high street, a shopping mall, in a city and rural applications.
  • Test the business with a few franchisees in the early stages that are willing to be ‘test sites’ in order to hone and fine-tune every aspect of the business model.
  • Don’t franchise your business unless you have the financial independence to support franchised outlets adequately especially in terms of marketing.Preview (opens in a new window)

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Do you have what it takes to be successful in business?

business-success

As the focus from government, big business and Expo’s like FASA’s recent KZN Franchise Expo is on empowering entrepreneurs, stimulating small business and creating jobs, we look at what does it take to be successful.

Making a success of a business requires total commitment and dedication to realising your own potential and ensuring success. To do that you need to:

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The next steps to owning your own business

For those that attended the IFE Franchise & Entrepreneurs Expo in Durban this past weekend, being able to talk on a one-to-one basis with franchise personnel from the range of franchise businesses on offer was invaluable as a big part of the success of franchising is in the win-win business partnership between the franchisor and its franchisees. FASA, whose mandate in presenting franchise expos is to educate the public on this business format, cannot emphasise enough the importance of understanding exactly what franchising is and how it operates.

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13 Lessons learnt in franchising in the current economic environment

business-steps-franchising

As leading franchise consultants, we have identified 13 lessons learnt from the franchise industry and current economic environment we find ourselves in.

1.Franchisees: Struggling in current economic environment

In the current economy franchisors are experiencing an increase in franchisees who are struggling to make a profit. The marginal franchisees have actually gone into a loss-making situation.  Franchisors need to assess whether their business model and support structure is adequate to ensure that franchisees have the best chance of making a success of their business. Franchisors should implement an “intensive care program” for struggling and loss-making franchisees. Franchisors should never allow royalty holidays or breaks as a quick fix solution, rather offer additional support in these tough times

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How the minimum wage will affect you and your business

wage-law-south-africa

Whether you run a business and employ staff or even use the services of a domestic worker or gardener, you need to adhere to the provisions of the National Minimum Wage Act (NMWA) which came into effect on 1 January 2019. Every worker is entitled to payment of a wage not less than the national minimum wage and employers will be obligated to pay workers this wage, which cannot be waived and overrides contrary provision in a contract, collective agreement, sectoral determination or law.

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9 Tips for handling the seasonality of your business cycle

business-cycle

Very few industries are immune to the ups and downs of annual fluctuations, and most entrepreneurs have experienced the dread of a silent telephone or empty inbox as the lean season kicks in. As a natural part of business, it is not so much seasonality itself that is the problem, says Arnold February, area manager at Business Partners Limited, but the uncertainty that goes with it.

 

9 tips for entrepreneurs to come to grips with the seasonality of their business:

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