Inquiry shakes up the grocery retail sector market

grocery retail

Since establishing the Grocery Retail Sector Market Inquiry in October 2015, the Competition Commission finally made public its findings which looked into key areas of concern in the grocery retail sector. It found features that ‘may prevent, distort and restrict competition’ effectively excluding widespread participation in the retail sector where barriers to entry should be low and participation possible. These relate to:

  • the use of long-term exclusive lease agreements and the exercise of buyer power by the national supermarket chains;
  • the inability of small and independent retailers, particularly spaza shops to adapt to a changing competitive environment; and
  • the lack of a pro-competitive regulatory regime that is aligned with the convenience model associated with small and independent retailers.

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Franchise industry survey, inviting you to participate

franchise-survey

FASA is appealing to all franchisors and franchisees out there to participate in this year’s Franchise Survey sponsored by Sanlam which examines this important industry that to date contributes a healthy R721 billion equivalent to 15,7% to the country’s GDP. Given the socio-economic and political influences, will that figure drop or grow and what other factors make up an industry that continues to be a major player in South Africa’s economy? If you are a franchisor or a franchisee you have to be part of this definitive survey that tracks and celebrates one of the strongest business arms of the economy.

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Winner of field service consultant award wins Las Vegas Trip

Lawrence Lindeque of Kauai in Las Vegas 2019

With franchising success largely based on the inter-dependency of both franchisor and franchisee, the task of looking after a brand’s many franchisees rests with the Field Service Consultants (FSC’s). So important does FASA believe their role is within the franchise format that each year they award a top prize of a trip to the American International Franchise Conference to South Africa’s best Field Service Consultant. Lawrence Lindeque, Field Service Consultant at Kauai was the lucky winner in 2018 and attended the IFA Conference in Las Vegas in February this year and gives us his feedback.

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Franchise compliance lacking despite CPA protection

compliance-franchising

A recent exposé on an investigative television programme put the spotlight on the compliance of franchise companies with the Consumer Protection Act’s Regulations and with the Code of Ethics as set down by the Franchise Association of South Africa (FASA). FASA, as a voluntary organisation representing the industry, regularly fields complaints from franchisees with some of the more common complaints related to non-member franchisors being:-

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Second-hand clothing sector spawns franchise retail fashion opportunity

Secondhand clothing fashion

Research by McKinsey State of Fashion shows that more than half of fast-fashion items are thrown away in less than a year, with 11 million clothing items a week (or 300 000 tonnes a year) in the UK alone landing up in landfills. The answer, it seems, is to never put clothes in the bin and rather, like FASA member 2nd Take, turn it into a successful franchise.

Gumtree SA reports having more than 20 000 items of clothing listed on their site and their survey shows that 65% of responders have ten or more items in their wardrobe that they never wear. Globally, the 2nd hand market is becoming the largest growing consumer sectors. Even designers like Stella McCartney launched an initiative called ‘The future of fashion is circular’ – promoting the purchase of sustainable quality clothing that retains its value and can then be resold to expand its lifespan, avoiding landfill or an incinerator.

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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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New FASA chair to focus on growth and empowerment in business

empower business growth

Growing and empowering the SME and franchise sector will be at the centre of Akhona Qengqe’s tenure as Chair of the Franchise Association for 2019 and 2020. As Transformation Director for KFC, she will use her experience and commercial acumen to find creative solutions to some of the challenges that business in South Africa faces in its transformation endeavours.

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Make sure the franchise you choose is a FASA Member

franchise association stand

The success of franchising is largely due to the handful of franchisors, who, 40 years ago, got together to formalise the business format of franchising along international ethical standards and laid the foundation for what is today the Franchise Association of South Africa.

The franchise sector today is well-positioned to come together in a concerted effort to stimulate entrepreneurship and create much-needed jobs. The opportunities to expand into many more sectors and particularly in the social and services sectors of the economy are endless – with the goal of accelerating BEE and enterprise opportunities, give training to the youth and above all create much-needed jobs.

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