“Things are not what they used to be…” is a common refrain – whether we are referring to the obstacles that we face every day or future challenges that will impact the way we do business. Franchising, which has made a significant mark on the South African economic landscape over the past fifty years, currently contributing R721 billion or 15, 7% to the country’s GDP, is being challenged from all sides to remain relevant and continue to contribute to entrepreneurship, skills development and job creation.
At FASA’s recent AGM, which saw the appointment of Akhona Qengqe, Transformation Director for KFC as FASA’s Chairperson for 2019/2020, the consensus was that franchisors needed to adjust their business models to cater for the financial environment faced by franchisees. According to Vera Valasis, Executive Director of FASA, “whilst the franchise industry still delivers healthy growth despite the negative economic environment – testament to the long history of the development of powerful brands that are household names here and in some international destinations – our sector must adjust its business format to be more in line with the economic climate across all business sectors.”
“As salary and wage costs escalate together with huge increases in electricity and rentals, a weak Rand-Dollar exchange rate and increases in almost every other input cost for business in South Africa today, franchisors need to restructure their business model in terms of management and marketing fees, supply streams and adopt a more inclusive and transparent management style.”
FASA has played a pivotal role in self-regulating the sector for the past forty years and must continue to protect its good reputation of ethical dealings and good financial returns and stamp out franchisors that bring the industry into disrepute. Here the association’s ‘legal’ hands are tied – it has been lobbying government since 2006 to give official recognition to the Code of Ethics as an industry code so that a franchise industry ombud can be established to root out delinquent and dishonest operators. Despite the Code having been published in a government gazette for public comments in 2016 it seems the matter is not receiving urgent government attention.
Ahead of the general elections taking place next week, FASA hopes that there will be a renewed optimism in working together to find solutions to the country’s challenges and that industries like franchising will be given the opportunity to work with those in government in building the economy, nurturing entrepreneurship and creating small businesses who will provide employment.