The franchise sector, at the end of 2019, was holding its own in what was a trying economic environment. According to FASA’s 2019 Franchise Survey, sponsored by Sanlam, the franchise sector contributed an estimated turnover of R734 billion, equivalent to 13,9% to the country’s GDP through its over 800 franchise systems, close to 48 000 franchised outlets and a workforce close to half a million.
Whilst the picture for 2020 will be vastly different as a result of the impact of COVID-19, one of franchising’s biggest attributes is its ability to adapt and innovate. At the start of the corona virus threat, franchises from all sectors stepped up their efforts to adapt their businesses to comply with stricter hygiene and safety measures. Those in the Restaurant and Quick Service Sector (QSR), in particular, began expanding and innovating to focus on takeaways and deliveries.
With their plans scuppered by the total shutdown for 21 days, all small business and franchise owners and their workforce are now experiencing the devastating economic impact of the crisis. According to Vera Valasis, Executive Director of the Franchise Association (FASA), it is important that assistance is given to franchisees so that they in turn can keep employees on the payroll and ride the storm in order to grow when the pandemic passes. The franchise sector, has once again, risen to the challenge!
“Having a franchisor whose franchisees can rely on becomes even more critical during these times of unprecedented urgency and crisis as has been noticed during the last few days, says Vera Valasis. “Thankfully most franchisors have taken strong leadership steps and have kept their franchised system informed as and when developments and information is published by the government about the lock-down regulations, financial aid and other funds that can be accessed for financial assistance. More importantly, many of them have suspended royalty payments until the situation improves – amongst them those in the fast food sector, the automotive, DIY and business to business sectors. The list grows daily and we are delighted that so many franchisors are so responsive and stepping up so quickly to help their franchisees.”
While there are so many uncertainties about the survival of loved ones, job losses, financial survival of businesses, duration of the lockdown, the impact of an economy on its knees and many other issues, there is no doubt that the franchise industry will survive this crisis and also would have learnt from it as well – but trading conditions as we know them will change perhaps unrecognisably in the future.
Never underestimate a tough and resilient franchise industry – full of talented and highly motivated people who excel during times of extreme stress and undue pressure and who, over the years, showed that their innovative thinking and unrelenting desire for success will help kick-start the South African economy and get the wheels of job creation and consumerism steaming ahead.
The Association has been inundated with enquiries from franchisors far and wide, members and non-members and it has made every effort to post important information on its website and social media platforms and keep everyone informed as much as possible. Fake news has also played its part unfortunately so it is important to verify all information at source if possible.
Kindly refer to the website – CoronaVirus link at the top of the landing page, for updates as and when they are available.