More than six decades have passed since the casual dining and QSR sectors spearheaded the development of modern-day franchising. Franchising has subsequently made strong inroads into a dozen or so other industries yet recently published research confirms that the CDQSR sector continues to play a dominant role in franchising as the chart below illustrates.
Whilst the Franchise Association of South Africa (FASA) operates under a government gazetted Code of Ethics for its 17 different sectors, the development of a Food Franchise Forum within FASA to liaise specifically with government bodies in respect of any proposed legislation, regulation or administrative action that has the potential to impact on the sector, was deemed an important step in a challenging food environment. An added or supplementary code of ethics for the franchised food sector and monitoring measures to it by its members would underpin the role of the Forum.
Based on 2016 figures, the franchise sector as a whole generated R587 billion in sales; this amounts to a credible 13.3% of South Africa’s GDP. The CDQSR segments contributed 29% of the total. It also employed 65,500 people, the bulk of which were previously untrained individuals who therefore stood little chance of finding employment in the formal economy.
Indications are that the food sector will continue on a growth trajectory. This is of particular importance in the South African context because it creates realistic opportunities for the establishment of sustainable small enterprises under franchise arrangements and further job creation. Moreover, the sector makes an important contribution to South Africa’s vibrant tourism industry.
According to Vera Valasis, Executive Director of FASA it is common knowledge that our sectors find themselves under increasing pressure emanating from an ever-growing number of legislative and regulatory interventions. “This is not a South African phenomenon. Similar roadblocks are popping up in other parts of the world, with well-documented developments in the US and the EU cases in point. Some of the regulations these countries have enforced, or are considering to enforcing border on the ridiculous and threaten the very survival of many long-established food service operations.”
Chairperson of the Food Forum, Nazrana Hawa of Spur, which spearheaded the establishment of the forum under the auspices of the Franchise Association of South Africa says, “Lobbying government on pertinent issues requires a united voice and a credible representative body mandated to speak on behalf of the sector. Examples of recent interventions by government that cause concern to operators in South Africa’s CDQSR sector range from the recent food safety scare, minimum wage bill to liquor policy and smoking regulations. Other key projects identified for consideration would also include new regulations for food licences, labelling regulations, proposed requirements around gas installations, tax laws that may affect the sector and developments around landlords and rentals and the POPI Act. According to Nazrana Hawa, “experience tells us that representations submitted to government by individual brands, no matter how well-reasoned they might be, are unlikely to achieve desired results. For the sector to be heard it needs to do so through a credible representative body mandated to speak on the CDQSR sector’s behalf.”
As FASA is well-established as a long-standing representative body, with strong local and international linkages and access to many of the relevant government departments, members felt that setting up the proposed body under its umbrella would make perfect sense. For the initiative to achieve its objectives, it will require buy-in by most if not all of the credible franchised brands and from suppliers to the industry. Given that government has gazetted FASA’s Code of Ethics and has expressed the intention to adopt the code for broader use further cements FASA’s standing as franchising’s sole representative vis-a-vis government and other stakeholders. Franchise companies that have come on board include some of the top brands including KFC, Nando’s, Taste Holdings, Fournews, Hot Dog Cafe, Barcelos, Pizza Perfect, Adega, Mike’s Kitchen, King Pie, Jimmy’s Killer Brands, Chicken Xpress, Kauai and OBC Chicken & Meat.
While FASA will continue to represent the interests of franchisors across a variety of business sectors including the restaurant sector, the FASA Food Franchise Forum will represent the sector-specific and clearly-defined interests of the CDQSR sector only.