Franchise ethics key to success
The Franchise Association of South Africa (FASA) since its establishment in 1979 has been dedicated to ethical franchising, guiding and safeguarding the reputation of the sector which today contributes 14% to the country’s GDP. FASA does not have statutory powers and regulating and enforcing its code of ethics and business practices can only apply to its members. The requirements of becoming a member of FASA are stringent – this no doubt scares off the less scrupulous operators and those who do not have correct structures and support systems required of a top class franchise system.
The very nature of the successful business formula of franchising is one of interdependence where both the franchisors and franchisees have an obligation to make their partnership work resulting in a win-win outcome of ‘if the franchisees are profitable, the franchisor will be too’.
Despite the on-going recession that is impacting heavily on small businesses, the franchise sector continues to be resilient and franchising globally has fared far better than independently owned businesses. This is largely due to the strong business format and support system inherent in franchising and to the strong support team that services franchising and ensures that all aspects of the business – from legal requirements to operational strategies; from training to marketing – is at the forefront guiding this global phenomenon.
Foundations of Franchising
The foundations of franchising are universal and apply in almost every country where there is a robust franchise sector often presided over by a franchise association. Every franchise relationship is founded on the mutual commitment of both parties to fulfill their obligations under the franchise agreement. Each party will fulfill its obligations, will act consistently with the interests of the brand, and will not act so as to harm the brand and system. This willing interdependence between franchisors and franchisees, and the trust and honesty upon which it is founded, has made franchising a worldwide success as a strategy for business growth.
The public image and reputation of the franchise system is one of its most valuable and enduring assets. A positive image and reputation will create value for franchisors and franchisees, attract investment in existing and new outlets from franchisees and from new franchise operators, help capture additional market share, and enhance consumer loyalty and satisfaction. This can only be achieved with trust, truth, and honesty between franchisors and franchisees.
Franchisees, before they sign on the dotted line, need to ensure that they have thoroughly investigated the franchisor, spoken to existing franchisees and above all, made sure that they fully understand the terms of their agreement and what they are committing to. It is the responsibility of the franchisor to supply a franchisee with a full turn-key operation, give extensive training on how to operate the business and above all give ongoing support and guidance to help the franchisee make a success of his/her business.
Entrepreneurs who are embarking on starting a franchise should, as their first port of call, engage with FASA for information on what is required to set up a franchise and then use the expertise of the support service providers – from franchise and business consultants to lawyers that specialise in franchising who can add value to their businesses. Visit www.fasa.co.za to find out more about franchising.
To protect, lobby, promote and develop ethical franchising across all sectors in South Africa with specific focus on transformation.