Franchise Industry Qualification on Track
For forty-four years, the Franchise Association of South Africa has steered the franchise sector to the point where it contributed, according to its last survey conducted in 2018/2019, close to 14% to the country’s GDP through its network of around 800 franchise systems and close to 40 000 outlets.
From its fledgling start in the 1960’s and 1970’s, when pioneering brands like Steers, Spur and Pick n Pay introduced consumers to the phenomenon of franchising – to the explosion of franchising concepts in diverse sectors from the 1980’s to the 2000’s on the back of renewed hope for the country’s new dispensation – the franchise community has always been ready to play its part in contributing to the economic development of the country. Through entrepreneurship, skills development and above all through job creation, it has made this sector, which in 2019 employed close to 500 000 people across fourteen sectors, one of South Africa’s most important and strategic business sectors – contributing more to GDP than key sectors like agriculture, mining and manufacturing – yet never getting the recognition it deserves.
“The reason for that,” according to Fred Makgato, CEO of FASA, “lies in the fact that franchising is the only business format that spans across multiple sectors so has never been seen as an ‘industry’ in its own right. The potential of franchising to position itself as the bedrock in the recovery of the economy by introducing the franchise model to government’s basket of Seta’s across all sectors – starting with the 70 sectors that the Services Seta represents is one of the most viable and ambitious projects that has the potential to transform the economic landscape for decades to come.”
Whilst the past two years has taken its toll on all businesses, the franchise sector has proved its resilience and FASA believes that now is the time for franchising to step up and find ways to plan for its future growth. It has, over the years, lobbied government to partner with it in using the franchise business model to establish entrepreneurial businesses using the tried and tested duplication principles that entrench effective training and efficient mentoring to produce viable businesses – whether in mainstream brands, social franchising or the development of micro franchising.
Laying the Groundwork
Finally, after a decade of lobbying and fine-tuning, FASA together with Inani NPC, a non-profit incubator Accelerator that, in addition to providing funding, training, development, supporting and guiding services for businesses and individuals, represents Employer Associations, to be its Socio-Economic Transformation (SET) partner, focusing on transformation for equal opportunities and acceleration inclusion of differently abled communities. To this end, an MOU was signed between FASA and Inani NPC, which cements the long-standing partnership in accelerating the multiplication of proven industry transformation models. This forms the foundation to work with the Services Seta as a first step, which represents over 70 sectors, to undertake definitive research on the scope and success of franchising, define its growth potential for the future and identify which businesses in specific sectors/industries could be franchised. More importantly, to evaluate the skills requirements and job opportunities for SMME’s, for the Youth, Women and Differently Abled Persons and identify the opportunities and benefits that franchising can bring to these sectors.
Industry Development Qualification
The starting point to the implementation of franchising is the establishment of an approved Franchise Industry qualification and by working with the Services Seta, which represents over 70 sectors, to develop this further. The Development Qualification, developed by Inani together with FASA and its members, has been published for public comment before being ratified.
According to Nico Botha, of Inani, the NPC’s aim is to facilitate more support, towards the capacity of talent pipelines and transformation projects as well as to increase the accelerated solutions towards inclusive education and empowerment for the franchising industry. “The potential exists, and should be further explored, towards increased collaboration across industries and through initiatives and business formats like social and micro franchising.”
In 2019, in collaboration with FASA and two of its members, a pilot project achieved great success and proved that by achieving critical mass in training and setting up businesses using the franchising format, it is possible to transform our economy and bring about more equal wealth distribution. “Following the current round of strategy and planning sessions, INANI has identified various parallel processes which will result in a number of upcoming projects, starting in a staggered approach, during 2023”, concludes Nico Botha.
Three-Pronged Approach
Given the impact of the pandemic on the economy, the current post-Covid 19 has brought with it its own challenges and where industries are recovering unequally and having to face soaring fuel prices, the focus must be:
- Firstly on transformation and addressing skills shortages, and to increase talent pipeline flow of already trained differently-abled persons in line with the recent Employment Equity Act (EE) changes, with the aim of creating jobs;
- Secondly to embark on economy re-employment programmes focusing on transitioning persons off from TERS to again becoming part of the workforce which contributes towards the economic taxpayer base; and
- Thirdly to implement economic recovery programmes which assist SMME’s with job creation and provides support services to entrepreneurs.
“Now is the time for us in the franchising sector to not rest on the laurels of the past forty-three years but look to the future by expanding this universally successful franchise model into as many industries and business sectors as possible,” concludes Fred Makgato, CEO of FASA. “In developed countries, franchising spans anywhere between 25 and 50 sectors and whilst South Africa can be proud of having expanded into fourteen business sectors, there is no reason why this successful business model, which ticks all the boxes of entrepreneurship, training, mentoring, empowerment and job creation, should not be vehicle to take South Africa into a new era of success.”
To protect, lobby, promote and develop ethical franchising across all sectors in South Africa with specific focus on transformation.
