Based on the theory that in hard times consumers will still buy luxury goods even if there is a crisis, the lipstick effect sees women, for example, instead of buying expensive treatments or clothes, settle for their favourite lipstick or luxury perfume.

Capitalising on that global theory, the Health, Beauty & Body sector in South Africa contributes 6% to the ‘franchise pie’ and with 74% of franchises owned by women, this sector continues to perform well despite the struggling economy.

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B.rain gives key factors for success that all franchisees should know and implement, in order to build and grow a compliant and profitable business.

Franchises are often (mistakenly) perceived as companies that are well-established and would offer support for entrepreneurs who wish to start their own business, but are wary because of their own inexperience. While good franchisors may offer mentoring and training sessions on the brand and systems a franchise does not teach franchisees how to run a business. Without some basic business skills, novice business owners are bound to struggle. Investing in getting a formal education to understand the details of operating a business is instrumental for franchisees to compete in a complex and ever-changing business environment.

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As the business environment gets more difficult due to socio-economic and political influences in South Africa, the question of fairness in franchising has become a hot topic – both locally and internationally. FASA regularly fields complaints from franchisees on the fairness of their contracts in relation to everything from false promises, non-disclosure by the franchisors of failed franchisees, selling of outlets in close proximity of fellow franchisees to excessive supplier costs and marketing contributions and the refund of deposits.

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With the shock decline in gross domestic product of 3.2% in the first quarter from a 1.4% expansion in the prior three months, can government live up to its post-election hype and deliver on its promises? This contraction, the highest in a decade, puts South Africa at risk of slipping into a second recession in successive years and has all sectors, including the franchise sector concerned for its future.

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The increase in online shopping and the consequent reduction in comparative trading densities prompted the South African Council of Shopping Centres (SACSC) to commission a new research report by MSCI titled Experiential vs Convenience Malls – Tenant mix driving mall strategy?

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OBC Chicken & Meat was one of the companies that made their submission to the Competition Commission on the power wielded by the major national supermarket chains over enforcing exclusive provisions in their lease agreements against challenger retailers and speciality stores. It welcomes the preliminary findings and will be submitting its comments to the Commission.

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Since establishing the Grocery Retail Sector Market Inquiry in October 2015, the Competition Commission finally made public its findings which looked into key areas of concern in the grocery retail sector. It found features that ‘may prevent, distort and restrict competition’ effectively excluding widespread participation in the retail sector where barriers to entry should be low and participation possible. These relate to:

• the use of long-term exclusive lease agreements and the exercise of buyer power by the national supermarket chains;
• the inability of small and independent retailers, particularly spaza shops to adapt to a changing competitive environment; and
• the lack of a pro-competitive regulatory regime that is aligned with the convenience model associated with small and independent retailers.

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In the current economic climate of belt-tightening and price wars, the Sorbet salon group saw sales jump 19% in the past year, reaching R100 million for the first time with trading profit rocketing by 74%. They also announced the anticipated opening of the new Sorbet SK-N.

The hum about town over the past six months was on a new Sorbet Group concept, set to grace South African skin. The rumours were true as loyal Sorbet guests grew excited by the day in anticipation of a first in beauty aesthetics for Sorbet – Sorbet SK-N!

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