It is with dismay that the Franchise Association of South Africa has learnt of the big risk of the return of load shedding predicted for late August or September which will once again have a devastating effect on small businesses.
Just two days ago one of the most well known business-to-business brands in South Africa stated that the brand lost no less than R8m in sales pertaining to just one sector of their business due to load shedding in March this year. Says Vera Valasis, Executive Director of FASA “renewed load shedding could be the proverbial ‘last straw that breaks the camel’s back’. Further loss of economic activity due to renewed load shedding is unaffordable and may push many small franchises to the brink of bankruptcy. The increase in labour costs, electricity, supply of goods, rentals, petrol and many other costs have more than doubled in the last ten years. However sales growth simply fell far short of having doubled over the same period which puts incredible pressure on profitability.”
With around 850 franchised systems in South Africa with a network of almost 42 000 franchised outlets, the franchise industry is one of the largest contributors to GDP in South Africa, which is around 15% according to the 2018 Sanlam franchise study.
So what steps can franchises take to keep their doors open during load shedding?
- Franchisors usually inform franchisees of the various steps that may be considered using alternate sources of energy for menu production during load shedding so ensure you receive these guidelines from your franchisor.
- Often the trading environment is not conducive to using a generator but where it is possible consider investing in a generator even though running costs are expensive.
- If you already have a generator, test it and make sure it is in running order and that you have a sufficient supply of petrol/diesel on hand.
- Make use of gas and solar lighting systems and consider investing in a UPS (uninterruptible power supply) system – this may be more expensive but it can address some basic power needs during load shedding.
- Keep a close eye on the planned load shedding schedules and plan accordingly – make sure equipment and appliances that need to be charged are fully charged although these schedules are not always strictly adhered to it should serve as a guideline.
The recent further R59b cash injection over the next two years into Eskom seems to be money thrown into a bottomless pit but the Association remains hopeful that load shedding in August/September may yet be averted.
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