Growth of franchising in South Africa

Franchising in Africa as a whole has a long way to go to becoming a primary business format but South Africa has enjoyed franchise success since the early 1960’s and leads the way in franchise development in Africa. FASA has represented the interests and growth of franchising in South Africa for the past 33 years in South Africa and plays an important role in fostering entrepreneurship, in the transfer of skills and in job creation. Many well-known South African franchise brands have established themselves in other countries in Africa and abroad.

FASA plays a guiding role in advising other African countries on the benefits of franchising and has advised countries wanting to establish associations. With a good number of franchise groups and retailers trading in other African countries, FASA has, among its membership, consultants that can assist companies with their foray into the rest of Africa.
As we climb out of the recession, franchising will continue to play an important role in the economic recovery through its tried and tested business format and FASA, through its commitment to promote franchising in line with government’s mandate to encourage small business development, will continue to safeguard the environment for franchising to flourish.
Franchising in South Africa does not enjoy statutory status but the recently introduced Consumer Protection Act which was signed into law on 1st April 2011 reflects most of the principles contained in FASA’s Code of Ethics and will apply to all franchisors doing business in South Africa.

Funding for franchise development in South Africa is provided by commercial banks and financial institutions, well established banks (the major ones being Absa, Standard Bank, First National Bank and Nedbank) that have established franchise divisions that assist both franchisors and franchisees with funding. These banks play an active role in the Franchise Association and encourage membership. Government has several small business agencies (eg. Seda, NYDA) and recently introduced a number of financial aid initiatives to assist previously disadvantaged persons access finance to start businesses. These bodies also work closely with FASA to grow franchising, and by extension, create jobs.

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