The success of franchising is largely due to the handful of franchisors, who, 40 years ago, got together to formalise the business format of franchising along international ethical standards and laid the foundation for what is today the Franchise Association of South Africa.
The franchise sector today is well-positioned to come together in a concerted effort to stimulate entrepreneurship and create much-needed jobs. The opportunities to expand into many more sectors and particularly in the social and services sectors of the economy are endless – with the goal of accelerating BEE and enterprise opportunities, give training to the youth and above all create much-needed jobs.
FASA’s first Code of Ethics drafted forty years ago, based on guidelines provided by the American International Franchise Association but modified to suit local conditions, has stood the test of time with just a few minor updates over the years. After extensive lobbying to government ahead of the formulation of the Consumer Protection Act (CPA) to include a section that applies to franchising, the National Consumer Commission (NCC) recommended accreditation and adoption of FASA’s industry code to ensure standardization of franchise agreements and pre-negotiation disclosures as per prescript of the CPA. It also recommends that FASA acquire statutory backing to provide expert advices and alternative dispute resolution (ADR) mechanism to parties in disputes.
In FASA’s experience franchise failures result from a combination of factors, including the following:
- Unwillingness of the part of self-styled franchisors to accept that for a franchise to be successful, tried and tested principles of ethical franchising must be observed, even though there may be no legal obligation.
- Unwillingness on the part of prospective franchisees to accept that before they take the big step, they need to investigate the merits of the network and examine their own motives for taking this big step.
- Unwillingness on the part of franchisors and franchisees to accept that franchising is not a magic wand but a precision tool that will deliver desired results only if applied correctly and with passion.
Today the franchise sector boasts around 865 business systems, 45 011 franchisees with an estimated turnover of R721 billion equivalent to 15,7% of the total South Africa GDP. Now that’s something to be proud of!
The Franchise Association of South Africa (FASA) has always been a proponent of small business incubation and has, over the years, embarked on various public/private initiatives to grow the franchise sector. Their efforts have included youth cadet schemes through the Jobs Fund, developing micro businesses to become franchise-ready through the Department of Small Business Development’s Micro Franchisor Development Project and through various private initiatives with funders and franchise members.
Working with other organisations and partnering with like-minded entities to lobby for change or to embark on joint-ventures puts FASA at the forefront of change. It is currently lobbying alongside the Consumer Goods Council for relevant change, creating a Food Franchise Forum to represent a leading sector and collaborating with the Small Business Institute (SBI) on business related issues. MOU’s have been signed with key partners such as the LWO labour organisation, has facilitated workshops with Proudly SA, will embark on regional expo road shows in 2019 with Ithala Business Finance and is initiating a QCTO approved training and start-up fund with Inani Projects.
Visit www.fasa.co.za for more information and to choose the right franchise for you.
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