The Facts on Franchising

Following a presidential summit on job creation between the South African government and Business Unity SA (BUSA) and taking into account Finance Minister Pravin Gordhan’s reference in his 2011 budget speech to the fact that 68% of private-sector employment was provided by small business with less than 50 employees, FASA would like this vital area of business to be included in government’s forward planning and given more support.

With only 17 business sectors benefiting from franchised systems in South Africa, compared to between 25 and 50 in countries like the USA, the UK, Australia and Brazil, there is ample room for expansion into other areas of business – including implementing both social and tandem franchise systems that could see government services franchised in a public/private partnership.
Franchising, despite the effects of the recent recession, showed an 11% increase in employment levels, according to an authoritative survey ‘The Franchise Factor 2010’, conducted by Franchize Directions.

  • In 1994 there were 156 franchise systems – by 2010 there were 551 – with 112 new concepts alone coming into the sector in the period 2008 to 2010.
  • The franchise sector has shown great resilience for the two years ending 28 February 2010 with a growth of 28 221 jobs, bringing the total number of jobs in the sector to 478 000.
  • 2 286 new businesses brought the number of total franchise outlets to just under 30 000 outlets operating under the 551 franchised systems.
  • The sector contributed R286-billion annually or 11.8% to GDP, with non-petroleum systems showing between 14 and 15% growth in turnover over the two-year period.
  • South Africa is made up of 88% home-grown concepts.

 

Economists agree that if government is to achieve its target of 5 million jobs by 2020 it means that 495 000 new businesses have to be created to provide those 5 million jobs. Franchising has proved that it can fulfil all the criteria for small business expansion and FASA has already initiated a transformation project that will encourage entrepreneurship within the emerging sector.
For more information on FASA membership visit www.fasa.co.za or contact FASA on 011 615 0359.

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