Among the sad casualties of Covid-19 have been the many industry associations that have seen a drop in membership due to the economic impact of the pandemic. The franchise sector has been hard hit by lockdown and many fledgling franchise brands may not survive these hard times or be faced with survival challenges or disputes with their franchisees.
It is especially in these hard times that franchise businesses have the support of an industry representative that can guide them, act on their behalf, lobby government and ensure the stability, protection and recovery of this important sector that, in 2019, contributed close to 14% to the country’s GDP, says Eugene Honey, FASA’s legal advisor.
“For many years, FASA identified the need in the South African Franchise Industry for an effective, alternative dispute resolution process, the intention being to provide both franchisors and franchisees with an opportunity to resolve disputes between them in a consistent, effective and efficient manner.
FASA worked closely with government to develop and refine a new Franchise Industry Code which includes a robust mediation process, additional provisions aimed at imposing on franchisees and franchisors a code of conduct aimed at regulating behaviour within the Franchise Industry and providing for certain matters not dealt with by the CPA.”
Until such time as the Franchise Industry Code is adopted and an ombudsman appointed and due to the nature of franchising and the often tenuous relationship between franchisor and franchisee, the Franchise Association of South Africa affords its members free mediation services as part of their membership fee.
As membership to FASA is voluntary, many new franchise brands believe that they don’t need to be members and proceed to run their businesses as they see fit – until they encounter legal disputes with their franchisees or statutory problems for being non-compliant with the requirements of the Consumer Protection Act (CPA) which has a section specific to franchising. Had those franchise brands been members of FASA, their disclosure documents would have been compliant as the association, on application ensures that a franchisor’s documents are all fully in line with the regulations of the CPA – and if they needed help and assistance by way of a mediation session, it would be on offer totally free of charge as a member.
Now, more than ever, with an industry code in the pipeline, all franchise businesses should become members of FASA in order to get the backing and credibility stamp from the industry’s only representative body – thus providing peace of mind not only for themselves but also to potential and existing franchisees.