The resilience and vitality of the franchising industry in South Africa is more apparent than ever, and increasingly becoming a notable asset to the country.
Jeremy Lang, regional general manager at Business Partners, says that the franchising sector continues to grow on all fronts, and is increasingly offering business opportunities for local entrepreneurs and enabling the creation of jobs – something that the country desperately requires as the economy continues to shed jobs.
He points to recent Franchise Association of South Africa’s (FASA’s) statistics which show that, in a year of low overall economic growth, the franchising sector’s share of the country’s GDP in 2017 is reported at R587bn (about US$44bn) and accounts for 13.3% – an increase from the 11.6% of GDP recorded in 2016. The number of outlets (franchisees) reportedly increased from 31,111 to 40,528, and the number of franchise groups (franchisors) also grew from 757 to 845 in 2017.
The sector now also employs 343,319 people – an increase of 14,074 jobs when compared to 2016.
While franchise businesses aren’t entirely immune to the struggles of the economy, Lang says that the sector’s apparent ability to shrug off the economic malaise can be linked to their ‘tried-and tested’ business approach. “The fact that a franchised business has a proven business model gives it a relative advantage over independent businesses which may still be finding their feet through trial and error.
“Similarly, while an independent business has to double down on marketing to draw in reluctant customers, franchised outlets have the added advantage of brand strength and market acceptance.”
He adds that the continued entry into South Africa of overseas franchise systems looking for global expansion, is also driving the sectors growth and creating opportunities for local franchisees.
Commenting on the Business Partners R150m ($11m) Brands and Franchise Fund, Lang says since the Fund’s launch in 2014 the company has noticed increased interest from local existing and aspiring entrepreneurs seeking to own and expand their franchises through finance and mentorship in order to capitalise on franchising’s remarkable ability to grow in tough market conditions.