SA franchises continue to grow, show resilience
Franchising in South Africa continues to grow and show resilience to challenging conditions, with an estimated turnover of $50.3 billion or 15.7% of gross domestic product, a recent survey by the Franchise Association of South Africa (FASA) shows.
The survey, sponsored by financial services group Sanlam, shows that the number of franchise systems has risen from 843 to 865 in the last year, with a total of 45 011 outlets, 80% of which are owned by the franchisees.
"The survey, whilst still showing positive growth and a high level of franchisee satisfaction, shows the sector is carefully and cautiously navigating the economic storms to safe-guard their businesses, supporting their franchisees whilst trying to grow their brand and contribute to the country’s GDP," FASA Executive Director, Vera Valasis, said.
"It is testament to the entrepreneurial strength of the franchising sector that, in the face of increased unemployment to 27.2% in the second quarter of 2018 and with job losses of 35 000 in the formal sector and 73 000 in the informal sector. There has been an increase in the total number of people employed in the franchise system."
On average, each franchisee employs 18 staff members in the business, including themselves, 2 on a full-time basis and six part-time. In line with concerted efforts to transform the sector, the average percentage of ownership by non-whites who were economically disadvantaged during apartheid has improved from 17 to 27%, while ownership by women has risen from 25 to 39%.
The survey shows that some of the main challenges facing franchisors include finding the right franchisees and getting finance to start a business.
There has been a significant increase in the number of franchisors that expect a new franchisee to take longer than a year to break even within the first year of operations and a corresponding decrease in those who believe they will break even within the first year of operations.