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South Africa’s franchising industry growing, now employing 344 000 people

Recent figures from the Franchise Association of South Africa’s (FASA) have shown that in a year of the country’s low overall economic growth, the franchising sector’s share of the country’s Gross Domestic Product (GDP) in 2017 is reported at R587 million (about US$40 million) and accounts for 13.3% – an increase from 11.6% recorded in 2016.

The sector now employs 343 319 people – an increase of 14 074 jobs when compared to 2016, while the number of outlets (franchisees) reportedly increased from 31 111 to 40 528, and the number of franchise groups (franchisors) grew from 757 to 845 in 2017, according to FASA statistics.

The franchising sector in South Africa 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,’ Jeremy Lang, Business Partners Limited regional general manager, said this week.

Lang, who seems to urge Small and Medium Enterprises (SMEs) to come to the franchising party, said the sector was becoming more resilient and vital, and considerably turning into a notable asset for the country.

While franchise businesses were not entirely immune to the struggles of the economy, he said the sector’s apparent ability to shrug off the economic malaise could 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 added.

“In the foreseeable future, the dominant trend for franchise outlets across all industries will be a continued and even more intense search for efficiencies, at least for as long as bottom lines remain under pressure.

“As such, franchisors and franchisees should consider how they can do things better, more cost effectively and timeously, without sacrificing the quality of their product or service offering.”
Furthermore, Lang said the continued entry into South Africa of overseas franchise systems looking for global expansion, was also driving the sectors growth and creating opportunities for local franchisees.

Image by iStock

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