Page 17 - index

?
SOUTH AFRICA’S FIRST FORAY
into franchising came about in
the mid-1960s with the establish- of the population was prevented from
ment of quick-service restaurant chain
Steers in Johannesburg. Since then, the
concept has made significant inroads
and achieved exceptional growth during
the past decade.
According to research released by
the 37-year-old Franchise Association
of South Africa (FASA) last year, 625
franchisors – those who own the
overall rights, intellectual property and entrepreneurial/business skills and
trademarks of a franchise brand – sell
goods and services through a network
of more than 39 000 outlets, most of
which are franchised.
A 2006 survey by Standard Bank put
the number of franchisors at 404, which
indicates 55% growth in 10 years. The
sector provides direct employment to
more than 520 000 people, contributes
12,5% to the country’s GDP and
achieves annual turnover exceeding
R465-billion (up from R302-billion in
2012). This figure excludes sales of
motor vehicles and fuel.
“That franchising continues to grow
in South Africa is not surprising,” says
franchise consultant, co-founder of
FASA and author of several books on
the topic, Kurt Illetschko. “The business
Franchising serves a range of business sectors, including the home
handyman market through brands such as Jack’s Paint and Hardware
model is tailor-made for a country like saw its lower-income Captain DoRegos
ours where, prior to 1994, the majority franchise battle against tough trading
conditions in its market – and recently
developing an entrepreneurial mind- the group announced that it is
set. By receiving on-going training contemplating selling the franchise.
? The slowing South African economy
The franchise model in 2016 may yet see other franchise
is tailor-made for a brands hit tough times.
country like ours
STRONG FOUNDATIONS
and guidance from franchisors, “But franchises with strong foundations
franchisees are able to build their and a sound business strategy continue
to produce excellent trading results,”
their businesses concurrently. ” says Illetschko. “Performance figures
presented by top brands in the 2016
Built around the mantra, ‘be in FASA Awards for Excellence in Franchising
business for yourself but not by competition are ample proof of this.”
yourself’, franchising weathered the
recent global economic downturn far Leading the franchisor competition
better than independent operations, – with the most impressive financial
both locally and globally. results and growth in the sector for the
year – was OBC Chicken & Meat. The
But it was not totally unaffected chicken, meat and fish, eggs and dry
and 2009 saw the closure of some goods retailer achieved 30% average
Vida-e Café coffee shops in Cape growth across the group and an increase
Town, for example, following disputes of two-million customers. Runners-up
between franchisees and the franchisor were Car Service City (auto service and
over profit expectations. Some food repairs) and Cash Converters (retail
franchises struggled as consumers pawnbroking and mini loans).
tightened their belts. Spur Corporation
The top three individual franchisees
for 2016 were drawn from Placecol Skin
Care Clinic (beauty), Perfect 10 (beauty)
and Car Service City. >>
August–September 2016 strategicmarketing 15