‘Tried and tested’ franchise sector growing strong

FRANCHISING continues to show strong signs of growth despite South Africa’s general poor economic performance in recent years.

According to figures from the Franchise Association of SA, the sector’s share of the country’s GDP this year stands at R587-billion, or 13.3%, an increase from the 11.6% of GDP recorded last year.

The number of outlets (franchisees) rose from 31 111 to 40 528 and the number of franchise groups (franchisors) grew from 757 to 845 this year.

The sector now employs 343 319 people, an increase of 14 074 jobs from last year.

According to Business Partners regional general manager Jeremy Lang, the franchising sector is growing on all fronts, and is increasingly offering opportunities for local entrepreneurs and enabling the creation of employment opportunities.

Lang said the franchise sector’s apparent ability to continue to perform in a weak economic climate could be linked to its “tried-and-tested” business approach.

“The 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 said.

The continued entry into SA of global franchise systems looking for expansion was also driving the sector’s growth and creating opportunities for local franchisees, Lang said.

Since the launch of Business Partners’ R150-million Brands and Franchise Fund in 2014, the company had noticed higher interest from local existing and aspiring entrepreneurs seeking to own and expand their own franchises through finance and mentorship “in order to capitalise on franchising’s remarkable ability to grow in tough market conditions”.

The sector will continue to grow in fast food services, automotive services, child entertainment and education. — BDLive