Franchising is on the up and up, despite tough trading conditions, research shows
THE FRANCHISE sector continues to play an important role in business and job creation, as well as in skills transfer.
It has also outpaced growth in other business sectors, the Franchise Association of SA (Fasa) said recently.
“Despite the tough trading times over the past seven years, franchising has held its own year-on-year in every respect – from showing long-term sustainability to showing a high level of optimism for the future,” said Vera Valasis, executive director of Fasa.
“This is borne out by the fact that the sector, which covers a wide range of industries, contributes a healthy 12.5 percent to the country’s GDP.”
The Franchise Association recently released the results of its third independent survey to assess the contribution by the franchise sector to the South African economy. Sponsored by Sanlam, the survey interviewed 250 franchisors.
The objectives of the study were to:
Measure the size of the franchise industry.
Determine the growth of the industry. Establish turnover generated. Gauge the working capital required, up-front franchise fees, management services fees and marketing/advertising levies.
Measure the industry’s contri- bution to the GDP.
Estimate the number of employees, including franchisor management and staff; franchisees and their staff and branch management and staff.
Determine how many franchisees come from the previously disadvantaged sector.
Investigate the expansion into other African countries, as well as countries outside of Africa.
The results of the survey showed that the franchise sector continued to be a major player in the economy, with steady growth shown even through difficult trading conditions. Franchisors remain optimistic, with many intending to expand their franchise systems.
Pleased with the outcome of the survey, Fasa’s chairman John Baladakis believed the positive results over the past three years was testament to the strength of the franchise business model and of the strong bond shown by franchisors in working with their franchisees to sustain profitability.
“With the government, and particularly the Small Business Ministry, putting their weight behind nurturing entrepreneurs, facilitating skills transfer and providing accessible funding, specifically to franchise initiatives, we predict stable growth within the industry going forward,” said Baladakis.
For more information visit www.fasa.co.za.