Black franchise owners shy away from sector

The franchise industry has managed to grow amid difficult economic conditions, but has attracted fewer black franchise owners over the past year.

According to a research study commissioned by the Franchise Association of SA and Sanlam, presented recently at Hogan Lovells in Johannesburg, the industry has fewer black owners than it did last year – 17% now, down from last year’s 18%.

The franchise sector has over the past four years grown its contribution to the country’s GDP from 9.7% in 2014 to its present figure of 13.3%, as well as its estimated turnover from R465 billion in 2014 to R587 billion this year.

The number of franchise systems and outlets has increased, leading to the increased estimated turnover.

The research, which excluded petrol station franchises and agriculture, also showed that 36% of franchisees have plans to hand over their businesses to family members.

Franchise Association of SA chairperson Tony Da Fonseca said the largest franchise sector remained the fast food and restaurant sector, which grew from 24% last year to 25% this year; while retail and direct marketing saw a drop from 16% last year to 15% this year.

“Tracking our success and looking for areas that need improving is part of the entrepreneurial nature of us as franchisers and franchisees. While we celebrate our tenacity in staying the course, and adding much needed small businesses [40 528 franchisees] and employing 343 319 people in our sector, we need to take heed of subtle undercurrents of uncertainty, which the survey has exposed and which need to be addressed to make the industry even stronger,” said
Da Fonseca.

He said the organisation, which is voluntary and has no legal powers over members, has been involved in discussions with government about the franchise industry ombud office because there is no legal regulatory body for the sector.

“As an association, all we can do is listen to both sides of the story and, if the owners don’t like what we say, they leave and that’s it. We can’t do much about it because we are a voluntary organisation,” he said.