March continues

IN CURRENT harsh economic times, large businesses should seriously consider the franchise format as an alternative means of expansion, says Thulani Cele, chairman of the Franchise Association of SA (Fasa). Cele says South Africa’s franchise industry not only contributes to the expansion of the country’s small business sector but is also extremely suitable for the use of social and tandem concepts for infrastructure solutions. Greater involvement by Government could therefore give new momentum to SA’s franchise industry.

Its role in SA’s economy is constantly growing, the latest (2008) Standard Bank Franchise Factor survey reported. In the two years from 2006 to 2008 the sector grew by 34% to a turnover of R256bn.

Cele says franchises will undoubtedly continue to play an increasingly important role in the country’s economy. “The franchise industry in SA is still considerably underutilised,” he says. “It plays a key role, because of its contribution of around 12% to gross domestic product. It stimulates entrepreneurship by encouraging small businesses and currently provides about 500 000 jobs.”

Fasa CEO Vera Valasis says the Soccer World Cup alone led to several franchise brands increasing turnovers by 11% to 14% compared with the same month in the previous year, but valuable contacts were also made with other countries. For example, the Franchise Association of Brazil, which will host the next Soccer World Cup, sent a trade delegation to SA at end-July. Next month SA can also be marketed as an investment destination when Fasa attends an international franchise gathering in South Korea.