Tag: Franchise Association of South Africa (FASA)

If you run a franchise network long enough, you learn that the problem sitting in front of you is rarely the only problem you have. A franchisee tells you that margins are under pressure. Dig a little deeper and you may discover that they have stopped replacing staff. Training has slipped, and service standards are beginning to suffer. Sales then start softening, which puts further pressure on the numbers.

South Africa’s franchise sector has shown tremendous resilience, first withstanding the heaviest effects from economic lens of the COVID-19 pandemic, secondly, looking at how global economies, suffered from the knock-on effect of the Russian war in the Ukraine.

Nearly eleven months after South Africa’s lockdown was first declared, there remains a great deal of uncertainty about the effect that the coronavirus pandemic will continue to have on our society and economy in 2021. Nevertheless, it is worth considering how one particularly hard-hit industry is expected to evolve in the context of the continued pandemic and difficult economic outlook.

Franchising has at its heart the spirit of entrepreneurship but amidst the COVID-19 pandemic that has resulted in immeasurable destruction of small businesses, the question remains whether the entrepreneurial flame can be re-ignited for future growth.

Franchising worldwide continues having a 90% success rate as opposed to 10% for those starting a business on their own and whilst the sector in South Africa contributes around R721 billion to the country’s GDP. Yet there are still many businesses masquerading as franchises when in fact their business models are far from that of a franchise.