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Franchise sector will continue to trade resiliently into the new year and beyond


Image: BusinessLIVE


For the franchise sector, last year was a year to regroup, re-strategise and come back stronger after being badly impacted by two years of the pandemic, followed by the July 2021 riots and later floods in KwaZulu-Natal. File Image: IOL


For the franchise sector, last year was a year to regroup, re-strategise and come back stronger after being badly impacted by two years of the pandemic, followed by the July 2021 riots and later floods in KwaZulu-Natal, says Freddy Makgato, the CEO of the Franchise Association of South Africa (FASA).


He said franchises in particular, by virtue of their ‘strength in numbers’ and their solid support mechanisms, were showing signs of recovery, and the sector remained one of the most resilient.


Makgato said that out of adversity came opportunities, and the franchise sector could expect to see new business models emerge that have adapted to the new normal, and will thrive going into the new year.

"This is both a good thing for entrepreneurs looking to start new franchise concepts and for the many who find themselves out of work and looking for an investment opportunity. Now is the time for franchisors to strengthen their business format and systems and make their concepts relevant-not just for consumers but also for prospective franchise buyers."

"The franchise sector is leading the way in its recovery and globally we are seeing the determination of both franchisors and franchisees to overcome the challenges and forge ahead with revival plans," Makgato said.


The association said that it had been knocking on government’s doors for decades inviting the small business departments to recognise the role franchises played by contributing almost 14% to the country’s GDP, through its over 800 franchise systems, over 48 000 franchise outlets and employment of close to 500 000 people.

He said that the message FASA and the franchise community wanted to send to government was: "Recognise us... and the role that we can play in rebuilding the economy.” The CEO implored the government to provide an enabling environment to do business, and talk to them about partnering on relevant franchise concepts like social, micro and tandem franchising that would make a real difference in transformation.


In November, Warren Pratt, Industry Specialist: Retail at FNB Franchising said the second-hand market was showing resilience despite the tough trading environment, as it continued to grow about 10% year-on-year. The specialist said to some extent the impact of Covid-19 over the last two years and slow economic growth, had led to consumers seeking alternative shopping avenues.


“These businesses traded well through Covid, and indications are that they will continue to trade positively going forward. The second-hand market is unique in that it catches both parts of the economic cycle,” Pratt said.


Makgato said FASA had identified three critical elements for the recovery of the economy by creating much-needed employment opportunities for youth, women and differently-abled persons. There was also a serious commitment to private/public collaboration in relation to access to market, an affordable and responsive funding approach, and training and developmental focus on entrepreneurship.


"For the franchise industry to accelerate job creation, mature franchise businesses should commit to provide support to the emerging manufacturers of consumable products, and source their supplies from those small businesses," Makgato said.


The association’s board and Makgato had engaged government departments at all levels (national, provincial and local) last year,


A project highlight last year was resuscitating relations with SEFA (Small Enterprise Finance Agency), which has massive power to provide financial support to the industry with regards to stimulating entrepreneurship, creating small businesses and contributing to job creation.


Credit to IOL



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