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South African equities have an attractive valuation, with most being under-owned and undervalued, says economist Sanisha Packirisamy and head of investment research Herman van Papendorp from Momentum Investments. According to the researcher’s latest Market and Economic Outlook for the first month of this year, South African stocks could stand in good stead during potential global equity drawdowns – especially during subsequent recoveries when global risk appetite rises. The economists added that there is a lot of bad news that is currently priced into South African equities. However, this enhances the future return potential from current levels. “South African equity valuations remain cheap against emerging markets (and even more so against developed markets), with South Africa a superior dividend payer within emerging markets and a large forward price to earnings discount to emerging markets,” said Momentum Investments. Momentum pointed to research conducted by SBG Securities that illustrated that apart from insurance, real estate, banks and capital goods, all MSCI South African sectors are currently trading at a discount to MSCI Emerging Markets. South Africa’s markets are expected to benefit from Russia exclusion from emerging market indices and investor worries about China’s invisibility within emerging markets due to regulatory overreach, said the group. As shown in the graph below, South Africa is likely to benefit from both Russia’s and China’s uncertainty – especially because it is the fifth most under-owned market within global emerging market equity funds. As a result of this, South Africa’s market should have “meaningful rerating potential from current cheap valuations when global risk appetite improves,” Momentum said. “Our overall expectation is for some rand appreciation as global risk appetite improves later in 2023,” said Momentum. “This would erode the local currency returns from global assets. Together with the more attractive valuations available from South African assets that provide a high margin of safety, we prefer South African asset classes over global assets in 2023.” Momentum is not the only financial services company predicting positive performance from South Africa’s markets – on 9 January, Jason Swartz, a portfolio manager at Old Mutual Investment Group said that the best return opportunities might be from domestic asset classes going into 2023. According to Swartz, South African equities have been undervalued for a while and are a good value compared to equities from both developed and emerging markets. “Locally listed stocks have a much better chance of delivering positive earnings growth in the coming year than global counterparts, and these have proven quite resilient in a tough economic environment,” said Swartz. Performance According to DailyInvestor, local investors in South Africa can expect good news from the equity market. The publication compiled the top five stock picks listed on the Johannesburg Stock Exchange (JSE) by industry experts, including: FirstRand/First National Bank – Wayne McCurrie from FNB Wealth and Investments Coronation Fund Managers – Bright Khumalo from Vestact Motus – Jacques Pretorius from Sinayo Securities Renergen – Jaco Eager from Rand Swiss Life Healthcare – Chantal Marx from FNB Wealth & Investments The graph below shows the performance of the overall performance of the top 40 JSE-listed stocks over the past six months: (Note: the stocks listed above reflect the views of the fund managers, not BusinessTech or DailyInvestor.) Credit to businesstech.co.za

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

Before the end of 2022, Ford South Africa will launch its all-new Ranger in the country. Dubbed as one of the most advanced bakkies to have debuted in sunny SA, the bakkie is a massive improvement over the model it will replace and boasts some of the most innovative technologies fitted to one yet. In the early stages of May 2022, we had the opportunity of driving a full production version of Ford's new Ranger in Thailand, experiencing the bakkie first-hand during the Asia Pacific regional drive. Going into the event, it was clear that Ford had gone to great lengths to improve the vehicle over the current model, and it would always prove to be a challenge as to which direction to take. But under the direction of Ian Foston, Chief Platform Engineer to the Ranger and Everest, the team managed to produce a bakkie that builds on the lauded credentials of the current one while ringing in a more technological flair. And after getting to grips with the new bakkie in Thailand's most treacherous conditions, we surmise that potential buyers would not regret the new Ranger as a future acquisition. Credit to News24 Charlen Raymond

Pro rally driver Ken Block, who later became an internet sensation with his daring stunts behind the wheel, died aged 55 after a snowmobile accident, his team Hoonigan Racing said on Monday. "It's with our deepest regrets that we can confirm that Ken Block passed away in a snowmobile accident today," Hoonigan said in a statement on Instagram. "Ken was a visionary, a pioneer and an icon. And most importantly, a father and husband. He will be incredibly missed." The accident occurred in Utah's Wasatch County and the Sheriff's Office said that Block was riding on a steep slope when the snowmobile upended and landed on top of him. "He was pronounced deceased at the scene from injuries sustained in the accident," they said in a statement, adding that he was riding in a group but was alone when the accident occurred. Having begun his rallying career in 2005, Block was named Rookie of the Year in the Rally America Championship. He competed in the World Rally Championship and won several rallycross medals at the X Games. WATCH | Why the infamous Mitsubishi Evo has a dangerous corner named after it The American also co-founded sportswear company DC Shoes and produced the Gymkhana video series, which featured him driving on dangerous tracks and obstacle courses. The series racked up millions of views on YouTube. Block spent time in South Africa in 2015, when he joined former Top Gear hosts Jeremy Clarkcon, Richard Hammond and James May for their for their motoring show Clarkson, Hammond & May Live. Credit to Reuters

Franchises remain a viable option for entrepreneurs in South Africa looking to generate a good income and create jobs despite volatility and uncertainty in the economy. Franchises are regarded in South Africa as highly feasible areas of potential growth. The Franchising Association of South Africa (Fasa) defines franchising as the right to operate a business or license under specific conditions. According to Fasa, franchise businesses are found in 21 different business sectors in South Africa, including: Agricultural, mining, manufacturing and industrial services Building office and home services Fast food and restaurants Health, beauty and body culture The retail and direct marketing services sector Entrepreneurship on Both Sides Franchisees have the advantage of joining a proven business system. A business model that has been proven to work allows them to trade under a well-known and reputable brand. Developing the franchise business requires both time and effort on the part of the franchisee - leveraging the brand and business systems. Franchisees, in this case, have the opportunity to start a successful business and provide employment for others. Franchisors, however, are also entrepreneurs. Because the franchisor licenses other businesses, jobs will be created by the franchisor. Franchisees must have access to support services (such as marketing and training) where required, and the franchisor must have an infrastructure and sufficient human capital to support the franchise operation. Legislation In order to balance the franchisor-franchisee relationship, the Consumer Protection Act of 2008 (the CPA) was introduced. Franchisees are required to receive a disclosure document that provides information about the franchise business, including, among other things: The financial requirements a prospective franchisee would have to meet to establish the franchise operation The expected ongoing running costs Moreover, the CPA stipulates that the franchise agreement must contain specific information and that the franchisee is entitled to a 'cooling-off period' in which they can end the agreement. The following must be included on the front of every franchise agreement: “The Franchisee is advised that, in terms of Section 7(2) of the Consumer Protection Act No. 68 of 2008 (“the CPA”), the Franchisee may cancel a franchise agreement without cost or penalty within 10 (ten) Business Days after signing such Agreement, by giving written notice to the Franchisor.” Intellectual Property In franchise relationships, three types of intellectual property (IP) are involved: copyright, trademarks, and possibly know-how. A franchisor should include all three under the definition of "Intellectual Property" in a franchise agreement when licensing IP to a franchisee. Copyright A copyright would normally exist in the operations manual, computer programs comprising the system, and fixation of the know-how (when the knowledge is removed from the brain and recorded in a document), whether embodied in the operations manual or in any other document or computer program. The franchise agreement should make clear to the franchisee that copyright in the operations manual belongs to the franchisor, and that any copying of it (other than that specifically permitted for business usage) would constitute an infringement of copyright. Know-How Trade secrets are hard to protect, since they include a business's know-how. Most of the time, a business's know-how is held by an individual employee. A business venture will be studied in detail over time, along with how the individual can conduct their own business. It is my belief that this development of knowledge should be encouraged, as it will create jobs and advance business. Employees shouldn't be allowed to remove confidential or trade secret information, including customer or supplier lists. Employees may not even be allowed to contact suppliers directly. An agreement governing the confidentiality of know-how typically identifies the topics that should be protected: The finances (income and expenditure) and profitability of the business All confidential, technical, and commercial information relating to the operation of the business (including information contained in the operations manual, and commercial information including customer demographics, cost of product, where the product is sourced from, etc.) As far as trade secrets are concerned, the information to be protected would be confidential information relating to the business of both the franchisor and the franchisee, and the rights granted in terms of the franchise agreement. Trademarks The Trademarks Act 194 of 1993 and the common law protect both registered and unregistered trademarks in South Africa. South Africa's Trademarks Registry is administered by the CIPC. Trademark applicants must file separate applications for each trademark class in which they want their marks protected. After trademark registration, a registration certificate is issued to the trademark holder. An exclusive right to use a trademark holder's mark is granted for a period of ten years, during which the CIPC can impose any conditions that might be necessary. A trademark holder can renew his or her registration after every ten years for another ten years, and maintain ownership indefinitely. An example of a brand mark would be a name, symbol, sign, trade dress, insignia, emblem, logo, or slogan the franchisor may adopt and use for marketing purposes. A franchise agreement typically contains an attachment that records trademarks. A franchisor needs to be knowledgeable about trademarks, how they are used in a specific class, who is licensing it, and who is receiving it. All franchise businesses rely on this trademark, since it is the trademark that the public is familiar with and that attracts customers. Tips for Prospective Franchisees If you are considering becoming a franchisee, it is a good idea to verify and evaluate the IP rights that form part of the licence granted in the franchise arrangement. You can also, more generally: Contact existing franchisees, suppliers, employees and customers Carefully study the disclosure documents and financial statements to check on financial health and forecasted profitability Check whether the franchisor is a member of industry bodies with enforceable codes of conduct Check for any court judgments or poor credit records against the franchise Visit franchised stores with a view to experiencing the services/goods from the perspective of a consumer The Bottom Line In South Africa, franchising offers a number of viable economic opportunities, regardless of whether you want to become a franchisee or a franchisor. Although a franchise is one of the easiest and safest businesses to start, you need to safeguard prevailing IP (franchisors) and ask the right IP questions (franchisees) in order to avoid ease and safety becoming complications and risk down the road. Credit to Stephen Hanlon

The business principle of franchising seems to have been around since man started trading – the very word ‘franchising’ is derived from an old French word meaning ‘privilege’ or ‘freedom’. It is linked to granting licenses to collect taxes for protection, goods or utilities. In America, the Singer Sewing Machine Company is credited with establishing a franchise-type network of salespeople in the 1900s. Surprisingly, a woman is said to have created the first business format franchise with her Harper Hairdressing Parlour, which soon spread throughout the United States. Along with the invention of the car in the early 1900’s came a new economic boom – that of gas stations, diners and supermarkets – and that marked the start of the franchising industry. The Power of the Americas With its domino effect, franchising soon swept the United States and started taking hold in other countries. Today the US remains the stalwart of the franchising industry, and research by Statista Research Department showed that in 2019 there were around 773 603 franchised establishments in the USA valued at $787.5 billion US dollars and employing 8.43 million people. Canada follows suit and today boasts 76 000 franchised units over 900 brands generating $100 billion in sales annually, responsible for 5% of Canada’s GDP. Although the considered third world, South America has made great strides in introducing franchise concepts – Brazil has tripled its revenue over the past decade as the middle class continues to grow. Other Latin American countries posted double-digit growth in the franchise sector year-on-year for both home-grown and foreign concepts, in countries like Brazil, Argentina, Mexico & Chile. The Sophistication of Europe Europe’s franchised concepts have developed uniquely, diverse and sophisticatedly. Whether in the home decor field or the fashion and beauty world, franchising in Europe continues to be a buoyant market. With 450 million consumers in 27 countries, a survey in 2009 by the European Franchise Federation estimates nearly 10,000 franchises are operating across 20 countries. Turkey registers the most franchise brands with more than 1,600, followed by France with more than 1,300, Germany with 960, Spain with more than 900 and the UK with more than 800 franchise brands. Italy has the most significant number of domestic or home-grown franchise brands at 96%, followed by the UK and France at 89%, and the Netherlands at 85%. The Success of Australia and New Zealand Sharing the podium with the US, Canada, UK and Europe as having mature franchise sectors, Australia and New Zealand have a high proportion of franchises per capita. Australia has more franchise outlets per capita than any other country except New Zealand, but nearly 90% of franchises are Australian-developed. It boasts 1 100 franchises with 65 000 franchise outlets employing close to 500 000 people. New Zealand has 37 000 franchises generating NZ$27.6 billion annually or 11% of GDP. In addition, both boast a high percentage of homegrown franchise concepts – 70% for New Zealand and 91% for Australia. The Potential of Emerging Markets With 80% of the world’s population living in emerging markets and economic growth shifting to developing countries, it comes as no surprise that the future development of franchising will be in emerging markets. China and India head the field simply by their combined population of around 2.8 billion people, and markets have opened up significantly in those two countries, such as Indonesia, the Philippines, and Vietnam. Africa – The New Frontier Franchising is the perfect mechanism to create employment, especially in the third world, where potential entrepreneurs do not have the necessary skills and experience to start a business from scratch. Africa is also seen as a viable market, with Southern Africa way ahead in terms of franchise development, paving the way for the potential of franchising in other regions, including Eastern, Western, Central and Northern Africa. Political stability and public/private franchise models such as social, tandem and micro franchising would go a long way to encouraging entrepreneurship and assisting with job creation. Credit to FASA.co.za

Business opportunities and franchises are two ways to open a business without having to start from scratch. While they are similar, they have distinct differences that should be acknowledged. Business Opportunities A business opportunity is the sale or lease of any product, service, equipment etc. that will enable the purchaser to start a business. Business opportunities cover a broad spectrum of careers, and include the following: Turnkey Operations Distributorships Dealers Network/Multi-level Marketing Trademark/Product Licenses Rack Jobbers Vending Machine Routes Work from Home Opportunities With the purchase of a business opportunity, the buyer owns the business outright and can customise virtually all aspects of the business to their own tastes. When an entrepreneur contacts an entity selling a business opportunity, they are contracting with that licenser for a business system including training, equipment or a service method that the licenser has cultivated and made profitable. Traditionally, once the purchase is finalised, and training – if applicable – is completed, the relationship is over. Franchises A franchise is defined as the right or license granted by a company (franchisor) to an individual or group (franchisee) to market its products or services in a specific territory. Three common types of franchises are: Product: The franchisor grants the franchisee permission to sell/distribute a product using their logo, trademark and trade name. Manufacturing: The franchisor permits the franchisee to manufacture their products (i.e. food) and sell them using their trademark and name. Business Format: Probably the most popular form of franchising. The franchisor licenses their brand to a franchisee for use with a predetermined way of conducting business. When a franchise is bought, the purchaser is required to comply with strict guidelines and rules regarding the operation of the business. These guidelines are in place to protect others within the system and maintain brand consistency. And unlike most business opportunities, costs paid to the franchisor don’t end with the initial sale. In exchange for these payments, the franchisee will receive continued support, such as marketing assistance and technical support. Choosing the Right Option for You Figuring out what kind of entrepreneur you are and what you’re looking for, is important for deciding which kind of business you should pursue. Both options are good for potential business owners that don’t have a unique product or service to bring to the marketplace, but still want to run a business. The big differentiator is how much support you might want. If you’re simply looking for a jumpstart and desire more flexibility, a business opportunity is probably the route for you. If you’re looking for consistent support, and can handle restriction in your business procedures, then a franchise might be the right path for you. Many people want to be their own boss, but don’t want the task of reinventing the wheel. In franchising, someone has already done the work establishing the business, and has ironed out the wrinkles. Here are some common benefits of the franchise system: The business has already been proven to work. The franchisor and the network of busily trading franchisees are testimony to that. You are fully trained in all aspects of the business, and sometimes your business partner and/or key staff receive training too. There is an operating system that can be learned and then implemented to the letter, or with a degree of flexibility. The brand is established. The franchisor helps with finding a good location that will deliver traffic if that’s what is needed (e.g. for retail or food outlets) or will be cost efficient if visibility is not paramount (e.g. for cleaning or home improvement businesses). Marketing tools and ad campaigns are provided, both nationally for the brand and locally for individual franchisees. The majority of franchisors also help franchisees make a major local impact with a press launch of the business. Franchisees receive ongoing support from good franchisors, delivered via toll-free numbers, a company intranet, newsletters, and regular visits by a representative from the corporate office, regional meetings and annual conventions. Centralised purchasing is a feature of many franchises where the franchisee benefits from discounted pricing on goods for a retail store or ingredients for a restaurant and other supplies. There are many different types of franchise opportunities available, with various investment commitment levels that can range from minimal to more substantial. For those not ready to leave their day jobs, there are plenty of offerings that require only a part-time commitment that grows gradually. Ambitious entrepreneurs, who want to totally commit themselves to owning a business, have a vast range of choices. Like anything else in life, there are pros and cons involved. Conduct in-depth research to ensure the benefits of franchising outweigh the disadvantages in your personal situation. Credit to Franchise Direct

In a strictly legal sense, every franchise agreement is entered into between a franchisor and one specific franchisee. What is frequently overlooked however is the fact that three other parties will be affected, to a greater or lesser extent, by every such agreement. Unless the franchise agreement enables the franchisor to exercise adequate control over the way each franchisee exercises his rights and carries out his obligations, the entire network of company-owned and franchised stores, its suppliers and its customers could suffer from the actions of one errant franchisee. The franchisor, having invested much time and money into the creation of the franchise package, is entitled to protect the value of the brand and ensure its continued growth. The franchisees within the network, in their efforts to maximize market penetration and business results, will rely on the reputation of the brand. The network’s suppliers, having entered into network-wide supply agreements, will expect each member of the network to meet its respective obligations arising from the supply of goods and services. Should, for example, one franchisee habitually default on payments, the credit rating of all other members of the network could be affected. Guided by word of mouth and their own past experiences and influenced by the brand’s advertising message, customers tend to develop certain expectations when dealing with a brand. They may not know which store within a network is company-owned and which one is franchised, nor will they really care. They expect that the service experience offered under the banner of the brand remains consistent throughout the network, no matter where the outlet they frequent is located or who owns it. If this simple expectation is not met, the brand will suffer. Understand the difference between Franchisor and Franchisee: THE FRANCHISOR…. Is the originator of the concept Provides an established and tested business system Has an established name, brand and trade mark Sells ‘clones’ of his concept for a prescribed contract period in order to grow the business and build the brand Supplies the know-how, training and support services Expands his network rapidly and cost-effectively Benefits from pooled operational efficiencies THE FRANCHISEE… Buys into a ready-made business package Buys the rights to operate under a well-established brand Invests capital, time and effort to replicate a proven concept Must follow the franchisor’s standards, methods, procedures, techniques and marketing plans Must pay a fee to the franchisor for the rights to use the trade mark and business system for an agreed period of time Benefits from skills transfer, training and business support Invests in a viable business that will prove to be a good investment Choosing the ideal Business Format and Support Structure It is imperative that franchisors have a look at themselves to honestly assess whether they have the business format and support structure in place to give each franchisee the best chance of making a success of their business. This would include reviewing whether a franchisor has: A proven, replicable business format for the franchisees to replicate. A fair and balance fee structure which makes the business viable for both franchisor and franchisee. A realistic cash flow projection to ensure franchisee is adequately capitalised from the outset. Strong systems and procedures in place. A viable and sustainable country development plan in place. Site and territory selection criteria. An up to date, accessible and relevant franchise package in place (operations and procedures manual, disclosure document and franchise agreement). Comprehensive initial and ongoing franchisee training programmes in place. Defined franchisee profile with a strong recruitment and selection process. Strong franchisee support culture and infrastructure.