Franchisinghas enabled entrepreneurs to expand their businesses at a much faster rate thanwould otherwise have been possible. It has also created a good number of highlysuccessful individuals. According to the FNB Franchise Think Tank, franchisingtoday has the potential to achieve many more successes in South Africa,including:
- Create newenterprises. Franchising is an ideal vehicle for start-ups because ofits significantly reduced failure rates. It is often described asentrepreneurship with a safety net, and rightly so.
- Acceleratethe creation of employment opportunities. Almost every franchised outletemploys staff. The number of employees a typical franchise will absorb can varyfrom two to three in the instance of a small service franchise to 100 or moreemployed by a Pick n Pay Family Store or a Dis-Chem Pharmacy.
- Improvelevels of statutory compliance. Experience has shown that on thewhole, formalised businesses tend to be more compliant when it comes tostatutory returns and payments, they understand the need to pay taxes and theytend to create better working conditions for their staff.
- Offerconsumers certainty. To remain competitive, known brands are practically forcedto offer their customers a pleasant shopping experience, value for money andfair product guarantees. As part of any suchnetwork, franchisees are compelled to comply.
- Encouragebig players to enter this field. Franchising is an ideal vehicle forthe revitalisation of tired branch networks. Many large companies would like toavail themselves of this but are concerned that the perceived complexities andlegal uncertainties that currently exist in franchising outweigh the franchiseconcept’s proven advantages.
- Createrealistic and sustainable BEE schemes. Instead of closing a loss-makingbranch, it can be offered to a deserving member of staff, possibly initiallywithin the framework of a joint venture. This would have to be structured insuch a way that the staffer would ultimately own the business outright butcontinue to operate it under franchise.
- Results-oriented owner-managers. Strong anecdotal evidence suggeststhat “placing the owner behind the counter” can have a dramatic impact on theprofitability of a store. Instead of being left with the aftermath of a storeclosure, namely loss of footprint and market share for the company, an emptyshop for the landlord and perhaps 20-50 people joining the unemployment queue,you end up with a thriving business.