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Franchising Sector Ready to Lend a Hand

Estimated reading time: 4 Min Read
April Franchise Blog Tony Da Fonseca

"We are at a moment in the history of our nation when the people, through their determination, have started to turn the country around.
Now is the time to lend a hand...
Now is the time for each of us to say 'send me'...
Now is the time for all of us to work together, in honour of Nelson Mandela, to build a new, better South Africa for all."
Cyril Ramaphosa, State of the Nation Address (SONA) 2018

The SONA speech by President Cyril Ramaphosa and his commitment to supporting small business and entrepreneurship has been welcomed by Tony Da Fonseca, the Franchise Association of South Africa’s Chairman, who in 2017 had already met with the chairperson of the Parliamentary Portfolio Committee for Trade and Industry to pave the way for greater cooperation between government and the franchise sector.

"We are encouraged by the President’s promise to increase cooperation with business and look at ways to encourage entrepreneurship, youth training and job creation," says Tony Da Fonseca. "We are confident that the franchise sector can play a pivotal role through innovations such as the development of social and micro franchising. These sectors hold enormous and largely untapped potential for the development of the economy and the improvement of service delivery."

Confirming that the growth of the economy will be sustained by small businesses, "as is the case in many countries," President Ramaphosa confirmed that the government would honour its undertaking to set aside at least 30% of public procurement to SMMEs (small, medium and micro-sized enterprises), cooperatives and township and rural enterprises and would continue to invest in small business incubation. "It is our shared responsibility to grow this vital sector of the economy."

As a sector that already contributes 13.3% to the country’s gross domestic product (GDP), generating an estimated R587 billion through its 845 franchise systems, 40,528 franchisees and employing 343,319 people, franchising is perfectly poised to play an even bigger role in furthering small business development, skills transfer and job creation.

"As a successful businessman and former franchise owner himself, Cyril Ramaphosa is familiar with the far-reaching potential that franchising has in small business development, skills development and job creation," says Franchise Association of South Africa (FASA) Chairman, Tony Da Fonseca. "We are hopeful that he will look to us in the franchise sector to assist in building that 'small business support ecosystem that assists, nourishes and promotes entrepreneurs' that he referred to in his SONA speech."

That, together with the welcome measures by the government to reduce the regulatory barriers for small business and the introduction of an innovation fund targeted at start-ups and small suppliers that could become supply chains to the franchise sector, will go a long way to opening the doors to small business expansion and the benefits to the economy that will flow from that.

FASA has always been a proponent of small business incubation and has, over the years, embarked on various public and private initiatives in an effort to grow the franchise sector. Their efforts have included youth cadet schemes through a jobs fund, developing micro businesses to become franchise-ready through the Department of Small Business Development’s Micro Franchisor Development Project and through various private initiatives with funders and franchise members.

According to Tony Da Fonseca, much more can be done in both the public and private development spaces. "The opportunities to transform government services, such as health care, water delivery, education and in many other areas, through the social franchise format, are enormous. Both locally and internationally, pilot projects in social franchising that operate on commercial principles, making enough profit to sustain operations and re-investing surplus profits into the community they serve, have proved to be viable."

According to Tony Da Fonseca, the franchise sector is well-positioned to come together in a concerted effort to stimulate entrepreneurship and create much-needed jobs. Franchising in South Africa currently services around 17 business sectors – way behind countries such as Australia, Europe, Canada and the USA who boast between 25 and over 70 business categories. "The opportunities to expand into many more sectors and particularly in the social and services sectors of the economy are endless. We welcome the opportunity to work with the government in creating an entrepreneurial environment that will grow investment confidence, introduce new small business concepts via the franchise system, accelerate BEE and enterprise opportunities, give training to the youth and above all create those much needed jobs."

The franchising sector is ready and able to take on the opportunities for 'renewal and revitalisation, and for progress to build the fair, just and decent society to which Nelson Mandela dedicated his life.'

Information courtesy of the Franchise Association of South Africa.
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