The Franchise Association of South Africa (FASA) 2023 database reveals compelling statistics that underscore the robustness of the franchising landscape in South Africa.
With 727 franchise systems operating in the country, representing a decrease from 813 in 2019, it's evident that the sector has undergone transformations amidst the disruptions of the past four years. This decline in the number of franchise systems can be attributed to various factors, including the challenges posed by the pandemic, which hindered the emergence of new concepts and potentially led to the closure of smaller ventures struggling to navigate the turbulent times.
However, despite the decrease in the number of franchise systems, the total number of franchisees has surged, reaching 68,463—a remarkable 43% increase since 2019. This growth is primarily fueled by the emergence of larger franchise systems, which have expanded their presence and operations, contributing significantly to the overall increase in franchisee numbers.
What sets the franchising sector apart is not just its growth but also its longevity and stability. The FASA data indicates that a substantial majority of franchisors (77%) and a significant portion of franchisees (53%) have been in business for more than a decade. This longevity speaks volumes about the resilience of franchise businesses and their ability to adapt to changing market dynamics over time.
One of the most notable trends highlighted by the FASA 2023 report is the increasing expectations regarding the break-even timeline for new franchises. Both franchisors and franchisees are increasingly optimistic about achieving profitability within the first year of operations. In 2019, 76% of franchisors expected a new franchise to break even within the first year—a figure that has surged to 89% in 2023.
Similarly, the proportion of franchisees experiencing break-even within the first year has also risen significantly, from 69% in 2019 to 89% in 2023. This trend underscores the growing efficiency and profitability of franchise businesses, driven by factors such as streamlined operations, enhanced support systems, and a deep understanding of consumer preferences.
In conclusion, the FASA 2023 database offers a comprehensive snapshot of the franchising landscape in South Africa, highlighting both its growth trajectory and its resilience in the face of adversity.
Source: Franchise Association of South Africa (FASA)