FRANCHISING SINGLED OUT IN MINISTER OF SMALL BUSINESS, LINDIWE ZULU’S RECENT SPEECH IN THE NATIONAL ASSEMBLY
Minister Zulu singled out franchising as a catalyst for economic growth and job creation. “The department is determined to transform the franchising sector through various measures and one of them is to develop more franchisors from townships and rural communities. We have started a process of identifying and packaging successful and profitable businesses based in township and rural areas. Micro-franchising is still at its infancy stage in South Africa. The mainstream franchise market remains expensive and inaccessible to the majority of potential entrepreneurs.”
The Minister’s specific mention of franchising follows on the heels of the Franchise Association’s Franchise Week where the Minister gave the key-note address at the opening of FASA’s International Franchise & Entrepreneurial Exhibition. On that occasion she commended the commitment of the Franchise Association of South Africa in playing a significant role over the past 36 years in furthering entrepreneurship, skills development and job creation. through its 627 franchise concepts, over 30 000 franchise outlets and employing close to 400 000 people.
John Baladakis, FASA’s Chairman welcomes the progress that Minister Zulu and the Small Business Ministry has made in identifying franchising as one of the areas where great strides can be made. “We look forward to collaborating with her and her team. We acknowledge that there are challenges in the franchise industry and that funding must be made available to entry level franchisees – with a particular emphasis on exploring franchise opportunities that can be rolled out in townships and rural areas.”
Reiterating President Zuma’s State of the Nation comment that ‘small business is big business’ when it comes to assisting in transformation, job creation and economic inclusion, Minister Zulu referred to the National Development Plan which envisages that the small business sector will create 90% of the expected 11 million jobs needed by 2030. “By our calculations, confirmed Minister Zulu, “small business will have to contribute roughly 800 000 jobs per year until 2030. As government, private sector and other relevant stakeholders we carry a responsibility to stimulate and support the growth and sustainability of the small business sector. Together, we must address lack of business opportunities in both the public and private sectors.”
The one business sector that has done more than any other in providing entrepreneurial opportunities for people from all walks of life to set up small businesses is, without doubt franchising. Franchising is one of the most successful business mechanisms for developing small businesses, with a failure rate of less than 10% compared to the over 90% failure rate in independent businesses. With its contribution to the country’s GDP at around 10%, the Chairman and board of FASA are ready to take up the challenge proposed by government.
With government’s sanction and initiatives in the pipeline from the Ministry of Small Business, that include:
- the Red Tape Reduction Programme which will see a review of the policy and regulatory environment that continues to hinder the development, growth and competitiveness of small business; to the
- Incubation Support offered by organisations such as SEDA and the proposed amendments of the National Small Business Act; to the
- funding initiatives spearheaded by various government departments and agencies;
FASA will, through its own initiatives, embark on an action plan that will see it working hand in hand with government, says John Baladakis. “Franchising can offer a myriad of solutions to growing the economy, providing the entrepreneurial spark that is needed to kick-start new business initiatives. “Whether we look at promoting lower-entry level franchise concepts geared for township business or work with government on developing the internationally acclaimed, public/private social franchising partnerships to assist in service delivery, the franchising community and FASA are committed to growing our sector and, in turn, the economy of South Africa.”