A relatively large number of players in the franchise sector are lagging behind with the implementation of meaningful B-BBEE initiatives. This could create the impression that the sector resists transformation but this is not the case at all. We decided to examine the situation and came up with the following findings. Problem statement Transformation in the franchise sector has indeed been slow. This is an unintended consequence of the criteria for transformation set out in the B-BBEE Act. The Act lists five elements for compliance: Ownership, management control, skills development, enterprise development and socio-economic development. The weightings applied in terms of the Act placed emphasis on ownership and management control. Meeting requirements in these two areas created difficulties for franchisors and their franchisees alike. FRANCHISORS Responsible franchisors pride themselves on assuming moral responsibility for their franchisees’ success chances. This forces them ...

Petra Rees As per the Revised Codes of Good Practice, the Enterprise and Supplier Development (ESD) element forms 40% of the revised B-BBEE scorecard. According to Petra Rees, Managing Director of Lean Enterprise Accelerated Programmes (LEAP), “The mind-set at many companies is shifting from historical arm-length relationships between Enterprise Development and procurement initiatives to ensuring that supply chain becomes optimally transformed through comprehensive ESD programmes.” When it comes to designing an effective Enterprise and Supplier Development strategy, Rees recommends the following:  1. Analyse your existing procurement initiatives The purpose of a Procurement Analysis is to give you a clear picture of where and with whom you are currently spending money and where you are scoring B-BBEE points. You need to get a clear report on key indicators – amongst which are your procurement score against target score, a strategic view of your dependence on key suppliers ...

How to Seal that BEE Deal In South Africa, as in the rest of the world, business shareholders focus on annual returns and dividends. For companies in South Africa, being B-BBEE-compliant makes a significant difference when it comes to growth and success. When implemented well, BEE can support job creation, global competitiveness and economic growth. It can also reduce the burden on entrepreneurs and assist in creating a more skilled workforce.   The Broad-Based BEE Codes of Good Practice are legally binding on all State and State-owned entities, so when it comes to choosing suppliers, granting licences or making concessions, all government (and an increasing number of public) businesses require their suppliers to be B-BBEE compliant. Israel Noko, CEO of NPI Governance Consulting says, “Being B-BBEE compliant has knock-on effects. For example, businesses with high B-BBEE ratings may be preferred suppliers because their score helps to improve the score of the companies makin...