A NEW YEAR BRINGS NEW HOPE

A MESSAGE FROM FASA’S EXECUTIVE DIRECTOR

In South Africa’s new era of promoting entrepreneurship, small business development and skills transfer as envisioned / proposed by our present government, FASA has a crucial role to play. Encouraged by government’s quest to provide five million jobs by 2020, FASA has taken up the challenge of growing the small business sector by playing an active role in ensuring that franchising remains a viable and accessible option for anyone wanting to go into business for themselves, but not by themselves. The position of franchising as one of the strongest business formats in the world today was highlighted and confirmed during the recent recession. Although franchises certainly have been affected by the economic downturn, it has proven its resilience by faring better than independent businesses.

The future growth potential for franchising in South Africa is enormous. Franchising locally is represented in only 17 business sectors compared to between 25 to over 50 business sectors in developed countries.  As the economy recovers, the franchise sector will undoubtedly rise to the challenge of providing entrepreneurial opportunities to aspiring small business owners, facilitating much needed skills transfer and contributing to job creation.

FASA has been a member of the World Franchise Council for many years, and for the past 33 years has encouraged local franchisors to adopt international franchise best practices. Indeed FASA’s own Code of Ethics complies with global franchise requirements. The new Consumer Protection Act (CPA), which came into force in April 2011, now clearly governs franchising in terms of its franchise agreement, its disclosure document and by extension, its operations manual. The new regulations will go a long way to separating the ‘wheat from the chaff’ when it comes to weeding out unscrupulous franchisors who do not abide by best franchise practices, or provide reasonable value for their franchisees. 

FASA’s 2012 Directory, available from FASA or through selected bookstores from January, features all those franchisors who run ethical operations and have voluntarily elected to join the association and who have passed its rigorous membership criteria. Vera Valasis, Executive Director of FASA, has a strong message for the over 500 franchisors operating in the marketplace, some ethically and some who are rather suspect. “The enforcement of the Consumer Protection Act as it applies to franchising has already begun. Authorities are targeting franchisors to check that they comply with the regulations as laid out in the Act. To facilitate compliance and get FASA’s stamp of approval, we strongly urge all franchisors to become members of FASA. In addition to benefitting from the guidance the association can provide in terms of the requirements of the Act, from networking events to unique marketing opportunities, members also enjoy many other benefits offered by the association.”

To those prospective franchisees who dream of owning their own franchise and are eager to join the 30,000 already successful franchisees in the marketplace, Vera Valasis also offers words of caution. “It has become imperative that you seriously consider only buying a franchise from a FASA member. Members are required to comply with FASA’s strict membership criteria and abide by FASA’s Code of Ethics. Furthermore, after the implementation of the Consumer Protection Act on 1 April 2011, it has become law that franchise companies comply with the franchise requirements of the Act and Regulations. Through its membership vetting process, FASA ensures that members not only comply with the CPA, but all other legal requirements applicable in South Africa.”

Recent economic conditions globally and locally have not been conducive to growth, and a number of businesses were forced to scale down and retrench employees. Some of these employees are now considering self employment, and while the franchise industry offers a number of opportunities, Vera Valasis has these words of caution: “Before you go any further I cannot stress enough how important it is to conduct thorough market research before you decide to sign on the dotted line. A guide like the FASA Directory should be your first port of call as it contains many interesting articles that will assist you in making up your mind, but do not be scared to ask as many questions as is necessary for your own peace of mind. Spend time with some of the existing franchisees of the franchise company you are interested in and find out if they are happy with their investment and whether the franchisor keeps his/her promises.”

Regrettably there are always unscrupulous individuals who operate franchise scams waiting to pounce on unsuspecting potential franchisees. While it is not always easy to spot a scam, here are some points to look out for:

• not being a member of FASA,
• claims that you can make lots of money quickly without much effort,
• reluctance to give details of existing franchisees,
• requiring payment upfront before any information is given,
• inconsistent or absence of financial information of a typical franchised outlet, and
• franchisor not having a physical or office address, only a postal address. 

If you pick up on any of these points during your research, proceed with caution, as these companies could be unethical and will only bring you hardship. Before making your final selection, it is always a great idea to speak to franchisors firsthand and pay a visit to the largest franchise expo on the African continent, the International Franchise Expo (IFE) 2012. FASA’s staff look forward to welcoming you to IFE 2012, at the Sandton Convention Centre from 17 to 19 May 2012. For more information about IFE 2012 visit www.ife.co.za.

“Remember, a well informed decision is your safeguard against a bad decision!”

Vera Valasis

Executive Director

To obtain a copy of FASA’s 2012 Directory, e-mail fasa@fasa.co.za