Partnerships create franchising opportunities

Kobus Oosthuizen, the new chairman of FASA, explains that, while there are many innovative and interesting businesses in South Africa, there are numerous situations in which owners want to expand, but have neither access to the intellectual property needed to franchise a business or the capital to get them going. “The risk is that the business’ potential growth is stultified or that the business owner embarks on a franchise route that may turn out to be seriously flawed. After all, franchising a business concept is not something to be done in a half-hearted way. The legal and tax issues are quite unique in the case of a franchise and specialist knowledge must be sought in order to ensure you have a strong and sustainable franchise.”

Learning support

To get its new project off the ground, FASA called on its members for support and 11 will be actively involved in the project. Explains Riaan Fouche, head of franchising at First National Bank (FNB) and one of the 11 FASA members involved: “We will be identifying businesses that have a franchisable concept, but in which the owner needs assistance and support to get the franchise going. The plan is for us to select five of these every quarter. We will provide learning and support, and each business will be allocated a service provider, such as a franchising consultant, who will assist the business owner through the process of establishing him/herself as a franchisor.”

The fundamental is that an entrepreneur must have an already successful business which is developed and tested in all the operational and market related aspects. The programme intends to prepare a currently successful concept for franchise expansion.
Once the viability and “franchisability” of a concept has been investigated and researched, only then will the franchise development work commence.
These will include, amongst other elements the disclosure document, franchise agreement and franchisee operations manual.

The project can only take place with sufficient funding and FASA members have been asked to assist with this. In addition, explains Oosthuizen, the association will approach the Department of Trade and Industry (DTI) to match the industry funding Rand for Rand. “Bearing in mind the pressing need for more jobs in our country and the fact that franchising is a good source of secure new jobs, we are sure that Government will recognise the value of the FASA project and support us in this initiative.”

The money offered by the FASA member companies and DTI will be used to fund the learning initiatives and specialist advice that will be provided to the new franchisors.

Expo

In addition to stimulating economic growth through the establishment of bigger businesses, the project will create opportunities for emerging business people who would otherwise struggle to expand their businesses. FASA also aims to bring more businesses into the organisation as members, since this will improve the integrity of the industry – membership entails meeting certain minimum standards regarding the running of the franchised business. This applies to both new franchisors and existing ones who can improve the way in which their businesses are structured.

This FASA initiative should provide for much-needed growth in the number of local franchised businesses and is being welcomed by the business community.

FASA has put together the International Franchise Expo at the Sandton Convention Centre from 3 - 5 May 2007. Industry trends and issues will be highlighted by all stakeholders during this period.