Franchising sector heeds Ramaphosa's call to encourage entrepreneurship, job creation

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“We are encouraged by the President’s promise to increase co-operation with business and look at ways to encourage entrepreneurship, youth training and job creation,” says Da Fonseca. “We are confident that the franchise sector can play a pivotal role through innovations like the development of social and micro franchising which hold enormous and largely untapped potential for the development of the economy and improve service delivery.”

Confirming that the growth of the economy will be sustained by small businesses, “as is the case in many countries”, Ramaphosa confirmed that government would honour its undertaking to set aside at least 30% of public procurement to SMMEs, co-operatives and township and rural enterprises and would continue to invest in small business incubation. “It is our shared responsibility to grow this vital sector of the economy.”

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Perfectly poised to grow small business

As a sector that already contributes 13, 3% to the country’s GDP generating an estimated R587 billion through its 845 franchise systems, 40,528 franchisees and employing 343,319 people, franchising is perfectly poised to play an even bigger role in furthering small business development, skills transfer and job creation.

“As a successful businessman and former franchise owner himself, Ramaphosa is familiar with the far-reaching potential that franchising has in small business development, skills development and job creation, says Da Fonseca. “We are hopeful that he will look to us in the franchise sector to assist in building that ‘small business support ecosystem that assists, nourishes and promotes entrepreneurs’ that he referred to in his SONA speech.”

That, together with the welcome measures by government to reduce the regulatory barriers for small business and the introduction of an innovation fund targeted at start-ups and small suppliers that could become supply chains to the franchise sector, will go a long way to opening the doors to small business expansion and the benefits to the economy that will flow from that.

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Opportunities in public/private development space

According to Da Fonseca, much more can be done in the public/private development space. “The opportunities to transform government services, such as healthcare, water delivery, education and in many other areas, through the social franchise format, are enormous. Both locally and internationally, pilot projects in social franchising that operate on commercial principles, making enough profit to sustain operations and re-investing surplus profits into the community they serve, have proved to be viable.”

Da Fonseca says that the franchise sector is well-positioned to come together in a concerted effort to stimulate entrepreneurship and create much-needed jobs. Franchising in South Africa currently services around 17 business sectors – way behind countries such as Australia, Europe, Canada and the USA who boast between 25 and over 70 business categories.

“The opportunities to expand into many more sectors and particularly in the social and services sectors of the economy are endless. We welcome the opportunity to work with government in creating an entrepreneurial environment that will grow investment confidence, introduce new small business concepts via the franchise system, accelerate BEE and enterprise opportunities, giving training to the youth and above all create those much-needed jobs.

"Mr President, the franchising sector is ready and able to take on the opportunities for ‘renewal and revitalisation, and for progress to build the fair, just and decent society to which Nelson Mandela dedicated his life."