Morne Cronje, FNB head of franchising, says the Budget Speech is an important economic indicator that franchises can use to gain insight on the government’s plans on spending and economic growth for the year ahead.
He highlights potential National Budget Speech outcomes that could boost the confidence of franchises:
• Relief – any form of relief that is likely to bring positive change, rebuild confidence and address some of the key challenges impacting consumers will be welcome by franchises. Cronje says consumer spending contributes a significant portion to the profit margins of franchises especially in the food sector.
• Economic growth – rating agencies are keeping a close watch on South Africa’s performance and prospects for growth, which will impact our Sovereign ratings for the rest of the year. Measures that the government puts in place to promote economic growth this year will be of interest to franchises.
• Regulation – franchise owners will be looking to benefit from regulatory changes that aim to improve growth, operating environment and enhance participation in all facets of the formal economy.
• Tax – based on the Mid-Term Budget Review in October 2018, there’s likely to be no major shake-up from a business tax perspective. The anticipated relief in tax will go a long way to boost the profit margins of franchisees.
• Infrastructure investment – spending on infrastructure creates vast opportunities for franchise business owners, as well as job creation in the country. The government has signalled an intention to partner with the private sector to develop an infrastructure fund to increase investment in public infrastructure.
“Franchises that operate in South Africa should prioritise the National Budget Speech as key decisions announced by the minister have a direct impact on their growth,” concludes Cronje.
