'International franchises a good boost for SA's economy'

The International Franchise Expo has kicked off in Sandton.

Picture: Starbucks.

JOHANNESBURG - While the South African economy is believed to be under pressure, negative or sluggish in some parts, the Franchise Association says the success of franchising has held its own year after year with a high success rate of around 90 percent.

It's only had a 10 percent failure rate compared to independent businesses.

The association will once again host its annual Expo at the Sandton Convention Centre this weekend and will highlight the continued level of optimism that remains in the industry.

Contributing nearly 12.5 percent to the country's GDP, Henk Botha, who is the Franchise Development Manager for Barclay's Africa, says one of the big reasons franchising has managed to stay afloat is because of a consistent level of dedication.

"In a lot of cases the franchisors look strategically while the franchises are operating operationally and because of that vision and that outlook they prepare their [business] models, they look at certain changes, they try and negotiate certain offerings to protect the franchisees margins and I think that involvement is one of the big reasons why franchisees are still surviving and making returns in current economic climates compared to non-franchises."

A number of international franchises are currently being introduced to South Africans, with Starbucks making its debut in Johannesburg this month.

Others include Krispy Kreme, Domino's Pizza and Dunkin' Donuts, which will open more than 250 stores in the country.

The home-grown franchise Chesa Nyama will make an appearance at the expo.

Speaking of the overwhelming number of international food brands entering the country, Botha says the competition is good.

"When competition moves in, people are awakened, certain [business] models need to be reviewed and instead of doing things the way they used to be done now all of a sudden models are reviewed to counter the challenges of international brands that come in."

He says these brands have been particular supportive to the local economy.

"The success rate of it has in a lot of cases still to be proven, a lot of brands are still new. The market is different than markets that they [currently] trade in so they also need to adapt, but there definitely are benefits to it if someone can bring capital into the country and create jobs."

Botha has encouraged the public to attend the expo and find out more about how you can have a stake in the industry, with a few training courses being provided at the event.

"If you're interested in going into franchising, it gives you an opportunity and a proper understanding of what a franchise is. It's a lower risk business but it's not for everybody. The expo is also here to present different brand and options."