Franchisees optimistic about the future of the sector

The failure rate of franchising is less than 10%, this is according to a survey by the Franchising Association of South Africa (FASA). This is compared to the over 90% failure rate of independent businesses.

This and other survey results show that franchising in South Africa continues to be a sustainable sector says Vera Valasis, Executive Director of FASA.

“The most revealing statistic to come out of the survey was the fact that three in five franchisees had been in business for more than six years, with a healthy 39% in operation for longer than 12 years. That, without question proves the sustainability of the sector – even in the face of recessionary times”, she says.

According to Valasis, the aim of the survey was to serve as a benchmark on not only performance of the sector but more importantly on the attitude and satisfaction levels of the over 30 000 franchisees that make up the backbone of the franchise sector.

In the study, the largest sector was the fast food and restaurant category at 20%; with retailing close behind at 19%. business-to-business services and childcare, education and training and automotive products and services occupy 21% of the franchise market (10% 11% and 10% respectively). The other categories (health, beauty and body culture, real estate services, construction and related services, personal services, building, office an Home services, entertainment and leisure) are 6% and smaller.

Sector confidence 

Sixty percent of franchisees who participated in the survey said they were optimistic about the future of their businesses and claimed to have made an average gross profit of 32.6% in the last financial year.

With slightly more than half of franchisees claiming to own one other business of the same franchise brand, and one in ten claim to own a franchise of a different brand.

New trends

The ‘multi-unit franchising’ trend – when a franchisee owns many stores and runs them like a corporate business – is gaining traction locally. This is according to FASA’s newly elected chairman, John Baladakis, a multiple-store Pick n Pay franchisee.

“This multi-unit ownership trend is allowing franchisees to move from being one-store owners to building their own successful business empire”, he says.

Reference: SME South Africa –  http://www.smesouthafrica.co.za/.