Franchise Association of Southern Africa Interview
February 28th, 2006To franchise or not to franchise? < International > Interviewer : Bruce Whitfield Interviewees : Kobus Oosthuizen (Vice Chairman) Kobus Oosthuizen, Franchise Association of Southern Africa Vice Chairman, talks about the franchising industry, and the disturbing number of franchising companies that go bust. How much of the South African franchising industry is actually home grown? I have seen the figures — 80 percent, is it that high?
It is high and one of the reasons is because South Africa is unique in terms of its trading environment and it is in many ways not like the rest of the world. And that really necessitated the development of home grown concepts. The international brands, of which there are a few, are quite well established, KFC is probably the most established one and it is one of the few international brands that really survived well in South Africa. There are quite a number of young and upcoming concepts, which are all quite exciting. The International Franchise Expo, is it international franchisers coming into South Africa to make opportunities available for locals? There are quite a few, again, I would say, as you mentioned, only 20 percent of the new systems comes from abroad, 80 percent of the new ones, comes from within. There are some fairly significant barriers to entering in terms of franchising. If you want to open up a bakery franchise or a KFC franchise, I would assume it is going to take the better part, if not more, of R1-million to set it up. Again, it varies. Surely your more established food brands are quite costly to set up. In South Africa as an association, we do try to promote the more affordable concepts, also to try and promote BEE in the franchising sector, but cash is one of the barriers. And if one can reduce the set-up costs, and work towards the development of more affordable concepts, you can widen the base quite substantially. |
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