SA IS poised to be the springboard for a franchising revolution in Africa.

An African Development Bank (ADB) study has shown the potential for franchising throughout Africa is "enormous", says Brenda Macqueen, who chairs the Franchise Association of Southern Africa.

At the same time franchising is attracting growing interest from previously disadvantaged South Africans seeking ways of getting into business, particularly in underserviced black communities.

SA, by far Africa's most sophisticated franchise market, already has a number of high-profile franchise operations in countries the length and breadth of the continent. But these are merely the forerunners in what promises to be a continent-wide revolution, she says.

Franchising holds "great promise" for African development as it filters down opportunities, encourages entrepreneurship, transfers skills and creates direct and indirect jobs. Incoming franchises also generate foreign exchange.

An ADB-commissioned study in SA, Morocco and Egypt found dynamic franchising growth in all three. In SA franchise systems have grown 17% a year since 1994. In Morocco, that growth is 73% in the past three years, and in Egypt the number of US fast-food chains alone has almost quadrupled in five years.

The study found that as existing franchises tend to cater only to the top 31% of the demographic market, there are clear opportunities catering to the rest.

ADB private sector department head Luciano Borin says the bank is looking to SA not only to help it form strategic African alliances for sustainable growth through franchising, but also through co-financing projects.

Macqueen says her association is co-operating with counties all over Africa, helping with advice and documentation to establish franchise associations or formal arrangements with business chambers. She says African countries should also provide incentives to major franchisers to invest directly by setting up their own local operations or forging joint ventures with local entities

A major problem in some countries is a lack of franchise-friendly laws, notably legislation on intellectual property. Other challenges include access to property, a lack of infrastructure and sound banking systems, unstable local governments, inefficiency and corruption.

South African franchises elsewhere in Africa include Shoprite Checkers, Pick 'n Pay, Truworths, Steers, Wimpy, Nando's, Debonairs, Butterfield, Chicken King, Newscafe, O'Hagans, Subway, Rhapsody's, Uniglobe, NWJ Jewellers and Coastal Tool Hire.

Research presented recently by First National Bank's head of franchising, Riaan Fouche, found franchising is growing at 13% a year in SA, representing 11,7% of gross national product and involving 23000 franchisees in 19 business categories. About 3200 new outlets are established a year, creating 15 to 20 jobs each.

A study supported by the franchise association found previously disadvantaged individuals were positive about franchising but felt there were too few low-cost opportunities. Franchisers found that these candidates’ recruitment and training needs were greater but subsequently compliance was better.

Macqueen notes that lower-cost opportunities in SA are growing, with more opportunities in rural areas and black communities. One novel franchise offers sports training at schools. A pap 'n wors-type food franchise could be investigated for black residential areas - even for workers at construction sites.

A new phenomenon is "social franchising", in which donor funds are allied to social programmes such as water and sanitation services, education and health care. A lack of implementation models is preventing optimal use of such funds.
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