by Khulekani Magubane, 29 November 2012, Business Day
FRANCHISING in South Africa has grown steadily, especially in the fast-food industry, but franchises still face challenges when expanding to other African countries and globally, says First National Bank (FNB).
At FNB’s first franchising leadership summit in Sandton on Wednesday, the bank estimated that franchising in South Africa was growing between 5% and 7% a year, and contributing to more than 10% of retail sales.
FNB chief marketing officer Bernice Samuels said much potential economic growth would come from franchising.
"Franchising gets people involved with big brands and allows them to get into a framework, into training and into support, and enables economic growth," she said.
Ms Samuels said companies looked five years ahead when considering in which countries to develop franchises, and that profit motives also drove franchises to "fish where there is fish".
Nando’s founder Robert Brozin said the franchise had more than 1,000 restaurants in about 26 countries around the world.
Nando’s marketing manager Guy Carter said the fast-food chain had a strong footprint in African countries, including Botswana, Zambia, Zimbabwe, Lesotho and Swaziland.
McDonald’s South Africa MD Greg Solomon said franchises looked to grow their wealth and create opportunities for investment, and that thriving businesses had to duplicate their successes, which could be achieved through franchising.
"What got you where you are in the past 10 years is not going to keep you in the same position in the next 10 years," he said.
"Every time your organisation grows in revenue, size and footprint by a multiple of 10 you need to make a fundamental change in your brand and organisational capabilities."
Mr Solomon said McDonald’s 24-hour services had been well received by consumers and now contributed 5% to the company’s total South African revenue. He said there was a sizeable market for McDonald’s coffee, and that the company would continue to "find different ways to do the same thing".
FNB head of franchising Morne Cronje said in a statement that despite difficult economic conditions, South Africa’s overall performance in the franchising industry had "held fairly steady, with the average annual growth of around 5% to 7%."
He said there were about 30,000 franchise outlets in South Africa, held by more than 550 companies.