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SOUTH AFRICA. LEVERAGING FRANCHISING FOR BUSINESS GROWTH AND NATIONAL DEVELOPMENT. Nic Louw. New challenges since 1995 Greater emphasis on entrepreneurship SME’s essential for economic growth But New businesses needed. FRANCHISING IN SOUTH AFRICA. JOB CREATION.

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south africa

SOUTH AFRICA

LEVERAGING FRANCHISING FOR BUSINESS GROWTH AND NATIONAL DEVELOPMENT

Nic Louw

slide2
New challenges since 1995

Greater emphasis on entrepreneurship

SME’s essential for economic growth

But

New businesses needed

job creation
JOB CREATION

Prior to 1994 – underutilised

Not a numbers story

Quality story

entrepreneurial development
Historical dominated by large corporations

and public sector

Franchisee units contribute to economy

absorbs labour

more taxes paid to government

demand for products and services

increases

ENTREPRENEURIAL DEVELOPMENT
wealth creation
Average direct job per franchise unit = 15

Indirect job similar

Average household = 4 to 5 people

785 000 jobs created in

3.1 to 3.9 million people

Middle class

WEALTH CREATION

Influence:

development of people
80% Failure for independent start-ups

Franchising – Skills transfer

Training and ongoing support

Historically disadvantaged people

Particpate in Economy as:

DEVELOPMENT OF PEOPLE

owners

managers

senior employees

gross domestic product
GROSS DOMESTIC PRODUCT

Franchising =9%

vs

Agriculture =2.1%

Mining =7.0%

Manufacturing =16.4%

household expenditure
HOUSEHOLD EXPENDITURE

16.6

14.5

12.7

8.4

6.4

retail sales through a franchise r excluding petroleum
RETAIL SALES THROUGH A FRANCHISE (R & $) – (EXCLUDING PETROLEUM)

R122.0

$ 20.2

R98.50

$ 16.3

R78.40

$ 13.0

R40.0

$ 6.6

R12.60

$ 2.1

R Billion

retail sales cont
RETAIL SALES (CONT.)

Consumer acknowledgement

Top ten brands in fast food and

restaurants

Seven grocery and convenience

Stores in top ten brands are

Franchises. Top five franchises

Trust and confidence = + 80%

Loyalty = + 72%

business categories

Restaurants

14%

Real Estate

4%

Education and Training 8%

Other

8%

Petroleum

2%

Building and

Home 10%

Business to

Business 6%

BUSINESS CATEGORIES

Fast

Food

15%

Retail

15%

Health and Beauty 4%

Video and entertainment 3%

Automotive 10%

slide13

BUSINESS CATEGORIES (Continue)

Financial

16%

Funeral

13%

Industrial

13%

Other

16%

Travel

13%

Information technology

19%

Cellular Communications

10%

part of global network
Attracts investment

Expertise and knowledge

Earns foreign currency

10% of franchised systems in South Africa are

International

Nearly 60% of South African concepts international

(Africa)

PART OF GLOBAL NETWORK

Advantages:

socio political influence
Government BEE code

Fast track re-entry of previously marginalised

communities into economy

Participation in growth and development not just to

benefit from re-distribution of wealth

Ownership, executive management participation

SOCIO-POLITICAL INFLUENCE

Franchising:

1995 = 9% (564)

2004 = 23% (5773)

Average increase per annum

= +90%

other
OTHER

Demographic

Geographic

Gender

Importance: Cultural and language

food for thought
Population

No. of Franchisees

Jobs

Family influence 4

South Africa

46 Million

25 200

785 000

FOOD FOR THOUGHT

Nigeria

126 Million

69 023

2.1 Million

8 to 10 Million