“Franchising has emerged as a powerful engine of growth and economic development worldwide, and South Africa is no exception. In a country grappling with high unemployment, economic inequality and the need for sustained entrepreneurial activity, franchising continues to offer a viable and sustainable business model.”

In recognition of the profound impact of the franchise business model on global economies and entrepreneurship, the World Franchise Council (WFC) has announced the inaugural establishment of World Franchise Day, which will be celebrated on June 11, 2025.

With the global population of MSMEs reported to be 65 million, by far the majority of businesses in the world, it represents about 90% of businesses and more than 50% of employment worldwide. In South Africa there are an estimated 2.6 million entrepreneurs running 3.2 million MSMEs who contribute 2 to 3 million formal full-time jobs in SA. They contribute 40% towards GDP. 

The Franchise Association of South Africa (FASA), a long-standing member of the World Franchise Council, is proud to represent the African continent on the international franchise stage and in overseeing franchising for the past 46 years in Southern Africa. Says Fred Makgato, FASA’s CEO, “we salute the 727 franchise systems in over 14 sectors and their 68 463 franchisees contributing 15% (R999 trillion) to the country’s GDP and directly employing around 500 000 people. To mark this global event, the association will be holding a celebratory event for its members and the franchise community on the 11^th June 2025, sponsored by Old Mutual, to shine a spotlight on the entrepreneurial energy of its franchisors and to also showcase its successful franchisees.”

The Economic Context of Franchising in South Africa

“If there is one business sector that knows how to balance the scales of supply and demand, be innovative enough to change course and use its collective power to weather the storm and grow, it’s franchising.”

The franchise sector has proved that it can adapt with franchisors taking pro-active steps to optimize their operating systems, adjusting their margins through careful cost controls and keeping labour and waste in check in order to survive. A strong franchisor management team at the helm of every franchise brand is hard at work evaluating and improving policies and practices for safe trading, revising contracts and business systems to incorporate any changes brought about by de-stabling events and socio-political challenges.

That’s according to Eric Parker of Franchising Plus, a founding member of FASA and South Africa’s franchise guru who is a strong proponent of franchising as a sustainable business option for South Africa, “South Africa’s economy is characterised by a dual nature: a well-developed industrial base co-existing with widespread poverty and unemployment” says Parker. “The unemployment rate remains alarmingly high, and economic growth has been sluggish. Against this backdrop, small and medium-sized enterprises (SMEs) are viewed as critical drivers of economic development and job creation. Franchising, as a business model, aligns well with these national priorities.”

Franchising represents a sustainable growth option for South Africa, offering significant benefits in terms of job creation, entrepreneurial development and decentralisation through knowledge, transfer of skills and economic empowerment.

Whilst challenges exist, they are not insurmountable. With the right support mechanisms, access to finance, and a conducive regulatory environment, franchising can play a pivotal role in South Africa’s economic future. As the country seeks pathways to inclusive growth and development, franchising stands out as a model that can bridge the gap between economic potential and entrepreneurial success.

Partnership with government key to future growth in Franchising

Ayabulela Njingolo, FASA Chairman for the 2025/2026 term who is with the OBC Group believes South Africa and the franchising sector stands at a crossroads of opportunity and challenge.

“Success will hinge on the ability to adapt to economic shifts, embrace technological innovations, and align with evolving consumer values. The future for South Africa holds immense potential for driving innovation, stimulating job creation, and fostering sustainable development across the country. With the right support from key stakeholders, particularly government and private institutions, the franchising model can unlock growth, especially for youth and emerging entrepreneurs.”

Franchising plays a significant role in the South African economy, yet there is still room for growth, as it serves as a catalyst for economic development. As a franchise commercial sector, this is attainable as the past fifty years of franchising has shown. Government initiatives, such as social, commercial, tandem and micro- franchising (albeit within the legal structures) should consider franchising to contribute to South Africa’s future economic growth.

FASA identified three critical areas of development which include:

• Serious Commitment to Private / Public Collaboration in relation to Access to         market;
• An affordable and Responsive Funding approach; and
• Training and Development with the focus on Entrepreneurship.

To this end, an MOU was recently signed between FASA and the Department of Small Business Development (DSBD) and the newly formed Small Enterprise Development and Finance Agency (SEFDA) to benefit the industry by ensuring that potential and deserving franchisees are funded through the funding mechanism and structured by government for entrepreneurship development. This powerful collaboration is designed to unlock real opportunities and support across the franchise landscape. Together, FASA and the Department have committed to: 

• Fast-tracking financial applications for FASA members.
• Cutting through the red tape that slows down funding access
• Delivering focused training to MSME's with franchising potential
• Offering ongoing support to help emerging franchisees succeed

“With government committing billions to transformation through small business development, we are happy that they have finally acknowledged that the franchising business format is an ideal way to roll out viable business enterprises based on the tried-and-tested universal franchising principles – not only on the commercial front but in terms of using franchise business principles to roll out public/private partnerships to address service delivery.”

Putting the spotlight on successful Franchisors/Franchisees

From its fledgling start in the 1960’s and 1970’s, when pioneering brands like Steers, Spur and Pick n Pay introduced consumers to the phenomenon of franchising – to the explosion of franchising concepts in diverse sectors from the 1980’s to the 2000’s on the back of renewed hope for the country’s new dispensation – the franchise community has always been ready to play its part in contributing to the economic development of the country. Through entrepreneurship, skills development and above all through job creation, it has made this sector a strong player in skills transfer and in job creation, providing around 500 000 direct jobs across fourteen sectors, contributing more to GDP (just under R1Trillion) than key sectors like agriculture, mining and manufacturing.

Credit must be given to the entrepreneurial tenacity of franchisors, some of whom recently celebrated over thirty years of success intent on growing the economy and giving business opportunities to people from all walks of life. But at the heart of franchising are the tens of thousands of franchisees that are the hard-working cogs in the wheels of this phenomenal business format seen in recent success stories of some of the top performing franchisees in various sectors.

Cash Converters - celebrated thirty years of successful trading navigating evolving market landscapes, diverse challenges and the shifting needs of customers - all the while rooted to core values and ethical standards.

OBC Better Butchery – celebrates over thirty years as the supermarket that brings top-tier products at affordable prices to the doorstep of local communities. Top franchisee Conway Mulaudzi of OBC Namakgale is one of many that exemplify mastery in growth and success.

Monkeynastix  franchisees -  Koos & Lynette Smith of North Pretoria have guided thousands of children over the past 30 years, fostering their mental and physical wellbeing.

Multiserv has served South Africans for 57 years, proving itself as a trusted brand in the footwear and key-cutting industries. Anthony Mameila is Multiserv’s top performing franchisee in the KwaZulu-Natal region where he operates five stores.

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