Franchising plays a role in formalising informal economies, enabling job creation and unlocking access to capital for entrepreneurs and represents a significant opportunity to unlock inclusive growth across Africa through collaboration and innovation.

By fostering entrepreneurship, enabling access to capital and enabling scalable business models, the sector is well positioned to contribute meaningfully to the continent’s long-term economic development, says Standard Bank South Africa Business and Commercial Banking head of franchising Andre Beck.

Franchising can be supported across the continent by improving access to funding and enabling more entrepreneurs to participate.

In South Africa, the franchising sector contributes about 15% to GDP, while the sector is increasingly contributing to economic activity across the rest of Africa, supporting hundreds of thousands of jobs and enabling entrepreneurship at scale.

Franchising is emerging as a catalyst for economic growth, entrepreneurship and financial inclusion, with the sector demonstrating resilience and adaptability and offering scalable opportunities for small business owners while strengthening value chains across industries in Africa, he says.

“Franchising offers a proven and structured pathway for entrepreneurs to enter the formal economy with reduced risk. Across Africa, we are seeing how well-supported franchise models can accelerate job creation, skills development and sustainable business growth.

“The focus now is on scaling these models responsibly and expanding access to underserved markets,” he says.

As African markets become increasingly interconnected, cross-border expansion is presenting new opportunities for franchise brands seeking growth beyond their home markets.

“Africa’s economic future will be driven by businesses that can grow across borders. Franchising is uniquely positioned to achieve this, given its replicable and adaptable model.

“By strengthening regional ecosystems and improving access to funding, we can empower entrepreneurs across the continent to participate in and benefit from this growth,” says Standard Bank Enterprise Banking for Africa Regions and Offshore executive head Joret Olivier.

However, despite strong momentum, the sector still faces challenges, including regulatory inconsistencies, infrastructure constraints and limited access to tailored financing in certain markets.

Addressing these barriers will require coordinated efforts among governments, private sector players and financial institutions, she says.

Further, environmental pressures, including climate change, water scarcity and waste management demands, continue to intensify, which makes it increasingly difficult for businesses to balance profitability, resilience and long-term sustainability.

In the retail and food service sectors, trends are increasingly shaped by convenience, affordability, technology and sustainability.

Online shopping continues to grow, with businesses integrating physical and digital channels through services like click-and-collect and home delivery. AI and machine learning are being adopted to improve operations and personalise customer experiences.

Consumers are also becoming more price-sensitive, which drives demand for discount retailers, private-label products and bulk buying.

However, there is also a shift toward healthier and ethically sourced products, including organic, low-sugar, plant-based and locally produced foods, alongside an increased focus on waste reduction and eco-friendly packaging.

Retailers are also expanding into underserved areas, scaling convenience formats, strengthening loyalty programmes and partnering with informal traders.

In the food service sector, growth is driven by quick-service restaurants, fast food and takeaway options, with reduced demand for traditional dine-in experiences and chicken-based fast food is a key growth segment.

Digitalisation through mobile apps, online ordering and virtual kitchens is transforming preparation and delivery. Consumers prioritise speed, value, and convenience while still expecting quality, hygiene and sustainable practices.

Reviews and social media strongly influence buying decisions and delivery has become a core sales channel, the bank says.

Retail and food service sectors face interconnected economic, operational, and structural challenges. Rising input, food and labour costs combined with economic volatility are constraining consumer spending and tightening margins.

Competition is intense, driven by dominant large players, urban market saturation and pressure from informal traders. Regulatory requirements and competition law scrutiny add complexity.

Simultaneously, rapidly evolving consumer behaviour, such as heightened price sensitivity, e-commerce adoption, and demand for sustainability, requires constant adaptation, often hindered by technology gaps and skills shortages, Standard Bank says.