Since the implementation of the Covid-19 emergency measures, about 94% of the franchise industry in South Africa has not been trading, with the exception of mostly food retailers.

This has had a devastating impact on the industry, industry body the Franchise Association of South Africa (Fasa) says.

It warns that unless more financial aid is provided, 75 000 jobs could be lost in the industry.

The association indicates that it has informed its members of the Government Gazette published on March 24 regarding the measures taken by government to assist businesses financially through the exemptions for the retail property sector, the Unemployment Insurance Fund emergency funding application, the small, medium-sized and microenterprise (SMME) funding through the Small Enterprise Finance Agency, as well as other emergency relief measures as and when they are announced.

However, it notes several matters that are of “grave concern” and, therefore, the association, on behalf of its members, has sent an urgent letter to government through Trade and Industry Minister Ebrahim Patel, to consider several matters.

FOOD & TAKEOUT

Firstly, Fasa wants take-out and fast food to be included as essential services. The industry is calling on government to reconsider the lockdown measures that apply to take-out and fast food sectors.

Prior to the lockdown, this sector of the franchise industry had already taken steps to augment their preparation procedures to deliver contactless food orders to customers, but Fasa says the industry's hopes were dashed when the regulations were published, preventing it from trading.

“We urge for the amendment to the regulations to urgently allow for contactless delivery of take-out and fast food meals,” Fasa emphasises.

“While one can understand that government decided to take very strict measures to clamp down the spread of the virus, we believe not having an alternative to their need for food, people are being driven out of their homes to buy food so there may be an even greater risk in not allowing contactless food delivery or for so-called dark kitchens to continue offering cooked food to consumers.

Delivery services have been operating all along so allowing them to deliver prepared take-out or fast food in addition to their other essential supply deliveries, makes for good economic sense. This will go a long way to minimising job losses and keep the franchise workforce earning much-needed income to support their families,” says Fasa executive director Vera Valasis.

RENTAL RELIEF

Secondly, Fasa has called for rental relief.

The organisation indicates that rental relief and loans offered by various entities are mostly offered on a basis of deferment of debt or a payment holiday. It notes that once the lockdown has been lifted it is not expected that business and sales will continue as normal.

However, once businesses re-open, landlords will most certainly revert to lease agreements that are in place, demand rentals and deferred arrears straightaway as will suppliers and other debtors.

Small business owners who are indebted by Covid-19 emergency fund loans will not cope under such a huge debt burden and further job losses will most certainly follow, Fasa warns.

Therefore, it urges the Minister to call on the banking industry and others to make meaningful contributions to small business in the form of immediate grant funding to save jobs and keep the economy going.

FINANCIAL RELIEF

On the other side of the Covid-19 crisis, lenders, with particular reference to the South African banks, should be called upon to agree to soften their very strict lending criteria, Fasa says, noting that the banks are “notoriously risk averse and it is difficult for any potential business owners to obtain funding from a bank”.

Fasa says that should the banks agree to consider business loan applications for franchised outlets on a less-risk averse basis, it believes it could make a material difference in getting people back into business or start new ones quickly, thus stimulating employment and economic activity.

ASSISTANCE FOR INDUSTRY BODIES

Fasa notes that government and its various agencies and divisions have indicated on many occasions in the past that it prefers to deal with and negotiate with industry bodies as they play a crucial role in the formal business sector.

Most of these industry representative bodies, including Fasa, are nonprofit organisations dependent on membership fees and sponsorships, it points out.

During the Covid-19 financial crisis, nonprofits have suffered severe loss of membership income and sponsorship has been severely impacted; yet there is no emergency funding available for industry representative bodies and as a result they face job losses across all sectors, Fasa explains.

“We call on government to consider making a funding resource allocation available to industry representative bodies in order to prevent deep-cut job losses and to enable the associations to continue with their important work,” it emphasised.