It is imperative that franchisers work with government and engage with them, including on policies, so that government can provide the support franchisers need, Small Business Development Minister Stella Ndabeni-Abrahams said during industry association the Franchise Association of South Africa’s (FASA’s) ‘Road to Recovery’ conference, held on October 26 in Johannesburg.

She emphasised that, for the sector to succeed, her department must provide a far more comprehensive business support system and improve access to effective participation of small, medium-sized and microenterprises (SMMEs).

Ndabeni-Abrahams pointed out that the mainstream franchise market remained expensive and out of reach for the majority of potential entrepreneurs, and that this required deliberate efforts by stakeholders in the ecosystem to address the barriers to entry.

She averred that government could collaborate with FASA and other stakeholders to ensure the industry benefited all stakeholders, and that the model was guided by a set of ethical and mutually beneficial standard practices, and importantly, to mitigate inherent risks.

Ndabeni-Abrahams noted that the department continued to ensure that the finance system was better aligned to the needs of SMMEs, including cooperatives, as also expressed in the department’s South African SMMEs and Cooperatives Funding Policy, that was recently gazetted for public comment.

She called on franchisers to participate in these and other regulatory processes, given the impact on them and how they worked.  

“When we issue policies, as government this is where we also expect you to then come on board and advise us.”

Ndabeni-Abrahams said the department would be taking this policy to the National Economic Development and Labour Council, and urged franchisers to access it online to familiarise themselves with it and how it would impact them.

Ndabeni-Abrahams also called for an increased focus by government on supporting SMMEs to create jobs.

She also mentioned that the department was looking at certain reforms, including procurement reforms and access to funding.

Ndabeni-Abrahams said the department was already financing some franchisers, and found them to be among the least risky SMMEs to fund.

Ndabeni-Abrahams also called for more gender, youth and disabled representation in the franchise industry.

She said this would require exploring innovative models to expand on the current franchise model, and the department partnering with entities like FASA. This would entail taking into consideration the challenges facing entrepreneurs in these groups, such as infrastructure issues and high crime in townships, which had to be addressed along with providing opportunities.

Meanwhile, Stuff South Africa editor in chief Toby Shapshak emphasised the importance of stakeholders in the sector embracing change, and not shying away from the opportunities offered by artificial intelligence. He said that there would be an adjustment period, as with any new development.