The Franchise Association of South Africa (Fasa) has called for the local franchise industry to be professionalised, with a board or council to accredit, adjudicate and oversee franchising similar to the roles of the Health Professions Council of South Africa, or even the Law Society of South Africa.
Fasa laments that despite the South African franchising sector contributing about R721-billion to the country’s gross domestic product, many businesses are “masquerading” as franchises when their business models do not reflect this.
Fasa executive director Vera Valasis explains that this is because many franchisees assume that because a new business opportunity is being advertised as a franchise, everything about the business model has been well-developed, with a proven record and is a safe investment.
This is, however, not the case, she points out, as many businesses hardly have any franchise fundamentals in place.
The issue is further exacerbated by aspiring franchisees being eager to own a franchise in the belief that franchising will make them financially independent, when this is not the case.
She explains that this misconception is formed because when members of the public hear about franchising, the concept is often associated with the assumption that it means financial freedom for the franchise business owner.
“Nothing can be further from the truth,” states Valasis.
To protect the public, Fasa cautions that strict requirements, checks and balances should be in place before a business can be marketed and sold as a franchise.
“In the same way that there are strict requirements in place before one can practice as a doctor, dentist or lawyer, for example,” she points out.
Should the industry be professionalised, Valasis says Fasa is “poised to assume this responsibility”.
In lobbying for the word franchise to be protected and guarded to ensure the concept is not loosely applied, Valasis says the association’s appeal for legislation and government intervention “cannot be met soon enough”.