The various international retail chain store brands entering the South African market is a positive indicator for the country, and highlights the opportunity that South Africa offers to international investors, despite the flurry of negative perceptions around the current local economy.
This is according to Jeremy Lang, Regional General Manager of Business Partners. Speaking in light of Franchise Month, he says that there are a number of emerging trends in the local franchise industry that are creating opportunities for franchisees.
The first trend cited by Lang is the influx of international franchisors expanding operation to South Africa, such as Burger King, Starbucks, Domino’s Pizza and Pizza Hut, which are re-entering the market, and the soon to launch Dunkin Donuts.
“The launch of such large international brands in South Africa highlights of the long-term investor confidence in the market, as well as the franchise sector,” says Lang.
The second trend is the increase in the establishment of franchises with a smaller setup cost requirement. With access to capital remaining a significant challenge for aspiring franchisees, franchised systems with smaller setup costs provide a good opportunity for franchisees to enter the market, where it otherwise would not have been possible. Setup costs in this instance typically range between R500 thousand and R2 million.
Lang further explains that the third trend, namely the growth of various child education and entertainment franchises, is attributed to an increased demand for safe, fun and educational environments for children.
While the sector as a whole is showing strong growth, the fast food and retail industry remains the strongest player.
Statistics from the Franchise Association of South Africa (FASA) shows that the fast food franchise sector comprises approximately 24% of the total franchise activity in the country.