FASA celebrates 40th anniversary 

“Things are not what they used to be...” is a common refrain – whether we are referring to the obstacles that we face every day or future challenges that will impact the way we do business. Franchising, which has made a significant mark on the South African economic landscape over the past fifty years, currently contributing R721 billion or 15, 7% to the country’s GDP, is being challenged from all sides to remain relevant and continue to contribute to entrepreneurship, skills development and job creation.

At FASA’s recent AGM, which saw the appointment of Akhona Qengqe, Transformation Director for KFC as FASA’s Chairperson for 2019/2020, the consensus was that franchisors needed to adjust their business models to cater for the financial environment faced by franchisees. According to Vera Valasis, Executive Director of FASA, “whilst the franchise industry still delivers healthy growth despite the negative economic environment – testament to the long history of the development of powerful brands that are household names here and in some international destinations - our sector must adjust its business format to be more in line with the economic climate across all business sectors. As salary and wage costs escalate together with huge increases in electricity and rentals, a weak Rand-Dollar exchange rate and increases in almost every other input cost for business in South Africa today, franchisors need to restructure their business model in terms of management and marketing fees, supply streams and adopt a more inclusive and transparent management style.”

FASA has played a pivotal role in self-regulating the sector for the past forty years and must continue to protect its good reputation of ethical dealings and good financial returns and stamp out franchisors that bring the industry into disrepute. Here the association’s ‘legal’ hands are tied – it has been lobbying government since 2006 to give official recognition to the Code of Ethics as an industry code so that a franchise industry ombud can be established to root out delinquent and dishonest operators. Despite the Code having been published in a government gazette for public comments in 2016 it seems the matter is not receiving urgent government attention.

NEW FASA CHAIR TO FOCUS ON GROWTH AND EMPOWERMENT
Growing and empowering the SME and franchise sector will be at the centre of Akhona Qengqe’s tenure as Chair of the Franchise Association for 2019 and 2020.

“Measured against similar emerging economies such as Brazil, Malaysia, India etc, South Africa is said to have the highest business failure rate” says Akhona. “What is even more concerning is, despite Governments’ efforts to encourage entrepreneurship, South Africa still has a relatively low number of adults involved in start-up or established businesses.”

One of the biggest benefits of encouraging SME development is the employment and job creation the franchise sector has created and can continue to do so. As an SME grows, it has the potential to employ even more people. For South Africa, with unemployment sitting at 27.5% in the last quarter of 2018 and also having the highest Gini co-efficient in the world, any opportunity that creates employment is most welcome.
“When I look at the Franchise sector, and specifically the Franchise business model” says Akhona, what encourages me is that it deals directly with the two biggest problems faced by start-ups in our country.”

- Firstly, because of the amount of time and effort that has gone into developing a replicable business model, franchisees or would-be franchisees generally receive more support from their franchisors, where they play a ‘big brother role’, ensuring the success of both franchisee and franchisor in the process.

Secondly, while there is a plethora of funding vehicles available both from government and other institutions, accessing funding for an independent start-up is probably twice as difficult as it is for a franchise business. Because of its proven track record, funders find it easier to back a franchise business.

“I also look forward to the contribution that the Franchise Association of South Africa will make in supporting up-and-coming Franchisors and ensuring that they uphold the highest ethical standards in their business dealings. FASA is celebrating 40 years this year and I would like to congratulate every one of the founding members who are still in business today. Starting a business is easy, but running a successful business for over 4 decades is truly remarkable.”

AKHONA QENGQE – TRANSFORMATION DIRECTOR, KFC & CHAIRPERSON OF FASA
Akhona’s career in the Franchise Industry spans 12 years, having started off in Petroleum and then later in the Fast Food industry. Having worked in various departments within Franchising from Strategy to Operations, Convenience Retail and Property Development, her move into Transformation has helped her use her experience and commercial acumen to find creative solutions to some of the challenges that the business faces in its transformation endeavours. Akhona holds a Bachelor of Commerce degree from the University of Cape Town and is currently perfecting her Diversity Literacy with the Centre for Diversity Studies at the Witwatersrand University and has been elected as chairperson of the Franchise Association of South Africa for 2019.

VERA VALASIS, EXECUTIVE DIRECTOR OF THE FRANCHISE ASSOCIATION OF SOUTH AFRICA (FASA)

Vera Valasis, FASA’s Executive Director, holds the distinction of being the first woman to hold the position in FASA’s history. Her experience in franchising spans over twenty years from her early days managing restaurants and in retailing to holding the position of Managing Director for leading brands Milky Lane and Juicy Lucy under the Pleasure Foods banner and later as MD of Debonairs for Famous Brands. She is highly experienced in all aspects of franchising and strategic planning and joined the association in 2005.

ABOUT FASA
As the Franchise Association of South Africaprepares to celebrate its 40th anniversary as the oldest internationally recognised franchise association on the continent, South Africa can be proud to hold the torch for franchising in Africa.

When entrepreneurs in the early 1960’s observed the emergence of steakhouse and burger concepts in the US with keen interest and decided that South Africa was ready for something along those lines, franchising was born with the likes of Steers, Burger Ranch Spur and Milky Lane. Today, nearly sixty years later franchising contributes 15,7 % to GDP and is bigger than key sectors such as agriculture and manufacturing.
The association was formed in August 1979 by a handful of forward-looking franchisors that realised that the lure of franchising could easily be abused and the time had come to align its business principles to internationally accepted norms. Some of those founding brands, which included Wimpy, Mend-a-Bath, Steers, Milky Lane, Minit Print, Juicy Lucy, Mike’s Kitchen and King Midas, set down ethical standards and became a forum for networking and promoting the business format of franchising to both business and the public.

Says Vera Valasis, Executive Director of FASA, “It is thanks to the entrepreneurial vision of those forward-thinking businessmen that today the Franchise Association of South Africa (FASA) ranks among the longest established franchise associations in the world and has a seat as the only African representative on the board of the World Franchise Council.”

Over the years, as new concepts grew from fledgling to big brands, they used FASA and its various platforms like the Franchise Awards to mark key stages of their development – with both the franchise sector and the public watching with interest as the burger brands were pitted against each other, new pizza brands challenged the status quo and new concepts began to climb the ladder of success. From just a handful of business sectors, franchising today in South Africa covers 17 business sectors – with a long way to go to reach the 25 to 50 business sectors that developed countries boast.

FASA’s mandate, over the forty years has been to oversee various areas of development, in line with socio-economic and political shifts. Central to all its work over the years has been the encouragement of entrepreneurship, the promoting of self-employment and small business development, the development of skills within the many business categories that it represents and the subsequent job creation that is generated by the thousands of outlets of franchise brands.

As we enter a new dawn politically and a new age with the 4th Revolution changing the way we do business, FASA’s vision for the future continues to be that of representing the interests of this vibrant sector and encouraging new business concepts that will add to the 865 franchise systems, 45 011 franchise outlets employing close to 400 000, that form part of one of the biggest business sectors in the country.