The Franchise Association of South Africa (FASA) released the findings of its annual franchise survey, once again shedding light on the current state of the franchising industry, which despite trying socio-economic conditions, political uncertainty and tough trading conditions, according to the survey, continues to show growth.
The results of the survey are based on the responses of 312 franchisors, and 300 franchisees out of a total market of 854 franchises. The interviews were conducted in May and June 2017.
Let’s find out how the industry performed – Here are the winners, losers, and important numbers from this year’s survey.
THE INDUSTRY BY NUMBERS
The largest franchise sector remains the Fast Food & Restaurants sector which grew from 24% in 2016 to 25% in 2017.
Building, Office & Home Services grew from 11% to 13% and Beauty & Body Culture grew from 5% to 8% – supporting the ‘lipstick’ effect theory that, in a recession, beauty, health and grooming remains a priority.
Also on the up and up is the Entertainment sector which grew to 5% from 4%.
Childcare, Education & Training remains static at 9%.
Reflecting the tough business environment is Business to Business which drops from 11% to 5% and Real Estate Services drop from 7% to 4%.
Retail & Direct Marketing saw a drop of 1% from 16% in 2016 to 15% in 2017. Automotive Products and Services dropped from 9% in 2016 to 7% in 2017.
Whilst the top challenges facing franchisors remains finding the right franchisees and staff with the necessary skills, there seems to be a shift in priorities and challenges to finding the right location, the poor economy, increasing costs and finding franchisees with the necessary finance has taken on more importance.
Other lesser issues are aspects such as high rentals, franchisees not meeting the standards of the business, the marketing of the business, lack of business/industry experience and staff training.