FASA Chair Empowering SME and Franchise Sector

Posted on April 29th, 2019
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Franchise Brands Procure From SMEs - Akhona Qengqe

When newly appointed chair of Franchise Association of South Africa (FASA) Akhona Qengqe took office earlier this year she put at centre to her tenure as chair for 2019 and 2020, the task of growing and empowering the SME and franchise sector.

Qengqe is also currently Transformation and Diversity Director for KFC Africa where she is responsible for advocating for diversity and inclusion within the franchise brand and KFC’s franchise partners, suppliers, beneficiaries and stakeholders.

“I help the business create opportunities for previously excluded individuals and entities,” she said in an interview with Bona.

“I ensure that I am well informed of any emerging discourse around diversity and inclusion, and advise the business accordingly.

“I make the business accountable for their decisions around diversity and inclusion.”

This is a mission that she plans to carry into her new role at FASA.

Qengqe spoke to SME South Africa about the importance of creating opportunities for SMEs within the franchise sector and procurement opportunities for township-based small businesses.

What are your goals and plans for supporting small businesses as the new FASA chairperson?

I think our biggest contribution as FASA in this space will be to create as many opportunities or platforms for franchisors to meet SMEs through our relationship with ProudlySA as well as other partners that we may identify.

Small businesses also struggle to access funding and business support and by being the connector of all these resources, we will be able to contribute to the growth and sustainability of SMEs and eventually deal with the high unemployment and high levels of inequality in our country. No matter how small the contribution is we can make, any difference we can make will be real and tangible.

You have said SME empowerment is one of your key priorities as FASA chair, why is it so important that franchise brands procure from SMEs?

Because of their buying power and ability to influence where their franchisees buy from, they can guarantee the sustainability of SMEs by committing to procure from these entities for extended periods of time.

We know that SMEs are the biggest vehicle for job creation and as their businesses grow, more opportunities for employment are created.

What are some of the products/services that are in demand in the franchising sector and that SMEs can be looking at?

Because of the broad nature of the franchise sector, demand can come in various forms ranging from goods to services.

For example,  professional services such as legal, auditing, to logistics, distribution, packaging etc. It depends on what the SME’s speciality is. Once that’s established they can then start looking for the right franchisor to engage.

Transformation challenges are not limited to just franchising

One of the issues that have been highlighted is the lack of procurement opportunities for township-based business, particularly from franchises operating in the townships. What can be done to bridge this gap and get more franchise brands procuring from township-based SMEs?

What one must appreciate about the franchise industry, which is actually a value proposition for the customer, is the standardisation of the offer and products across the franchise system. What that sometimes requires is that franchisees procure from a centrally approved group of suppliers who in many cases need to have a larger geographical reach (this has cost benefits as well due to economies of scale).

However, you do find categories that can be localised even within the franchise system and in that case I think township-based businesses need to organise themselves such that when they speak to franchisors they do so as credible and sustainable businesses.

Franchise operations want to make sure there is guaranteed product supply over and above the quality and other requirements they may have.

When township businesses organise themselves according to the types of services and products they can offer and speak as one voice versus one person approaching the franchisor, I believe they may have a better chance of success. For example the local building contractor could collaborate with the local tilers, plumbers, painters etc. and approach a franchisor who is developing in their community to pitch their service offering and understand what they would need to do to meet their requirements.

What opportunity does the franchise sector offer in terms of job creation in South Africa and what can be done to boost this further?

Every new franchise business that opens creates new employment opportunities. The rate at which banks approve funding for new businesses, the rate of growth of the franchise brands themselves, and ultimately the most important element upon which all of these rest is the growth of the economy.

When our economy grows, there is a lot more appetite to invest, consumers spend more money, which creates demand and ultimately more business growth which leads to more job creation.