Franchising is more than the growth of big brands. It is a way to create jobs and strengthen the South African economy. The unemployment rate is now 33,2 percent.
Youth unemployment is above 46 percent. These numbers show how urgent it is to find models that create jobs and keep them sustainable. Franchises give entrepreneurs that option. They also inject work opportunities into communities across the country.
Here, we’ll dive into the role that the franchise sector plays in driving job creation in South Africa.
Franchising Provides a Sustainable Business Model
Starting a business from zero is risky. People who start businesses from scratch tend to make many unnecessary mistakes in the process. Franchising has its own challenges, but it also removes many business hurdles when done right. When you go into a franchising business, you get guidance through training, ongoing support, and brand recognition. These reduce the risk of early failure.
A franchise not only protects an investment. It also gives the business a higher chance of lasting. The model spreads risk across the network. This makes it easier to survive during tough economic periods.
Franchise Models Encourage Entrepreneurship
Franchising makes business ownership more accessible. New owners can focus on sales, service, and operations within a proven system. They do not have to build every process themselves. This speeds up learning and promotes discipline.
Models like micro-franchising and social franchising open doors for entrepreneurs who might not get into business otherwise. They are especially powerful in townships and rural areas. These models help owners access funding, build skills, and grow businesses that can expand over time.
Micro-Franchising and Social Franchising
Micro-franchising is a smaller and more affordable version of a traditional franchise. It allows an entrepreneur to run a low-cost business that follows the systems of a larger brand. It often suits first-time owners or people in lower-income areas. It can involve selling products, offering services, or running mobile operations.
Social franchising uses the franchise model to deliver services that meet community needs. These can include healthcare, education, or clean energy. The aim is to create both income and social impact. Owners still follow a set system and receive training from the main brand. Both models lower entry barriers. They make it easier for people to start a business and create jobs in areas that need them most.
Pushing Job Creation Through Franchising
In South Africa, it is a profitable business model. The ripple effect of a profitable and sustainable business model is job creation. The numbers below show how big the sector’s impact is:
- Franchises employ almost 500 000 people in South Africa.
- According to a FASA survey, for every 14 direct jobs, there are 7 indirect jobs in supply chains and support services.
- The sector accounts for 4,7 percent of national employment.
- 88 percent of franchise systems in South Africa are local brands.
These figures make it clear that franchising is not a small player in job creation. It is a core driver of employment and skills development.
Franchise Longevity in South Africa
According to the Franchise Association of South Africa (FASA), there is no other industry that has contributed a sustainable growth rate of 15% to the country’s GDP over the past 50 years. This has been achieved through small business development, entrepreneurship, and job creation.
The Impact of Franchise Expansion in Townships
Townships hold a large and growing market. With over 20 million people living in townships across South Africa, as well as an economy that’s estimated to be worth over R900 billion, there’s still a lot of untapped room for the franchise sector to grow.
Franchises create access to goods and services while bringing jobs closer to home. They also introduce formal training and management systems into communities.
There are a variety of brands that have built a solid presence in townships. These brands include:
- Shoprite
- Debonairs
- Funeral insurance and parlours: B3 insurance, AVBOB, Tshipi-Noto, and more.
- PEP
- KFC
- Spar (SPAR2U)
- Hollywood Bets
- McDonald’s
There are too many franchisors to mention in the list, but the township is evidently a gold mine for franchise growth. With malls and shopping centres increasingly being built in townships, there’ll be more opportunities for franchises to expand and further contribute to increasing job creation and boosting the country’s GDP.
