Government is overlooking a vital business sector in its quest to create five million jobs in a decade, the Franchise Association of SA (Fasa) said on Friday.
“Franchising in South Africa is under-utilised and is not given enough credit for the role it plays in the economy, in stimulating entrepreneurship, in establishing small businesses that make up the backbone of the economy and above all in job creation,” said Rasheed Kathrada, Fasa chairman, in a statement.
Franchising should be included in government's plans and given more support.
This was particularly as Finance Minister Pravin Gordhan said in his budget speech last month that 68 percent of private-sector employment was provided by small business with less than 50
employees.
Fasa said only 17 business sectors in South Africa used the franchise system, compared to between 25 to 50 in countries like the US, the UK, Brazil and Australia.
This left “ample room” to expand into other areas of business, including implementing systems that could see government services franchised in a public/private partnership.
“Once established, a franchisor's network of franchisees contribute extensively to skills transfer and in turn provide much needed jobs,” Jan Davel, Fasa's chairman designate for 2012, said.
Despite the recession, franchising showed an 11 percent increase in employment levels, according to a survey The Franchise Factor 2010, conducted by Franchize Directions.
About 478,000 people were employed in the sector by February 2010.
Just under 30,000 franchise outlets operate under 551 franchise systems.
Fasa said the sector contributed about 11.8 percent to gross domestic product. - Sapa