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SOUTH AFRICA

SOUTH AFRICA. LEVERAGING FRANCHISING FOR BUSINESS GROWTH AND NATIONAL DEVELOPMENT. Nic Louw. New challenges since 1995 Greater emphasis on entrepreneurship SME’s essential for economic growth But New businesses needed. FRANCHISING IN SOUTH AFRICA. JOB CREATION.

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SOUTH AFRICA

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  1. SOUTH AFRICA LEVERAGING FRANCHISING FOR BUSINESS GROWTH AND NATIONAL DEVELOPMENT Nic Louw

  2. New challenges since 1995 Greater emphasis on entrepreneurship SME’s essential for economic growth But New businesses needed

  3. FRANCHISING IN SOUTH AFRICA

  4. JOB CREATION Prior to 1994 – underutilised Not a numbers story Quality story

  5. Historical dominated by large corporations and public sector Franchisee units contribute to economy absorbs labour more taxes paid to government demand for products and services increases ENTREPRENEURIAL DEVELOPMENT

  6. Average direct job per franchise unit = 15 Indirect job similar Average household = 4 to 5 people 785 000 jobs created in 3.1 to 3.9 million people Middle class WEALTH CREATION Influence:

  7. 80% Failure for independent start-ups Franchising – Skills transfer Training and ongoing support Historically disadvantaged people Particpate in Economy as: DEVELOPMENT OF PEOPLE owners managers senior employees

  8. GROSS DOMESTIC PRODUCT Franchising =9% vs Agriculture =2.1% Mining =7.0% Manufacturing =16.4%

  9. HOUSEHOLD EXPENDITURE 16.6 14.5 12.7 8.4 6.4

  10. RETAIL SALES THROUGH A FRANCHISE (R & $) – (EXCLUDING PETROLEUM) R122.0 $ 20.2 R98.50 $ 16.3 R78.40 $ 13.0 R40.0 $ 6.6 R12.60 $ 2.1 R Billion

  11. RETAIL SALES (CONT.) Consumer acknowledgement Top ten brands in fast food and restaurants Seven grocery and convenience Stores in top ten brands are Franchises. Top five franchises Trust and confidence = + 80% Loyalty = + 72%

  12. Restaurants 14% Real Estate 4% Education and Training 8% Other 8% Petroleum 2% Building and Home 10% Business to Business 6% BUSINESS CATEGORIES Fast Food 15% Retail 15% Health and Beauty 4% Video and entertainment 3% Automotive 10%

  13. BUSINESS CATEGORIES (Continue) Financial 16% Funeral 13% Industrial 13% Other 16% Travel 13% Information technology 19% Cellular Communications 10%

  14. Attracts investment Expertise and knowledge Earns foreign currency 10% of franchised systems in South Africa are International Nearly 60% of South African concepts international (Africa) PART OF GLOBAL NETWORK Advantages:

  15. Government BEE code Fast track re-entry of previously marginalised communities into economy Participation in growth and development not just to benefit from re-distribution of wealth Ownership, executive management participation SOCIO-POLITICAL INFLUENCE Franchising: 1995 = 9% (564) 2004 = 23% (5773) Average increase per annum = +90%

  16. OTHER Demographic Geographic Gender Importance: Cultural and language

  17. Population No. of Franchisees Jobs Family influence 4 South Africa 46 Million 25 200 785 000 FOOD FOR THOUGHT Nigeria 126 Million 69 023 2.1 Million 8 to 10 Million

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