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Home-grown businesses need help to expand, writes Isaac Moledi

By unknown | May 02, 2007 | COMMENTS [ 0 ]

The Franchise Association of South Africa (Fasa) says it will launch a project this year to identify businesses with franchisable concepts.

The Franchise Association of South Africa (Fasa) says it will launch a project this year to identify businesses with franchisable concepts.

But the businesses should be those in which the owners needhelp and support to get the franchise going.

The project, which aims to select five of these businesses every quarter, will provide learning and support.

Each business would then be allocated a franchising consultant to help the business owners through the process of becoming a franchisor.

Kobus Oosthuizen, the new chairman of Fasa, says though the franchise industry has experienced substantial growth in recent years and was poised to continue on this upward trend, the number of home-grown franchised businesses was a concern.

He explains that while there are many innovative and interesting businesses in South Africa, there are numerous situations in which owners want to expand.

But the owners do not have access to the intellectual property needed to franchise a business nor the capital to get them going.

"The risk is that the business' potential growth is stultified or that the business owner embarks on a franchise route that may turn out to be seriously flawed.

"This is because the legal and tax issues are quite unique in the case of a franchise, and specialist knowledge must be sought to ensure you have a strong and sustainable franchise."

To get its new project off the ground, Fasa has asked its members for support and 11 will be actively involved in the project. The selection criterion is that an entrepreneur must have an already successful business, which is developed and tested in all the operational and market-related aspects.

The programme intends to prepare the current successful concept for franchise expansion.

Only when the viability and "franchisability" of a concept have been researched will the franchise development work commence, says Fasa.

These will include the disclosure document, franchise agreement and franchise operations manual.

Oosthuizen says the project can only take place with sufficient funding, and Fasa members have been asked to help set up a viable funding base.

Oosthuizen further explains that the association will approach the Trade and Industry Department to match the industry funding rand for rand.

"W e are sure the government will recognise the value of the Fasa project and support us in this initiative."

The money offered by the Fasa member companies and the department will be used to fund the learning initiatives and specialist advice that will be provided to the new franchisors.

In addition to stimulating economic growth through setting up bigger businesses, the project will create opportunities for emerging businesses that would otherwise struggle to expand.

Meanwhile, Fasa has arranged a three-day International Franchise Expo at the Sandton Convention Centre from tomorrow.


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