Franchising covers many sectors. It's a misconception that franchise opportunities are limited to the fast-food sector.
The hospitality and retail sectors are proving to be increasingly profitable for franchises.
The following factors drive the development of franchising:
l Demographic - The emergence of a strong middle class means a growing number of consumers more likely to demand established brands;
l Competitive pressures - In today's complex marketplace, customers demand personalised service and a franchise owner is more motivated to supply this than the far-flung executive of a network of stores;
l Economies of scale - In large networks, such as franchises, businesses will be able to cut costs by purchasing in bulk for all members to benefit.
Easier access to finance
Independent small businesses, especially unproven ventures, will find it difficult to raise finance to establish capital intensive start-up businesses.
Failure of independent business
It is estimated that 80percent of new ventures in South Africa don't last past the first year of operation. A franchise takes away a significant amount of the risk inherent in an unknown venture.