Beefing up support for franchising

So says Jan Davel, MD of the RealNet national estate agency franchise group and chairman-elect of the Franchise Association (FASA), who believes franchising is one of the most important keys to solving some of the country’s biggest problems including lack of education, unemployment and poverty.

Quoted in the latest issue of Be Your Own Boss, he says that with regard to job creation, for example, almost 500 000 new businesses will have to be created if government is to meet its target of 5m new jobs by 2020.

“And franchising has already proved that it can fulfil the criteria for small business expansion and job creation. While formal sector employment fell alarmingly in the two years from 2008 to 2010, the franchise sector, which represents 17 different industries, created 2300 new business outlets and more than 28 000 new jobs.

“Indeed, franchising can go a long way in stimulating entrepreneurship and helping people to establish the successful small businesses that are the backbone of the economy and job creation. It provides inexpensive, measurable mechanisms to provide training, facilitate skills transfer and unlock opportunities in local communities.”

Consequently, says Davel, it is important for both the banks and more would-be business owners to understand that once a franchise system has been tried and tested, one can take well-informed decisions based on realistic financial projections – and subsequently mitigate risk far better than in the case of independently-owned businesses. “A franchise business is simply a much safer option for both the borrower and the lender than an untested new business, no matter how good the business plan.”

Having said that, however, he does not believe that the biggest challenge facing franchising at the moment is the current economic climate and banks’ conservative lending policies. “The biggest challenge now is to get the message across about the very important role franchising can and does play in the economy, and to expand the concept to other industries.

“Countries such as Australia, Brazil, the UK and US have far more franchised industries than we do, and just looking at some of our country’s current challenges, I think energy and water saving solutions, waste-recycling, health care options and education, for example, all offer excellent opportunities for franchise development now, and that we will possibly also see the development of public-private franchise systems for the delivery of government services in the not too distant future.”
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