Do Business Well

Early business format franchise concepts emerged primarily in the quick restaurant domain, simply because this type of business with its limited menu, standardised operating procedures and mass market appeal was ideally suited to large scale replication. Meanwhile, however, many other industries have succeeded in streamlining their concepts, thereby making them franchiseable. Small wonder then that at the beginning of the new millennium, franchising had established itself in the United States as a dominant force.

In the United States, franchising has grown from small beginnings less than half a century ago into a US-$ 1 trillion a year business. More than 600 000 companies active in over 70 industries and operating under about 2 500 different brand names provide jobs for eight million people.

And the moment these figures were committed to paper they were already outdated as the number of participants in the franchise movement, and with it the volume of business they generate, is growing by the day, both in the United States and world-wide.

Although the United States can rightfully claim to be the birthplace of modern-day-franchising, the concept did not remain under wraps for long. It spread around the world like wildfire and has become a truly international movement. The mere fact that over 40 different countries worldwide have thriving national franchise associations of their own illustrates this point. What’s more, each one of these associations continues to report growth in membership and market share with almost monotonous regularity. Germany, arguably Europe’s leading economy, serves as an excellent example (see Figure 1 below).

South Africa, too, has embraced franchising with open arms, and wellknown brands like Steers, Spur, Milky Lane, Minit Print Instant Print Centres, Mend-A-Bath, Mike’s Kitchen and King Midas were among its pioneers. To this day, many of them continue to lead the way in their respective field of activity.

Trade sanctions in force during the 1980’s had a dampening effect on the arrival of foreign brands on our shores, but whether this was all bad is debatable. Enforced isolation from foreign concepts gave South Africa’s franchisors the necessary impetus to develop home grown franchises from scratch. As standards were maintained throughout, one could argue that this was in fact preferable to the import of overseas concepts under master licence arrangements, as has frequently happened in other parts of the world. And one thing is certain: the fact that most of our franchise networks are home grown has not depressed their level of excellence at all.

Spearheaded by the Franchise Association of Southern Africa, a lively exchange of franchise expertise was maintained, even during the worst days of the sanctions era. As a result, our franchisors operate in accordance with world-class standards. Indeed, several local franchisors have competed head-on against top foreign competitors in the past and have acquitted themselves well.

From the mid-1990’s onwards, franchising in South Africa grew exponentially as Figure 2 illustrates. However, observers agree that, impressive as developments to date may seem to the casual observer,saturation is still a long way off and franchising is set to remain on a growth curve for many years to come.

Possibly related posts: (automatically generated)
Modern-day Franchising Part 3

• Business format franchise
• Is a franchise the optimal solution? From the prospective franchisor's viewpoint
• Some Franchise Terminology
• Selling the Franchise
• Relationship Franchise Agreement - Operations Manual
• Modern-day Franchising Part 2
• Modern-day Franchising Part 1
• The franchise agreement
• The parties to the franchise agreement
• Investing in a franchise: Take it slow

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