Franchising in South Africa Creating jobs through franchising

Franchising in South Africa • Standards are high • Penetration is very low – 54% of retail sales in USA – 32% in Australia – 12% in South Africa

N.B. • Great Opportunity to utilise this marketing tool to create jobs at the lower end of the market • Solution for retirees without sufficient capital

Unemployment in South Africa • Population 50 000 000 – 8,96 million permanently employed – 8,5 million job seekers. 500 000 new job seekers every year

– 25,7% Unemployed now – More information – refer appendix 1

Note: Franchising can create a minimum of 700 entrepreneurs and 6000 permanent jobs in 3 years

Problem • The 8 000 000 job seekers have very specific skills – – – – –

Garden Paint Clean Build Spaza stores

Don’t try to up-skill them, rather utilise them!!!

Solution • Create a franchise model for each skill set. i.e. – – – – –

Cleaning Painting Gardening Building/handyman Spaza stores

Note: There are very successful models internationally under the team Man and a Van

Who should do it? • Government should give incentives for big supplier companies to set up franchises. E.g. – – – – –

Cleaning: Bidvest Painting: Plascon Building: P.P.C. Gardening: Lasher Tools Spaza stores: Massmart

Note: • Companies will also receive BEE points for the initiatives and entrepreneurial development • Similar situation for retires – refer appendix 2

Appendix 1 Unemployment in South Africa

SA unemployment – In July South Arica lost more than 270 000 permanent jobs on an annualised basis – Given the trend SA likely to lose 470 000 permanent jobs in 2011 – Currently 8,5 million job seekers Plus – 500 000 new job seekers every year – Only 8,96 million permanently employed – Unemployed 25,7% – SA now has lowest level of permanent of any significant country • 4/10 employed in SA • 5,8/10 employed across all developing countries

Note:

We can create 700 entrepreneurs and 6000 permanent jobs in 3 years and we will utilise the existing skill pool. i.e. Gardeners, painters, cleaners, builders, Spaza stores, food workers

Appendix 2 Can Franchising Contribute to a Financially Sound Retirement?

The majority of South Africans reach retirement age without sufficient funds!! • • •

They more than likely can’t continue to work because of the compulsory pensionable age in most companies. They probably won’t be employed because there are very limited jobs available for senior citizens in the current economy. The economy is unlikely to improve in the short term so retirees cannot expect their investments and interest to shoot the lights out. To retire with sufficient funds differs from individual to individual, however on average what do you need?

• •

Assume you are 65 years old and require to earn an inflation adjusted income of ± R40 000-00 per month, you will need a capital amount of R6 000 000 and hopefully your home and car will be paid off.

Appendix 2 Can Franchising Contribute to a Financially Sound Retirement?

So what happens if you don’t have sufficient capital and don’t have special skills and experience to be employed?

• Purchase a franchise. • Start a business. • This is not ideal because at this stage in your life you should not be taking risks. However you are left with no alternative. The lowest risk available is to purchase a Good, Proven franchise. International Trends have developed specialised franchises for senior citizens. These franchises have the following:

• Use the senior citizens’ skills e.g. business/financial experience. • Not physically limited e.g. roof repairs. • Lower risk e.g. do not sign high rental long leases requiring personal security.

Appendix 2 Can Franchising Contribute to a Financially Sound Retirement?



What is the position in South Africa



This category has been badly neglected, however Franchising Plus and Whichfranchise.co.za intend to develop the category and promote suitable franchisors and encourage entrepreneurs to develop new concepts for this sector. Some examples already available are:– – – – –

Consulting Financial management Recruitment Property Travel

Advantages for Senior Citizens purchasing a Franchise • • • • •

Earn a salary Employ members of the family Supplement your savings from profits Build up a saleable asset that you can sell later on and that capital gain and your supplemented profits will then enable you to retire comfortably. We are planning to have a seminar around this subject. If you would like to attend please contact Franchising Plus on 011 454 2235