Question 1

What is a franchise?

Accepted Answer

A franchise is a business arrangement in which a franchisee operates using a franchisor’s brand and agreed business model, under a franchise agreement. It combines business ownership with the requirements of an established network. In South Africa, the model extends well beyond restaurants to retail, automotive businesses, education and services. The agreement defines the relationship, so understanding its obligations is essential.

Question 2

Where did franchising begin?

Accepted Answer

Modern commercial franchising is commonly associated with the United States. In the 19th century, Singer began granting sewing-machine distribution franchises in 1851, an important precursor to modern agreements. Business-format franchising grew rapidly in the US after the Second World War, particularly during the 1950s and 1960s. South African entrepreneurs drew inspiration from American restaurant concepts while building home-grown brands such as Steers.

Question 3

How has franchising developed in South Africa?

Accepted Answer

Early product distribution arrangements preceded the growth of business-format franchising in the 1960s. Steers began franchising in 1965, and KFC opened in South Africa in 1971. Franchisors came together in 1979 in the organisation that became FASA. Growth gathered momentum around the transition to democracy, and franchising now reaches across retail, services and education, with local brands also expanding internationally.

Question 4

What are the advantages of franchising compared with going it alone?

Accepted Answer

Franchising offers the opportunity to work within an existing brand and operating model rather than develop everything independently. The practical benefits depend on the particular agreement and the support available, so they should be checked rather than assumed. South Africa’s established home-grown networks offer a wide range of concepts to investigate. An established name does not remove commercial risk or guarantee success.

Question 5

How do I get started with a franchise in South Africa?

Accepted Answer

Start by researching South African franchise opportunities, local demand and the total financial commitment. Use QFA’s directory and guides as starting points, then investigate each shortlisted business carefully. Request disclosure information and examine the franchise agreement, fees and support arrangements. Speak with existing franchisees and seek independent legal and financial advice, including advice on the Consumer Protection Act, before making a commitment.

Question 6

How is franchising regulated in South Africa?

Accepted Answer

South African franchising is regulated through legislation, including the Consumer Protection Act, alongside contract and competition law. The Act provides protections for franchisees, including a right to cancel within 10 business days after signing by giving written notice. FASA also applies its Code of Ethics to members. This is general information, not legal advice; obtain current South African legal advice on your particular agreement and circumstances.

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