R3m township funding ceiling puts franchise readiness in focus

South Africa’s higher funding ceiling for township and rural entrepreneurs has prompted a call to look beyond finance when preparing businesses for expansion. Writing in Sowetan on 4 November, Franchise My Business founder Sean Goldsmith welcomed the increase but argued that founders need operating systems and capable managers before taking on a second location or pursuing franchising.

Funding ceiling rises from R1m to R3m

According to Goldsmith’s column, the enhanced Township and Rural Entrepreneurship Programme has increased the maximum available to a qualifying business from R1 million to R3 million.

The higher ceiling is the starting point for his argument, rather than a guarantee that a business is ready to grow. His central question is practical: once an entrepreneur has the resources to expand, who will run the next branch?

For South Africa’s franchise community, that distinction matters. Goldsmith presents franchising as one possible route for a proven business, not the automatic next step for every entrepreneur who gains access to funding.

His proposed test is whether the original operation can function without constant intervention from its founder. If a business cannot operate for a week while its owner is away, he argues, opening another branch is probably premature.

Prove the systems before expanding

Goldsmith sets out several foundations that owners should establish before attempting to replicate their businesses. These include recording what each product or service costs to deliver, documenting staff training, and setting standards for quality and complaints.

He also calls for stock and cash controls that another person can follow. The emphasis is on turning the founder’s knowledge into routines that employees and managers can use independently.

A practical part of that process is giving a capable employee responsibility for managing the business while the owner is absent, then examining what goes wrong. In Goldsmith’s argument, this is a way to expose weaknesses before they are repeated at another location.

These recommendations place operational readiness alongside access to capital. A second premises is only part of an expansion plan; the business also needs a way to maintain service, supervise staff and control money without the founder overseeing every decision.

Franchising is an option, not a requirement

Goldsmith describes franchising as a route through which another local owner can operate a business using tested systems, training and ongoing support.

That opportunity comes with a warning. Weak margins, unrealistic promises and poor support can undermine the arrangement. Charging a franchise fee, he argues, cannot repair a business model that does not work.

His column also challenges the idea that all promising township businesses should become franchises. Some founders may be better suited to opening a second company-owned branch. Others could build networks of independent suppliers or remain strong employers at a single location.

The common requirement is evidence that the chosen route is appropriate. For a prospective franchisor, that means demonstrating more than demand for the brand: the operation must be capable of being repeated and supported by people other than its creator.

Measure capability as well as funding

Goldsmith points to Sowetan’s reporting on the Alexandra Automotive Hub, which has 17 workshop rental spaces, as an example of useful business infrastructure.

He proposes pairing facilities of that kind with practical training in pricing, operations, supervision and financial controls. This is a recommendation, rather than an announcement of a new training programme at the hub.

His suggested measures of progress go beyond the value of funding approved or the number of entrepreneurs attending workshops. He asks whether businesses have improved their margins, trained managers, created lasting jobs and expanded responsibly.

That reframes the funding discussion around what entrepreneurs can sustain after receiving support. The higher ceiling is welcome in his assessment, but developing home-grown brands also requires businesses that can outgrow their founders.

Practical takeaway: Before committing to another branch or offering franchises, document costs, training and controls, then test whether a manager can run the existing business without daily founder involvement. Use that evidence to choose the next step.