This is a best prospect overview of industry sectors for this country.
Last Published: 7/14/2019

Overview

Franchising has proven a successful mode of business in South Africa. Since the 1960’s, franchising has grown steadily. To date, there are 865 franchise systems (FASA Survey, 2018) and over 45,000 stores in the country, of which 80% are franchisee owned.

Most franchises are found in Gauteng province, the capital hub of South Africa, followed by Kwa-Zulu Natal and the Western Cape. Around 39% of local concepts have operations outside of South Africa, mostly in neighboring countries, and 12% have a reach beyond Africa, including Dubai, the U.S. and UK. 

Franchising turnover is estimated at approximately USD 52 billion, equivalent to 15.7% of South Africa’s GDP in 2018, with a significant number of people employed in the sector.

Trends

Although the Fast-food and Restaurant category dominates (23%), along with Retailing (18%) and Building, Office and Home Service (13%), other categories, such as Leisure/Entertainment (4%), B2B Services (7%), Automotive (8%) and Childcare, Education, Training (9%) are popular.

Most franchise concepts in South Africa are local in origin. Only one in eight franchise brands is international, which includes a significant number of U.S. brands, such as Krispy Kreme, Burger King, McDonalds, Signarama, Pizza Hut, Starbucks, and Domino’s Pizza.

Market impediments to obtaining U.S. concept are difficulty in financing the high start-up costs, as all the fees are dollar-denominated. The ability to source locally is an important factor in reducing in-put costs. The pool of qualified franchise candidates is small, with some major players in the market such as Famous Brands, Taste Holdings and Grand Parade Investments. 

Franchisors often cite the difficulty of finding the right franchisee and right location for their concepts, as well as the complexity of the market (highly fragmented). An indication of the current economic downturn is that it now takes longer for franchisees to break even.   

Franchise Association of South Africa (FASA)
Telephone +27 11 615 0359
www.fasa.co.za

International Franchise Expo/Franchise Indaba
November 1 – 2, 2019
Johannesburg
https://ife.co.za/

Prepared by the International Trade Administration. With its network of more than 100 offices across the United States and in more than 75 markets, the International Trade Administration of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.