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Eric Parker - Franchising Plus

By Eric Parker

If one looks coldly at the South African population situation, economically the numbers do not stack up!

“There are not sufficient Tax payers to fund the basic needs of the majority of the population”
Added to this the current tax payers are in debt and stretched to the limit. The majority of the tax money collected is used to support the bottom end of the population grid. The current tax payers are not deriving benefits for their taxes and are left to fund their own medical aids, education, security etc. South Africa needs additional tax income, but there is only so much you can squeeze out of the earners, hence the huge dispute around the proposed toll roads.

The current state of the world economy has not helped either and then this together with inflation has resulted in the lower salary earners going on strike to demand higher wages and services.

The following diagram illustrates the point.

State of the world economy

So what is the situation?
Employment

How do we create employment?

(i) Encourage Foreign Investment
We must do everything possible to encourage foreign investment – this will mainly be around tax breaks and incentives.

(ii) Franchising
The majority of our unemployed have developed specific skills e.g. they can paint, clean, garden, build etc. They have limited further education opportunities and they don’t know how to find work e.g. look at the number of people that gather outside hardware stores every day looking for work. Customers refuse to employ them due to security fears.

We could develop Franchisors in each category e.g. painters to assist them to create their own small business and operate under a trusted brand name within a tried and tested business model.

(iii) Less Red Tape
Try and open a business today! The red tape is just inhibitive. Just to open a bank account or obtain a VAT certificate is almost impossible for a small business operator.

The latest Global Entrepreneurship Monitor (G.E.M.) report found that less than 14% of South Africans planned to start a business within the next 3 years. It also found total entrepreneurial activity fell to 7,3% last year from 9,1% IN 2011 AND 8,9% in 2010.

(iv) Accessible Funding
We need to find a way to make unsecured funding available to entrepreneurs. Many entrepreneurs stall because they cannot secure funding. The four major commercial banks just don’t lend to budding entrepreneurs unless they have 100% security. The Government departments tasked with making funds available are slow, cumbersome and ineffective.

(v) Education and Mentoring
Our education system is not geared to encourage and teach entrepreneurship. We also do not have mentoring facilities to assist start-up business. We could utilise retired experienced businessmen who in many cases are sitting at home totally underutilised.

Conclusion
We do not profess to be able to sort out the nation’s problems, but we could certainly help with the franchising part of it. As a start we could assist all those artisans sitting outside the building and hardware outlets, just eager to go and do a hard days work.

If you would like to discuss franchising further please contact me on 011 454 2235 or email This email address is being protected from spambots. You need JavaScript enabled to view it.