Our South African government has urged all business sectors to help combat unemployment in South Africa. The rise of unemployment statistics is becoming more prevailing, therefore franchise stakeholders, social innovators and entrepreneurs in the sector are exploring new ways to empower small businesses and entrepreneurs in bridging inequality, creating prosperity and sustainable employment solutions.
According to Anita Du Toit, Director at Franchising Plus and one of the few franchise consultants who have pioneered the piloting of social franchise projects, there should be more programmes with a focus on skills development and that certain skills could be turned into sustainable micro franchises, thereby helping these franchisees to earn a living and removing them from the job seeking market.
“We have always said that painters, tilers and such trades could be franchised under the umbrella of a big retailer or paint manufacturer. This would solve the problem of consumer perceptions of the credibility of independent contractors while also ensuring a central referral system, ongoing training and support and helping such tradesmen to earn a good living as a small business operator. The focus should move from job creation to the creation of sustainable small businesses. Franchising offers a mechanism to enable this.”
This prevalent topic on how franchising can aid job creation is gaining national awareness by being discussed in an interview with Anita and ENC Africa
Employment in South Africa
The quarterly labour force survey from Statistics SA has indicated that:
- The South African unemployment rate has reached an astonishing 13-year high of 27,7% in the first quarter of 2017; this is due to unemployment rising faster than employment and more people joining the labour force on a regular basis.
- Even though there was a growth in employment by 144 000 it was offset by the growth of 433 000 people entering the labour market.
- Of these 433 000 people seeking employment, approximately 58% are young people aged between 15-34.
- There are currently 6,2 million people unemployed in our country over various industry sectors; this figure includes 35,6% people who have stopped looking for work.
The franchise sector
The franchise sector currently contributes 11.6% to the country’s GDP and employs over 400 000 people through its 757 franchise systems. The Franchise Association of South Africa (FASA) as well as other stakeholders in the franchise sector can play a key role in creating the necessary jobs to grow the economy through innovative venture creations.
FASA’s Chairman, Tony Da Fonseca says, “Solutions to the employment challenge need to be tackled as a matter of urgency. We as the franchise community have the business format expertise to assist in the establishment of new franchises in a variety of sectors not yet franchised – be it in agriculture, manufacturing or even in government’s social services. But we need to mobilise business and industry leaders, government and civil society to play a part in freeing up economic regulations and find creative solutions to allow entrepreneurship to flourish.”
Micro-franchising is a for-profit business model that applies traditional franchise mechanisms of operations, systemisation and replication to small businesses in the developing world.
The main objectives of micro-franchising include:
- Promoting economic development by providing self-employment opportunities to those who lack entrepreneurial skills
- Whilst reaching social impact goals i.e. reducing unemployment rates in South Africa, especially in the informal sector and
- Creating economic self-reliance not only for the franchisees but introducing products and services into a community that might previously not have had access to it
Micro-franchising allows people to become successful business owners with the benefits of:
- Low funding requirements involved
- Replication of a proven system
- Brand recognition
- Marketing support
- Established supply and distribution channels
- Mentoring, training and support
Most franchise opportunities are not affordable to young unemployed adults looking for opportunities. That is why micro-franchising will be such an effective and affordable solution for our youth to find sustainable employment opportunities for themselves and the community not relying on age and experience but on their ability to focus on execution and implementation.
How to create a Micro-franchise
- Identify the need or gap in your market and/or community
- Design and build a business model and strategy to resolve the need or gap you have identified
- Pilot the model (the model needs to be proven through validation of the business model and social impact)
- Systematise the model (this includes developing necessary documentation and materials)
- Scale and replicate the business
Current opportunities in South Africa
1. The Clothing Bank
The Clothing Bank inspires skills and supports employment by providing unemployed people with income opportunities and skills transfer to manage and sustain small businesses. One of their projects include the Micro Franchise Accelerator where they develop micro “business in a box” models. They currently have models in early childhood development and mobile food vending.
2. Sorbet and SEW Foundation
Sorbet has the underlying philosophy of making a difference in people’s lives, therefore they established the SEW Trust (Sorbet Empowering Women) to uplift the lives of women in communities by giving them the chance to fulfil their full potential. They provide business principles and beauty training which enables women to find employment within the beauty industry as nail technicians. This initiative is funded by clients purchasing bracelets or donating money instore or online to the cause
3. The Daily Sun
The Daily Sun is South Africa’s biggest selling daily newspaper. This low entry cost micro franchise provides opportunities for aspirant entrepreneurs while Daily Sun secures motivated township distributors and valuable enterprise development points.
4. Danone Clover – Daniladies
Danone Clover wanted to expand its reach from suburban supermarkets into the heart of township communities. Their distribution model was refined to where women known as DaniLadies were empowered to sell affordable fortified yoghurt. This created dozens of micro-entrepreneurs while building a new low-income segment market for Danone Clover.