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FASA Establishes Industry Specific Food Franchise Forum

The Forum is bound by a supplementary code of ethics for the franchised food sector and will adopt a series of monitoring measures by its measures.

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The Franchise Association of South Africa (FASA) is delighted to announce the establishment of a Food Franchise Forum representing the majority of the household names in the casual dining and quick service restaurants (CDQSR) sector.

Based on 2016 figures, the franchise sector as a whole generated R587 billion in sales; this amounts to a significant 13.3% of South Africa’s GDP. Of this, the CDQSR segments contributed 29% of the total. The sector also employs some 65,500 people, the vast majority of whom were previously untrained individuals who otherwise stood little chance of finding employment in the formal economy.

More than six decades have passed since the CDQSR sector spearheaded the development of modern-day franchising. Franchising has subsequently made strong inroads into a dozen or so other industries, yet recently published research confirms that the CDQSR sector continues to play a dominant role in franchising as the chart below illustrates.

Whilst the Franchise Association of South Africa (FASA) operates under a government gazetted Code of Ethics for its 17 different sectors, the development of a Food Franchise Forum within FASA to liaise specifically on matters that have the potential to impact on the sector is an important step in the challenging food environment. The Forum is bound by a supplementary code of ethics for the franchised food sector and will adopt a series of monitoring measures by its measures.

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Related: 6 Things You Need To Know About Profit And Cashflow

More than six decades have passed since the CDQSR sector spearheaded the development of modern-day franchising. Franchising has subsequently made strong inroads into a dozen or so other industries, yet recently published research confirms that the CDQSR sector continues to play a dominant role in franchising as the chart below illustrates.

Whilst the Franchise Association of South Africa (FASA) operates under a government gazetted Code of Ethics for its 17 different sectors, the development of a Food Franchise Forum within FASA to liaise specifically on matters that have the potential to impact on the sector is an important step in the challenging food environment. The Forum is bound by a supplementary code of ethics for the franchised food sector and will adopt a series of monitoring measures by its measures.

Indications are that the food sector will continue on its growth trajectory. This is of particular importance in the South African context because it creates real, value-creating opportunities for the establishment of sustainable small enterprises under franchise arrangements and further job creation. Moreover, the sector makes an important contribution to South Africa’s vibrant tourism industry.

According to Vera Valasis, Executive Director of FASA, “It is common knowledge that our sectors find themselves under increasing pressure emanating from an ever-growing number of legislative and regulatory interventions. This is not a specifically South African phenomenon. Similar roadblocks are popping up in other parts of the world, with well-documented developments in the US and the EU being cases in point. Some of the regulations these countries have enforced, or are considering, are onerous and threaten the very survival of many long-established food service operations.”

Chairperson of the Food Forum, Nazrana Hawa of Spur, which spearheaded the establishment of the forum under the auspices of the Franchise Association of South Africa comments, “Raising awareness about issues affecting our sector requires a united voice and a credible representative body mandated to speak on behalf of the sector.”

Examples of recent issues causing concern to operators in South Africa’s CDQSR sector range from the recent food safety scare, draft liquor policy and proposed smoking regulations. Other key projects identified for consideration are new regulations for food licences, labelling regulations, proposed requirements around gas installations, tax laws that may affect the sector and developments around landlords and rentals and the POPI Act.

According to Hawa, “Experience tells us that representations submitted to government by individual brands, no matter how well-reasoned, are unlikely to achieve the desired results. For the sector to be heard it needs to do so through a credible, representative body, mandated to speak on the CDQSR sector’s behalf.”

Related: Thinking Of Going Into Franchising?

Hawa continues, “As FASA is a well-established, representative body of long-standing, with strong local and international linkages and enjoying good relations with relevant government departments, members felt that setting up the proposed body under its umbrella makes perfect sense.  For the initiative to achieve its objectives, however, will require buy-in by most, if not all, of the credible franchised brands and from suppliers to the industry.”

Hawa notes, “Given that government has gazetted FASA’s Code of Ethics and has expressed the intention to adopt the code for broader use, further cements FASA’s standing as franchising’s sole representative vis-a-vis government and other stakeholders. The need for and value of the Forum is validated by the fact that major franchise companies have come on board including: Famous Brands, KFC, Nando’s, Taste Holdings, Fournews, Hot Dog Cafe, Barcelos, Pizza Perfect, Adega, Mike’s Kitchen, King Pie, Jimmy’s Killer Brands, Chicken Xpress, Kauai and OBC Chicken & Meat.

Hawa clarifies, “While FASA will continue to represent the interests of franchisors across a variety of business sectors, including the restaurant sector, the FASA Food Franchise Forum will represent the sector-specific and clearly-defined interests of the CDQSR sector only.”

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Servant Leadership Key For Healthy And Growing Businesses

The success of beauty brand – Sorbet – hinges on its people and their passion, argues its founder and CEO Ian Fuhr. Speaking at a UCT Graduate School of Business event in July, Fuhr said that if you focus on your people and create a working environment where they feel nurtured, cared for, content and inspired, they will be motivated to serve their guests to the best of their ability.

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Servant leadership in business is important particularly in the South African context, says Ian Fuhr, founder & CEO of Sorbet – a leading South African beauty brand.

“It [servant leadership] becomes more important in the South African context because the country is highly diverse …it’s about race, it’s about religion, culture, and language,” Fuhr said during a roundtable discussion on his new book at the UCT Graduate School of Business (GSB) in July.

According to Professor Kurt April, chair of the Allan Gray Centre for Values-based Leadership at the GSB, servant leadership is a philosophy and set of practices that enriches the lives of individuals, builds better organisations and ultimately creates a more just and caring world. A servant-leader focuses primarily on the growth and well-being of people and the inclusive communities to which they belong. He adds that it starts with self-mastery. “If you cannot lead yourself, you will struggle to lead -diverse-others and head up organisations. It starts with the self, with true self-awareness that guides behaviour, choices and decision-making”.

According to Fuhr, building a successful organisation requires leaders to “accept and respect people who are different to us and to learn to live with each other”.

Related: Sorbet’s Ian Fuhr: Servant Leadership Personified

“There is no reason why we cannot build a rainbow community within our workplace. We have to understand each other, accept and respect people who are different to us, and learn to live with each other…and this is one thing we work on [at Sorbet] to get people to understand the importance of accepting and respecting people who are different to you. You might not agree with them but you need to respect that they have different views to yours and that you are not always right,” he said.

Servant leadership requires a paradigm shift and that you have to lead by example, Fuhr continued. In this spirit, he says the he personally does the induction training at Sorbet. “It helps that I am able to explain directly what’s important and why they [workers] have to believe what we believe in.”

The GSB regularly hosts business leaders to discuss and share ideas to improve business and society on its Distinguished Speakers Programme. Facilitating this event was GSB alumna, Heloise Janse van Rensburg  (MBA 2017), whose MBA dissertation was on “How the ‘Sorbet Way’ of Servant Leadership is Scooping Up Success”.

Fuhr established Sorbet in 2005 and it has become one of the largest beauty franchise businesses in South Africa, with just over 200 salons, including five stores in London.

Advising up-and-coming entrepreneurs, Fuhr said business owners need to have intuition “which tells you something is right”. “You have to have courage because there will be times when you want to throw in the towel… and determination because it’s a long journey. No business ever happened overnight. You should not be afraid to fail.”

In his book, The Soul of Sorbet: Building People, Culture and Community, co-written by Johanna Stamps Egbe, People and Culture Manager of the Sorbet Group, Fuhr emphasises the need to focus on employees and customers in order to grow a business.

“It’s like the age-old question: ‘What came first? The chicken or the egg?’ Similarly, in business we have to ask: ‘What comes first? The purpose or the reward?’ I believe that the purpose is paramount and the reward is the natural result.

“If you focus on your people and create a working environment where they feel nurtured, cared for, content and inspired, they will be motivated to serve their guests to the best of their ability with a positive attitude, and to touch the lives of those guests in a powerful way. This creates loyal guests who will feel good about themselves and enjoy visiting your business on a regular basis, and spending money on products and/or services.”

Related: Servant Leadership – Will You Serve?

Fuhr added that “lean and mean” businesses might well produce short-term profits for the shareholders, but sooner or later the culture will impact negatively on productivity.

“There will be nothing to inspire exceptional performance and the culture of fear will begin to debilitate the business. Negativity will spread like a cancer. Demotivation will set in and customer service will no longer take centre stage. Despite the fact that they might be earning a good salary, when people are discontented and disillusioned in their working environment and unhappy about the way they are being treated, their anger and frustration become directed towards their managers. The internal conversations become nothing more than moaning and bitching sessions and the biggest casualty, by far, is always the customer who is now just an interference in the ongoing battle between management and staff.

“A short-term profit obsession can sometimes lead to fundamental blunders, particularly when restructuring is overdone and the staff complement becomes so thin that the business can no longer effectively serve its customers.”

It is next to impossible to grow a business without focussing on the people that make the organisation,” he concluded. As Stamps Egbe has said:

“How will you grow your business if you do not grow your people…that is an important philosophy.”

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Franchise News

Thinking Of Going Into Franchising?

Do you think you have what it takes to be successful in the Franchising Sector in South Africa? Morne Cronje, Head of Franchising at FNB Business, says you need to consider the following aspects.

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A lot has been said about franchising being one of the resilient sectors in our economy as it contributes approximately 13,3% to South Africa’s GDP. Thus, people might consider the route of owning a franchise in their entrepreneurial journey.

Morne Cronje, Head of Franchising at FNB Business says:

“Franchising has a lot of advantages than starting a business from the ground up as the failure rate in franchising is less than 10% compared to the high failure rate of traditional start-up businesses.”

Cronje shares the following factors that should be considered when going into franchising:

  • Conduct research: Deciding to open a franchise can be daunting and exciting at the same time. Potential franchisees need to do a thorough research on the franchise industry before taking the actual steps to open one.
  • Choosing a franchise that suits you – There is a wide variety of sub-sectors in franchising and entrepreneurs needs to select one that appeals to their interests and ambitions. The rule of thumb says; it is better to choose a sub-sector that you are passionate about. For example, if someone is passionate about food, it may be worth looking at franchises that appeal to such a passion.
  • Shadow franchisees – Spend at least one day with a franchisee to get to know more about how they run their business. This will give you an insight on how franchisees (one who purchases a franchise) spend their time and what the key focus areas are to run a successful business.
  • Location, location and location – If the franchisor (owner of the overarching company, trademarks, and products) has not identified a site, a franchisee will need to start looking for a location. On the other hand, if the franchisor proposes a site, you should still do an in-depth analysis to check the viability of the location. Check out the site with respect to size and affordability, access to utilities and security, proximity to your target market, visibility and availability of parking. The location of competitors is another important consideration.

Related: SA Fast Food Franchising On The Rise

“Just like any other business, don’t just go in franchising blindly; understand the pros and cons of the industry. It is highly recommended that you consult before choosing to own a franchise. At FNB, we provide financial and operational tools that are designed to accelerate and support the growth of franchisees,” concludes Cronje.

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Franchise Award Winners Reflect Global Consumer Trends And Commitment To Growing The Economy And To Job Creation

The Franchise Association of South Africa (FASA) held its Awards for Excellence in Franchising sponsored by Sanlam with the winning brands reflecting what’s trending in worldwide consumer circles and cementing the franchise community’s commitment to growing the economy and to job creation.

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The Franchise Association of South Africa’s Awards for Excellence in Franchising, sponsored by Sanlam, reflects what’s trending in worldwide consumer circles and cements the franchise community’s commitment to growing the economy and to job creation.

The results reflect trends identified by the Nielsen Consumer 360 survey, which looks at the key drivers that will shape consumer opportunities until 2025. It shows that as South Africa’s population becomes more urbanised,  with different product and service needs for the Generation X and Y’s, there will be a keen focus on the health and wellness sectors.

Health and fitness: The trends to watch

The FASA Awards this year clearly reflected those worldwide consumer trends in health and wellness in the two top awards:

Kauai as Franchisor of the Year – who continue to ride the trend wave in the health food revolution are reaping the rewards for their innovativeness.

“We are thrilled to be judged ahead of the curve both in consumer trends and in brand strategy, says Guy Le Ray Cook, Franchising Executive for Kauai. “Not only have we had our best year in 22 years of trading with 25% year on year growth and 4% improvement on Net Profit percentage, but we have upped our game in introducing innovative communication strategies. From being the first to market with our new app that includes order ahead, loyalty and cashless payments adding a minimum of 5% additional overall sales in loyalty transactions –  to introducing our K Konnect platform that allows everyone – from kitchen staff to franchisees to get information and share day-to-day experiences on a live cell phone platform.”

Related: How Everyone Can Help With Youth Empowerment

Body20 with their Brooklyn, Pretoria branch taking the Franchisee of the Year Award – who’s 20-minute EMS (Electro Muscle Stimulation) training per week, has revolutionised how we keep in shape.

So confident are Body20 that their revolutionary EMS Studios will become one of the most influential fitness franchise companies in the world – they are opening new studios in South Africa at a rate of almost one a month and have already broken into the USA market with great success. Says Bertus Albertse, CEO of Body20; “The combination of state of the art EMS Technology, modern personal training and rapid fitness results make Body20 the most exciting franchise opportunity in fitness this decade. It’s a low-staffing business model, with fast break-evens and impressive returns – our 36 outlets in just over three years attests to that.”

Communication is the key to success

What has shown up quite clearly in the 2018 FASA Awards is the franchisor’s commitment to assisting franchisees weather the economic hard times through innovative communication strategies – whether through their field service monitoring or reaching their markets through the latest customer loyalty apps.

  • Kauai who took a second award in Brand Builder of the Year is leading the way by establishing successful customer loyalty apps with key partners such as through the 93 Virgin Active Health Clubs and through Discover Vitality and Discovery Insure – building their customer base, raising their brand awareness and boosting their bottom line.
  • Kauai’s field service consultant Lawrence Lindeque won Field Service Consultant of the Year through the effective business monitoring and mentoring of the franchisees in his area resulting in double digit growths in all his stores.

Contributing to job creation

kfc-wins-job-creator-of-the-yearJob creation is on everyone’s lips since President Cyril Ramaphosa set a goal of creating half a million jobs in the next year.  A tall order, one might argue, but with franchising’s duplication model, this is the one sector that can make a meaningful contribution – the sector’s 845 franchise systems, 40 500 outlets employing close to 400 000 people and contributing 13.3% to the country’s GDP – is testament to that.

KFC took the Job Creator of the Year Award – with their 20 500 employees across 1 053 outlets since they opened their first outlet forty years ago, they take the lead in making an incredible contribution to job creation.  If one adds the indirect jobs they create through their supplier network and partners, their contribution is compounded and to be lauded.

Hall of Fame Award salutes Ian Fuhr, the man behind the Sorbet brand of Beauty Salons

hall-of-fame-award-presented-to-ian-fuhr-of-sorbetBehind every successful brand is an entrepreneur with the vision to take a concept and build it into a household name.  This year the Franchise Association have honoured Ian Fuhr, entrepreneur extraordinaire, who revolutionised the franchising model with his Sorbet brands by redefining customers as ‘guests’ and staff as ‘citizens’ – putting service and support ahead of sales and profit.  The culture he installed in his businesses is that, ‘if the service is excellent and the citizens feel validated and cared for… the money will automatically follow.”

Related: How Ian Fuhr Built Sorbet – The Beautiful Business Empire

Sanlam, sponsor of the FASA Franchise Awards is proud to be associated with the Franchise Association of South Africa, the body representing the franchise industry in South Africa.  “South Africa is in dire need of economic growth” says Kobus Engelbrecht, Marketing Head, Sanlam Business Market.

“Franchising is an effective way to create new businesses as well as new employment opportunities that will stimulate this much needed economic growth. By recognising and rewarding outstanding performance in the franchise industry, we are building and promoting franchising as a business concept as well as an excellent career option.”

Vera Valasis, Executive Director of FASA, who has just returned from representing South Africa at the World Franchise Council reports that, whilst the effects of global economic turbulence is affecting some countries more than others, almost all report that franchising is still alive and well and making huge contributions in their respective economies and to franchising globally. “As a global phenomenon, franchising remains one of the drivers of entrepreneurship, small business development and job creation.”

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