Why being accredited by FASA matters

FASA’s primary role is to define the business of franchising and ensure that all parties adhere to the franchise business principles adopted and accepted internationally. With franchising universally accepted as one of the most successful business formats, FASA’s role is to continually promote the advantages of franchising both to business entrepreneurs, to prospective franchisees and to the public at large.

FASA’s Vision and Mission of promoting self-employment and small business development is taking on new meaning as it joins forces with government and the business community to stimulate new business concepts, encourage entrepreneurship, create jobs and play a part in the skills development of all South Africans.

South Africa leads the way

FASA has spent many years making sure that the international franchise community is cognizant of the potential that lies within South Africa. As the leader in franchising on the African continent, South Africa needs to stand up and be counted. It is a recognised fact that South Africa is the obvious springboard for potential growth into Africa and the stark reality is that the broader African economies cannot grow in isolation as the continent’s future is inextricably linked to South Africa and the example it sets.

The most important benefit for franchise companies who join the FASA is that of being able to align themselves and their brands to an internationally recognised body that adheres not only to international best practices but to the sound business ethics established through the country’s various legislative channels. Members can also network with other franchise owners in diverse sectors and have access to affiliate members such as suppliers, franchise consultants, financial institutions and attorneys.

South Africa’s population of around 65 million people offers diverse opportunities for companies wishing to expand their footprint through the franchise business format. Although the majority of the population fall into the lower end of the earning bracket, there is a growing middle class and, whilst luxury products cater to a more exclusive market segment, products and services appealing to the middle market are gaining popularity. There is room for growth for lower entry franchise opportunities especially in the services and recycling categories with social and tandem franchising a welcome solution to some of the country’s service delivery challenges.

Promoting the concept of Franchising

FASA has been the guiding force of franchising in South Africa for over forty-five years and the growth and stability of the sector is largely thanks to the work that FASA has done over the years to promote ethical franchising. Considering that most international franchise associations were started in the 60’s (the USA, Canada), 70’s (UK, Germany) and 80’s (Australia), the formation of the Franchise Association in 1979 was testament to the integrity of those early South African franchisor members who voluntarily committed themselves to establishing a bone fide business format with high ethical standards. Their mandate then, and now is to:

Promote the concept of franchising as a viable business format to potential franchisors and franchisees.
Issue guidelines according to which sound franchise schemes should operate.
Apply a Code of Ethics to the industry and establish standards of international best practices.
Promote franchising in the small business sector with the aim to nurture entrepreneurship, contribute to skills transfer and create jobs.
Collect and disseminate information on franchising.
Provide education on franchise-related subjects
Represent the sector vis-a-vis government, legislation, the media and the general public.

Membership Scrutiny

One of the first questions anyone considering aligning themselves to the franchise sector needs to ask is “Is the franchise I am considering joining accredited by the Franchise Association of South Africa? And if not, why not?”

Becoming a franchisee of a reputable franchise company that is a member of FASA gives you the peace of mind that those companies have, in becoming members, agreed to manage their franchise companies not only in accordance with FASA’s Code of Ethics and strict membership criteria, but are kept up-to-date with all the necessary legislative changes. Furthermore, if things go wrong as they sometimes do, FASA offers mediation and dispute resolution mechanisms to its members.

FASA members voluntarily align themselves and their brands to an internationally recognized body that adheres not only to international best practices but to sound business ethics established through the Consumer Protection Act, the Franchise Industry Code and in turn the soon-to-be-appointed Ombud for the sector.
The fact that a franchisor that is a FASA member voluntarily opens himself, his company and his operations to scrutiny shows his commitment to running his operation ethically and along sound business principles.
FASA members are viewed as credible operators and quality companies within the franchise community and usually accredited by the major banks and lending institutions.

Benefits include the prestige of being associated with an internationally recognized franchise association, participating in the many networking events that FASA holds throughout the year, being informed of the many legislative changes that may affect franchising and benefiting from legal, industrial and labour advice.
FASA makes a thorough assessment of each applicant company before membership is granted. This would typically include a look at the viability of the concept as well as the presence of appropriate documentation, with the minimum requirements being:-

The viability of the concept and that the company has a pilot operation operating for at least a year
Has a disclosure document that complies with FASA’s stringent specifications and complies with the Consumer Protection Act.
Has a fair and reasonable franchise agreement that clearly reflects the spirit of FASA’s Code of Ethics and Business Practices
Has a comprehensive operations and procedures manual.

Tips to choosing the right franchise

The Franchise Association deals with enquires from the public on a daily basis concerning franchisees who invested in a franchise that has not been accredited by the association, only to realise afterwards that the business is not profitable for various reasons. Although complaints against members of the association have increased it is off a very small base but the careless decision making process implemented by some people when it comes to buying a franchise is of serious concern.

FASA recommends that potential franchisees conduct a very thorough market analysis of the franchise they are interested in buying paying particular attention to the following:-

Has the franchise company been accredited by the Franchise Association of South Africa?
Did you conduct interviews with existing franchisees of the franchise you are interested in buying and would they invest in another business from the same franchisor?
Did you discuss the planned purchase with the franchise desk at your local bank or funder and if so, is the funder satisfied with the financial track record of the brand?
How many outlets has the franchise company closed to date?
Does the franchisor get involved in the marketing, training and hand-holding if a franchised outlet underperforms financially?
How many complaints have been lodged by customers or clients of the brand on social media and other relevant complaint websites?

If you are thinking about investing in a franchise you should keep the adage, “if it sounds too good to be true – generally it is” in mind when investigating franchise opportunities.