What is the SA Government doing to develop the franchise sector

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What is the SA Government doing to develop the
franchise sector?
Presented by David Morobe CEO NAMAC Trust
A member of the dti Group
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the dti Vision

• To provide leadership to SA economy
• To act as a catalyst in the economy
• To provide adequate environment for economy

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Transformation

• We can be proud of the political and human rights
  transformation that have taken place over the
  past ten years.
• Unfortunately, a corresponding socio-economic
  transformation is still lagging behind.

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SA has aHighly Stratified Society
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the dti Vision 2014

• Growth achieve higher economic growth
• Employment growth that creates jobs
• Equity remove inequalities

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Medium Term Objectives2004-2007

• Increase SME contribution to GDP
• Realise broad based empowerment
• Increase level of investment
• Increase market access for SA goods services
• Contribute towards building solid skills,
  technology infrastructure
• Reposition economy into higher value added
  activity
• Provide citizens with avenues for redress

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NAMAC Trust

• Who are we?
• A Trust established in July 1997
• Department of Trade and Industry (the dti) is the
  custodian of the Trust
• Core partners are CSIR, Ntsika and NPI
• Form part of the dti Group of Institutions
• Form part of the COTII Sub Committee on Small
  Business and others
• Leading Implementation Agency in the Sector
• Core Programmes are
• Manufacturing Advisory Centres (MAC)
• Business Referral Information Network (BRAIN)
• Franchise Advice and Information Network (FRAIN)

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NAMAC Trust mission

• We will contribute significantly to the
  continuous economic growth and sustainable
  development of South Africa by improving the
  competitiveness and growth of SMMEs as a vehicle
  for poverty alleviation, wealth and job creation
• THIS MEANS
• Through appropriate SMME support structures we
  will supply high quality advisory and information
  services to new and existing SMMEs in line with
  best practices globally.

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FRAIN Vision

• To grow the South African SME market rapidly by
  improving franchising.

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FRAIN mission

• The Mission is to supply high quality information
  and support services to individuals and SMMEs to
  ensure growth and improvement of new and existing
  Franchising Businesses.
• The emphasis is on historically disadvantaged
  individuals, women and the youth, and the aim is
  to help them to join the mainstream economy by
  leveling the playing field.

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National Strategy forthe Support and
Development of Franchising in SA

• The Franchise Sector asked government for the
  following
• Database of Franchise Opportunities
• Franchise Support Desks
• Research Franchise Census
• Franchise Training
• Best Practices in Franchising
• Communication and Education Campaign
• Entrepreneurship Development
• Access To Finance
• Co-ordination and integration
• Monitoring and Evaluation

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FRAIN response
Franchise Website and Database (www.frain.org.za)

• Franchise Information
• 400 Franchise Systems
• Over 100,000 Hits per month
• Website on CD available
• Printed Franchise Material handed out

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FRAIN response
Franchise Research

• Starting point of Programme
• Tool to monitor impact of the Programme
• Accurate statistics are important
• Survey every two years
• Latest survey report will be available today

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FRAIN response
Franchise by Numbers

• World class step by step guide to help
  Franchisors to franchise their business
• Presented by Franchising Plus consultants
• Includes a four-hour strategic planning workshop
  and 5 consultations of 2 hours each with
  Franchising Plus consultants
• Normal cost is R15 000 plus vat. The Franchisor
  contributes 50 and FRAIN therefore subsidises
  50 of the cost

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FRAIN response
Franchise by Numbers (cont)

• Criteria as follows
• Franchisable according to FRAIN criteria
• 9 critical factors on FRAIN website
• Pilot operation for more than 12 months
• Balance sheet for past 12 months proving
  profitability
• Trademark registration

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FRAIN response
Franchise Awareness Training

• World class training manuals with international
  and local content
• Presented country-wide by Business Skills of
  Southern Africa (BSSA)
• 615 Business Advisors have been trained
• 65 of them have been trained to train and they
  will offer training in future country-wide

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FRAIN response
Franchise Export Project

• 90 of Franchises in SA are home-grown
• Local Franchisors purchase from local
  manufacturers and export shopfitting, signs,
  machinery and products
• Trade and Investment SA (TISA) will establish the
  incentive scheme during 2004
• Franchising will be part of a new services
  division at TISA

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FRAIN response
Franchise Cadet Project

• Many graduates have no work experience
• Pilot project 12 cadets in Gauteng
• Started 1 February 2003
• Contract for 12 months
• Selection by Psychometric Testing
• Cadets are unemployed black graduates with a
  degree in business sciences

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FRAIN response
Franchise Cadet Project (cont)

• Cadets are paid R2000 per month
• Cadets work in 4 Franchises (3 months each)
  during the 12 months
• Franchisors participating Butterfield Bread,
  Nandos, Pick n Pay, Mc Donalds, Cash Converters
• The role of the mentor is important

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FRAIN response
Franchise Cadet Project (cont)

• Possible Outcomes
• Franchise offers cadet employment
• Cadet buys a Franchise with support by FRAIN
• Cadet has twelve months working experience with 4
  Franchises

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FRAIN response
Social Franchising

• To satisfy a Social Need and not a Commercial
  Need
• To deliver Government Services, Health, Water and
  Sanitation and Business Development Services
• Pilot project under discussion with DWAF.
• Social Franchising Report is available

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FRAIN response
Obstacles to Expanding Franchising

• Survey by Franchize Directions
• To Investigate the Obstacles to Expanding
  Franchising as a medium to Empower Previously
  Disadvantaged Individuals (PDIs)

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FRAIN response
Obstacles to Expanding Franchising (cont)

• Is the main obstacle access to finance?
• What about the lack of affordable franchises?
• What about the lack of highly profitable
  franchises?
• What about the lack of support and training from
  low cost franchisors?
• Report is available.

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FRAIN response
Tandem Franchising

• New project with Franchising Plus to empower
  black franchise manager to become franchisees
• Profit share purchases equity
• Mentor has an incentive
• Commercial banks and Khula to participate in
  project
• Franchisors will select candidates
• Report is available

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FRAIN response
Access to Finance

• African Development Bank
• IDC
• Khula
• Umsobomvu Youth Fund / Business Partners
• Commercial Banks Franchise Desks ABSA, FNB,
  Peoples Bank, Standard Bank
• Provincial Economic Empowerment Institutions
  ITHALA, ECDC

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FRAIN response
FRAIN response available

• Becoming a franchisee
• Becoming a franchisor
• Social franchising
• Obstacles of PDIs
• Tandem Franchising
• Franchise Census 2004

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