How Can The Private Sector Use Franchising To Contribute To The Economic Development Of South Africa

1
How Can The Private Sector Use Franchising To
Contribute To The Economic Development Of South
Africa

• Presented by Eric Parker

2
The State of Entrepreneurship in South Africa

• Global Entrepreneurship Monitor (GEM) results
  2002
• Only 6.54 of SA population involved in
  entrepreneurial ventures in 2002
• SA ranked lowest of all developing countries
• Weakest in new firm and established firm
  entrepreneurship, low economic contribution

3
Results of GEM 2003

• Major contributors to our low entrepreneurial
  levels
• Low education levels
• Perceived lack of skills
• Only 35 of men under 45 believe they are capable
  of starting a business
• Lack of entrepreneurial role models
• Lower levels of exposure to entrepreneurs
  comparative to other developing countries

4
FRANCHISING AND ITS INFLUENCE IN SOUTH AFRICA
5

• You
• work 40 years
• 480 Pay Cheques (40 x 12)
• Say you earn
• R10 000 per month

6

• You will only earn
• R4 800 000
• in your lifetime
• (Inflation Excluded)

7
AVERAGE LIFETIME LIVING EXPENSES
8
LIFETIME CASHFLOW
9
Entrepreneurial Comparison

• Average K.F.C. franchisee would make
• R4 800 000
• profit in 10 years
• and still have a saleable asset

10
CONTROL OF DISTRIBUTION
Manufacturer 9,00 per chicken
2c GP
Central Kitchen 10,50 per chicken
1,50 GP
Retail 49,50 per chicken
29,70 GP 9,00 NP
CUSTOMER
11
Commodity
MBA CA
Manufacturer 9,00 per chicken
2c GP
Added value
Central Kitchen 10,50 per chicken
1,50 GP
Brand
Retail 49,50 per chicken
U.D.O
29,70 GP 9,00 NP
CUSTOMER
12
CASE STUDY
LOSS
360 company owned outlets
13
120 Loss
180 Contributing
60 Highly Profitable
14
How can we create jobs

• Corporate companies to upsize instead of
  downsize.
• Corporate companies to use entrepreneurship as
  Corporate Development Programme.
• Corporate to use franchising for BEE initiative.
• Encourage offshore investments in South Africa.
• Help develop small business.

15
How can we create jobs

• Educate encourage entrepreneurship.
• Make finance available.
• Use retrenchments.
• Store within a store.
• Use local talent YDE model.