Franchise funding leads to job creation

Kobus Oosthuizen is the CEO of SAFW.

According to Kobus Oosthuizen, CEO and founder of SA Franchise Warehouse, the initiative involves a strategic partnership between various SME development funders, suitable franchised brands, the Franchise Association of South Africa (FASA) and SA Franchise Warehouse to establish new businesses within existing franchised networks.

The establishment of small enterprise will remain very risky by its nature but establishing these new businesses within existing franchised networks reduces the risk and associated costs significantly hence attracting the interest of funding partners. The franchised brands for which applications have been facilitated include MSC Business College, Sign-a-Rama, Boost Juice, Matrix Computers, OBC Chicken, Sandwich Baron, ACDC, Sparkling Auto, Jimmy's Killer Fish and Chips, Zebro's Chicken, Perfect 10, Cape Town Fish Market, Minuteman Press, Levingers, Chicken Xpress, Col'Cacchio and Caramello's.

Unlike commercial funding, where a maximum of 50% on the set up cost of the business can be borrowed, this initiative allows for qualifying franchisees, associated to accredited franchise brands, to borrow 80% of total start-up cost. This approach reduces start up funding risk, proven by a zero percent failure rate to date and allows for job creation where most needed.

In addition to the technical and operational support a franchisee would receive from the franchisor, SA Franchise Warehouse would render small business administration and accounting services as a condition of funding and assume the obligation of reporting to the funders on the performance of the funded business for the duration of the loan term.

Of the 203 jobs created for 2014:

• 81% of the jobs are outside Gauteng
  
• 59% female
  
• 87% youth (younger than 35) with more than 43% younger than 18
  
• 93% of employees are black

Of the 15 businesses established, 11 are black owned and a total of R23 million in loans have been made.

"Interest and participation by franchised brands and funders commitment suggest that we could treble the numbers in 2015," Oosthuizen said. He further added that the scalability of the project, as well as the ability to establish sustainable rural enterprises at a very competitive cost per job, bodes well for the future of the project.