Franchising as a mechanism for economic empowerment in South Africa.

Abstract

South Africa is currently undergoing a phase of transformation that has indicated a shift from institutionalised oppression in all political, social and economic spheres to a society that is ideally open, free and democratic. Many aspects of life in South Africa are therefore changing as this transformation process is proceeding. It is this transformation process that has prompted interest in the area of economic empowerment amongst those who were previously disadvantaged in the "old" South Africa. The previously disadvantaged represent a large percentage of potentially economically active members of South African society. However, because of a high unemployment rate, other alternative forms of employment need to be sought, mainly through entrepreneurial endeavours. One such alternative, which is presented in this study, is the possible role that the franchise industry may play in economically empowering people that were previously disadvantaged. The purpose of this study is to theoretically and empirically examine the potential of franchising to act as a mechanism for economic empowerment. It explores the perceptions of franchisors, franchisees and financial institutions in regards to the current state of the franchise industry in order to assess the extent to which franchising does or does not act as a mechanism for economic empowerment. Conclusions have been drawn to correlate the theory and the empirical analysis of the surveys that were undertaken. It has been found that in many ways, franchising may act as a mechanism for economic empowerment but there are factors that inhibit the role that franchising can play in promoting this form of entrepreneurship. Where these negative factors have surfaced, a methodology has been presented in order to minimise such effect.