SA’s franchise growth may depend on better franchisee support

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South Africa’s franchise industry is a significant contributor to the economy, generating R721bn in GDP and supporting hundreds of thousands of jobs. It is a sector that has demonstrated resilience through challenging economic conditions and continues to outperform independent business ownership on many measures.

Yet beneath these impressive figures lies a challenge that deserves far more attention.

Franchisors and franchisees are facing declining revenues, rising costs, and increasingly difficult trading conditions. In response, the traditional levers of growth are being pulled: more outlets, tighter cost control, and increasingly stringent brand compliance.

But what if the answer to sustainable franchise growth isn't necessarily another store? What if it is getting more from the stores that already exist?

Growth starts with the franchisee

The conventional understanding of franchising is straightforward: a franchisee buys into an established brand, a proven business model, and an established operating system. In return, the franchisor provides training, guidance and support.

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But support cannot simply mean ensuring that a franchisee follows the rules.

Brand standards and compliance are essential. They protect the reputation of the network and ensure that customers receive a consistent experience. However, compliance should be viewed as the starting point of the relationship rather than its ultimate objective.

There is a fundamental difference between monitoring a franchisee and developing one.

I experienced this distinction first-hand when I was running franchise stores myself during a particularly difficult period.

My first area manager approached the role largely through compliance. Visits consisted of assessments, scores, identifying shortcomings, and reporting back. The feedback was accurate, but there was little engagement with the actual challenges facing the business.

Over time, I began cutting corners. Nothing dramatic, but small departures from the standards that I could justify because the relationship with the head office had become transactional.

Then a new area manager took over.

The audits didn't disappear. The standards didn't change. What changed was the conversation.

Instead of simply identifying what was wrong, this area manager wanted to understand why the business was struggling. We looked at costs, staffing, sales trends, and the operational challenges affecting the stores. The focus shifted from checking the business to improving it.

Within a few years, profits in those stores had increased by 400%.

I certainly wouldn't attribute that result to one individual. But the difference in the quality of support was undeniable, and it fundamentally changed how I viewed the role of the franchisor in the success of the franchisee.

The missing piece: business leadership

Across South Africa's 727 active franchise systems, there is no shortage of capable franchisees. Many know their operations exceptionally well. They understand their customers, their products, and the practical demands of running a store.

But running a business and leading a business are not necessarily the same thing.

Financial management, strategic planning, people development, leadership, and the ability to interpret business performance are critical skills. They may appear in franchise training programmes, but too often they are not developed or applied deeply enough in the day-to-day business.

This creates an opportunity for franchisors.

A franchisee who becomes a stronger business leader is more likely to build a healthier, more profitable operation. A healthier operation is more likely to reinvest, employ people, expand, and remain committed to the brand.

The commercial benefit to the franchisor is equally clear.

When franchisees perform better, royalties increase. When they understand the reasons behind brand standards, compliance tends to improve.

Engagement becomes stronger because the franchisee is no longer simply following instructions; they understand that protecting the brand is also protecting their own investment.

Franchisee development should therefore not be regarded as a goodwill exercise. It is a business strategy.

Rethinking the role of the area manager

This is where area managers have enormous potential.

In many franchise organisations, area managers are primarily measured on compliance. They visit stores, conduct audits, identify shortcomings and ensure corrective action is taken.

All of that remains important.

But an area manager who only measures performance is missing an opportunity to influence it.

The most effective area managers should be able to move between compliance and coaching. They should be comfortable discussing financial performance, identifying operational problems, understanding people challenges and helping franchisees develop practical strategies for improvement.

The audit should open the conversation, not end it.

An area manager who can sit down with a franchisee and say, "Here is what the numbers are telling us, and here is what we can do about it," adds significantly more value than one who simply reports that the numbers are poor.

This requires a different skill set.

Franchisors traditionally recruit area managers because of their operational and industry experience. Yet coaching ability, leadership, financial literacy, communication, and strategic thinking are equally important if the role is to deliver its full potential.

These skills need to be developed with the same commitment that organisations give to operational and brand training.

The next phase of franchise growth

The South African franchise sector has every reason to be ambitious about growth. But opening more outlets into an increasingly pressured consumer environment cannot, on its own, provide the answer.

Sustainable growth starts with the performance of the businesses that are already operating.

If franchisees become better business leaders, their businesses are more likely to perform.

If businesses perform better, franchisors benefit.

And if area managers become genuine business partners rather than simply compliance officers, the relationship between the franchisor and franchisee becomes considerably more valuable.

The statistic that 63% of South Africa's franchise brands have fewer than 30 stores is therefore more than a measure of the industry's current size. It represents an opportunity.

For many of these businesses, meaningful scale may not begin with finding the next franchisee. It may begin with helping the franchisee they already have become more successful.

Ultimately, the question every franchisee should be able to answer is simple: Does my franchisor genuinely want my business to succeed?

For the franchise brands that get that relationship right, the answer could determine just how far their businesses are capable of growing.