Franchising is an authorization granted by a government or company to an individual or group enabling them to carry out specified commercial activities, for example acting as an agent for a company’s products.
The Franchise Association of South Africa has acknowledged the continuous growth of franchise businesses in the country and its commendable contribution to the country’s economy. This is evident since the sector has had a 13.35% contribution to the country’s GDP.
This attributes to R721 systems with 30,528 having managed to employ more than 343,319 people across the country. Here is a list of the most profitable franchises in South Africa that you can consider investing in rather than starting your own business from scratch.
Types of Franchises
Business Format
Product
Conversion
Investment
Job
Top 10 fast food franchises in South Africa
McDonald’s
Burger King
KFC
Nandos
Fish and Chips Co.
Wimpy
Debonairs
Capitan DoRegos
Steers
Barcelo’s
Clothing franchises in South Africa
Apricot Lane Boutique
Big Frog
Pro Image Sports
Instant Imprints
Hometown Threads
Mainstream Boutique
Gap Inc
The Top 10 Biggest Franchises in the World
The following franchise brands lead the pack according to the Franchise Times Top 200 guide for 2014. Interestingly, four of these top ten were founded in the 1950s. Half of these brands have representation in South Africa, including McDonald’s, KFC, Pizza Hut, Subway and Burger King.
1. McDonald’s
Founded in 1954
More than 33 000 outlets worldwide
McDonald’s is the world’s largest franchise network with an incredible $89 billion in global sales. Despite increasing competition, it has held on to this spot every year since the rankings were first released in 2000. To put this size into context, it is larger than KFC, Subway and Burger King combined.
2. 7-Eleven
Founded in 1927
More than 55 000 outlets worldwide
The tills continue to ring in 7-Eleven franchises with $84 billion in global sales and a ranking as the world’s second largest franchise. This is also the world’s largest convenience store chain with some 55,000 stores in 16 countries and 10,400 stores in North America alone.
3. KFC
Founded in 1930
More than 18,800 outlets worldwide
What came first, KFC or the craving for fried chicken? The world’s taste for KFC is insatiable and this giant serves more than 12 million customers each day in more than 115 countries. Parent company Yum! is ranked number 201 on the Fortune 500 list, with revenue topping $13 billion. It is estimated that, on average, an estimated 185 million people see a KFC commercial at least once a week.
4. Subway
Founded in 1965
More than 42,000 outlets worldwide
Back in 1965, Fred DeLuca planned to become a medical doctor. Searching for a way to fund his education, a friend suggested he open a submarine sandwich shop. Today, the brand is the world’s largest sandwich chain and fourth largest global franchise. Submarine refers to the shape of the roll, and not the recommendation that the sandwich should be eaten under water. Subway are also expanding in South Africa, here’s more about current franchise opportunities.
5. Burger King
Founded in 1953
More than 13,000 outlets worldwide
Burger King, often abbreviated as BK, is placed as the world’s sixth largest franchise with global sales reaching $16 billion. The group’s majority shareholders, Brazilian private equity group 3G Capital, are chasing world domination and in 2013 the franchise added a ‘whopping’ 700 international locations to the network.
6. Hertz
Founded in 1918
More than 11,500 outlets worldwide
Almost as old as the invention of the car itself, Hertz boasts almost a century in the car rental industry. With $14 billion in global sales, Hertz is the world’s largest car rental business with approximately 9,000 locations in 147 countries. Hertz’s reservation centres handle approximately 40 million phone calls and handle 30 million reservations annually.
7. Ace Hardware
Founded in 1924
More than 4,800 outlets worldwide
Ace Hardware comes in at number seven with global sales totalling over $13 billion. The company was named after the ace fighter pilots of World War I, who were able to overcome all odds. An apt name for what has become the world’s largest home improvement franchise.
8. Circle K
Founded in 1951
More than 8,200 outlets worldwide
At number eight is convenience store brand Circle K, overtaking ninth place contender Pizza Hut in 2014. This is quite a feat for the retail giant which filed for bankruptcy in 1990. The franchised portion of the business boasts global sales of $12 billion. Circle K is owned and operated by the Canadian firm with the tongue-twisting name of Alimentation Couche-Tard.
9. Pizza Hut
Founded in 1958
More than 14,000 outlets worldwide
In the number nine spot is Pizza Hut, the second brand by parent company Yum! to crack the global top ten list. This fast food franchise can be found in over 120 countries – everywhere from Lebanon to Luxembourg. With global sales topping $12 billion, we can hold this pizza giant responsible for
driving up the price of tomatoes. Pizza Hut recently re-entered the South African market.
10. Wendy’s
Founded in 1969
More than 6,500 outlets worldwide
Wendy’s is still a firm franchise favourite with a formidable global sales figure of $9 billion. While it doesn’t have a signature meal like ‘The Big Mac’ or ‘The Whopper’ the chain is known for its square hamburgers, sea salt fries and soft serve ice-cream.
How much is franchise in South Africa?
As with other South African franchises, there is also a franchise fee (excluding VAT) of between R114,800 and R175,700 depending on the style of franchise you are looking to open. The estimated set-up costs for a Wimpy franchise is R2. 2 million and an initial franchise fee of R114,300 (excluding VAT).
Can I start a franchise with no money?
It’s not possible to start a franchise without any money. You’ll need to pay an initial franchise fee, and you will have other start-up costs. … You might be able to free up some money with a home equity loan or by using your retirement savings.
Are franchises a good idea?
Before you buy a franchise, it’s a good idea to research the opportunity. … If you want to own a business, but don’t have an idea to build from scratch and you have the resources to make it work, a franchise can be a good choice.