Franchises of all types are expanding into new global markets. Domino’s Pizza recently opened their 10,000th location internationally. It is no longer only the McDonald’s and Subways of the world opening new locations in China, Dubai and elsewhere. Many smaller franchise businesses are beginning to stake their claim in markets such as South Africa.
TradingEconomics.com and EdwardsGlobal.com, who regularly report on the aspects of a market for new business expansion, give South Africa a fair or mid-range score for new businesses to enter.
TradingEconomics.com reports that the past two years have been the high point for South Africa, they rate them at 82 out of 190 markets. A decade ago, the country had a score of 32.
EdwardsGlobal.com’s GlobalVue rating tracks 50 countries quarterly. South Africa has a fair rating of 48th on the latest list of countries. This is not much of a red flag rating as they did score a 2.5 out of 5, which they label as “fair”. It does, however, indicate that many other markets may be more favorable or easier to enter at this time.
Population: approximately 58 million (2018).
Largest Cities: South Africa has two cities with populations over three million: Cape Town and Durban. Johannesburg is third with just over two million people.
Religion: 81% Christian.
Government Type: Republic. Operating within a three-tier parliamentary system.
Industries: South Africa has diversified quite well from the days of relying heavily on natural resources and agriculture for much of their GDP. Today, finance accounts for 20% of GDP, manufacturing at 13%, mining at 8% and agriculture at only 3%. South Africa is moving toward an information/knowledge-based economy with stronger focus on finance, ecommerce, technology and communications.
GDP: $350 billion (2018). 2016 was a sharp low point within the last decade, but they had a solid rebound in 2017.
Transparency Index: 73 out of 180 markets with a score of 43 out of 100, according to Transparency International.
Languages and Cultures
When considering South Africa for franchise expansion, language is an important factor. South Africa has 11 official languages and over 35 languages recognized as natively spoken.
Afrikaans and English are most widely spoken in the country. English is being used more and more frequently for official government use while Afrikaans is beginning to see a reduction in official use.
The other official languages include Ndebele, Pedi, Sotho, Swati, Tsonga, Tswana, Venda, Xhosa and Zulu. Many other languages are also spoken and popular within the country.
A key bridge language for most in the country is Afrikaans and/or English.
Leading Franchises in South Africa
FranchiseFinder.com reports that among the top 10 they report as the leading franchises in the country, eight are restaurant related, one is a supermarket and one is education related.
Their overview is very interesting to read on these companies, you can find it here: http://www.franchisefinder.co.za/Article%20Archive/SAs-top-ten-franchises.shtml
You will see names among this top 10 are known quite well globally, such as KFC and McDonald’s, along with other lesser known names to us in the USA.
In South Africa and elsewhere, international franchising is not something only the large multibillion-dollar companies can participate in. They have helped lead the way and made it easier for this new phase of companies to enter global markets where customers, potential business owners/franchisees, law makers and governments are familiar with the franchise business model and best practices needed to be successful.