South Africa Country Commercial Guide
Learn about the market conditions, opportunities, regulations, and business conditions in South Africa, prepared by at U.S. Embassies worldwide by Commerce Department, State Department and other U.S. agencies’ professionals.
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Franchise
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Overview

According to the latest survey by the Franchise Association of South Africa (2023/2024), the number of franchise systems has dropped from 811 to 727, with 67,463 business units in the country (2024), of which 91 percent are franchisee-owned with an estimated number of 500,000 people employed in the sector.

Most franchises are found in the Gauteng Province, the capital hub of South Africa, followed by Kwa-Zulu Natal and the Western Cape. Around 39 percent of local franchise brands have operations outside of South Africa, mostly in neighboring countries like Botswana, Lesotho, eSwatini, Namibia, and Mauritius, and 13 percent have a reach beyond Africa, including Middle East, the U.S., and UK.

  • 2021: Total Turnover - R734 billion (USD 56 billion). 13.3 percent of total SA GDP 40,528 business units.
  • 2023: Total Turnover – R999 billion (USD 58 billion). 15 percent of total SA GDP 49,312 business units.
  • 2024: Total Turnover – R1.01 trillion (USD 61.2 billion). 15.3 percent of total SA GDP 68,463 business units.

Types of Franchising

The following categories dominate the franchise sector in South Africa:

  • Fast-food and Restaurant: 26 percent
  • Retail and Direct Marketing: 18 percent 
  • Building, Office, and Home Service: 10 percent
  • Childcare, Education, and training, B2B services, Automotive Products Services: 8 percent
  • Health, Beauty, and Body Culture: 6 percent
  • Leisure and Entertainment, Construction, Personal Services, Electronics/Mobiles/Telecoms: less than 5 percent

 

Most franchises in South Africa are local brands. Approximately 27 percent are international, which includes a significant number of U.S. brands, such as KFC, Krispy Kreme, Burger King, McDonalds, Signarama, Pizza Hut, and Starbucks.

  • Market impediments: Obtaining U.S. concepts is often impeded by difficulties in financing high start-up costs, as most associated fees are denominated in U.S. dollars. The ability to source locally is an important factor in reducing input costs. The pool of qualified franchise candidates is small and difficult to find. Franchisors often cite the difficulty of finding the right franchisee candidate and the right location for their concepts, as well as the complexity of the market (which is highly fragmented). An indication of the current economic recession is that it now takes longer for franchisees to break even.  
  • Trends: In response to the ever-changing demands of the consumer, many franchises have had to adapt the way they operate not to lose market share to their competitors. Below are some of the leading trends in the sector:
  • Delivery Services: A significant trend driven by consumer demand for convenience and safety, expanding beyond food to other sectors. 
  • Technology Adoption: Increased reliance on technology, artificial intelligence (AI), and automation to manage financial benchmarks and customer behavior. \
  • Sustainability & Ethics: A strong focus on sustainable and ethical business practices, with franchisors and franchisees adapting to new economic realities. 
  • Resilience and Adaptability: The sector has demonstrated resilience, with franchisors actively optimizing systems, controlling costs, and revising practices to survive and thrive post-pandemic. 

Entrepreneurial Development: Franchising provides a lower-risk pathway for entrepreneurs due to established brand recognition, proven business models, and comprehensive training and support.

For more information, the U.S. Commercial Service South Africa can be contacted via email: Sanjay.Harryparshad@trade.gov.
Phone: +27 (0)31 305 7600 X33350 

Resources

Franchise Association of South Africa (FASA)

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