In addition, FASA is in the process of registering as a professional body by the Services Seta and is currently in the process of applying for professional status at SAQA (South African Qualifications Authority).
It is estimated that there are nearly 600 business systems in South Africa claiming to be franchises and only 25% of these are members of FASA. The requirements of becoming a FASA member are stringent and are policed on a regular basis, as far as the capacity of a non-regulatory body allows. This no doubt scares off the less scrupulous operators and those who do not have correct structures and support systems required of a top class franchise system.
According to Vera Valasis, executive director of FASA, the association handles an increasing number of contacts, either directly or from its website, from disgruntled franchisees who have a problem with their franchisors and who have nowhere to turn except to go the legal route.
Most often these issues are related to another outlet being opened by the same franchise company within spitting distance of the complainant's outlet (without having been approached by the franchisor to open the new outlet), supply of goods from nominated suppliers and, more alarmingly because their outlet is no longer profitable.
"Franchisees don't want to disclose the name of the franchisor upfront, as they first want to know from FASA whether they have a valid complaint and whether they can do something about it without risking being alienated by the franchisor or losing their investment. Sadly, in most cases, FASA cannot assist as the companies are often not members, which forces them to either approach a franchise attorney for help, which is an expensive and time-consuming option or approach the National Consumer Commission, another time consuming resolution process."
Whilst FASA does offer its members and their franchisees an effective mediation service at no cost, this can only happen if both parties agree and before any litigation takes place. However, because of the very nature of franchising and its legal implications, many franchisees fear they would be seen as troublemakers if they lodged a complaint or went public with their concerns.
Says chairman of FASA for 2014, Ian Jacobsberg of law firm Routledge Modise, "If the ADR application is successful then any dispute received by the Commission will be referred to FASA - whether the franchisor/franchisee is a member of FASA or not. This will be a big step forward in protecting the name of franchising, helping those in the sector with their complaints and consolidating the industry."
Tanya Woker, Professor of Law at the University of KwaZulu-Natal and the author of 'The Franchise Relationship under South African Law' addressed FASA's members at its recent AGM and gave an interesting perspective on how the legalities affect the franchise relationship. "Although the focus with the CPA is on the law, I found that often the problems that arise in franchising lie not in the agreement but in the relationship," says Woker. "There is never a one-size-fits-all and franchisors and franchisees should look at their contracts, not as a dispute contract, but as an ongoing or developing relationship similar to that of a 'business marriage'."
FASA appeals to all those businesses operating as franchise systems to take responsibility to ensure the profitability of their franchised outlets and have mechanisms in place to address any contentious issues. Valasis believes that franchisors do their franchisees a disservice by not being members of FASA where both parties have the protection of not only an internationally sanctioned code of ethics but expert mediation services should problems arise.
"There are too many franchisors out there that do not understand the importance of partnership in a franchise relationship and need to understand that a successful franchise system is one where, if the franchisees are happy and making money, the franchisor will thrive," she concludes.
