Saturday, May 25, 2024

Local entrepreneurs sidelined by lack of national franchise laws

The franchise business in Botswana remains impervious and registers a steady growth in light of heavy demand. However it is strange that the success and growth of the franchise industry in the country is said to be controlled by a few businessmen, mostly foreigners, who allegedly block locals who are interested in that line of business.

According to trade and competition specialists at the Competition Authority (CA) and the Botswana Institute of Development Policy Analysis (BDIPA), it is evident that aspiring local entrepreneurs have been sidelined by the unnamed individuals who hold rights to franchise licenses of some the leading and international fast food retail shops.

The ill-fated situation is however not helped by the government’s failure, over the years, to draft and implement a policy or law that guide franchise business in the country.

Director of Competition at the Competition Authority, Dr Mokubung Mokubung, shares sentiments with BDIPA’s Professor Roman Grynberg who says that a healthy legal environment is of great importance for franchising business in the country and that it should include provisions pertaining to all areas that fall within the ambit of franchising.

Speaking at the World Competition Day panel discussion this Thursday, Professor Grynberg, a former Head of Trade Policy at the Commonwealth Secretariat as well as Head of Trade at the Pacific Islands Forum said that it is evident that only a few individuals are holding licenses to a number of franchised stores in the country.

Grynberg said that the most common type of franchise in Botswana is the single-unit franchise system whereby the franchisee buys the concept and operates it according to the franchisor’s rules.

“Such individual’s controls the industry and determines who cannot be given a go ahead to operate certain franchises. They can block aspiring entrepreneurs if they want. That is why this retail shops looks all the same in all the malls and countrywide”.

The BIDPA think tank is of the view that to foster the rapid and sustained growth that this channel brings it is critical that laws to regulate the franchising business exist. He said such law will also protect locals from being barred from entering the lucrative fast food retail market.

Despite a significant growth in the franchise market, currently there are no laws enacted solely for the purpose of regulating the growing business of franchising, even though many countries including the developing ones across the world have enacted such laws. The result is that when franchisors enter Botswana they are governed by a number of different statutes and codes rather than a single comprehensive enactment.

When quizzed on what the authority is currently doing to help the affected individuals and end the uncompetitive behaviour, Mokubung said that they are currently drafting a proposal to the relevant ministry in a bid to establish a policy that will regulate that line of business. “It is work in progress,” he said.

Retailers that are operated under the franchise business model in Botswana include fast food outlets such as Nandos originating from Portugal, KFC from America as well as several others such Wimpy headquartered in South Africa. Some retailers selling clothes and furniture, mainly from neighbouring South Africa are also trading under the same arrangement.

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