Africa: Market Potential for Franchising in Africa

While some African countries do not yet have the economic and legal infrastructures in place sufficient to encourage substantial U.S. franchise growth, several African countries are demonstrating that they have the market size, growth, opportunities, and developing laws to support franchise development that would be attractive to forward-thinking, established franchisors and entrepreneurs looking for new investments.

 

A common roadblock to an increased U.S.-based franchisor presence in Africa is the perceived and, in many circumstances, real lack of a legal infrastructure to support franchising in many African countries. Recently, African countries have addressed this concern by drafting and enacting legislation specific to franchising. South Africa and Tunisia have enacted franchise legislation that includes mandated pre-sale disclosure for franchise operations. Tunisia recently passed legislation that dictates the terms that must be contained in franchise agreements. Nigeria has established laws to require registration of agreements containing the exchange of intellectual property.

 

Of these three countries, South Africa is a model for potential franchise growth throughout the rest of the African continent, and franchising continues to bloom after the country’s enactment of the Consumer Protection Act (“the Act”) in 2009. The Act codified franchise practices that had been advocated by the Franchise Association of South Africa (“FASA”) since the early 1990s. What is important about the Act is that franchisees are explicitly included as “consumers.” Pursuant to the Act, they are given a number of consumer rights, including the right to disclosure, fair and responsible marketing, honest dealing, and fair agreements. To protect franchisees in the contracting process, a franchisee has the right to cancel a franchise agreement without cost within 10 business days after signing the franchise agreement by giving notice to the franchisor.

 

Click here for full article published in the LJN’s Franchising Business & Law Alert.

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