The franchise body says the planned competition probe is too broad and could lead to difficult-to-enforce recommendations.
The Franchise Association of South Africa (FASA) has raised concerns over the scope of an upcoming market inquiry into the country’s franchise sector, warning that the investigation may be too broad to deliver practical results.
The Competition Commission announced plans to launch the inquiry after publishing its draft Terms of Reference on 26 June 2026. The investigation will examine whether certain market features have impeded, distorted or restricted competition in South Africa’s franchise sector.
FASA said it supports efforts to improve competition in the industry but believes the current scope of the inquiry is excessively wide. According to the association, a broad investigation could result in recommendations that may be difficult to implement or enforce.
“The Terms of Reference are too wide, and that on its own creates some doubt for us,” FASA CEO Fred Makgato said. “We would like to see more focused, streamlined areas that the Commission could look into.”
The inquiry will not target any specific franchise brand but will examine the broader mechanisms of competition in the sector, including franchise agreements, contractual practices, financing and funding arrangements.
The investigation could affect major franchise brands operating in South Africa, including KFC, Chicken Licken, Pick n Pay, Spar, Spur, Steers, Italtile Retail and Sorbet.
FASA has urged the Competition Commission to narrow the scope of the inquiry and engage more closely with key industry stakeholders before finalising its Terms of Reference. The association said some of the issues identified by the regulator are already being addressed through existing initiatives, including sector transformation and efforts to help small businesses become franchise-ready.
Makgato also highlighted what he described as a growing skills gap in the franchise sector, saying more support was needed to provide aspiring entrepreneurs with the qualifications required to enter the market.
“We have partnered with Services SETA to put in place a franchise managerial professional training module, and with the Department of Small Business Development,”
he said.
South Africa’s franchise sector includes more than 800 franchisor brands, over 3,500 franchisees and more than 30,000 franchise outlets nationwide. The sector contributes an estimated R999 billion in turnover and supports more than 500,000 jobs.
The Competition Commission is accepting public comments on its draft Terms of Reference until 7 August 2026. After reviewing submissions, the regulator will publish the final version of the document.
Source: Daily Investor
