THE STATE OF FRANCHISING IN AFRICA: PATHWAYS TO GROWTH AND INCLUSION

 Franchising is fast emerging as a powerful catalyst for economic growth, entrepreneurship, and financial inclusion across the African continent. In a rapidly evolving business environment, the sector is demonstrating resilience and adaptability, offering scalable opportunities for small business owners while strengthening value chains across industries.

“Franchising is playing a critical role in formalising informal economies, enabling job creation, and unlocking access to capital for entrepreneurs. In South Africa alone, the franchising sector contributes approximately 15% to Gross Domestic Product (GDP), while across the rest of Africa the sector is increasingly contributing to economic activity, supporting hundreds of thousands of jobs and enabling entrepreneurship at scale. This demonstrates the extent of impact the model can achieve. The opportunity now is to replicate this success across the continent by improving access to funding and enabling more entrepreneurs to participate”, says Andre Beck, Head of Franchising for Business and Commercial Banking at Standard Bank South Africa.

The Key Trends That Are Shaping Franchising in Africa:

Retail and food service trends are increasingly shaped by convenience, affordability, technology, and sustainability. In retail, online shopping continues to grow, with businesses integrating physical and digital channels through services like click-and-collect and home delivery. AI and machine learning are being adopted to improve operations and personalize customer experiences.

Consumers are becoming more price-sensitive, driving demand for discount retailers, private-label products, and bulk purchasing. At the same time, there is a shift toward healthier and ethically sourced products, including organic, low-sugar, plant-based, and locally produced foods, alongside increased focus on waste reduction and eco-friendly packaging. Retailers are also expanding into underserved areas, scaling convenience formats, strengthening loyalty programmes, and partnering with informal traders.

In food service, growth is driven by quick-service restaurants, fast food, and takeaway options, with reduced demand for traditional dine-in experiences. Chicken-based fast food is a key growth segment. Digitalisation through mobile apps, online ordering, and virtual kitchens is transforming preparation and delivery. Consumers prioritize speed, value, and convenience while still expecting quality, hygiene, and sustainable practices. Reviews and social media strongly influence purchasing decisions, and delivery has become a core sales channel.

“Franchising offers a proven and structured pathway for entrepreneurs to enter the formal economy with reduced risk. Across Africa, we are seeing how well-supported franchise models can accelerate job creation, skills development, and sustainable business growth. The focus now is on scaling these models responsibly and expanding access to underserved markets,” Beck adds.

As African markets become increasingly interconnected, cross-border expansion is presenting new opportunities for franchise brands seeking growth beyond their home markets. According to insights by McKinsey, Africa’s consumer class is projected to reach about 1.1 billion people by 2030, with the urbanisation rate in Sub-Saharan Africa among the fastest globally. This demographic shift is expected to directly fuel growth in the franchise sector, which is already valued at nearly $94 billion.

Joret Olivier, Executive Head of Enterprise Banking for Africa Regions & Offshore at Standard Bank, highlights the importance of regional integration:

“Africa’s economic future will be driven by businesses that can grow across borders. Franchising is uniquely positioned to achieve this, given its replicable and adaptable model. By strengthening regional ecosystems and improving access to funding, we can empower entrepreneurs across the continent to participate in and benefit from this growth.”

Retail and food service sectors face interconnected economic, operational, and structural challenges. Rising input, food, and labour costs combined with economic volatility are constraining consumer spending and tightening margins. Ongoing supply chain disruptions, infrastructure limitations, and logistical inefficiencies further impact operations.

Competition is intense, driven by dominant large players, urban market saturation, and pressure from informal traders. Regulatory requirements and competition law scrutiny add complexity. At the same time, rapidly evolving consumer behaviour such as heightened price sensitivity, e-commerce adoption, and demand for sustainability requires constant adaptation, often hindered by technology gaps and skills shortages.

Environmental pressures, including climate change, water scarcity, and waste management demands, continue to intensify, making it increasingly difficult for businesses to balance profitability, resilience, and long-term sustainability.

Despite strong momentum, the sector still faces challenges, including regulatory inconsistencies, infrastructure constraints, and limited access to tailored financing in certain markets. Addressing these barriers will require coordinated efforts between governments, private sector players, and financial institutions.

Franchising represents a significant opportunity to unlock inclusive growth across Africa through collaboration, innovation, and the right partnerships. By fostering entrepreneurship, enabling access to capital, and enabling scalable business models, the sector is well positioned to contribute meaningfully to the continent’s long-term economic development.

• The GDP statistic referenced in this article is sourced from the Franchising Association of South Africa: Can franchising in South Africa keep up with global growth.
• The key trends shaping franchising in Africa referenced in this article is sourced from the BMI – A Fitch Solutions Company, South Africa Consumer & Retail Report (Quarterly Report: Forecasts to 2030): BMI Consumer Retail: Fitch Solutions
• The Africa’s consumer class is projected to reach about 1.1 billion people by 2030, with the urbanisation rate in Sub-Saharan Africa among the fastest globally is sourced from McKinsey: Reimagining Africa’s economic growth | McKinsey
• In addition, the economic overview of the interconnected retail and food service sectors is sourced from Who Owns Whom – African Business Information, The Restaurant, Fast Food and Catering Industry in South Africa (November 2025 Report): https://www.whoownswhom.co.za/store/restaurant-fast-food-catering-industry-south-africa/

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