It was good to see the IDC put its hand deep into its well funded pockets in support of small business and specifically the franchise industry in a recent deal with Famous Brands.

With many small businesses struggling to live with the governments BEE strategies and in many cases taking the brunt of the risk on this, entrepreneurs in some industries will see this as a step in the right direction. Small and micro enterprise (smme) support and enticement could be seen as two of the easier ways to stimulate South Africa's economy and with the smmme sector already in trouble and lagging far behind that of other developing countries around the world, much more of this is needed.

Concerns may be raised that certain industries are receiving more funding than others and that the money seldom reach the areas where it can have the biggest effect. We would encourage a move from the IDC not only to publish details of the funding granted to certain industries, but also to publish the results and effects that such funding may be creating.

The above is in response to the article by Edward West below.

Your comments welcome,
Ben


Famous Brands, the restaurant franchiser group, has secured R25,5m from the Industrial Development Corporation (IDC) to fund new Wimpy, Steers, Debonair's Pizza and FishAways franchised stores for black entrepreneurs.

Famous Brands chief operating officer Kevin Hedderwick said the aim was to make these brands more accessible so black franchisees could own 20% of the franchise network in the short term, up from the current 15%.

Loans from R500000-R1,5m on "favourable terms" would be to granted to approved candidates, Hedderwick said.

IDC executive vice-president Katinka Schumann-Bester said the state-owned firm viewed the facility as an intervention necessary to ease entry into the franchising sector for blacks.

The loan will be supported by a mentorship programme, managed by the group, to enhance the success of the new franchisees.

Government has identified the franchise industry as an important growth area to support its strategy of building a sustainable small business sector.

Famous Brands is the second listed restaurant franchiser group to obtain funding from the IDC in support of a black economic empowerment programmes.

Spur executive chairman Allen Ambor said in the company's recent annual report that the group had secured R30m of financing from the IDC this year to finance black franchisees.

He said many black entrepreneurs were unable to secure funding from traditional banking channels and it was proving difficult to accelerate growth in the number of black franchisees.

"Some of these franchisees could be selected from within the ranks of our employees. This could also hasten the rate at which franchise opportunities become available, thereby facilitating growth avenues for the group," said Ambor.

Hedderwick said demand for Famous Brands' franchises was still strong at about 1000 inquiries a month, but black entrepreneurs often did not have enough cash for a premium restaurant franchise brand.

He said a restaurant franchise was a "tough, unforgiving, seven-days-a-week business", but it could be lucrative for the franchisee if variables in the business such as positioning, gearing, rentals and staff costs were right.

Famous Brands' share price slipped 1,77% to close trade at R12,77 yesterday. A total of 215410 shares changed hands in 81 deals.



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