New
Investment Fund for a New Generation of Entrepreneurs
Business Partners
Umsobomvu Franchise Fund Launched in Johannesburg
A new
investment fund aimed at enabling and empowering South Africa's young
entrepreneurs, particularly those from previously-disadvantaged communities,
was launched in Johannesburg today. The Business Partners Umsobomvu
Franchise Fund is a private/public sector joint venture between Business
Partners Limited and the Umsobomvu Youth Fund; an initiative of the
national government. With an initial investment allocation of R125 million,
the fund's specific aim is to make all of the opportunities and benefits
of franchising available to the country's new generation of entrepreneurs.
"Franchising
is an accessible and powerful retail delivery model," says Business
Partners MD, Jo' Schwenke, "providing access to the mainstream
economy for youth of all groups." And statistics all over the world
bear out this statement. In the USA, nearly 50% of all retail business
is conducted through franchises, while in Canada the sector accounts
for 45% of retail trade. In Europe, this figure is about 30%, with Australia
fast gaining ground. There, about 26% of all retail sales are made through
franchised networks. "As franchising currently only accounts for
7% of retail sales in South Africa, we at Business Partners feel there
is huge potential for growth in this sector, particularly in non-food
franchising and we hope to enable young entrepreneurs to realise this
potential," says Schwenke.
Business
Partners is South Africa's leading specialised investment group for
small and medium enterprises and was selected to manage the new fund
on the basis of its experience of entrepreneurial enterprise in general
and of franchising in particular. This initiative is one of several
initiated by Umsobomvu to provide for the delivery of funds from the
Umsobomvu Youth Fund (UYF) to target groups. The UYF was established
by government in 2001 with the objective of creating new economic opportunities
for the country's young people aged between 18 and 35.
The
UYF's equity was created from a R855 million levy paid to the government
when Old Mutual and Sanlam de-mutualised in 1999 and now stands at R1
billion. "In line with Umsobomvu's vision, very clear qualifying
criteria have been established for entrepreneurs seeking investment
financing from this fund," says Malose Kekana, the UYF's Chief
Executive Officer. Since its stated objective is to provide investment
financing for viable youth-owned franchises across all sectors, applicants
will - first and foremost - need to have some knowledge of and experience
in business. The composition of the business will also be a vital qualifying
factor.
Entrepreneurs
will only qualify for financing from the fund if young black people
between the ages of 18 and 35 have an equity holding of at least 30%.
Individual applications will be assessed on the viability of a sound
business plan and on the drive, vision and competency of the individual
entrepreneur or entrepreneurs. "Franchising is one of the most
undervalued tools for providing access to the mainstream economy for
entrepreneurs, especially those from previously-disadvantaged communities,"
says Kekana "and with the Business Partners Umsobomvu Franchise
Fund, we hope to unlock that potential for our future business leaders.
"Ultimately,
the benefits of franchising extend way beyond access to an established
brand, comprehensive training, operational support and integrated marketing.
"Franchising is not only a vehicle for the creation of personal
wealth, but for skills development and job creation as well," says
Jo' Schwenke. "In the USA, 8 million people are employed in franchising
and the industry accounts for $1 trillion in turnover annually. One
in every twelve retail outlets in the States - approximately 320 000
independent enterprises in 75 different industries - is a franchise.
"There can be no doubt about it," he concludes, "with
the business franchising model, everyone benefits - and we hope to see
more emerging entrepreneurs having access to the rich opportunities
it provides."
|
