75 000 jobs at risk if franchises can’t start working

South Africa’s 48 000 franchise businesses are holding their collective breath as they wait to hear who will be able to do business again when the total lockdown ends at midnight on Thursday.

This week, President Cyril Ramaphosa announced that economic activity would be gradually scaled up after a comprehensive lockdown was imposed last month.

However, a risk-controlled strategy will be followed. This means that businesses that are not regarded as essential – where the danger of the spread of the Covid-19 coronavirus is high – will most likely only be allowed to open at a later stage.

About 94% of South African franchises have been unable to do business since March 26. It is feared that 75 000 jobs could be lost as a result.

“But that is a conservative estimate,” said Vera Valasis, executive director of the Franchise Association of SA (Fasa), which expects that many more job losses will result if these businesses are not allowed to begin operating soon.

In a letter dated April 11 and addressed to Trade, Industry and Economic Development Minister Ebrahim Patel, Fasa asked that fast-food businesses be allowed to sell frozen, prepared food such as lasagne or pizza.

“But government appears to have moved in the opposite direction to what we requested, and we do not understand the reason for that. It would have been an important lifeline for these businesses,” said Valasis.

She said Fasa hoped that fast-food businesses would at least be allowed to do deliveries – without contact – when the full-scale lockdown was lifted.

“Our fast-food franchises are more than ready to prepare food in highly hygienic conditions.”

It was announced yesterday that under lockdown level 4, which begins at midnight on Thursday, the delivery of hot, cooked food to people’s homes by fast-food enterprises would be allowed, but only during set hours.

Valasis pointed out that the fast-food industry was not the only one struggling: “The whole franchise industry, with the exception of supermarket groups, has been dealt a heavy blow.”

Rudi Rudolph, CEO of the beauty salon franchise Sorbet, said the group’s income dropped 30% last month, even before the lockdown was implemented. Because Sorbet salons do not qualify as an essential service, they have all been closed.

Rudolph said Sorbet had prepared for additional safety and hygiene measures to be taken in all of its salons, including the erecting of screens between tables where beauty therapies would be carried out.

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“Even before the lockdown, we had already stepped up measures considerably for disinfecting shops and equipment, and for providing personal protection for our beauty therapists.”

When Sorbet salons are able to open their doors again, staff will be divided into teams and the salons will stay open for extended hours as fewer people will be allowed in at a time.

“Where there are 10 tables for nail care, for example, only five will be open so that the correct physical distance between therapists and clients can be maintained.”

Rudolph said Sorbet had gone to considerable lengths to accommodate its franchise holders during the lockdown, including waiving the payment of their franchise fees for last month and this month.

“Our main goal is to prevent job losses, and salaries are our first priority. Nothing else. If we are allowed to do business again and we have no staff, what then?”

Richard Mukheibir, CEO of Cash Converters, told City Press’ sister publication Rapport that pawn shop businesses had also asked to be allowed to operate.

Mukheibir said his group could play a meaningful role in putting cash into the pockets of South Africans.

“People who have been laid off during this time, or who have received only a portion of their salaries, can bring in unused items and exchange them for cash.”

Cash Converters also has an option that gives clients an advance if they want a loan and can offer a movable asset as security for the loan.

“For example, you can bring your lawn mower to a store and borrow money against it.”

Naas du Preez, managing director of Oasis Water, said that, although the group’s stores were declared an essential service, thereby allowing them to do business, turnover was currently 50% lower than it had been at this time last year.

“We will only be able to catch up again in 12 to 18 months.”

The demand for Oasis Water products has declined considerably because far less bottled water has been ordered for functions and events because these are not taking place.

Du Preez said that about 40% of the group’s staff would eventually be affected by stringent working conditions, set up to mitigate the impact of the Covid-19 outbreak. These could include reduced working hours and unpaid leave in future.

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