Across South Africa’s franchising sector, a quiet reworking of how stores are built, staffed and financed is under way, and the changes are showing up in the numbers that matter to operators: what it costs to open an outlet, who can afford to own one, and how a network holds together once the doors are open.
The scale of the sector is substantial. Franchising does an estimated R1-trillion in turnover annually, and about one out of every five randelas earned in the industry comes from serving people food. That works out to roughly 3% of South Africa’s GDP, based on the Competition Commission’s estimation that food service accounts for 15% of the sector. Many of those outlets are pizza places.
Col’Cacchio, which has been serving handmade pizza for more than 32 years, is one of the brands rethinking its delivery model. The group has introduced Col’Cacchio Go, a small-format, click-to-collect and delivery-centric store format. The operational logic is straightforward: the traditional back-of-house, hand-crafted food preparation stays, while front-of-house operations are converted to digital counter service. The effect on capital expenditure is significant. Setting up an outlet previously required about R6-million to R8-million; the new format brings that down to R2-million to R2.5-million per store.
Group CEO Etienne Pieterse says the adaptation addresses severe overhead pressures, makes expansion into smaller regional markets easier, and establishes a unit economic framework optimised for third-party delivery ecosystems, digital click-to-collect ordering and multichannel retail integration. In practical terms, it is cheaper and easier to buy into as a franchise owner.
Pieterse has also changed the language of the relationship. “I got rid of the word franchisee,” he tells Daily Maverick. “I hate that word because franchisee means parent/child and that’s not what our business is.” In his view, the company is in the partnerships business, and all its franchises are called partners. “Think about it, yes it’s one thing to have standards but if there can never be a relaxation of that standard, or an openness to explore something new, that’s where you lose innovation.”
Operationally, that balance shows up in how stores are run. Col’Cacchio combines strict national quality standards for core commodities, meaning pizza and pasta ingredients, with localised autonomy for regional produce and wood sourcing. Store owners in Kimberley, for example, may source fresh produce and wood locally, choosing between wattle and blue gum because standards still apply, rather than relying on central logistics from Cape Town, provided quality benchmarks are met. Owners can also maintain signature menu pages unique to their location.
“If you strip back, each of our stores is a mom-and-pop store,” Pieterse says. “Every restaurant has got its own owner in its own area… It’s local people, local owners putting [in] hard sweat.”
Not everyone is convinced franchising is the right vehicle at all. Vladislav Priadko, founder of Coffee Bike World, approached Daily Maverick to advocate for independent equipment ownership instead. “My preference for independent ownership comes from being an operator myself,” he says. The company built its first Coffee Bike in Vancouver in 2017 and spent more than eight years operating its own bikes, serving over a million cups, before offering the concept to other entrepreneurs.
His model eliminates recurring franchisor fees and mandatory purchasing obligations. The initial capital purchase includes the specialised mobile equipment, operational training and supply chain access. To date, Coffee Bike World has distributed 36 mobile units across 31 independent owners in Canada, the US and Peru, operating primarily in mobile coffee and chai catering markets. “Franchising certainly has its place, especially when the brand brings customers through the door,” Priadko says. “With our model, I believe the owner should be able to build their own brand and benefit from the relationships and reputation they develop locally.”
By contrast, WAXIT, a wax-only specialist brand founded in 2015 by Michelle Royston, operates 49 branches in Gauteng, KwaZulu-Natal and the Western Cape under a traditional franchise model, with standard store setup costs of approximately R1.7-million, excluding VAT and working capital. Because steep upfront capital can exclude talented operational staff from ownership, Royston built an internal micro-franchise incubation pathway. Over a structured five-year period, long-serving team members who have demonstrated operational excellence within the company’s internal recognition structure, the “Smooth League”, receive mentorship in financial discipline, operational governance and secured funding support.
“This has been on my goal list since the start. I want to build a legacy, not an empire,” Royston says. In the pilot, two long-standing internal leaders, Thuli Ngwenya and Precious Matabane, moved into joint franchise store co-ownership. Ngwenya spent 11 years with the business, progressing from waxologist to head of WAXIT’s seta-accredited training centre.
The structural risks facing these networks are real. Larry Hodes, CEO of Grow Franchising, a Franchise Association of South Africa board member and founder of Arbour Café and Courtyard restaurant in Johannesburg, draws on Fasa’s 2023 industry survey: 60% of franchisors identify escalating operating costs as a critical challenge, 45% flag franchisee-related operational issues, and 42% cite staff recruitment, training and retention difficulties. “Having the money to buy a franchise and having the ability to run one successfully are two completely different things,” he says.
There are more than 800 franchisor brands in the South African market, more than 3,500 individual franchisees and upwards of 30,000 franchised outlets nationwide, according to Fasa data cited in the Competition Commission’s Draft Terms of Reference for the Franchise Market Inquiry. Yet ownership remains skewed: 57% of franchised outlets are owned by white business owners, 18% by black owners, 17% by Indian owners and 8% by coloured owners, even though black citizens make up more than 80% of the national population. Changing the idea of what a franchise is and how those businesses can work could help bridge that gap. Whether cheaper formats and incubation pathways can deliver that shift at scale is the question the next wave of store openings will answer.