Female entrepreneurship fosters franchise growth

Businesses' growing acceptance of female leaders in the workplace, combined with females' ever-growing entrepreneurial spirit, are transforming the business world and the franchising space. Although equality is still not a complete reality, the phenomenon is gaining ground and more women are taking charge.?

The increase of successful woman-owned and run companies across all industries has impacted the business world. It is even more so if you consider how much further we are than the Global Entrepreneurship Monitor (GEM) Women’s Entrepreneurship 2016/17 report figures that stated that 111 million women are running established businesses. The number of female-run businesses must have drastically increased since then.?

In addition, female leadership inspires more women to take up the challenge of running businesses and entering the business and franchise worlds as the 163 million women that started businesses in 2016, as per the GEM Women’s Entrepreneurship 2016/17 report must surely now have increased as well. According to Bizee (previously IncFile) Data, the number of women-owned businesses in America has increased 114% over the past two decades. Then the growth in women entrepreneurship is up 48% year-on-year, outpacing their male counterparts by 22%.

The World Bank says that roughly a third of principal owners of all businesses globally are female, and this proportion varies with country income levels. One in four businesses has female owners in low-income countries, whereas, in middle-and high-income countries, female entrepreneurship participation is higher – between 36% and 37%, respectively. According to research by Guidant Financial, an estimated 31% of all small businesses and franchise ownership in the US in 2022 are female.?

The Word Economic Forum 2024 Global Gender Gap Report states that the Economic Participation and Opportunity gap has closed by 60.5%.

The days of white old men as the only leaders and owners of companies are becoming a thing of the past, as strong entrepreneurial women are stepping up and making a difference.

Genevieve Allen, Founder and CEO of Club Engage says: “Many women exit the corporate business space because the flexibility of time is poor and mandates are often watered down due to hierarchical or traditional structures. The glass ceiling is real, and owning your own business provides more control of your destiny and time.”?

According to the Franchise Association of South Africa (FASA) 2023 database, franchise systems in South Africa show a 43% increase from the 2019 figures recorded.

Allen believes this is positive news for the franchise business arena and underscores the possibilities that franchising can offer women entrepreneurs the space and grow the franchise market even further.

“There are still many opportunities for growth in the franchise arena, especially in the childcare, education and training sector, which according to the recently released FASA South African Franchise Market 2023 Report, currently represents 7% of the overall franchise market.?

“There are gaps in both the Founder/CEO space and senior roles in Corporate run franchises. As more women-led franchises are started and banks provide better support requirements for funding by reforming scorecards, things are improving. Albeit transitions are happening slowly, things are improving for women entering the franchise space,” Allen says.

Another positive aspect that the FASA report highlights is that franchisees experienced a 20% increase in breaking even within the first year of operation, growing from 69% (2019) to 89% (2023).?

This is a clear sign that a franchise business is a good choice, with few businesses reaching the break-even point and starting the return on investment (ROI) cycle within a year of business. The average accepted time frame for a new business to reach the break-even point is two to three years.?

Women Franchise Opportunities

The findings of the FASA 2023 report say that the average percentage of ownership of franchisees by previously disadvantaged groups improved significantly from 2019, currently sitting at – 48% White ownership, 32% African ownership, 10% Indian ownership and 9% Coloured ownership.?

Though the ownership figures are positive, the report also found that this relates to the ownership of franchise systems, meaning franchisors, and it found that ownership by women in 2023 sadly did not increase and remained at 30%, compared to 2019.?

However, in South Africa, women make up 29.0% of top management, marginally above the global average of 28.7%, according to the Public Investment Corporation's (PIC's) Landscape of women-owned and managed businesses 2023 report.

The PIC report also states South Africa ranks 8th globally with regard to women's board composition. Women average 31.8% of the board composition of listed companies in the country.

Countries with the highest proportion of women running businesses with 20+ employees included South Africa, according to the Global Entrepreneurship Monitor (GEM) 2021/2022 Women's Entrepreneurship 2021/2022 report.

Allen remains positive and believes that if more women enter the space as franchisees, combined with their entrepreneurial spirits and increased board participation, they will transform these numbers positively.

“Mentorship opportunities are important but most important, I believe, is that representation matters. Once relatable, successful examples are in place – the face of anything changes, as does the art of the possible. Just look at Simone Biles or the Willams sisters – they completely reshaped who people see when they think of women in sports. Business is no different,” Allen explains.

“With women's core focus on empowering teams and talent, flexible working conditions and the benefit of work-life balance, and usually in the minority within senior positions, their inclusion almost always increases diversity. There is a proven researched positive correlation between diversity and innovation, and again between innovation and sustainability. The perfect Trifecta!,” she expresses.

Allen further believes that women will be successful in franchises if they have an interest in the sector their franchise participates in, and some business acumen.?

She however clarifies this and says: “By business acumen, I don't mean finance skills alone, but also possessing business development and team leadership skills, and the ability to focus on the right things while juggling many things. Having the confidence to outsource things that matter, that aren't your skill set, to ensure the best possible results is paramount.”

She further adds: “We live in time-scarce times and all services that allow for more productive and effective use of time are critical for women and often driven by them.”

What The Future Holds

Funding and capital investments for women to pour into franchises are still challenging, the GEM 2021/22 report found that women in South Africa spend 2.5 times that of men on entrepreneurial investments.

As reflected in the FASA report, most franchisees were buoyant about the future of their businesses, with 88% expecting to see growth in the coming year, compared to 78% in 2019.??

Franchisees in the childcare, education and training space were especially optimistic about future growth with 94% responding positively.?

Lucette Kanyama, Club Engage Franchisee at Pinnacle College, Johannesburg, says: “As this franchise is about helping families in a school community, the people and stakeholders are more keen to listen, because they believe as a woman, your maternal instincts will influence the running of your business positively.”

However, she also notes that a unique challenge she experienced being a woman in this business was that: “Parents wanted to emphasise that because I am a woman, I will agree to offer services with no payment.”

Some misguided perceptions that affect women in business remain, but women deal with these professionally, with support and guidance from others and through a positive entrepreneurial approach.

This is supported by Sasha-Lee de Bod Smith, director at Franchising Plus, who says: “Franchising is all about adaptability, and good franchisors will always not only bounce back but will kick in that entrepreneurial flair that got them started in the first place.”?

Franchising is becoming a viable option, offering proven models, brand recognition and a lower-risk investment. Moreover, women entrepreneurs in South Africa are breaking barriers and setting new standards across different sectors. Their leadership is not only fostering a culture of empowerment but also driving substantial economic contributions.

Many organisations support the growth of women-owned/led businesses and, like PIC, intend to increase funding towards women-owned businesses and drive greater women's inclusion at the executive and board levels.?

Reports indicate that women lead about a quarter of all businesses in Africa underscoring their vital role in the entrepreneurial landscape.