Warning about crackdown on KFC, Chicken Licken, Pick n Pay, Spur, and Steers in South Africa

The Franchise Association of South Africa (FASA) has expressed concern regarding the scope of an upcoming market inquiry into South Africa’s franchise sector.

FASA is an officially recognised trade association which serves as the representative body for franchisors and franchisees across South Africa.

This comes after the Competition Commission signalled its intention to launch an inquiry into the sector when it published its draft Terms of Reference on 26 June 2026.

The inquiry will seek to determine whether certain market features have worked to impede, distort or restrict competition in South Africa’s franchise sector.

In a statement, Competition Commission spokesperson Siyabulela Makunga described the franchise sector as an integral part of South Africa’s economy.

“It comprises more than 800 franchisor brands, over 3,500 franchisees and more than 30,000 franchise outlets nationwide,” Makunga said.

“The sector contributes an estimated R999 billion in turnover and supports more than 500,000 jobs, making it an important driver of employment, entrepreneurship, and access to goods and services.”

It includes many top South African brands, such as Chicken Licken, KFC, Italtile Retail, Steers, Pick n Pay, Spar, Spur and Sorbet.

The Commission has reportedly received numerous complaints over the years from various stakeholders, raising concerns around certain business practices which they say could hinder competition.

As such, the upcoming market inquiry will involve a general investigation into the mechanisms of competition in the franchise sector, rather than looking at a specific franchise’s conduct.

These will include an analysis of competition dynamics, the impact of franchise agreements and contractual practices, and the function of financing and funding, among others.

In an interview with Newzroom Afrika, FASA CEO Fred Makgato said his organisation had mixed feelings on the inquiry, arguing that the current scope of the investigation was far too broad.

“The Terms of Reference are too wide, and that on its own creates some doubt for us,” Makgato said. “We would like to see more focused, streamlined areas that the Commission could look into.”

“But spreading it too wide, it creates doubt. We are of the view that it may also come to a conclusion on recommendations that may not actually be enforceable.”

FASA calls for reduced scope

The Competition Commission’s market inquiry could bring about substantial change with regard to how businesses are allowed to operate within South Africa’s franchise sector.

However, Makgato said it would be counterintuitive to run through a lengthy inquiry process only to find that many of these changes cannot be effectively implemented.

As such, FASA has recommended that the Commission adjust its scope to ensure a quicker and more enforceable response to the inquiry’s findings.

Makgato also urged the Commission to better engage with key stakeholders in the franchise sector, something he said had not been adequately provided for in the draft Terms of Reference.

He explained that there were already processes in place to address some of the issues raised, such as sector transformation and upscaling of SMMEs to be franchiseable.

However, Makgato said a major issue which had not been included in the scope of the inquiry was that of the franchise sector’s growing skills gap.

To address this gap, Makgato stressed that it was vital to empower new entrepreneurs who are looking to enter the franchise market with the necessary qualifications.

“We have partnered with Services SETA to put in place a franchise managerial professional training module, and with the Department of Small Business Development,” Makgato said.

“We are engaging with the Department of Industry, Trade and Competition insofar as the industry is concerned. Activities are happening, but no one has attempted to source that information from us.”

The Competition Commission has opened its draft Terms of Reference for public comment until 7 August 2026, encouraging key stakeholders to submit responses.

Following the closing of the submission deadline, the Commission will consult the received responses before publishing its finalised Terms of Reference.

Makgato indicated that FASA would actively participate and engage with the inquiry, and said his organisation would provide reliable and accurate information on these issues to the Commission.