Competition Commission to examine competition dynamics in franchising sector
On 26 June 2026, the Competition Commission published draft Terms of Reference for a proposed market inquiry into South Africa’s franchising sector. The market inquiry is initiated because the Commission believes that features in the industry may impede, distort or restrict competition in the South African franchise industry.
The proposed inquiry matters because franchising is a significant part of the South African economy, contributing an estimated 15% of South Africa’s GDP. With 800 franchisor brands, 30,000 franchise outlets, and an estimated 500,000 employees, the impact of the inquiry cannot be overstated.
At the heart of the inquiry is whether franchising is fulfilling its potential as a route into the formal economy for small and medium-sized enterprises and historically disadvantaged persons.
The draft Terms of Reference identify three broad areas of focus. First, the Commission will examine finance and funding requirements, including whether upfront capital contributions and franchise finance criteria create barriers to entry for SMEs and HDP-owned businesses. Secondly, it will assess franchise agreement terms and related business practices, including restrictive supply arrangements, rebates and discounts, pricing and promotional requirements, and royalty or franchise fee arrangements. Thirdly, it will consider whether information asymmetries affect prospective franchisees’ ability to make informed investment decisions.
For franchisors, franchisees, suppliers, financiers, industry bodies and investors, this is an important opportunity to engage early and help to shape the Commission’s understanding of the sector. Stakeholders should consider now whether their franchise agreements, funding models, supply arrangements, pricing practices, disclosure documents and operational controls may become relevant to the inquiry.
Interested parties have until 7 August 2026 to comment on the draft Terms of Reference. The final Terms of Reference will then be published, and the inquiry will commence 20 days after publication, with the final report to be completed within 18 months.
Our Competition Law team is available to assist interested parties with commenting on the Terms of Reference, preparing submissions, assessing competition-law risks, reviewing franchise arrangements and engaging with the Commission throughout the inquiry process.
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