24 Feb 2014

Parliament has been informed that it is the prerogative of the business to become a master franchise and sell the production rights to the franchisees. 

This was said by Assistant Minister of Trade and Industry, Mr Keletso Rakhudu when answering a question in Parliament on February 20.

Mr Rakhudu said in master franchising, the owner of the brand contractually allowed enterprises to produce, distribute or provide a service in compliance with the prescribed specifications, adding that it was purely a business strategy.

He said in master franchising, there was a possibility of monopoly to be created if there were no competing master franchisees or if the existing franchisee conducted its businesses in such a way as to block new entrants in the market.

“When there is evidence that the franchise owner discriminates against franchisee applicants, or when the existing franchise agreement blocks new entrants in the market, then the Competition Authority will make an enquiry,” he said.

Mr Rakhudu told the house that the concept of master franchising was an international practice and was prevalent in many countries around the world.

He noted that franchising was allowed under the international Competition Laws and even under the Botswana Competition Law. The assistant minister stated that the Competition Authority was in the process of completing a country – wide study of the retail sector, including the holding of franchises and their effect on competition.

Member of Parliament for Shoshong, Mr Phillip Makgalemele had asked the minister to state if the concept of master franchise as practiced by most franchise owners in Botswana is not anti – competition and could lead to monopoly.

The minister was also to elaborate on international practice and whether the Competition Authority has ever undertaken any proactive investigations on this matter or handled any complaints from businesses. If so, Mr Makgalemele also wanted to know the outcome of the investigations. Ends