Franchises under probe

The Namibian Competition Commission (NaCC) has launched an inquiry into the Franchise industry to uncover growth and development prospects, empowerment and competition concerns that may be present in the sector.
The Villager has learnt that the inquiry is aimed at developing a Sector Development Policy Paper for the Franchise sector to ensure that appropriate regulatory approach and reforms are considered for it. Confirming the inquiry is NaCC’s Director of Economics & Sector Research Dr. Michael Humavindu said they have already started the inquiry and they are doing first stage data-collection to build the policy proposals for the sector. Dr. Hamavindu highlighted the importance of the inquiry saying the current franchise industry is preventing indigenous Namibians from owning similar businesses.
“The Franchise sector is a major component of the overall Service Sector in the economy. It provides a viable avenue for empowerment, skills development and transfer and SME growth and development. “However the current situation has various constraints that hampers the country’s ability to optimise on these benefits. For example, the issue of access to master franchises hampers indigenous Namibians to have full ownership of such business opportunities. We need to interrogate these various constraints and proffer possible policy solutions that the government could consider adopting,” he said.
 He said the Commission aims to develop a policy document that could be considered for overall national policy framework for the franchise sector.
“Given the current institutional rigidities and opacity surrounding the operations of the sector whilst the possible benefits for Namibians are so apparent, the Commission is optimistic that the work could help advanced the right reforms for the sector,” he said.
 He added that, “Since the sector is marred by data opacity, the public is welcomed to approach the NaCC with further insights or data where feasible as to the workings of the industry. The Economics and Sector Research Division in the Commission is the focal point for the work”.
 The inquiry is supported by the Ministry of Trade and Dr Humavindu confirmed that the Commission has received some financial resources to complete the work. The Minister of Trade and Industry, Calle Schlettwein said the purpose of the inquiry is to find out unwanted practices in the franchising industry.
“We give a lot of support to NaCC because they are under the Ministry we also fund them and with this inquiry we just want to make sure that the franchises are not introducing the element or prices that are harmful to the public. Franchise is a big business and we have many in Namibia that’s why we are looking into the business of creating a legal framework for franchises.
NaCC will use this inquiry to decide whether to come up with a legal framework or not. As the Ministry we are confident that NaCC will do a great job because they have reasonable capacity to do investigation. Obviously we are going to consult businesses and we have umbrella bodies that we are working with such as Namibia Chamber of Commerce & Industry, Namibian Manufacturers Association (NMA), Team Namibia among others,” he said.
Dr Humavindu said Franchisees, like any other undertakings are expected to comply with Part 1 and 2 of Chapter 3 of the Competition Act, unless exempted in accordance with the provision of Part 3 of that same Chapter of the Act.  “Undertakings are expected not to contravene the law by engaging in anti-competitive conducts. Should information of anticompetitive conduct come to the NaCC’s attention, involved parties will be investigated and sanctioned in accordance with the Act,” he said.
He added that, “Generally any conduct that restricts competition in any market is prohibited. In order for the NaCC to be able to tell whether the alleged conduct is acceptable or not, an investigation has to be carried out to ascertain the object or effect the alleged clause has on any market”.
Apart from the inquiry The Villager also learnt that the Commission is also part of the team spearheaded by the Namibia Trade Forum, which is tasked to develop a Retail Charter for Namibia, one of the objectives being the Support of local sourcing and assistance with the promotion, marketing and distribution of Namibian produce and manufactured goods; support for domestic value chain and supplier development support for regional value chain development.