Franchise law a necessity – say experts


Jeremiah Ndjoze

The need for the enactment of laws pertaining to franchising in Namibia is fast becoming a dire necessity.

This, according to the Deputy Permanent Secretary at the Ministry of Trade, Industrialisation and SME Development, Dr Michael Humavindu.

In an exclusive interview with this writer, Humavindu did not mince words when he stressed that the enactment of a franchise law in Namibia is “as important today, as it was yesterday”.

Humavindu maintained that such a law would go a long way in ensuring that previously disadvantaged Namibians get a fair chance and yield the economic spin-offs that come with being a franchisee of a reputable brand.

“Previously disadvantaged Namibians are still unable to penetrate the franchise market because of fixed limitations and the lack of laws to penetrate such hindrances,” Humavindu said.

Humavindu maintained that there is a need for the country to come up with a national policy that says “all master franchises should be advertised publicly.”

This, he said, would curb the prevalence of an anomaly where master licence franchisors from headquarter businesses are allowed to grant licences to others within a geographical area such as Namibia, as such, restricting others from getting licences to sell a competing product.

Humavindu’s observation is corroborated by the former CEO of the Namibian Competition Commission (NaCC), Mihe Gaomab II, who writes in one of the Commission’s newsletters that the aforementioned drawback is worsened by the fact that franshisors are not required by law to register for approval of their licences from the Ministry of Trade, Industrialisation and SME Development.

Gaomab goes on to reveal the empirical that master franchisors often have an incentive to decrease product competition among franchised locations, because decreasing competition allows them to extract greater fees from franchisees.

“This deprives consumers from enjoying greater product or service choice and competitive pricing on such products and services within a geographical area,” Gaomab maintained.

Gaomab revealed that the NaCC, in its capacity as a competition advisor to the Ministry of Trade, Industrialisation and SME Development, has submitted, as directed by the ministry, a study that would serve as input to the drafting of a franchising law in Namibia, which is currently not in place.

Said Gaomab: “It is the considered view of the Commission that such a law, once effected, would be useful to level the playing field between franchisors and franchisees in terms of, and in accordance with the proper ministerial authority to licensing and registration, which would allow enterprises to operate legally, justly and fairly within the confines of the franchising and competition laws towards greater enterprise development in Namibia.”

In the newsletter, the former CEO confirmed his awareness of franchisors in Namibia who are restricting other Namibians from taking part in franchising activities within the country. He maintained that such conduct is viewed with concern by the powers that be as it restricts facilitation of new firms, companies or business for products and services that should be available as a wider choice for consumers, as such standing in the way of the socio-economic development of the country and particularly the small and medium enterprise sector.


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