For the first time, South Africa's competition authorities are putting the franchise model itself under formal scrutiny. The Competition Commission published draft Terms of Reference for a market inquiry into the franchise sector on 26 June. Public comments closed on 7 August. Once the final Terms of Reference are published, the inquiry must begin within 20 days, and it is expected to run about 18 months. (Source: Polity, 1 July 2026.)
Fast food is one of six priority sectors named in the draft. If you operate, franchise or supply in this industry, this process will run in the background of your business for the next year and a half, and its findings will be cited for years after that.
What the inquiry actually covers
The draft Terms of Reference put the everyday machinery of franchising in scope:
- Franchise agreements and their practices: the clauses everyone signs and few negotiate.
- Mandatory procurement: the requirement to buy from approved suppliers, at approved prices.
- Rebate structures: the money that moves between suppliers and franchisors, often invisibly to the franchisee paying the invoice.
- Financing terms and information imbalances: what a prospective franchisee is told, and not told, before signing.
Anyone who has spent time in the operators' forum will recognise this list. It is, almost point for point, the list of things franchisees say they cannot ask about.
Why a market inquiry matters
A market inquiry is not a case against any company. It is a formal investigation into how an entire market works, with the power to compel information, and it typically ends in recommendations that range from voluntary commitments to regulatory change. The practical point for operators: terms that today feel non-negotiable may not stay that way. The practical point for franchisors: the paperwork, the procurement flows and the disclosure practices are about to be examined by someone with subpoena power.
What operators should do now
Nothing here requires panic. It rewards preparation:
- Read your own agreement again. Note every mandatory-procurement obligation and every clause you accepted without negotiation. The inquiry is effectively asking whether these are fair. You should know what yours say.
- Track what you pay against what you could pay. If approved-supplier pricing runs above open-market pricing, document it. That gap is precisely what the inquiry exists to measure.
- Keep records of what you were told before you bought. Disclosure documents, projections, emails. Information imbalance is a named theme.
- Follow the process. Submissions, hearings and interim reports will all be public. We will track every milestone in the Brief.
What franchisors should do now
The forward-thinking response is not legal defensiveness. It is getting ahead: audit agreement templates against the themes in scope, be able to explain every rebate flow, and make disclosure documents genuinely informative. The franchisors who come out of this well will be the ones who can show their model creates value on both sides of the agreement.
The bottom line
Nobody in SA franchising owns this story yet. It will shape the terms of every franchise agreement signed after 2027. Franchise Hub will cover each milestone as it lands (the final Terms of Reference, the start date, the hearings and the findings) in the daily Brief, with deeper analysis here as the picture develops.
This article summarises a regulatory process based on published sources. It is not legal advice. If the inquiry's themes touch your agreement or your network, speak to a competition attorney.
