Quick take
- Competition Commission stories should be treated as decision prompts, not proof that an opportunity is right for every buyer.
- Check the source date, commercial context and assumptions before acting on this regulatory signal.
Franchise King articles are editorial information and AI-assisted franchise intelligence, not professional advice. Use them as a starting point for your own due diligence.
The South African Competition Commission has taken a significant step that could reshape the franchise landscape. On 26 June 2026, it published draft terms of reference for a proposed market inquiry into franchise markets, acting under section 43B(1)(a) of the Competition Act 89 of 1998. Franchise King is watching this closely because a market inquiry has the power to recommend structural remedies, code of conduct changes, or even legislative amendments. For everyone in the franchise ecosystem – from buyers to suppliers – this is a signal that regulatory scrutiny is intensifying.
Why Franchise King is watching this
The Commission says it has reason to believe that features of the franchise market may impede, distort or restrict competition. That is a broad net. Potential areas of concern could include exclusive supplier arrangements, territorial restrictions, opaque disclosure practices, or imbalance of power between franchisors and franchisees. The draft terms of reference are not yet public in full, but the mere announcement raises the stakes for due diligence and contract review.
Buyer impact
For franchise buyers and existing franchisees, this inquiry could be a double-edged sword. On one hand, it may lead to greater transparency and fairer terms. On the other, it could create uncertainty around ongoing franchise agreements and supplier obligations. Buyers evaluating a franchise now should factor in the possibility that the regulatory environment may shift within the next 12 to 24 months. Funding decisions may also be affected if lenders perceive higher risk.
Franchisor impact
Franchisors should prepare for deeper scrutiny of their franchise agreements, supply chain arrangements, and market conduct. The inquiry may examine whether franchisors impose anti-competitive restraints on franchisees, such as tied purchasing or restrictive exit clauses. Franchisors with strong, pro-competitive practices may weather the inquiry well, but those with aggressive territorial or supplier exclusivity clauses should review their legal exposure. The Commission’s final terms of reference will clarify the scope.
What to watch
- The final terms of reference after public comment – likely to be published in the coming months as at 2026-07-03.
- Which franchise sectors are specifically targeted – quick service, retail, or services? The draft terms may signal sector focus.
- Whether the inquiry leads to a code of conduct or mandatory changes to franchise agreements.
- The timeline for hearings and submissions – franchise systems will need to allocate resources for compliance.
Questions buyers should ask
- How might this inquiry affect the franchise agreement I am about to sign? Are there clauses that could be challenged?
- Does the franchisor have a history of complaints regarding supplier lock-in or unfair restrictions?
- What is the franchisor’s legal team doing to prepare for the inquiry?
- How would a change in regulations affect the profitability of the unit I am buying?
Franchise King take
This inquiry is a wake-up call. Franchisors can no longer rely on the assumption that their business model is beyond regulatory reach. The Commission is signalling that franchise markets will be held to the same competition standards as other sectors. Franchise buyers should treat this as a reason to insist on clear, competitive terms. Franchisors that proactively review their agreements and supply chain practices will be better positioned to respond. The franchise sector’s growth depends on trust and fairness – this inquiry could accelerate both.
Why it matters
This matters because competition commission signals can affect how buyers judge capital requirements, operator support, timing and risk before they shortlist a franchise opportunity.
Who is affected
Opportunity and risk
Medium attention required. This rating is editorial guidance for further investigation, not financial advice.
Related sectors
Sources
- BizCommunity bizcommunity.com
Use this article as a starting point for your own due diligence. Franchise King content is editorial and AI-assisted; it is not professional advice or a guarantee of accuracy, outcome or suitability. Read the full disclaimer and AI content policy.
