A lively small business sector is regarded as a prerequisite for fast growth and economic development in South Africa. The South African government has identified three strategic priorities as integral to its broad-based socio-economic development plan, namely, developing skills, encouraging small business enterprises and creating employment. Statistics have already shown that the franchising sector contributes to the fulfilment of these three strategic priorities. Government has already put some principles in place to increase the communication as well as some strategies to improve support to the small business sector. Several studies have already been undertaken to determine reasons for the failures of small business enterprises. Amongst the most important reasons pointed out are the lack of managerial capabilities such as planning and decision-making and the experience of the entrepreneur. Furthermore, the sector encounters problems with financing accessibility for potential entrepreneurs. A kind of enterprise containing some of the elements to address the above-mentioned deficiencies is the franchise enterprise. Connoisseurs regard franchising as a good option for South Africa in order to create work and establish new enterprises. It can result in the creation of work opportunities, which in turn can contribute to growth of the economy. Entrepreneurs can enter the market with an established plan and with the necessary guidelines provided by the franchisor. This study concentrates on the benefits of the franchise concept and the potential problems that can be solved if the concept is understood well. The problems of the potential franchisee are highlighted and suggestions on how the franchising concept can assist the potential franchisee in the application for financing are provided. There are clear indications in the study of the factors that influence the value of a franchise and how this can reduce the risk for the supplier of the finance. The population's analytical units are the banks and other financial institutions in South Africa involved in supplying financing to franchises. Only the head offices of the different institutions where policy is formulated are part of the population. A random sample was not taken, but a sub-population was isolated by means of purposeful selection. The other institutions included in the study population are, on the basis of their involvement in financing of SMEs, for example, Business Partners and the Industrial Development Corporation. Personal visits were paid to the 10 financial institutions. At each financial institution a personal interview was conducted with the appropriate person responsible for making financing available to small and medium sized enterprises in particular. The focus of the questions was to determine whether the franchise concept held any advantages as seen from a financing point of view. The purpose was to ascertain what the financial institution would be looking for in order to make a value assessment. The all-inclusive package and the assistance received by the franchisee offer definite advantages to the financing application. As a result of the study the critical factors to evaluate a franchise could be to differentiate between measurable factors and non-measurable factors. The non-measurable factors that give an indication of the value of the franchise concept include the following: the value of the already established trademark, the reputation of the franchisor, the quality of the training given by the franchisor, the quality of the assistance with marketing and the contractual agreement between the franchisee and the franchisor. Directly measurable aspects which may give an indication of the franchisor's value are: the franchisor's period already in the business, the number of market outlets successfully operated by the franchisor and the market share of the franchisor [ABSTRACT FROM AUTHOR]