The first two calendar months of 2007 are history. During these two months I enjoyed the privilege of meeting many AÏDA franchise owners and managers from KwaZulu Natal, Limpopo, Mpumalanga, the Northern Cape and the Free State.

If everything goes according to plan, I will have met most of the franchise owners from the remaining provinces before the end of February 2007.

For some of our partners January was a quiet month as far as their businesses were concerned, while others simply pushed forward as if they were totally unaware of the reports on slower year-on-year house price growth figures, looming interest rate hikes, upward pressures on the inflation rate, new credit legislation and other “influences on our business”.

One has to take cognisance of all factors that could have an impact on one’s business and one should ensure that one is in proper compliance, well prepared and one step ahead of the rest, but one should be careful not to look at the perceived negativities too intently. We shall try our very best to assist our business partners through these and other issues.

If one wanted to get depressed, one could ponder on some economic reviews extensively: for example that in nominal terms, house prices increased by only 15,2% during 2006. That was far worse than the 22,7% recorded during 2005, not to mention the 32,2% recorded during 2004.

However, have you considered the performance of your retirement annuity and endowment policies lately? How did Government bonds, equities and other asset classes perform over the past three years? Let us not probe into that any further…

Are all the current economic forecasts negative for the property industry? No, it needs to be noted that there are already forecasts of lower interest levels for 2008. These forecasts are indicative of an improved house price growth rate, and therefore an excellent 2008 to 2009.

And, regardless of all these forecasts and projections, it needs to be noted that property sales will continue as some consumers will experience financial pressures, forcing them to scale down, while others will have the desire and the ability to improve their lifestyles.

A simple word of advice to our business partners is to never stop striving. One should adopt an attitude of treating challenges as opportunities every day, and one should follow the proven AÏDA system of converting leads into successful sales.

I’ll sign off by quoting Martin Luther King, Jr.: “The ultimate measure of a man is not where he stands in moments of comfort, but where he stands at times of challenge and controversy.”

When a contract for the sale of immovable property is concluded between seller and buyer and the sale is conditional upon the buyer obtaining a home loan for the full price by a certain date, this condition must be fulfilled within the said period. The courts have consistently held that:

subject-to-bond clauses were for the buyer’s benefit only, and hence capable of being unilaterally waived by him;
the fact that such a clause contained or was coupled with a cut-off date for fulfillment did not mean that it was no longer for the exclusive benefit of the buyer and that it could therefore not be waived by him;
this did not mean that a buyer was entitled to waive the clause after the cut-off date: it was not clear how a purchaser could unilaterally waive a clause of a lapsed agreement and by doing so breathe new life into a defunct agreement.

What this means is that the buyer can unilaterally waived the clause before the cut-off date, but then he is not entitled to waive the clause, after the cut-off date. He also cannot unilaterally waive a clause of a lapsed agreement and by doing so breathe new life into that agreement.

The buyer includes this condition, to protect himself in the event that the necessary finance is not obtained, in which instance he generally can merely “walk away” without any real consequences to himself.

The contract in such event remains conditional and will only become unconditional:

once all the suspensive condi tions have become fulfilled; alternatively
once any suspensive condition/s for the exclusive benefit of either party has been waived by that party, and in the event where it is coupled with a cut-off date for fulfillment, before such cut-off date.

Theart Mey & Ramabulana Inc.
Telephone: (011) 476 9642 • E-mail: natanyab@theartmey.co.za

The 2007 rugby season in South Africa started on 2 February with the onset of the Super 14 competition. Bob Skinstad is back for the Sharks, while Schalk Burger is back in shape for the Stormers. The Cats probably hope that playing under the Lions brand will change their luck for the better, whilst the Bulls settled unfinished business with the Cheetahs at Loftus Versveld.

TV shows (both local & international), theatre, cricket, soccer, golf,etc, there will be more than enough in SA to draw the nations’ attention away from crime & corruption, the terrible health system, and much more that would drive a “normal” democratic government to tears.

Part of the “entertainment”, on the other hand, might just end up coming from the government – or at least the governing alliance – themselves. That’s if one look at the terrible infighting between ANC members, and also between the ANC and its Cosatu and SACP partners.

Halfway through January 2006 the JSE All Share Index was racing at around 18500, almost 50% better than a year before. As I’m writing this analysis, the index stands at 25150 points – around 6650 points, or another 36%, higher! The prime lending rate at that stage of 2006 was 10,5%, only 0,5% down from a year before. During 2006 inflation jitters pushed the Reserve Bank to increase prime rates to 12,5%, with the possibility of more increases in 2007. The price of gold was standing at $405 per ounce in January 2005, jumped by 35% to $545 in January 2006 and went all the way past $700 - prices last seen more than 30 years ago - before coming to float at around $620 in the first month of 2007.

Interest Rates

Economists are currently forecasting a further increase of at least 0,5% in the repo rate. Interest rates in SA are mainly managed on the movement in inflation rates, and a drop in these remains a prospect based on the retreat in oil prices. However, should the current growth in consumer credit uptake in SA continue throughout 2007, a further interest rate increase remains a definite possibility.

Exchange Rates

One has to admit that we’re only a few weeks into the new year, but to date the Rand has been one of the world’s most volatile currencies. Starting at R6.90 to the US$ in January, the Rand weakened to the point of R7.38/US$ during the second week. It traced its way back to R7,15/US$ at the time of writing. This purports to a weakening of 7%, and then an improvement of almost 4%.

In my analysis of February 2006 I wrote about the difference between the repo rate of SA and the Federal Reserve (Fed) rates in the US, or “carry”, and that the theoretical impact of a further decrease in the carry could result in a devaluation of the rand “at a rate nearer to R7/$1”. This devaluation eventually occurred toward the end of last year, but I’ll be the first to admit that it happened more due to a combination of situations than the theory explained back then.

However the carry between the Fed Rate and our repo rate is back to almost what it was in early 2006 and should the Federal Reserve decide to lower its rates, and the SARB continue to increase SA rates, the effect could be a strengthening of the rand against the US$ later in 2007.

Property Values

Property values remain stagnant over a bigger and bigger spectrum, with the only real growth being experienced at the entry level properties. This is becoming ever more visible, as reports from the real estate industry are showing that buyers are much harder to find than 12 months ago.
The rental market is also in the middle of a makeover, as many lifelong tenants over the past three years became homeowners due to the ease with which bonds could be obtained. The “new generation” of tenants have a much bigger portfolio from which to rent, and the offering at prices similar to three years ago is much better. In many instances it even makes much more sense to rent than to own. Property economist
Erwin Rode, of Rode & Associates, said it was gratifying to see more players in the residential property market taking an interest in the rental segment. SA, having historically been an owner-occupier market, might possibly in future years see the rental market grow as residential prices become prohibitive, especially for new entrants.
Meanwhile Francois Viruly of Viruly Consulting predictes: “We will see a tightening of the rental market, with rentals rising by well above the inflation rate and probably touching the 15%-20% level”.

Summary

In his 1st century satire Juvenal arrives at the conclusion that if you must pray for something then it should be "mens sana in corpore sano" - a healthy mind in a healthy body. 2000 years after the writing of this piece of poetry, the message remains as true as ever. If a nation continues to live on what the government has to offer - panem et circenses – then people will never achieve mens sana in corpore sano.

Enjoy the “entertainment” on offer, and accept that the government might well become part of the circus. Just be sure that you don’t get so caught up in the little that our leaders have on offer at the moment, that you never enjoy a healthy mind in a healthy body.

My recent visits to the Western Cape and the Garden Route once again made me realise how important the business relationship between the franchisee and franchisor is – as is the relationship among the various franchisees.

All parties in a franchised environment have to benefit from a synergistic business relationship before they can achieve long-term success. It is evident that the franchisor cannot be successful unless there are successful franchisees. The franchisor thus needs to ensure that it offers a successful business model, proper training, sufficient support, effective brand positioning, marketing assistance – in short, everything franchisees require from the franchisor.

But at the same time, it cannot be a cannibalistic relationship. Franchisees themselves need to make a contribution. The relationship between franchisee and franchisor is very similar to the relationship between husband and wife. Each has a different background, interpretations, emotions, and experiences, but they share a common goal and a common interest. They have an interdependent relationship under the roof of one trademark and one corporate identity.

This special relationship is open to attack from third parties and could also be subject to other influences such as cash flow constraints, unrealistic expectations, miscommunications, or poor timing. It reminds me of an old saying: “Women have their faults, men have only two: Everything they say and everything they do.”

However, it follows naturally that more harmony and more mutual benefit will accrue once there is understanding, appreciation, transparency, and security.

As you might have heard, we here at Aïda National Franchises revisited our delivery mechanisms and our entire support structure at a recent two-day strategic planning session. As a result, we are now busy implementing a few changes to meet not only our franchise network’s immediate requirements, but also their requirements in the medium to long term.

It will take us a while, but we are putting together a business team that will not only subscribe to a new Code of Conduct, but that will also approach various aspects of our business from a fresh perspective. The team will address challenges such as improving our marketing, branding, advertising, new business development, client retention, management information, estate agent training, practical coaching and other elements of our support services. Our challenge is to retain the good and to improve on the not so good…

I’ll sign off now by quoting Thomas Paine:

“Bring me men to match my mountains, Bring me men to match my plains. Men with empires in their purpose and new eras in their brains.”