South Africa - International Franchise Association

Department of Trade and Industry. It is important for a U.S. exporter to maintain close
contact with the local agent to track changes in importing procedures and to ensure that
the agent is effectively representing the sales interest of the exporter.
Typical commission rates for agents (also known as a Commission Sales
Representative, or CSR) in South Africa depend upon the contract concluded and upon
the CSR's responsibility. These rates can range from 3 to 25 percent commission per
concluded transaction. Companies sometimes pay a retainer fee plus costs plus an
incentive scale on deals.
Distributors who buy for their own account and carry a wide range of spare parts often
handle capital equipment and commodities such as chemicals, pharmaceuticals, and
brand new products on an exclusive basis. Leading distributors often have branches
throughout South Africa and sell to both wholesalers and retailers.
When appointing a South African distributor, U.S. exporters should take care to find out
if the distributor handles a competing product. In some instances, major South African
corporations whose holding companies market products competing directly with
American products have approached some U.S. exporters.
In South Africa's competitive marketplace, it is essential that the U.S. exporter provide
adequate servicing, spare parts, and components, as well as qualified personnel
capable of handling service inquiries. In most cases, after-sales service should be
available locally since potential delays often lead purchasers to seek alternative
suppliers.
The U.S. Commercial Service has found that the most successful ventures entered into
by U.S. companies have been preceded by thorough market research. This is an
important first step before engaging in a search for agents or distributors. Once contacts
are established, U.S. companies should visit South Africa since first-hand knowledge of
the market and society is an advantage. Such a visit provides an opportunity for a
personal appraisal of the prospective agent or distributor. U.S. exporters should
carefully investigate the reputation and financial references of a potential agent or
distributor and establish a clear agreement delineating the responsibilities of both the
exporter and the agent.
The Commercial Service (CS) in South Africa offers a number of business facilitation
services, including market research, appointment-setting, and background checks on
potential business partners. For a full list of the services offered, please visit:
http://export.gov/southafrica/index.asp
In 2011, CS South Africa took on the coordination of market research and business
facilitation in several sub-Saharan African states. These include:
Angola
Benin
Botswana
Burkina Faso
Cameroon
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