New businesses often come with a set of novelty pain points, some which often lead to the premature liquidation of a business, explains Marcel Strauss, Group Chief Operating Officer of The Franchise Co.
“The reality is franchisors have a system in place that has been tested, all the kinks that come with starting from scratch have been ironed out, and the franchisees have immense support from the holding company. These contribute to franchising being very a successful business model in South Africa,” says Strauss.
While announcing the Economic Reconstruction and Recovery Plan, President Cyril Ramaphosa said the era of big corporates creating thousands of jobs had passed. There is a greater move to recognise the need to open opportunities to entrepreneurs.
President Ramaphosa said while 98% of formal businesses are Small Medium to Micro Enterprises (SMMEs), they make up a far smaller contribution to employment and the country’s Gross Domestic Product. To achieve the goal of the National Development Plan for SMMEs to create at least 90% of the targeted 11 million new jobs by 2030, the country needs to pay far closer attention to developing small businesses.
Strauss, echoing the President’s sentiments, says one of franchising’s drawcards is that interested entrepreneurs do not need to be overly qualified to run a franchise. The business comes with a series of experts such as legal; human resource; marketing; training; supply chain; and operations, which franchisees can tap into.
“With franchising, it is not as simple as opening up a store and leaving the operator to the mercy of the market. Franchisors have the collective strength of franchisee numbers which we leverage in acquiring fit-for-purpose equipment, tapping into a reliable supply chains, and often negotiating better lease prices for their stores. Even a newly established shop benefits from the power of The Franchise Co.’s brand,” explains Strauss.
Beyond brand awareness, franchisees have access to an existing loyal customer base without having to face the hurdle of introducing their products to the market or having to change the behaviour of their clients. This guarantees sales and accelerates the growth needed for the long-term success of the business.
Strauss adds that the success of the franchise leans heavily on how well the franchisees perform and to ensure growth for all parties, franchisors must provide valuable oversight of the business. This becomes especially useful when considering how immersed business owners often become in their day-to-operations, leading to tunnel vision and the obfuscation of the bigger picture.
“The same oversight also mitigates exposure to litigious risks, which stand-alone businesses are sometimes not shielded from. It is not easy to pinpoint one objective that has led to the success of The Franchise Co.’s business models. However, being able to simply plug into a well-researched, tested and successful model with access to national marketing and an operational system that is carefully curated to provide consistent quality control and great customer service, are but a few reasons. Not forgetting that franchises also employ about 343,000 people in South Africa, making them a big contributor to the country’s GDP, it is clearly a good business model if entrepreneurs partner with the correct franchisor,” concludes Strauss.
The Franchise Co. offers franchisees an opportunity to invest in the following food brands: Blacksteer, Yummy Fish and Chips ChesaNyama, Mike’s Kitchen, Nyamalicious, Yami Rib & Burger, Yami Pizza, and Zebro’s.
