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How To Find The Right Franchise Fit In Tough Economic Times

Franchising is a resilient sector, but you should still consider the risks, says Dumsani Bengu, head of Franchise Africa at Barclays Africa


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The franchising industry has proven in many countries to be resilient even in the face of extensive macroeconomic difficulties, says Dumisani Bengu, Head: Franchise Africa at Barclays Africa, making reference to South Africa’s economy seeing consecutive negative growth that has placed it in the grips of a technical recession. 

"This is borne out by the fact that the sector - which grew by 10 percent even at the height of the global financial crisis in 2008 and 2009 - has continued to grow every year. Year-to-date, Absa’s franchise book has shown 15 percent growth on loans over the same period last year. This illustrates a remarkably healthy appetite for franchising and pursuing opportunities in the various industries that comprise the overall sector. 

However, even with a positive forecast, the industry is at the mercy of an increasingly competitive business landscape, he adds.  

Bengu gives his 7 tips for rookie franchisees to find a gap in the market, despite economic challenges. 

1. Find The Balance Between Value And Good Quality:  Those looking to enter the franchising sector need to find the sweet spot between value, quality and price – particularly in the cost-sensitive retail and Quick Service Restaurant (QSR) spaces.

2. Take Into Account The Entire Franchising Value Chain: A franchise with a robust brand reputation, integrity and equity that is able to excite customers is a must.

But so is an agreement between franchisors and franchisees that is fair, sustainable and protects the rights of both parties. Franchising is a codified business, so potential franchisees need to ensure that there is a comprehensive and elaborate franchising manual in place. 

3. Consider The Operations Process: Interested parties should look at the quality and consistency of training programmes in order to ensure that they are able to stay at the forefront of their chosen industry. 

4. Don’t Forget The Importance Of Sales And Marketing: A strong sales and marketing strategy is priceless, so it is critical to make sure upfront that the sales and marketing strategy is strong.

5. Look To Implement A Service Model That Is Robust And Places Customers At Its Heart: High-intensity strategies that enhance service delivery are the markers of successful franchises. Anyone looking to make the move into any sphere of the franchising world needs to make sure that they place efficient service delivery on top of their list of priorities.

6. Prioritise A Streamlined Supply Chain: A well-run franchise relies on bulk buying, centralised distribution and well-organised logistics systems. If a franchisee is able to tick those boxes, they will benefit from an efficient supply chain and it will be that much easier to focus on guaranteeing customer satisfaction.

7. Make Sure That You Are Following A Passion: Even with the extra layer of protection that comes from buying into a trusted brand, opening a franchise takes a lot of hard work, time and commitment. So it makes sense to choose a field that there is some connection with and passion for in order to make the inevitable sacrifices that come with starting a business worthwhile.

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