Opportunities aplenty in franchise space - not for sissies
Could franchising be the next big push to lift our ailing economy? Statistics show buying into a franchise is increasingly becoming a lucrative investment for many of the previously marginalised.
It is also a huge job creator, with each new franchise employing on average 18 people at a time.
According to the Franchise Association of South Africa, 30% of franchises are owned by previously disadvantaged individuals, with one in three businesses having a turn-over of more than R20m.
According to Michael Vacy-Lyle, chief executive of FNB Business, there are now many opportunities available outside the traditional franchisor-franchisee model.
He lists the increase in popularity of service stations as a new frontier in franchising as the food court loses its legacy as the preferred setting for franchises.
According to Vacy-Lyle, many brands, including Steers, Debonairs and Mugg & Bean On-the-Go outlets, are co-locating with major fuel retailers to create fully-integrated accessible centres.
"Looking at new, less expensive alternate locations beyond the shopping malls and strip malls, to expand into stand-alone kiosks, food trucks, corporate catering, campuses, sporting events, craft markets, is a major trend," he says.
Vacy-Lyle says consumers are also increasingly preferring local businesses over national brands.
"Some of the bigger brands are more and more looking for creative ways to tackle this situation by tagging with local businesses."
Niche markets are also gaining traction, he says, whether in offering a unique gourmet food experience, craft beer or whether it's in the environmental space of energy saving technology or recycling.
These are where you can find many new opportunities.
"With the increase in social awareness, social responsibility is a part of any business, small or big.
The current generation of consumer is challenging the role of business in society and franchises have wonderful platforms to play a positive role and win customers."
Then there is an opportunity for tailor-made products and services.
Opportunities aside, being a franchise owner is not easy. You may be buying into a tried and tested name, but to be successful takes more than skill - it requires attitude, risk-taking, dedication and hard work.
Of course, the advantages of acquiring the rights to an established brand are that you will not only benefit from a reputable brand, but also years invested in developing the product and services, customer loyalty, the company's public image and of course, parent marketing support.
But for a franchise owner, much like any other entrepreneur, it's the time and energy you put in that will yield results.
Choosing the right industry for you, sourcing funding, hiring the right people, and finding the right training for yourself and your staff are but a few ingredients in the recipe to success.
Building on success
Once in the franchise space and producing results, you may want to expand. Vacy-Lyle highlights a new trend for growth - more multi-unit owners, and owning multiple concepts.
He says the next step is to think beyond mastering the tried and true formula franchises have designed for their franchisees.
"If you're like many franchise owners, you start opening another location. And then another. By recreating your success in multiple locations, you can quickly grow your revenues and increase your business' sustainability."
Another step on your growth ladder should be diversification. Vacy-Lyle says many franchisees are also opening other, non-competing franchise offerings as they grow their businesses to diversify earnings.
Pointing to on-demand products and services, which include same-day delivery in the age of instant gratification, he says. "Differentiation through delivery remains a big opportunity".
Another trend is new franchise owners preferring to run smaller and more cost-effective models.
So, big or small, are you ready to take the dive? Then start by doing the homework!