Franchising in Africa as a whole has a long way to go to becoming a primary business format but South Africa has enjoyed franchise success since the early 1960’s and leads the way in franchise development in Africa.

South Africa’s population of around 55 million people offers diverse opportunities for companies wishing to establish themselves in the country. Although the majority of the population fall into the lower end of the earning bracket, there is a growing middle class and, whilst luxury products cater to a more exclusive market segment, products and services appealing to the middle market are gaining popularity. There is room for growth for lower entry franchise opportunities especially in the services and recycling categories with social and tandem franchising a welcome solution to some of the country’s service delivery challenges.

Africa – the New Frontier

Often seen as the ‘poor cousin’ to the rest of the world, the numbers paint a different picture for the rest of Africa. According to the African Development Bank, GDP growth for the African continent is forecast to accelerate to 4% in 2019, up from an estimated 3.5% in 2018, making it the fastest-growing region in the world after Asia. And that’s despite Nigeria and South Africa, which make up almost half of the continent’s GDP, pulling down Africa’s average growth. While the powerhouses in western and southern Africa struggle to show meaningful growth, the continent’s economic growth will be driven by East Africa, which will be the fastest-expanding region for the 5th straight year.
As franchising becomes saturated in developed countries, emerging markets like the Far East, China, India, South America, Eastern Europe and Africa become fertile grounds for franchising to take root. With Africa’s long-term growth and the help of technology, urbanization and an expanding labour force will see the rise of the middle-class African consumer. According to McKinsey’s research, in 1980, just 28% of Africans lived in cities. Today, 40% of the continent’s one billion people do – a proportion roughly comparable to China’s and larger than India’s; by 2030, that share is projected to rise to 50%, and Africa’s top 18 cities will have a combined spending power of $1.3 trillion.
FASA has spent many years making sure that the international franchise community is cognisant of the potential that lies within South Africa. As the future frontier of franchising, Africa and in particular South Africa needs to stand up and be counted. It is a recognised fact that South Africa is the springboard for potentially explosive growth into Africa and the stark reality is that the broader African economies cannot grow in isolation as the continent’s future is inextricably linked to South Africa and the example it sets. Through the establishment of the Pan African Franchise Federation, FASA plays a guiding role in advising other African countries on the benefits of franchising and has advised countries wanting to establish associations.

Economists agree that if government is to achieve its target of 5 million jobs by 2020 it means that 495 000 new businesses have to be created to provide those 5 million jobs. Franchising has proved that it can fulfill all the criteria for small business expansion and FASA has already initiated a transformation Master Plan project that will encourage entrepreneurship within the emerging sector.

Franchising will continue to play an important role in the economic through its tried and tested business format and FASA, through its commitment to promote franchising in line with government’s mandate to encourage small business development, will continue to safeguard the environment for franchising to flourish.

FNB and Franchising Plus are hosting the 8th Franchise Leadership Summit on 3 March 2020 at Monte Casino Johannesburg. The theme this year is “Agility accelerates growth”. In these times of rapid changes to technology, the competitive environment and consumer demand patterns, agile organisations continue to grow and thrive. What does it mean to be agile? According to a McKinsey Global Survey, it’s the ability to quickly reconfigure strategy, structure, processes, people, and technology toward value-creating and value-protecting opportunities.

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The customer experience is not to be confused with customer service. Customer service is what we do and customer experience is the sum of multiple touch points which result in how we make the customer ‘feel’.

We are living in an era where the customer experience plays a significant role in the success of a brand/business. It is now a topic of discussion in many boardrooms and has become a strategic measure of most business plans. If not, it should be!

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There is no question that franchising’s saving grace in a struggling economy is the fact that, by its very nature franchising is entrepreneurial, flexible and forward-thinking. Not only does it continue to be resilient, but it also offers, largely due to its strong business format and support system, a better chance of surviving the ups and downs.

Thinking outside the box and looking for ways and means to cross-promote and reach new markets is a trait that many of FASA’s members do extremely well. They are the ones who find a ‘niche’ that sets them apart or, by default, thrive on the back of challenging conditions.

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The changing face of customers

The days of marketing all things to all people are gone – technology provides statistics to business owners to understand the buying patterns of their customers to be able to customize and personalize products or services to suit every customer. Whilst this provides the perfect e-commerce solution that streamlines the route from production, marketing, data capturing through to payments, it can never replace the personal service that will make the difference at the end of the day.

Whilst consumers have embraced APP technology they still want to feel they are being treated as individuals and given special and personal attention – especially if they encounter problems when things go wrong on the AI automation side.

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US President Barack Obama once said, “Change will not come if we wait for some other person, or if we wait for some other time. We are the ones we’ve been waiting for. We are the change that we seek.”

There has never been a more important time for change. As the world stands on the brink of the 4th Industrial Revolution, we are acutely aware that these changes will impact on the way we live and the way we work; jobs as we know them will become obsolete as robotics and artificial intelligence take over not just the low-paying jobs in production and manufacturing but also the high level jobs like those of lawyers, accountants, doctors and insurers.

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Say hello to Enji

“Who or what is Enji?” you might ask, Enji is a very large and important part of the Corporate Social Investment made by the Signarama Group as we head into 2020 celebrating our 20th Anniversary in Southern Africa. As part of these celebrations, Signarama franchisees elected to donate a portion of our annual CSI budget to the SA Guide Dogs Association. Each year, the Signarama Group elects a suitable beneficiary for our CSI investment for that year and we are proud to say that our initiatives have created a lasting impact on the communities that we serve. Our most recent investment combined the sponsorship of the Association’s annual Golf Day in Cape Town, plus the sponsorship of a Guide Dog from their center in Johannesburg.

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The obsolescence of the middle class never hit home before as much as it did when I read ‘Choose Yourself’ by James Altucher. He describes in his book how robotics and technology are set to take over most of the jobs performed by the middle class and coined the phrase ‘you have been replaced’  by robots – many people just don’t know or realize it yet.

He believes that unemployment should be around 50% as most employable people should be entrepreneurs and/or outsourcing their skills to various clients. Yet in South Africa, many young people are looking for jobs and one wonders what jobs they had in mind. It seems robots over time would take over the performance of most repetitive or mundane tasks – or even highly skilled tasks – like taking over agricultures’ crop production by analyzing, for example, soil for crop optimization. Another example that comes to mind is the surgeon performing precision and detailed procedures that robots can do better than humans.

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As more and more shopping malls and strip malls sprang up around the country, the big supermarkets flexed their corporate muscle by building in exclusivity clauses into their leases which often prevented smaller supermarkets, butchers, bakeries, greengrocers, and delis being part of the tenant mix.

After five years of the Competition Commission’s Grocery Retail Market Inquiry, their final report makes strong recommendations on the food retail industry, including a call for the monopoly leases between landlords and the big supermarket chains to come to an end. The exclusivity lease practice will be phased out as those implicated supermarkets’ existing leases will need to run their course which could take as much as five years.

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When opening a business, it is important to identify factors that make your enterprise unique. These factors can be used to market your business and attract clientele. When opening a Signarama franchise, you have a specific service to offer clients – signage and branding solutions – and you should build your marketing efforts around this.

Investing in a Signarama franchise instead of opening your own signage or printing business permits you to benefit from the brand’s established reputation from the start. A company’s brand and reputation influence potential clients’ purchasing decisions. If a prominent food critic, for example, eats a meal at a restaurant and delivers a bad review, it will indirectly change your opinion of the specific restaurant – sometimes without you even realizing it!

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