What can we learn from international franchises?
The previous FASA survey conducted in 2019 showed that 73% of all franchise systems in SA are home-grown. It’s a remarkable achievement that South African entrepreneurs have created world-class brands targeting our local market with great success. However, there is always an opportunity to learn, and it is interesting to research some trends prevalent internationally.
Mobile franchises
The UK franchise market is particularly fond of mobile franchises, especially in the service industry. This format offers many benefits, including fewer overheads, outdoor marketing through branded vehicles and the opportunity to standardise services that independents traditionally offer with no brand affiliation. Cleaning and other service-based businesses seem to dominate this category. An example is a pet food delivery franchise called Oscar Pet Foods that taps into the growing pet care category and the need for convenient deliveries.
Delivery only franchises
A new trend probably spurred by lockdowns is a delivery only format for food franchises. Similar to the “dark kitchen” trend, this offers the franchisee the opportunity to open an outlet with less cost and overheads while directly focusing on deliveries to the end consumer as its primary market. Chilli Flames is a food franchise in the UK that offers a delivery, express and full restaurant option to potential franchisees.
Smaller units and space optimisation
Kiosk formats are all the rage in the UK franchise market, and a food outlet can be as small as a pastry counter and coffee machine. The economic impact of COVID-19 necessitates the re-evaluation of formats and sizes to make franchise units more economical to operate. In South Africa, we have additional operational constraints such as load shedding and high electricity costs to be factored into the design of franchise units. Developing smaller express formats could solve affordability and operating cost issues.
Smart technology use
The lockdowns worldwide promoted the use of technology for everything from the world of work to how we consume products. Delivery and e-commerce sites boomed as consumers had to stay home. Franchises that still pondered the introduction of online ordering had to go to market quickly. Consumers have become used to the convenience of technology, which adds a new dimension to many franchises, especially in the food industry. Restaurants are complaining about the high cost of third-party delivery services, which created a gap in the market. Local Eats is a UK franchise that developed a tech platform competing with the likes of Uber Eats. Their owner-operator franchises are outselling the competition in most markets they are entering.
As we get ready for “re-entry”, “building back” or ‘life after a pandemic’, franchises still have a window of opportunity to adapt their models to the new normal. South Africa is also contending with high rates of unemployment, growing state debt and infrastructure challenges. These elements create an environment where the use of technology, clever design and lean operational models will have more potential to succeed.
Anita du Toit is the Founder and Franchise Development Consultant at Franchise Fundi. She has more than 20 years franchise consulting experience across the telecommunications, automotive, restaurant and retail industries amongst others. She is an international authority on social franchising with extensive experience and papers published on the subject.
