Advice and Opinion

Demand for commercial franchises on the increase

In recent months, says Leon Breytenbach, National Commercial Manager of the Rawson Property Group, there has been a marked increase in enquiries for commercial property franchises. “It appears that more and more people now believe that they can make a good career for themselves in this field.”

Enquiries, he added, come from a diversified cross-section of South Africa, including a wide range of racial, educational, cultural and work backgrounds. However, he said, the common factor among applicants is a strong desire to be independent and to run their own businesses. At the same time they recognize the benefits of being able to operate under the mentorship and guidance of an established national brand such as the Rawson Property Group.

Both new and existing commercial property franchises, said Breytenbach, benefit significantly from the systems and training which the Rawson Property Group provides and the on-going backup and advice on commercial property related matters, which they also receive. The group’s training, he said, can be especially helpful if the new franchisee and their commercial brokers still have to achieve their obligatory NQF4 and NQF5 qualifications.

“These days,” said Breytenbach, “it is a legal requirement that players in the property marketing industry have these qualifications – without them they are not entitled in South African law to receive commission payments. The NQF4 and NQF5 qualifications, added Breytenbach, have to be property-specific and not based on educational achievements in other spheres, even though these may have been impressive. This can be an obstacle to some new franchisees, but it is one which we can, however, help them overcome.”

Under the Rawson Property Group system, 90% of the franchisee’s earnings are retained by themselves and the vast majority of the franchisees would agree that the 10% royalty retained by the franchisor is low priced in view of the benefits the franchisee receives. In the Rawson Commercial franchising operation these include the fact that the franchisee is usually mandated to sell or rent properties within a very large designated area – with non-exclusive provincial licenses also available.

In addition, said Breytenbach, the franchisee benefits in a very big way from the on-going branding that most major groups carry out at a national level. In the case of the Rawson Property Group, exactly half the franchise royalties collected are reinvested into promoting the brand and experience has shown that the public react favourably to a strongly branded group.

“Our goal,” added Breytenbach, “is always to build up this national brand and it is a proven fact that newly appointed franchisees will always benefit from being able to leverage off the successes of those franchisees which are very well established and successful.”

With South Africa’s economy predicted to grow at 2,6% in 2014, said Breytenbach, there is now a ‘healthy’ demand for commercial property space. Western Cape warehousing is now especially in demand, while nationally both investors and owner-occupiers are largely on the lookout for office space of 300 m2 or less.

“The call for space of this kind,” said Breytenbach, “comes about as a result of small independent businesses increasingly taking on a share of the activities formerly controlled by big corporates. Various SMEs are successfully securing niche markets, and it is always encouraging to share in their successes in some way, by placing these businesses in the right premises.”

On the retail front, he said, demand has dropped off in response to the average consumer’s drop in disposable income over the last three or four years. However, selected retail precincts are still doing exceptionally well.

In view of the steady rise in enquiries, Rawson Commercial expects to have 10 new franchises up and running by the end of this year, said Breytenbach.

“It is indeed satisfying to see the new lease of life, the enthusiasm and the fun that people get when they embark on running their own franchise,” said Breytenbach. “Although some may struggle, most grow and flourish under the independent conditions that franchising makes possible.”

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