Advice and Opinion

The changing franchise landscape

Businesses are increasingly looking at Africa’s fast-growing cities for long-term growth and development. Being innovative, adaptable and nimble- business, both big and small are ideally positioned to capitalise on the rise of the African consumer.

The African consumer is becoming brand conscious and brand loyal. According to Vijay Mahajan, author of Africa Rising …‘Africa has more than 900 million consumers. Despite the challenges, every day they need to eat. They need clean water. They need shelter, clothing, and medicine. They want cell phones, bicycles, computers, automobiles, and education for their children. Businesses are already seizing these opportunities to build markets across Africa.’

The continent still suffers from the misconception that it’s a difficult place to conduct business. Arguably, the franchise industry has been instrumental in building confidence in the African market and contributing to economic growth. Home to a rich cultural, ethnic and religious diversity, many Africa countries have already been exposed to multinational and local franchise brands.

Consumer needs and wants have changed. “Today more than ever before, a core focus has been placed on the rise in demand for branded goods and services. Franchising encourages low cost, simultaneous expansion across the globe, diversification of risk, sharing of benefits; enhanced structures, innovation and is seen as an engine of economic growth,” says Morne Cronje, Head of FNB Franchise.

In South Africa, the franchise industry has remained solid despite challenging economic conditions. Provinces such as the Western Cape and Gauteng remain attractive to local and international franchise brands due to their economic power. Going forward, South Africa will need to continuously improve the operating environment for franchisees because other African countries are increasingly positioning themselves as attractive markets.

The potential for business growth in Africa is exponential. The global recession, has forced both business and consumer to be more innovative and deliver on exceptional products and services. This has indirectly encouraged businesses to develop a progressive strategy that caters for a diverse and changing consumer market. Franchise operations need to adopt new technology and learn new skills in order to keep the franchise model lucrative and sustainable. This not only encourages sharing of resources but encourages franchisees to invest in business concepts that are in demand.

“The rise of innovation and technology has helped build an environment that has contributed to the enhancement of the current economic landscape. It not only helps aid in creating better working processes but also adds key insights and trends on the industry,” explains Cronje.

Integration and collaboration of ideas can add value to any business idea, but encouraging brands to innovate and drive their brand to previously unchartered territories is crucial if we want this industry to survive. “The current franchise landscape is competitive. We need to raise the profile of the industry and ensure its ability to be an effective lever of social empowerment and economic growth in Southern Africa and Africa for decades to come. This can be achieved if we work together and find innovative solutions that will ensure that there is greater diversification and growth in the business sector.” concludes Cronje.