Franchising is increasingly being touted as one of the most viable paths towards financial freedom for South Africans who are looking into opportunities of self employment. However Nicolas De Sousa, marketing and operations director at Traditional Brands, reckons there is still big space for improvement within South Africa’s franchising space.
The latest Absa SME Index firmed up the critical role of franchising within the South African economy. “Franchises seem to remain in business generally longer,” said economists Mike Schussler. Absa declared that franchises have also proven to be more attractive to bank funding.
De Sousa whose company has built a fledging franchise base has a more cautious story to tell. Traditional Brands has burst into the franchisor space with its brand Old Fashioned Fish And Chips taking the market by storm.
De Sousa preaches that stability, traceability and consistent representation should be three vital features that one should consider when looking to invest in a franchise. De Sousa also believes that local entrepreneurs have the ability to claim a fair share of the franchisor space which is currently dominated by foreign/multinational players like KFC and McDonalds.
De Sousa said the local franchising industry remains a somewhat rough terrain. “South Africa has great potential but there are still a number of areas which require significant attention. One of the greatest challenges is the current lack of industry regulation. Anyone is able to franchise their brand in this country without having to comply with legislation, this being a situation which does not encourage expertise, originality or standards.”
He observed that larger economies have something to teach us in their running of the franchising sector. “The greater GDP’s of the world are defined by business principles and innovation, not replication”.The African fast-food industry is dominated by global brands such as KFC and McDonalds, with only a few local players competing successfully. De Sousa believes that if the local players are given the right kind of backing there is potential for franchising to become a great asset to the economy.
He said Traditional Brands is the perfect case study of how business-savvy entrepreneurs have the potential to revolutionise the industry. He pointed out that when “Old Fashioned” Fish and Chips first launched, there were less than 30 fast-food outlet brands in the country. That number has increased to about 150 brands. “Since the launch of our first brand, we have seen significant development of local concepts as well as a decrease in the number of international brands entering the local market”.
De Sousa advised that budding entrepreneurs looking to enter the market must develop an in-depth understanding of the consumers they hope to attract. “Replicating a business model or strategy should never define your brand strategy, no matter how brilliant the results it produces. It should rather be based on consumer demand which will vary geographically, right down to the last few metres of a city’s block. Remember that consumer demand is not the same thing as consumer need, which is predominant in a weaker economy. As such, pay attention to the trends which apply to your situation and develop your brand strategy accordingly”.