Unlocking franchising opportunities in Africa - CNBC Africa

Unlocking franchising opportunities in Africa

Special Report

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Unlocking franchising opportunities in Africa. PHOTOS: Getty Images/Risksa.com

Since the International Monetary Fund (IMF) predicated a 6.5 per cent GDP growth rate for sub-Saharan Africa in 2015, with less than three per cent forecasted for South Africa, many companies based in the country are seeking growth opportunities north of the border as a hedge against lacklustre domestic prospects.

(READ MORE: Consumer focus will drive business growth)

This is according to Morne Cronje, head of FNB Franchising, who believes that franchisees and franchisors are ideally positioned to capitalise on the rise of the African consumer.

“While the industry is expanding locally and internationally we find there is an increasing need to keep abreast with the latest trends but at the same time maintain brand presence in the market. With reliable support systems and ongoing research, franchising is seen as an industry with no boundaries and if successful it could be a profitable business venture in any industry,” said Cronje.  

With Africa’s rich cultural, ethnic and religious diversity, the continent has many untapped markets where a one size fits all concept does not apply.

(READ MORE: Africa a top global business expansion destination)

Jason Muscat, an FNB economics industry analyst, added that companies cannot enter Africa thinking that their brands will fit within each country the same way.

“Despite the abundant potential, there are many critical considerations when venturing into new markets, chief among them being suitability of the offering. Too often, Africa is thought of as a single homogenous country, where brands that have thrived in South Africa can easily be introduced to new countries, and enjoys the same success,” he explained.

“Both franchisors and franchisees will also have to contend with varying levels of infrastructural development (electricity, water, road, real-estate, supply chain), different regulatory and tax regimes, as well as the impact of foreign exchange movements.”

Cronje therefore believes that franchisees need to have enough passion and commitment to make their brand work in foreign countries

“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,” said Cronje.