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FRANCHISING: OVERVIEW

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Above left: The Levingers franchise offers consumers a professional dry cleaning, laundry, garment, leather repair and alteration service. The brand
has more than 60 outlets. Above right: Franchising exhibitions in South Africa are well-attended by franchisors and potential franchisees

Naas du Preez, FASA’s Chairman in tough times – some even thrive on the flexibility to adapt to changing times
and Group Director of bottled water the back of challenging conditions,” and reinvent itself to take advantage of
franchisor, Oasis Water, adds that he says. “Whether it’s the automotive new opportunities.”
franchising is sustained not only by service that benefits from motorists
South Africans’ proclivity for supported repairing rather than replacing their The ongoing influx of international
entrepreneurship, but also because we cars in tough times; building, office franchisors to SA – most notably
are largely a forward-thinking nation. and home service franchises that offer Burger King, Starbucks and Dunkin’
do-it-yourself options; or the business- Donuts – is another positive indicator
“Socio-economic factors and tough to-business sector that takes care of for franchising, observes Jeremy Lang,
trading conditions affect businesses, business outsourcing, franchising has Regional General Manager for Business
but there are always those who do well Partners, a specialist risk finance
company for SMEs. Recent growth in
EXPANDING A BRAND THROUGH FRANCHISING the sector, he believes, is helped by
the increased availability of franchises
Franchising is acknowledged as a great to focus on building the brand and with smaller set-up costs. Examples
tool for entrepreneurial individuals to guide franchisees in their quest for of these include 3@1 Business
go into businesses. But what about business success.” Centre (retail business centres), ACDC
companies that are ready to expand Express (electrical suppliers), DIY
their footprint? Why should they In some cases, companies with Depot (hardware), Dream Nails Beauty
consider going the franchise route? established branch networks find (beauty) and Sorbet (beauty/grooming).
that going the franchising route turns
“Franchising is an ideal vehicle branches that previously performed “Access to capital remains a
for the expansion of a sound marginally into far better performers. significant challenge for aspiring
business into a national or even However, prospective franchisors franchisees,” says Lang. “The rise of
international brand,” says franchise should be aware that to set up a franchised businesses with smaller
consultant Kurt Illetschko. “The professional franchise operation set-up costs – typically ranging between
reason for this is simple: in a not only requires a substantial up- R500 000 and R2-million – makes
franchise arrangement, the franchisee front investment, it also needs a expansion by franchisors easier
invests capital, time and effort. This willingness to accept franchisees as and provides greater opportunity for
creates an extremely high level of self- de facto long-term business partners entrepreneurs to enter the franchise
motivation. It also frees the franchisor and treat them accordingly. industry. Furthermore, risk by
franchisors is spread across a

16 strategicmarketing August–September 2016