Cape Town - Local entrepreneurs have the ability to revolutionise the South African franchising industry and in so strengthen the economy, says Nicolas de Sousa of Traditional Brands.
In an analysis of the current state of franchising in South Africa, De Sousa highlighted the most vital areas of consideration for potential investors as stability, traceability and consistent representation, which significantly are also facets of business that a well-established franchising industry is able to offer local and international investors.
De Sousa explains that the local franchising industry is a somewhat rough terrain with considerable room for improvement.
“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 says.
On the other hand, larger economies which boast players such as Walmart contribute around $450bn in GDP, this demonstrates a far greater economic understanding of how a successful franchising industry should be run.
“The greater GDP’s of the world are defined by business principles and innovation, not replication,” De Sousa says.
Closer to home, the African fast-food industry is dominated by global brands such as KFC and McDonalds, with only a few local players such as Traditional Brands successfully competing.
De Sousa is however adamant that should the industry receive the right kind of backing from entrepreneurs and governing bodies, there is potential for franchising to become a great asset to the economy.
Traditional Brands is the perfect case study of how business-savvy entrepreneurs have the potential to revolutionise the industry.
Traditional Brands is the holding company of “Old Fashioned” Fish & Chips and Chingos.
When “Old Fashioned” Fish and Chips first launched, there were less than 30 fast-food outlet brands in the country, today there are an estimated 150 brands, a number that is steadily increasing. This dramatic rise in number is largely attributed to the introduction of the company’s highly creative and financially viable business model which other brands have sought to emulate.
“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 says.
Successful brands are able to investigate the considerable opportunities present in franchising across Africa. De Sousa explains that “Old Fashioned” Fish and Chips began its expansion into Africa through master franchisee rights and franchisee development in 2010.
His advice for budding entrepreneurs looking to enter the market is to 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,” he says.