Partnership with Standard Bank gets McDonald’s franchisee ‘rocking and rolling’

The ‘Rock and Roll’ McDonald’s franchise, strategically situated at one of Joburg’s busiest intersections, beckons passing motorists with its 50’s ‘rock and roll’ memorabilia. Judging from the lunch-time queue at the drive-through, it obviously works.

For many, this McDonald’s franchise on the corner of Grayston Drive and Rivonia Road, Johannesburg, is a living example of what a successful franchise should be.

Its success, however, was far from being a simple case of being in the right place in the franchise line at the right time. In reality, it was driven by a mixture of determination to succeed and forming the correct partnerships.

The story began in the mid-90s when Susan Rawoteea, holding down both an HR job in a corporation and waitressing to accumulate funds to buy her own business, found herself at a crossroads in her life.

She was unexpectedly retrenched and decided that the time had come to put her plans for business independence into action. She decided that the franchise route would be the most suitable and began approaching McDonald’s - a decision partly influenced by reading about the McDonald’s corporate story in the business book “Behind the Golden Arches.”

“I knocked at McDonald’s doors for nine months and nothing happened,” says Mrs Rawoteea. “I refused to give up, although they kept acknowledging that they had my application and would be in touch. With no job, and no income to speak of, I could afford to spend the time sitting in the franchise manager’s office area waiting for an interview.”

Her perseverance paid off and she got the interview. But a major obstacle then stood in the way – the funds required. After selling off everything she owned and retaining just her car, she found herself with only a third of the money required for buying the franchise. A daunting R2 million had to be found.

It was then that a partner in the form of Standard Bank came to the fore. Although she had little to underpin her ambitions in the way of tangible assets, Mrs Rawoteea said that the bank believed in her, even though she was looking for finance at a time when interest rates had spiked well above 20%, leaving many South Africans facing financial hardships.

Mrs Rawoteea, however, was armed with a determination that kept her actively talking to the bank and supplying the information that was required to keep the process on track. To her delight, Standard Bank came through and the money was paid across.

She was then able to undertake McDonalds training in Australia at the end of 1996 and her dream of becoming a franchisee was realised when she opened the McDonald’s Rock ‘n Roll in June 1997.

Hard work, determination and passion for business saw her and her husband George working all hours in the business, from working tills to even pushing brooms across the car park when it was required at 4am on Highveld winter mornings.

Mrs Rawoteea’s ambition of paying off her loan to Standard Bank was achieved in four short years. The bank, appreciating her efforts, then helped with the acquisition of the McDonald’s franchise in Sandton City in May 1998.  Mrs Rawoteea then proceeded to buy a third business, McDonalds in Rivonia Boulevard, in September 2006. All three businesses are thriving today.

Although the food retail franchising business is lucrative and has minimal failure rates, it is a difficult environment for newcomers to break into, says Veronica Impey, Standard Bank Specialist for Technology Finance in the franchising team.

“A critical success factor for those who want to crack it in South Africa’s food retail franchising industry is to have huge amounts of business management experience, patience, capital and a willingness to learn,” she says.

Entering this R100-billion-plus industry is made more difficult by the fact that it is among the most expensive franchise sectors. As a result, franchisors and banks usually insist on newcomers having prior experience, or else expect them to be prepared to go through a very steep learning curve.

Mrs Rawoteea affirms that this was certainly a business reality and a challenge that she faced in starting her first franchise.

“There were some rough times - particularly at the end of the 90’s and into the new millennium when interest rates caused several business challenges – but Standard Bank stood by me through all my trials. It’s the reason that I am still with them,” says Mrs Rawoteea.

Ms Impey says both franchisors and banks play a big part in ensuring that the failure rate in food retail franchising is very low, by properly screening potential candidates and stepping in quickly with support whenever franchisees experience problems.

She stresses however that those franchisees that have made it in this sector have done so by doing their homework properly, understanding the local environment and having the willingness to learn – all qualities portrayed by Mrs  Rawoteea.

“Besides standing by my side, the franchising finance team at Standard Bank truly understands my business. I know that all I have to do is call and help and advice will be on the way,” concludes Mrs Rawoteea.

Notes to editor:

Standard Bank is well placed to offer advice on finance and also offer potential purchasers peace of mind by having an extensive knowledge of which franchisors give franchisees the highest levels of support.

The bank’s extensive knowledge of franchising is backed by the ability to help a prospective business purchaser take a 360 degree view of their financial status and offer them specialist support.

Standard Bank, because of its years of involvement in franchising, is able to help clients avoid traditional pitfalls.