Franchises grapple to remain affordable and maintain profits in the wake of high input costs Soaring input costs and the electricity tariff hike coming into effect in April, coupled with increasing food prices and daily living expenses are making it difficult for fast food franchises to pass on costs to consumers who are already struggling to make ends meet. Morne Cronje, Head of Franchising at FNB says in response to the tough economic conditions, fast food franchises are becoming more strategic about maintaining profit margins while making sure that their offerings remain relevant and affordable to consumers. Franchise outlets have to take a number of market factors into account, such as lower disposable income, rising food inflation and interest rates, when deciding on the price of goods, to avoid driving customers into competitors’ hands. Consequently, franchises are having to absorb input costs in order to retain and continue to attract customers. Cronje clarifies that in some...

Owning a property and knowing its value is as important as knowing your ID number these days. If it is an investment you take seriously and you would like to know the value of your holding, one should get a professional opinion on a property valuation. “A property valuation is an estimated market value of a property, determined using a sophisticated statistical calculation” informed Craig Hutchison, CEO of Engel & Völkers Southern Africa . Not only will the price of your home get influenced by what is happening, on the political stage of the country you live in, the area and surrounding suburbs also play a vital role in the evaluation as well. The fact that it has easy access to highways, shopping centres and schools will have your price looking to the plus side in the ideal location. Overall the condition and upkeep of your property is one of the biggest factors which result in home owners losing money when the opportunity for sale presents itself. It’s always best to consult...

If you are working to a tight monthly budget and you can afford to, it might be a good idea to fix your rate now, even though fixed rates are usually higher than variable rates. Many people make the mistake of waiting for rates to rise before locking themselves into a fixed rate. “Before buying a property, stress test your budget to ensure you will still be able to meet your mortgage repayments if rates start to rise. Should the interest rate go up, you need to be sure you will still be able to afford your monthly instalments” noted Craig Hutchison, CEO of Engel & Völkers Southern Africa. There are two interest rate options to choose from: Fixed rate For the fixed rate option, you pay a fixed instalment for an agreed period of time. The fixed rate duration ranges from 12 months to 36 months. The main difference between a fixed rate and a variable rate is that the instalment with the fixed rate does not change with interest rate changes during the 'fixed period'. Var...

Fatima Sullivan As consumers and businesses are urged to tighten their belts in light of slowed economic growth, customer service experience is set to become an increasingly important differentiator for local businesses, and one of the main factors that will influence decisions regarding which supplier to purchase products and services from. This is according to Fatima Sullivan, Vice President of Customer Services for DHL Express Sub-Saharan Africa (SSA), who says that research shows consumers are willing to spend more for better customer service and with those companies that they believe provide excellent customer service. “In an environment where alternatives are rife, customer experience is rapidly becoming one of the most important elements of a business’ success. While price will always be important in the mind of the consumer, this becomes less so if a business offers first class customer service to support the product or service.” It is for this reason that DHL invests so he...

The most fun, flexible and fulfilling way to become your own boss Making the decision to start your own business and become financially independent is never an easy task, which is why Clamber Club’s training and proven franchise package is there to help every step of the way. With over 25 years of experience, Clamber Club has created a successful and profitable business model, which provides franchisees with all the support and tools they need to run their own thriving Clamber Club franchise. What is Clamber Club? Developed in 1990 by well-known occupational therapist, Liz Senior, Clamber Club is a sensory and perceptual motor learning and development programme for babies, toddlers and pre-schoolers. In line with its motto, “move learn grow,” Clamber Club has two main aims: To promote a lifelong love for exercise and a healthy lifestyle from a young age To promote important perceptual motor skills through appropriate movement activity, essential for later academic learning....

A further hike in interest rates, whether it takes effect now or later during the year, would put more pressure on consumers, leaving businesses with no choice, but to absorb costs in the short-term as profit margins continue to shrink. Dawie Maree, Head of Information and Marketing at FNB Business, Agriculture Farmers that are still recovering from the impact of the drought would be hardest hit by a hike in interest rates given that the electricity tariff increase and tyre levy are coming into effect in April and October respectively. With profits under pressure and cash reserves gradually depleting, the ability to manage farm operations while servicing debt and keeping up with employee wages will take its toll on farmers. The impact would likely spread across the entire agricultural value chain with meat consumption heavily affected as struggling consumers cut back on spending and opt for lesser expensive sources of protein. Furthermore, if the price of meat continues to increase, ...

SA Franchise Warehouse is a specialist funding facilitator within the franchise sector in cooperation with various funding partners. Every franchise funding application is unique in terms of: Experience, age, profile, BEE status, gender and brand preference of the applicant, Shareholder structure, Own cash contribution and security available from the franchisee, Brand, location and industry of the franchised business, and Existing or start-up business. All funders participating in the franchise sector differ in their policies, mandates, preferences and per se exclusions relating to the nature of a specific application. SA Franchise Warehouse makes it their business to stay informed on the criteria and policies of the various funders so that applicants can be steered towards the most appropriate funder based on the nature of the application. The focus of SA Franchise Warehouse as far as the facilitation of funding is concerned, is on assisting suitable entrepreneurs who do not...

Local price increases will be met by resistance from struggling consumers Despite fears that local coffee prices will drastically increase due to a shortage of beans from Brazil, coupled with the entrance of Starbucks into the local market, prices will remain stable and steadily increase at realistic levels. Because South Africa is a net importer of coffee, the severe drought which affected Brazil last year, the largest coffee producer in the world, heightened fears that prices would increase due to global supply shortages. Brazil has since had a fair share of rain and is set to produce its largest harvest for the 2016/2017 season which will lead to lower coffee prices globally.  Dawie Maree, Head of Information and Marketing at FNB Business, Agriculture says South Africa has not yet experienced supply challenges as we import most of our coffee beans from Eastern African countries which continue to increase yields and produce quality crops. Maree cautions that lower glob...

By Ben Strauss, Director in Cliffe Dekker Hofmeyr's Tax and Corporate and Commercial practices Taxpayers should take great care when selling assets where the price is paid in instalments as the transaction may trigger some tricky capital gains tax (CGT) consequences. Consider the case of New Adventure Shelf 122 (Pty) Ltd vs The Commissioner of the South African Revenue Service (7007/2015) [2016] ZAWCHC 9 (17 February 2016). In this case the taxpayer acquired immovable property in 1999. In the taxpayer’s 2007 tax year it sold and transferred the property to a third party for a profit. The buyer had to pay the price of the property in instalments over more than one tax year. The taxpayer accounted for CGT on the entire purchase price in its 2007 tax return. The South African Revenue Service (SARS) assessed it accordingly. However, in its 2012 tax year the taxpayer and the buyer agreed to cancel the sale agreement as the buyer could not proceed with the intended development...

Marciano Jardim, store manager at Big Save Evaton, with Frans Mdluli, winner of the ABI win a Bakkie competition Frans Mdluli  was the ecstatic winner of the ABI Win A Bakkie promotion in partnership with Big Save on the 26th February 2016. The draw for the Nissan NP200 Bakkie took place at Big Save Evaton, where the five finalists from each Big Save store gathered to find out if they were the lucky winner. The competition was held at each Big Save Stores last year, where shoppers had to buy 5 cases or more of Coca-Cola and fill in an entry form to enter. A finalist from each Store was drawn and contacted to be present at Big Save Evaton for the final draw. When asked how he felt about winning the Bakkie, Mdluli commented: "I feel so happy! I am very excited and I cannot wait to take my new baby home." Mdluli is a trader who purchases all of his stock from the wholesale department of The Big Save Hammanskraal Store. Mdluli was not the only winner for the day. Big ...

Glenfair Brooklyn Brothers, the newly opened fast-casual burger, wings and craft beer restaurant belonging to Fournews, engaged its local community in a donation drive to collect dry goods, toiletries and other essential items in support of Uncle Ben’s Den, a home for the elderly situated in Pretoria. During the course of the day, an unbelievable 125 adult diaper packs, 125 packs of toilet paper and 10 kg of boerewors were donated – that on top of an entire bakkie load of toiletries and essentials, all of which was sent directly to Uncle Ben’s Den. “The response from the community on the day was truly moving,” says Dane Harley, owner of Brooklyn Brothers Glenfair. “People really opened their hearts – and their wallets – in support of Uncle Ben’s Den, reminding us that the spirit of community and generosity are an integral part of our South African culture.” Local bearded heroes, Buffelsfontein Baard-olie, were in attendance manning a bakkie in which donated items such as adult d...

In his budget speech on 24 February 2016, Pravin Gordhan confirmed that applications to the value of R12-billion has been approved by The Jobs Fund. The franchise industry is part of that R12-billion and in conjunction with Business Partners, SA Franchise Warehouse is proud to announce that grant funding has been negotiated for qualified BEE franchisees who wish to enter into partnership with existing franchisees for new outlets within established franchised networks. The objective is to encourage partnerships between existing experienced franchisees within stable franchise networks and a BEE operating partner. The own contribution requirement for the funding of a new outlet will be 10% of the set-up cost of the franchise, and the 90% funding will be a blend of a commercial loan and grant funding from The Jobs Fund. Although the grant is ultimately repayable, it attracts no interest and only has to be repaid once the commercial loan is paid in full, regardless of the loan term...

In the Budget Speech on 24 February 2016, the Honourable Mr Pravin Gordhan, Finance Minister of South Africa, announced that the Department of Energy’s (DoE) Independent Power Producers Procurement (IPPP) Programme will be extended to include coal and gas power projects. According to Paschal Phelan, Chairman of Solar Capital, the IPPP Programme will be rolled out in order to replicate the successes achieved in the South African renewable energy sector. “Although the replication in other sectors will allow for further energy to be produced, a focus on solar power would allow for the supply of energy at a massively reduced rate.” He explains that not only is solar energy readily and freely available, but the cost of solar technology (internationally and locally) has come down substantially in the last few years. “Internationally, the price has reduced as a result of technological innovation, the manufacturing learning rate, economies of scale and further competition.” Phelan points out...

Craig Hutchison and James Verwey By Camilia du Plooy Engel & Völkers Southern Africa has kicked their year off on a very positive note with the signing of their first licence for 2016. Covering the 3 main areas known as Pretoria New East, you will soon see the EV brand dominating this territory. James Verwey signed the Faerie Glen Licence on 18 January 2016 – giving him access to the entire area known as the Pretoria New East. James comes with a wealth of experience and background in various fields. He started his life after school by studying law at the University of Stellenbosch after which he entered the motor industry. After 10 years in senior management positions at Toyota SA, he moved on by joining Toyota in the UAE as Marketing Director for Toyota and Lexus for a further 10 years. From there he joined Premier Motors in Abu Dhabi, one of the leading distributors in the world with iconic Brands like Ferrari, Maserati, Jaguar, Land Rover, Ford and Lincoln as MD. It is al...

Agriculture, Healthcare, Financial Services, Retailers and Franchises should use Big Data   Yudhvir Seetharam As corporates increasingly harness the power of Big Data analytics to improve productivity, gain market share and a competitive edge, there are sectors that are lagging behind by not fully capitalising on data to produce actionable insights. According to Yudhvir Seetharam, Head of Analytics for FNB Business - global business challenges and developments are putting more pressure on key sectors that are sensitive to economic cycles. As a result, insight gathered from Big Data can help solve some of the biggest challenges currently facing businesses. He says there are five sectors in South Africa that should consider incorporating Big Data analytics into their operations.  Agriculture - the agricultural industry can utilise data predominantly to increase operational efficiency. Faced with drought conditions, South Africa more than ever requires the agricultur...

Steven Nathan From 1 March 2016, a number of retirement and tax reforms introduced by National Treasury will take effect. Designed to create a simpler and uniform retirement savings regime, Steven Nathan, CEO of 10X Investments says that the value and purpose of these new laws has not been clearly communicated to the public. Nathan believes this lack of clarity that caused wide spread misperceptions around retirement reforms. Ultimately, it forced Government to postpone the compulsory annuitisation of provident funds at retirement for another two years. “If we don’t tackle these issues now, we’ll be sitting in the same predicament in 2018. It’s important to immediately clarify some of the burning issues related to vested rights, tax deductions on contributions, as well the ability of members to access their fund benefits on resignation or dismissal,” says Nathan. Uniform tax deductions across all types of retirement funds Presently, there are different tax deduction limits on co...

Johannes Gouws The Curator of African Bank yesterday announced that the proposed restructuring of African Bank has received the overwhelming support of its creditors. This is a significant milestone in the delivery of the African Bank restructuring. Subject to a number of conditions being fulfilled, the target effective date for the commencement of the Good Bank operations and settlement of the exchange offers is 4 April 2016. Bringing their combined South African and international experience to bear, the alliance firms Webber Wentzel and Linklaters , together with Prinsloo, Tindle & Andropoulos Inc , have worked together with PwC throughout the period of the curatorship to help African Bank management, the Curator and other interested parties deliver what is a novel, very complex and highly bespoke resolution to the circumstances confronting African Bank.  “The restructuring of African Bank has been a long and complex process during which the complexities of restructu...

Elize Giese As SMEs reflect on the National Budget Speech, the focus should now be on implementing long term strategies to deal with challenges imposed by the ever-changing business environment. Elize Giese, Head of Investments for FNB Business, says given the current economic landscape, SMEs should constantly look for ways to reduce operating costs and use the savings to cater for unforeseen business expenses and emergencies. One way that SMEs can cut costs is through tax competence.  Although the National Budget Speech did not provide tax relief for small businesses, entrepreneurs can save or manage costs by improving efficiencies. Giese shares a few guidelines for small businesses:   Constantly track business expenses – small businesses should keep record of all expenses regardless of their value. SARS provides deductions for a range of business expenses such as entertainment, travelling, gifts for clients and common office expenses, amongst others. ...

According to global industry insights published by Saatchi & Saatchi, 64% of business executives consider ‘shared values’ as the primary reason for building a relationship with a brand. In another study cited in the same publication, when it comes to business decisions ‘personal value’ based on emotion has twice as much impact on decision making rather than ‘business value’ derived by logic and reason. Bradly Howland, Account Director of Epic MSLGROUP says that marketers, along with psychologists like Nobel Economics laureate Daniel Kahneman, have long understood that people are not rational decision makers. “What marketers haven’t understood until now was why. Why is emotion, rather than logic, the driver of our buying behaviour, especially when it comes to business-to-business (B2B) decisions?” “Research suggests that due to the level of personal risk B2B buyers feel when making important business calls, this sort of buying is highly personal. In fact, B2B purchasing decisio...

Heather Lowe Bolstering efforts to support high potential businesses to grow revenues and reach the next level of growth should be one of the solutions considered to help the country reach its National Development Plan (NDP) goals to create an estimated 11 million jobs by 2030. Scale ups are high potential businesses that have been resilient enough to outgrow challenges that many small businesses face in the start-up stages. These businesses stimulate high levels of entrepreneurial activity and can drive the creation of sustainable jobs. Heather Lowe, Head of Enterprise Development at FNB says the contribution of start-ups to economic growth and job creation is invaluable, but these businesses should not be neglected as they grow. High potential businesses still need support and mentorship in order to fulfill their legacies, contribute to sustainable economic growth and help the country to be more competitive. Lowe says there is a growing misconception that scale-ups are already...