Chilled franchise opportunity – a hot trend

Franchising is a popular business model – internationally as well as in South Africa where it is estimated to generate around 12.5% of the country’s GDP.   A recent survey by the Franchise Association of South Africa (FASA) confirms that franchising is one of the soundest business formats and is well structured to withstand economic challenges. The fast food and restaurant sector remains one of the strongest in this sector at around 24% - not only generating income but also creating jobs. 

Ice cream is one of the more unusual quick serve foods to be making a major come back into many markets around the world, South Africa is no exception.  And discerning consumers are willing to pay a bit more for their tasty creamy treat.

Liquid nitrogen produced ice cream was introduced to the local market  two years ago by husband and wife team, Errol and Maija Groenwald, when they launched the N2Ice Cream Lab.  The ice creams are preservative, additive and emulsifier free and are all freshly prepared.  Using liquid nitrogen in the process allows the ingredients to freeze extremely fast, resulting in smaller ice crystals, which translates into a smooth, rich, creamy and delicious ice cream.  The science and process behind making liquid nitrogen ice cream mimics a laboratory environment and is billed as ‘tasty chemistry’ served by Brrrr-istas wearing goggles, white coats and gloves.

After successfully getting the business off the ground in Cape Town via a permanent shop, pop up stores and mobile units at markets, events and weddings N2Ice Cream Lab now have two franchisors in Gauteng and is looking for more partners to take this dynamic business countrywide.

‘This business offers many options for franchise partners,’ explains Errol Groenewald. ‘These range from permanent outlets through to kiosks, mobile units and ice cream trucks. In fact our first ice cream truck hit the road earlier this month. The business allows for flexibility and creativity in terms of functions and eventing as well as flavour options.  The basic flavours are chosen from a ‘periodic’ table but the combinations are constantly changing as we update our selection and offerings, which now include sorbet, sundaes and banting friendly ice cream treats.

‘It is certainly by no means a traditional working environment.  The hours can be long with weekend and evening events so our partners need to understand this, have an insight into the catering or fast food industry, a flair and need to get on with people. We have found that having the right staff in place is crucial to attracting and retaining customers.’ 

Groenewald says that as with other franchise opportunities the investment comes with extensive training and ongoing support across the board – from identifying appropriate sites through to recipes, operational and financial systems, machinery and equipment and marketing.

‘Upon signing the three year contract we supply the entire set up.  This includes the built unit, signage, machinery, equipment, the mixes, liquid nitrogen and so on so that a franchisor can walk in and operate for at least two weeks. It also means that turnover and profit is instant.  There are some management fees built in but these are below the industry norm of 6% and not based on turnover. We also have an around .75% kiosk value annual contribution towards marketing and advertising levies.’

Depending on the size and location of the franchise the investment buy-in is from R675k up to R975k.   Once a franchise is in place, mobile kiosks to allow for trading at markets, events, weddings and business functions are available from R300k upwards.

‘Rolling out this new brand and educating customers about liquid nitrogen ice cream has had its trials,’ says Groenewald.  ‘But we have worked very hard to get things right and the response has been incredibly positive.  We know we have a winning formula, that is now proven, which is an incentive for investors.  They can pretty much be their own boss without taking on all the risk of a new business start up.’

The company is also currently in talks with interested parties in Mauritius.

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