New criteria give fresh start to black franchisees

July 15 2011 at 05:00am

Samantha Enslin-Payne

PLANS by the Fruit & Veg City group to expand its Freshstop brand have been given a boost by a partnership with the black business supplier development programme (BBSDP), a Department of Trade and Industry initiative. The department recently revised its criteria to enable more small firms to access the programme.

Pertunia Ndhlovu, the deputy director of the BBSDP, said yesterday that, in an effort to enable more companies to participate, businesses with a minimum annual turnover of R250 000 could now qualify. The threshold previously stipulated was R1 million. Other criteria had also changed.

Ndhlovu said the focus was to improve the competitiveness of existing companies and to create jobs.

Among the beneficiaries of the scheme is Freshstop, Fruit & Veg City’s convenience store brand, which is in partnership with Caltex service stations.

Freshstop director Joe Boyle said the partnership would support Caltex franchisees from previously disadvantaged groups who were interested in converting to Freshstop convenience stores. There are 50 Freshstop stores, of which 20 are black owned.

So far the Department has approved two projects from the Western Cape, which has created 13 additional jobs.

Converting a Caltex convenience store to a Freshstop requires more staff, as deliveries of fresh produce are done daily rather than weekly.

Boyle said the group was working with the BBSDP to include black franchisees operating Food Lovers Market and Fruit & Veg City stores that intended to expand.

“We are planning quite a substantial roll-out of Fruit & Veg City, with 28 additional stores being planned.” The group has 90 Fruit & Veg City outlets and 30 Food Lovers Market stores.

Ndhlovu said the BBSDP would not assist in the buying of a franchise. The programme was not only for franchise opportunities, but would assist small black-owned companies in a range of sectors.

The programme will help to some extent to plug the gap created by the Industrial Development Corporation (IDC) when it stopped funding franchising.

Mandla Mpangase, the public relations manager of the IDC, said franchisee funding was stopped because “we needed to focus more on our core mandate in line with government’s priority sectors”.

The IDC continued to honour financial agreements with existing clients that were on its books before the franchising business unit was phased out.

Taste Holdings chief executive Carlo Gonzaga said there were a number of funding tools that required a low contribution from the entrepreneur, but these were not always appropriate as franchisees needed to put their own money in.

“Free money does not encourage the tenacity required of an entrepreneur.”

More than funding, the biggest challenge was supporting franchisees who had not been through a good educational system. Taste Holdings owns the Scooter Pizza, Maxi’s, St Elmo’s and NWJ brands.

According to Taste’s annual report, 30 percent of its 343 franchisees are black people.