The correct financing for a franchise can heighten chances for success Ethel Nyembe There are numerous options available to fund a franchise. Careful evaluation and management of these options should see you on the path to commercial success and wealth. Establishing a business requires the investment of a great amount of time, effort and money. Most potential franchise owners do not have the capital needed to launch and run an enterprise effectively, and therefore rely on borrowing. “For many, the opportunity to launch a business is created by a pension or provident fund payment or, very commonly, from retrenchment cheques when leaving the corporate world,” says Ethel Nyembe, Head of Small Enterprises at Standard Bank. “There are, however, other, more conventional ways of finding finance.” Below, Ms Nyembe suggests and explains the more established methods of funding a commercial enterprise, and which approaches to avoid. Friends and family “Many potential franchise own...

The menu must reflect changing consumer trends In the restaurant business, consumer trends are always changing and their tastes must be noted and accommodated. With culinary ‘revolutions’ such as the Banting and high protein diets becoming increasingly popular and the burgeoning financial middle class becoming more health conscious, more and more restaurants are reconsidering their offering to cater to their consumers’ health and lifestyle requirements. Maxi’s marketing manager, Yolandi Ferreira says this is impacting the way their restaurants traditionally offer meals. These days the distinction between breakfast, lunch and dinner is increasingly blurry, with consumers making meal choices off the menu based on what they actually feel like eating at that moment, rather than what traditional meal times dictate. Underpinning this trend in South Africa is a robust demand for grilled food throughout the day. For many South Africans grilled meat and chicken are the heart of any meal...

FASA appoints its first franchisee as chairman John Baladakis For the first time in its 36-year history, the Franchise Association of South Africa (FASA) has appointed one of its franchisee members as Chairman for 2015. John Baladakis is a Pick n Pay Franchisee.  His appointment comes at a time when the country needs to grow its economic base on every front, particularly in the small business sector. FASA was established as the franchising sector in South Africa was finding its feet. Today the GDP contribution of the franchising industry is estimated at almost 10%, with an excess of 620 franchised systems operating and over 31 000 franchised businesses countrywide who, in turn employ about 323 500 people in the sector. In his address at the FASA AGM, John Baladakis said he intended to build on the work done by the association over the 36 years of its existence.  “As a franchisee that benefited from the opportunities that franchising afforded me in the field of entrep...

Business interruption insurance is not a solution for load shedding risks 90% of business interruption insurance claims as a result of load shedding will not be paid out  Bryan Verpoort Blackouts are estimated to have shaved 0.3% off GDP, or $940 million, in 2014 after the country experienced weeks of rolling power cuts – the first since 2008. A continuation of this trend this year has placed increasing strain on an economy struggling to eke out even 2% growth, and as a result many businesses are mistakenly taking out business interruption policies as cover against power outages.  Bryan Verpoort, Head of Corporate and Business Insurance at Standard Bank, says business interruption insurance should not be seen as a solution for load shedding. “In terms of insurance - If a risk is not foreseeable, then you need to take precautions – but load shedding is foreseeable, which makes it challenging to insure.” “What this means is that a loss of profits needs to have been ca...

Franchising in 2015 How to ensure that your franchise remains successful Morne Cronje The global franchise environment is growing at a fast pace. Looking into 2015, South African franchises are confident about their growth prospects and better yet, looking at ways of improving the current business conditions.   A rejuvenated business environment is key to ensuring the survival and growth of many franchises. Currently franchise businesses, big and small face many challenges. “We are seeing slower economic growth, increased unemployment, new regulations, further load shedding and labour unrest, which increases the cost of doing business and makes it difficult to justify new investment opportunities,” explains Morne Cronje, Head of FNB Franchise.  Businesses have become more risk averse and are willing to take calculated risks to grow and develop their businesses. He adds that  companies need to be cautious in the current economic landscape given the challenges t...

Let us encourage brand activism Gordon Cook How decent, healthy and authentic are our brands? Are we sufficiently activist about those which are dishonest or even harmful? Gordon Cook, co-founder Vega School of Brand Leadership (Vega), an educational brand of The Independent Institute of Education’s (The IIE), calls the industry to arm against passive consumerism. The debate about the benefits and genuineness of today’s brands applies, of course, to the quality and integrity of the brand internally, as well as externally. A misalignment between the two is already a target for activism.  In this debate we need to see a brand as an open system — the complete supply chain including suppliers, distributors and retailers, as well as all outsourced services. Ignoring a more holistic brand approach has already landed many companies in a reputation crisis. A good example of this is when some brands distanced themselves from their manufacturers who were using child labour, harmfu...

Eight common reasons why franchises fail Ethel Nyembe Buying a franchise doesn’t automatically guarantee success; commitment to developing the skills needed to manage a business is key Aspiring entrepreneurs who want to avoid the high risk of failure associated with small businesses often look to franchising, assuming that a recognised trademark and support is a guarantee of success. Although it is true that franchises have a higher success rate, it is not true that they cannot fail. As it is the case with other businesses, there are several reasons why franchises fail, says Ethel Nyembe, Head of Small Enterprises at Standard Bank. “Enhancing your chances of becoming a prosperous franchisee can depend on addressing the common issues that can impact on a franchise by addressing them upfront.” “One of the primary reasons franchises fail is because potential franchisees often rely too much on the professional assistance and systems supplied by franchisors. If you are going to ...

Zebro’s Chicken lights the fires of braai lovers While there are many things in South Africa that speak to the heart of its people, nothing is as popular as a good ol’ braai. South Africans love to braai. Why? Because to us, a braai is more than a meal. It’s a celebration of our culture. It’s an experience that is loaded with the more than just the flavour of good food, but includes good company too.  Across race, language, region and religion, we all share one common heritage. Although the ingredients may differ, the one thing that never changes is that when South Africans have something to celebrate they light fires, and prepare great feasts.  There is something about the open fires and the flavours it unleashes that has captured the hearts and the tastebuds of those who enjoy this mealtime gathering. Even though many braai enthusiasts prefer using charcoal and briquettes – for convenience sake – nothing beats the flavour that resonates from a wood fire. This is w...

The smart way to increase costs on a menu Tanya Spence To ensure a business is keeping up with the times, it is necessary to adapt and change. Whether it be a change in the management of the business, or in something that impacts the customer even more directly, change is essential for progress. Sandwich Baron recently undertook an update to their menu, to ensure profitability and sustainability of the business – while seeing to the changing needs of customers in the same instance. National Operations Manager for Sandwich Baron, Tanya Spence, knows that updating a menu is no easy feat. She shares some inside info on the process of implementing a national menu update and all the factors that can influence this change. To ensure ongoing profitability for franchisees so that their business can grow, it is important to not only monitor progress, but also to do forecasts of the things that could impact on it. We know that supplier costs and other expenses such as fuel and electrici...

Pre-approved funding solutions Interested to find out if you qualify? Call us, we can help. If you are thinking of of buying your own franchised business, but are unsure just where and how to start — talk to us. Enroll for the Pre-approved Funding Programme and we can help you achieve your dream of owning your own franchise. It is not too late to get your ducks in a row! SA Franchise Warehouse has been hosting franchise orientation workshops for the better part of five years, empowering aspiring entrepreneurs to make informed decisions about their futures as business owners. With each workshop we attempt to tailor our programme to address the needs of the attending candidates and it soon became apparent that there were two overriding concerns — firstly, to understand the various aspects of the franchise industry and secondly, candidates very much want to know if they would, in fact, quality to become a franchisee and particularly whether they could afford it. Knowing that you ...

The indirect effect of Budget 2015 on SMEs Petra Rees South Africa’s tax plans for the next three years have just been announced by Nhlanhla Nene, the country’s finance minister. The Budget 2015 will directly impact small and medium-sized enterprises (SMEs), but there are also indirect effects – such as the weakening Rand and power shortages – that are just as significant. The growth rate in South Africa is expected to be around 2,5% this year, although the National Treasury has just revised this figure to 2%. The deficit must be kept under 3% of the GDP, which explains the government spending, tax and borrowing plans announced in the Budget 2015.  “Government spending is very high on the agenda and must be tightly controlled in order to reach those targets. If the government doesn’t succeed, South Africa will be downgraded to a junk status by the rating agencies. A further downgrade would put the Rand under severe pressure which would have a ripple effect on the whole e...

Arrival of Domino’s Pizza in SA creates real jobs Since its successful launch into the South African market in April last year, followed by the opening of six stores from October 2014, Domino’s Pizza has already made a noteworthy contribution to job creation around the country.  The six restaurants effectively employ over 180 people, and more than 300 jobs will be created with the opening of an additional 12 restaurants by the end of March 2015. The company estimates that it will open or convert 125 stores in 2015, adding further socio-economic development initiatives. Domino’s Pizza employs a range of employees, including those who function as trainers, general managers, assistant managers, behind-the-counter crew and drivers, as well as head office staff. Ongoing skills development is taking place with 22 employees already having completed in-depth training of between two and five weeks in Miami, Florida, USA, with the Domino's Pizza International team. Further, Domino...

Grow your Business through Acquisition Michael Naidoo Whilst organic growth is an important element of any business as it is a source of shareholder returns, the impact of growth through an acquisition can be more beneficial for any business. Michael Naidoo, CEO of FNB Specialised Finance says, “The key to growth through acquisition is taking advantage of good opportunities and could be a quicker, cheaper and less risky proposition to grow your business. Furthermore, acquisition offers a number of other advantages such as easier financing and instant economies of scale.” Managing the risks involved in an acquisition can be equally complicated. Acquisitions might provide business owners with a way to grow and strengthen their companies, but they can also present unique challenges.  Naidoo explains that “for a smooth acquisition process; a solid and comprehensive strategy needs to be put in place. Before contacting the company you want to buy into, research and ge...

The impact of Budget 2015 on SMEs Petra Rees At the end of February Finance Minister Nhlanhla Nene announced the tax plans for the next three years as part of the national budget, and in it he showed his support for the smallest enterprises in South Africa, by giving tax relief to small and medium enterprises (SMEs).  Micro businesses with a turnover under R335 000 will not pay tax, previously this threshold was R150 000. This news has the backing of small business owners, who will now have extra money to support their growth. “We work with a lot of start-ups in our incubation programmes and this is a fantastic way of getting entrepreneurs thinking of starting a new venture. We really welcome this move by the government,” says Petra Rees from Lean Enterprise Acceleration Programmes (LEAP), a subsidiary of PLP Group.  The biggest challenge facing SMEs will come in the form of indirect taxes, as the fuel levy and road accident fund levy are both set to increase from t...

Franchise Model - the muscle behind BODYTEC® SA Boris Leyck What began as a trip to South Africa during the 2010 Soccer World Cup has resulted in a booming business.  When Boris and Sandra Leyck launched their first BODYTEC®* studio in South Africa in 2011, Electro Muscular Stimulation (EMS) used in day-to-day strength training was a relatively new concept, and BODYTEC® was the first studio of its kind in the country. Now, almost four years on, the fitness solution that promises leaner, stronger figures from a mere 20 minute workout a week has grown from strength to strength, and the company has grown rapidly through a robust and successful franchise model.   “While we were aware of the success of similar concepts overseas, nothing could prepare us for just how well BODYTEC® would take off in South Africa,” says BODYTEC® SA founder, Boris Leyck, who was instrumental in identifying the opportunity for a sustainable franchise model and bringing the international techno...

Why sharing a meal with others is good for you Pertunia Tsotetsi In a world where everything is fast, instant and on the go, the idea of slowing down or being delayed just doesn't fly. While a rapid pace is good for getting things done fast, it’s also not too difficult to lose track of the simple things in life when hurrying through life. Like sitting together and enjoying a meal as a family. Pertunia Tsotetsi, marketing manager of The Fish & Chip Co. shares more on the importance of spending time together while dining.  In the 21st century, instant gratification is the order of the day. If it is not readily available at the click of a button, it’s just not good enough. This is especially true in the fast food industry, which allows a person to eat anywhere, and with 24 hour establishments now open, any time also. With many companies capitalising on this ‘24/7 instant availability’, consumers have grown hungry for instant access – no matter where they ar...

Domino’s Pizza feeds Cape firefighters and volunteers As fires continue to rage on the Cape’s Southern Peninsula, Domino’s Pizza’s two Cape-based stores in Tableview and Vredekloof have been providing firefighters and volunteers with a continuous supply of pizza to sustain them during this exhausting battle.  Domino’s Pizza has also donated pizza to residents evacuated from an old age home in Muizenburg. “While donations have been coming in to relieve families who have had to abandon their homes, the firefighters and volunteers have been out there almost continuously among the smoke and flames without much relief, and we felt we wanted to support these brave men and women with food to strengthen them and keep them going,” says CEO of Taste Holdings, Carlo Gonzaga. “Drivers from both our Cape stores are making regular trips to make these deliveries and we will continue to do so until the fires are controlled. This is our way of saluting the heroes who are fighting so hard ...

Top SA business and franchise expo rebranded     Thebe Reed Exhibitions has rebranded and expanded its successful Business Opportunities and Franchise Expo in line with changing trends in South African business. The annual expo previously known as the Business Opportunities and Franchise Expo will now be staged under the banner THE BUSINESS, ENTREPRENEURSHIP & FRANCHISE EXPO, reflecting the increased focus on entrepreneurship in South Africa. Brad Hook, Business Development Director at Thebe Reed Exhibitions, says the expo name recognises the wave of entrepreneurial spirit sweeping South Africa. “We feel the time is right to adjust the brand positioning to ensure that the show reflects the growing trends in the start-up, SME and franchise sector,” he says.   Built on a proud 22-year tradition of helping to grow South African businesses, the BUSINESS, ENTREPRENEURSHIP & FRANCHISE EXPO remains the premier Southern African platform for business a...