Floundering businesses, lay-offs and a loss of faith in traditional work styles have had a positive upshot: a growing number of people are embracing entrepreneurship with enthusiasm.
“A lot of companies are downsizing or employees are choosing to leave on their own terms, so there’s been an uptick in people looking at new avenues, speaking to franchisors and wanting to enter the market,” says FNB head of franchising Morne Cronje. We’ve always seen that franchising is a safe way to enter entrepreneurship because you’re in business for, but not by, yourself.”
Hot Dog Café general manager Nicollette le Roux says that since December 2020 the company has noticed an increase in franchisee queries, but with little to no follow-through. “We believe that people know and appreciate that franchising offers the support and know-how one hopes for when venturing into a new business, but the uncertainty of the times is making them indecisive. Many people want to buy businesses, but the fear of investing hard-earned money prohibits them from taking the next step.”
Acquisitions by larger Franchisees
South Africa’s economy wasn’t exactly roaring pre-COVID-19, and several franchisees were in distress, says Cronje. “The second lockdown hurt many franchisees who used up their capital to weather the first storm. It’s difficult for them to stay afloat, and we are seeing a trend where larger, more successful franchisees are looking to acquire other stores. I think that moving forward we’ll see this at a franchisor level too.”
Le Roux says they’ve definitely noticed such a trend. “Many of our franchisees are aware of the opportunities within the brand and are always looking for ways to increase their portfolios. This depends on the franchisee, their financial position and their vision for the business.”
COVID-19 or not, our online habits are here to stay, and businesses need to be ready.
This has forced many franchises to fast-track ideas that might have been on the backburner, says Franchising Association of South Africa chair Pertunia Sibanyoni. “For example, a number of education and training franchises were forced to operate online over the past year and, while doing so, established alternate online courses that will continue into the future. Real estate franchises have moved to online showings and this opens up different franchise options. Those in the food sector, including some of the big names, are developing ‘dark kitchens’, drive-throughs and delivery services to supplement their main offerings.”
Cronje says the restaurant industry is a prime example of this trend. “Before the pandemic, very few restaurants had a comprehensive takeaway offering. Now if a restaurant or fast food establishment is not fully operational on an e-commerce platform, it’s missed the boat.”
Aneez Amod, MD of Jimmy’s Killer Express, says businesses need to take advantage of delivery service providers such as Mr D Food, Uber Eats and the like that already have the necessary vendor- and user-friendly apps. “Creating one’s own app is not feasible for fast food franchise outlets, so making use of established service providers works out well.”
Home is where the opportunity is
People are spending more time than ever at home, and savvy franchises need to figure out how to reach isolated consumers. Amod says fast food franchises should direct more of their marketing activities at getting potential customers to make use of online ordering systems or call-and-collect services.
“It is key to find new ways of distributing your product to the customer,” says Kauai franchise executive Guy le Ray-Cook. “Convenient access to your brand coupled with credibility or brand trust should mean you can keep your brand front of mind for your customer base, if you get the delivery channel and product extension right.”