How to take your franchise across borders

This according to FNB’s head of franchise, Morne Cronje. He said many brands have made aggressive plans to further grow their African operations. “There is still much scope for growth if you’re thinking about moving into Africa,” he added. “We can expect to see similar announcements from listed franchisers as well as their unlisted counterparts who are continuing to capitalise on rising consumer spending and development across our borders.”

Cronje explained that a few factors needed to be considered before taking that first continental plunge. He further expressed that there was a lot of intercontinental rivalry.

The non-executive board member of Taste Holdings, Grant Pattison added, “As a South African you are competing with many global brands, and as a result you may not be the preferred supplier in the market. In many instances a United States or United Kingdom investor is much preferred.”

Cronje said franchisers should invest in extensive research of the foreign market. “Brands are defined by customer needs and wants,” he added. “This not only ensures that your brand will be successful but also services customer needs. The challenge is to be operationally flexible but nevertheless true to your core strategy and brand.”

Pattison explained that businesses began their growth strategies in neighbouring countries first, such as Lesotho and Swaziland followed by Namibia, Mozambique and Zambia, and bypassed Zimbabwe. “Then, if you succeed here, consider East and then West Africa,” he added. “On the upside, the worse the logistics challenges, the higher the margins.”

Cronje added that franchisers would need local expertise to navigate the regulatory tax and legal environments. “Before any decisions are made, franchisers are encouraged to cultivate good local networks as well as learn from other companies,” he said.