LATEST NEWS
South Africa’s franchises are adapting operations to move ahead post-COVID
31 July 2020
As a result of the COVID-19 pandemic, many small businesses are facing countless challenges and it has resulted in immeasurable destruction of small businesses. “Entrepreneurship is the heart and spirit of franchising but, the question remains whether the entrepreneurial flame can be re-ignited for future growth,” says the Franchise Association of South Africa (FASA).
According to FASA, South Africa’s franchise sector is represented in about 14 different business sectors which were the highest and most diverse range of entrepreneurial endeavours, as well as the most suited to lead the post-COVID recovery.
FASA’s 2019 survey showed a sector that contributed R734 billion (almost 13.9%) to the country’s GDP, including over 800 franchise systems with 48 000 outlets employing close to a million people.
FASA explained that tapping into the wave of innovation would bring about change, from online trading to mobilising creative and innovative responses, seeing the gaps in the market to re-designing and re-engineering for the future. “This is what entrepreneurs across the globe will be focusing on,” said FASA.
Franchises taking the lead to recovery and revival
Many businesses across the globe have been forced to fight for their survival and have shifted operations to accommodate an unknown economic landscape due to the pandemic.
“For franchise brands, in particular, success will require franchisors to support franchisees and customers by pivoting their business models to better suit the changing marketplace,” according to FASA. They also said that they have canvassed several member companies on their survival strategies and on their plans to move ahead post-COVID.
Franchise Association of South Africa (FASA) highlighted these franchise brands:
Car Service City
According to Natasha Bohmer, the group suffered under lockdown and had to find ways to work within the “new normal”. Bohmer said that they were assisting the franchisees to keep their overheads low and negotiating better rentals with their landlords and service providers until the economy has regained traction again.
Cash Converters
Richard Mukheibir said that the group’s business model was made up of three distinct revenue streams which are well-positioned for post-COVID recovery.
Mukheibir explained, “Second-hand goods will become an increasingly valued commodity, as the impact of production slowdowns from key markets resulting in shortages of consumer goods; the devaluation of the rand means that good quality second-hand items will have more value and be more desirable because people will be conscious about how they spending their money”
Franchise group Real Foods
Real Foods have diversified, which lists Kauai, Nü Health Food Café, Highveld Honey and other food brands in its portfolio. Real Foods said that its footprint has grown abroad by launching two new brands and has acquired a food manufacturing business.
“Locally, the franchise group has launched Free Bird, a free-range crispy chicken burger concept,” according to Real Foods.
Free Bird was initially trading as a virtual brand in dark kitchens around Cape Town, Sandton, Pretoria and available via UberEats and Mr D, with plans for physical retail locations over the coming months.
Chief Executive Officer, Dean Kowarski commented, “The various teams have also continued to work throughout lockdown on building a pipeline of projects that will be rolling out in the second half of the year.”
“I wager that the franchise industry will make a faster and better recovery post-COVID than most other business categories,” says Executive Director of FASA, Vera Valasis.
Valasis also called on the banking fraternity to step up their support within the industry. She explained that they should step up with funding solutions which are less risk-averse with simple application processes that would stimulate growth for franchisors.
“Rapid distribution growth will create jobs and stimulate disposable income; which in turn will stimulate the growth of further franchise brand growth as the industry depends largely on consumerism,” she concluded.
Originally written in BusinessTech
