The Franchise Association of South Africa’s Awards for Excellence in Franchising, sponsored by Sanlam, reflects what’s trending in worldwide consumer circles and cements the franchise community’s commitment to growing the economy and to job creation.
The results reflect trends identified by the Nielsen Consumer 360 survey, which looks at the key drivers that will shape consumer opportunities until 2025. It shows that as South Africa’s population becomes more urbanised, with different product and service needs for the Generation X and Y’s, there will be a keen focus on the health and wellness sectors.
Health and fitness: The trends to watch
The FASA Awards this year clearly reflected those worldwide consumer trends in health and wellness in the two top awards:
Kauai as Franchisor of the Year – who continue to ride the trend wave in the health food revolution are reaping the rewards for their innovativeness.
“We are thrilled to be judged ahead of the curve both in consumer trends and in brand strategy, says Guy Le Ray Cook, Franchising Executive for Kauai. “Not only have we had our best year in 22 years of trading with 25% year on year growth and 4% improvement on Net Profit percentage, but we have upped our game in introducing innovative communication strategies. From being the first to market with our new app that includes order ahead, loyalty and cashless payments adding a minimum of 5% additional overall sales in loyalty transactions – to introducing our K Konnect platform that allows everyone – from kitchen staff to franchisees to get information and share day-to-day experiences on a live cell phone platform.”
Body20 with their Brooklyn, Pretoria branch taking the Franchisee of the Year Award – who’s 20-minute EMS (Electro Muscle Stimulation) training per week, has revolutionised how we keep in shape.
So confident are Body20 that their revolutionary EMS Studios will become one of the most influential fitness franchise companies in the world – they are opening new studios in South Africa at a rate of almost one a month and have already broken into the USA market with great success. Says Bertus Albertse, CEO of Body20; “The combination of state of the art EMS Technology, modern personal training and rapid fitness results make Body20 the most exciting franchise opportunity in fitness this decade. It’s a low-staffing business model, with fast break-evens and impressive returns – our 36 outlets in just over three years attests to that.”
Communication is the key to success
What has shown up quite clearly in the 2018 FASA Awards is the franchisor’s commitment to assisting franchisees weather the economic hard times through innovative communication strategies – whether through their field service monitoring or reaching their markets through the latest customer loyalty apps.
- Kauai who took a second award in Brand Builder of the Year is leading the way by establishing successful customer loyalty apps with key partners such as through the 93 Virgin Active Health Clubs and through Discover Vitality and Discovery Insure – building their customer base, raising their brand awareness and boosting their bottom line.
- Kauai’s field service consultant Lawrence Lindeque won Field Service Consultant of the Year through the effective business monitoring and mentoring of the franchisees in his area resulting in double digit growths in all his stores.
Contributing to job creation
Job creation is on everyone’s lips since President Cyril Ramaphosa set a goal of creating half a million jobs in the next year. A tall order, one might argue, but with franchising’s duplication model, this is the one sector that can make a meaningful contribution – the sector’s 845 franchise systems, 40 500 outlets employing close to 400 000 people and contributing 13.3% to the country’s GDP – is testament to that.
KFC took the Job Creator of the Year Award – with their 20 500 employees across 1 053 outlets since they opened their first outlet forty years ago, they take the lead in making an incredible contribution to job creation. If one adds the indirect jobs they create through their supplier network and partners, their contribution is compounded and to be lauded.
Hall of Fame Award salutes Ian Fuhr, the man behind the Sorbet brand of Beauty Salons
Behind every successful brand is an entrepreneur with the vision to take a concept and build it into a household name. This year the Franchise Association have honoured Ian Fuhr, entrepreneur extraordinaire, who revolutionised the franchising model with his Sorbet brands by redefining customers as ‘guests’ and staff as ‘citizens’ – putting service and support ahead of sales and profit. The culture he installed in his businesses is that, ‘if the service is excellent and the citizens feel validated and cared for… the money will automatically follow.”
Sanlam, sponsor of the FASA Franchise Awards is proud to be associated with the Franchise Association of South Africa, the body representing the franchise industry in South Africa. “South Africa is in dire need of economic growth” says Kobus Engelbrecht, Marketing Head, Sanlam Business Market.
“Franchising is an effective way to create new businesses as well as new employment opportunities that will stimulate this much needed economic growth. By recognising and rewarding outstanding performance in the franchise industry, we are building and promoting franchising as a business concept as well as an excellent career option.”
Vera Valasis, Executive Director of FASA, who has just returned from representing South Africa at the World Franchise Council reports that, whilst the effects of global economic turbulence is affecting some countries more than others, almost all report that franchising is still alive and well and making huge contributions in their respective economies and to franchising globally. “As a global phenomenon, franchising remains one of the drivers of entrepreneurship, small business development and job creation.”
The 7th Annual FNB Franchise Leadership Summit
FNB Business remain committed to helping grow this very important sector and are well positioned to provide solutions supporting franchising as it evolves with these themes.
The franchising sector has shown steady growth over the past four years, in a tough economy from contributing an estimated 9.7% to the country’s GDP in 2014 to its recent figure of more than 15%, according to the Franchising Association South Africa (“FASA”) 2018 survey. This trend is expected to continue.
The survey further highlights that 78% of franchisors are optimistic about future growth in their businesses. Around 30% of franchises are now owned by previously disadvantaged South Africans, with one in three franchises turning over more than R20m per annum. This together with the fact that on average a franchise employs 18 staff members (the sector employs more than 370 000 people), makes it clear that as a business model, franchising remains critical to the future of South Africa.
Given the FNB Franchise Leadership Summit theme this year – “the future of the franchising sector”- I thought it would be good to reflect on some of the key trends we are noticing in this very dynamic space…
1. More Multi-Unit Owners, and franchisees owning multiple concepts
What happens once you have mastered the tried and true formula franchises have designed for their franchisees? If you’re like many franchise owners, you start opening another location. And then another. By recreating your success in multiple locations, you can quickly grow your revenues and increase your business’ sustainability.
Many franchisee owners are also opening other, non-competing franchise offerings as they grow their businesses in an effort to diversify earnings.
2. Smaller, more cost-effective franchise models
Among the new frontiers in franchising is the food court losing its legacy as the preferred setting for food franchises, as service stations increase in popularity in the industry. Many brands – including Steers, Debonairs and Mugg & Bean On-the-Go outlets – are co-locating with major fuel retailers to create fully-integrated accessible centres. Looking at new, less expensive alternate locations beyond the shopping malls and strip malls to expand into stand-alone kiosks, food trucks, corporate catering, campuses, sporting events, craft markets, is a major trend.
3. Niche markets
Consumers increasingly prefer local businesses over national brands. Some of the bigger brands are looking for creative ways to tackle this situation by tagging with local businesses and this trend is on the rise. Niche markets are gaining traction. Whether it’s in offering a unique ‘gourmet’ food experience, craft beer or whether it’s in the environmental space of energy saving technology or recycling, these are where many new opportunities are to be found. With the increase in social awareness, social responsibility is a part of any business, small or big.
The current generation of consumer is challenging the role that business plays in society and franchises have wonderful platforms to play a positive role and in so doing win customers.
4. Increased customisation/ personalisation
In a world of increased consumer choice, it is no longer about what you have on the menu, it is now about how your product or service can be tailor-made to what a customer really wants. The success of RocoMamas speaks to this – with 61 franchise outlets their business model clearly responds to the essence of this trend by allowing consumers to create their own burgers, and increasingly consumers want the ability to create their own dining experience.
5. On-demand products/ services
Amazon is a great example of this – same day delivery is becoming the norm in the age of instant gratification – I want it now! Differentiation through delivery remains a big opportunity.
6. The significance of online and social media
Social media is how your customers chose to interact with brands, whether to express anger, inquire or to show appreciation. It is no longer about the question of should a business use social media or not, it is now more about how a business uses social media. Today’s digital-savvy customers are highly choosy about online buying. Some key points to consider:
- You need A Responsive, Interactive and up to date Website
- Customers should be able to view your website perfectly on any device
- Data Analytics is Important – Like it or not, your data is what drives your business
- Seemless and Safe digital payments are critical.
There is no doubt that franchising not only offers viable business opportunities, but also ensures that franchisees are better equipped to weather the tough economic environment. We at FNB Business remain committed to helping grow this very important sector and are well positioned to provide solutions supporting franchising as it evolves with these themes.
Be Your Neighbourhood’s Best Buddy
Ubuntu is a treasured part of South Africa’s heritage – but it could be better applied in parts of the country’s business sector, believes Richard Mukheibir, CEO of Cash Converters.
“Businesses operate most sustainably when they are entrenched in and care about the community that surrounds them,” he says.
“Ubuntu means we are people through our interactions with each other and I firmly believe that a people-centred approach like that should be a strong thread in sound business development.”
Embedding yourself in the community is also good for business – as long as you authentically and truly work at being your neighbourhood’s best buddy, he says.
“Be about helping people get on with life, about making their lives easier,” he advises. “We always encourage new franchisees to take a fresh look at the neighbourhood where they are setting up so that they can be active participants and not just providers or suppliers.”
Corporate social responsibility applies some of this thinking but, says Mukheibir, if it is a “parachute drop”, one-off activation in a community, this is far less convincing than sustained communication and cooperation.
Cash Converters places such emphasis on this that it is a major focus of the strategies implemented by the company’s Local Area Marketing Manager Juan Botha. This approach enables each franchise in the group to be in touch with its neighbourhood through social and other local media challenges, giving them added strengths locally while being supported by the advantages and professionalism of national and international 21st-century business systems.
“All franchises and chains are aware that branches represent the company on the ground,” says Mukheibir. “But Juan opened our eyes to the importance of being good neighbours and not just another store along the street.”
If you are a neighbour buddy by acting as a central, participating and unifying figure in the community, your neighbourhood will in turn work for you. You can build awareness by sponsoring local events such as food festivals, cycling races or trail runs, especially if you can offer part of your own site as a venue, for example.
Related: Cash Converters Franchise Listing
You will establish real, long-term partnerships, though, by working consistently with community gatekeepers, from schools and welfare groups to gyms and conservancies. Adopt a community project and encourage staff to give their time and effort and this will generate goodwill that will be reflected back at you.
Such activities are about a lot more than column inches in community media, says Mukheibir. Building good relationships with communities can enhance your brand’s reputation, he believes. But being your neighbourhood’s best buddy can also make an important contribution to social cohesion.
“Plenty of people hark back to the good old days of mom-and-pop stores when everybody in the neighbourhood looked out for each other,” he says. “It’s not just nostalgia to want to rebuild that in our society – it makes sense.
“We all need to contribute to the safety and stability of our neighbourhoods, whether we are individuals or businesses. The season of goodwill is fast approaching – why not see what difference your business can make in your neighbourhood by then?”
Clean Out, Clean Up – And Win Big With Cash Converters!
Spring is on the way and Cash Converters is celebrating the season of renewal with a bigger than ever Spring Clean Sale – and this year it gives you two very different opportunities to cash in.
From 24 August to 2 September, you can help Cash Converters spring clean all its stores nationally by snapping up discounted items across all their different product categories. Then in the second phase starting on 3 September, Cash Converters returns the favour by giving away R200 000 over 20 days! A total of 100 customers will win cash prizes in this Spring Clean Special Draw of R10 000 per day from 6 to 25 September. To enter, all you need to do is sell Cash Converters an unwanted item that you have decided to spring clean.
Sorting through your cupboards for items that are in good condition but rarely used and that you are ready to sell could put you in line to be one of the lucky winners of a fistful of cash that will make your budget stretch further or give you a head start for early Christmas gift buys. If you have not yet managed to act on this year’s resolution to declutter your space, here is an excellent incentive to make good on that goal.
Many of us have items crowding our homes that turned out to be bad buys, were unwanted presents or are outdated for our needs. Trading in these items can help you trade up to something that suits you better – as well as giving you the chance to be one of the lucky cash winners!
Get ready to cash in on:
- Spare phones, computers or cameras
- Unused power tools or exercise equipment
- Unwanted jewellery and watches
- Unnecessary kitchen appliances and electronic goods
- Surplus gifts or inherited items
“Essentially, we are paying you to spring clean!” says Richard Mukheibir, CEO of Cash Converters. “Even if you are not fortunate enough to be one of our daily cash-prize winners, you will be cashing in on items you do not need. That is a welcome boost to anybody’s wallet with petrol prices and the VAT increase still eating away at our income.”
Apart from all the excitement around the opportunity to win big, the outcome is win-win for everybody, says Mukheibir. Whatever you choose to trade in for cash in hand could well become the treasure that somebody else has been looking for. He believes the Spring Clean process also has an important message for South Africans.
“We are specifically running this promotion during Heritage Month because it helps enable a key change in mind-set that we need to entrench if we are to live sustainably on our beautiful planet,” he says.
“It has been estimated that the City of Johannesburg’s landfills will be full in just six years’ time, for instance. But enabling items you do not need to have a second, useful life, or astutely buying quality second-hand items you do need, is taking action on the reuse, recycle, repurpose message of our times. That makes you one of the savvy consumers who are doing what they can to save our planet for future generations.”
Related: Cash Converters Franchise Listing
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