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How Cash Converters Grew Through Franchising

Franchising can provide quick access to capital, which is great if you’re looking to grow your business. But the franchising system isn’t without its challenges. Cash Converters MD Richard Mukheibir offers some advice for those looking to expand through franchising.

GG van Rooyen

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richard-mukheibir

Vital stats

  • Player: Richard Mukheibir
  • Position: Managing Director
  • Company: Cash Converters
  • Retail Turnover: R500 million+
  • Visit: www.cashconverters.co.za

In 1993, a business partner showed Richard Mukheibir a promotional video for Cash Converters, a company that was then showing quick growth in its home market of Australia.

“I was in IT, so I never really pictured myself becoming a second-hand retailer,” laughs Mukheibir. “But the more I thought about it, the more it made sense. This was just before the political changes of 1994, so we felt fairly sure that there would be a big expansion of the middle class. We would see much more upward mobility, which could be great for a brand like Cash Converters.”

Before long, Mukheibir was on his way to Australia. He liked what he saw and signed a contract to receive a master licence for South Africa. Two months of training followed.

Related: Cash In On South Africa’s Burgeoning Second-Hand Goods Market

Buying into a brand

“I’m often asked why we didn’t simply replicate what Cash Converters was doing in Australia. Why spend so much money on buying into an overseas franchise?” says Mukheibir. “There were two reasons for this.

“Firstly, even though the brand wasn’t known in South Africa yet, we liked the idea of bringing in an established and respected brand. At the time, second-hand retail didn’t have a great image. It was seen as dingy and somewhat unsavoury. Cash Converters had reinvented the concept and brought it into the modern age. We wanted to be a part of that.

“Secondly, I had an IT background, so I knew very little about the retail environment. It was important to buy into a franchise that would provide the training and expertise needed to set Cash Converters up in South Africa and run it successfully. To me, that is the whole point of a franchise system — it offers a proven business model that you can replicate. If a franchise doesn’t offer that, you have to question what the value is. Thankfully, that wasn’t the case with Cash Converters.”

When money isn’t a problem

Another great advantage of franchising is the ability to expand your business without having to bankroll that expansion yourself. In South Africa, Cash Converters embraced the franchising system and has managed to grow very successfully because of it. The business currently boasts 80 stores with another 20 in the works.

“The franchise model allows you to grow relatively quickly, since franchisees help to fund your growth. So, while access to capital is usually one of the biggest barriers to growth, it isn’t really the case with franchises,” says Mukheibir.

“But it brings with it some other challenges. When money isn’t a problem, for instance, you can be tempted to grow too quickly. Just because you have the money to grow, doesn’t mean that you should grow.

Related: Cash Converters Franchise Listing 

“There have been many instances where we’ve decided to slow the company’s growth, simply because we felt that the timing wasn’t right. We’re interested in long-term success, both for ourselves and our franchisees. We want multi-unit franchisees who stay in the business for decades.

“If you grow quickly through franchising, you might raise a lot of capital in the short term, but it could damage the company in the long run. It’s not just about the number of stores you have, you also need the structures in place to support your franchisees.”

Finding the right people

Cash Converters

According to Mukheibir, the biggest barrier to growth for a franchise company like Cash Converters lies in the finding of promising new franchisees.

“Finding great franchisees is our biggest challenge,” says Mukheibir. “We are very particular about the people that we allow to join the brand. It’s not just about the money, it’s also about the skills and energy that a person will bring to Cash Converters. For instance, some level of business acumen is very important to us. We want people who know how to run a business.

“Even more importantly, though, are the values that potential franchisees have. It all starts with values. Skills can be acquired, but you can’t force your values onto someone else. So, we start off by looking for people who share our values — who will act with integrity and always treat employees and customers with respect.”

People who can make the business model work

And how does Cash Converters go about finding these people? The most obvious way is to simply sell franchises to existing franchisees. By setting up multi-unit franchisees, the company knows that it’s dealing with people who can make the business model work, and to whom they would need to provide less training and support.

When it comes to new franchisees, Mukheibir and his team treat every interaction with a potential franchisee as a sort-of ‘interview’.

“We pay close attention to how prospective franchisees conduct themselves. If someone promises to send through a document the next day, does he or she actually do it, or does the paperwork arrive a week later? We try to find out if people are as good as their word. Once again, it’s all about values.”

Treating franchisees like partners

Cash Converters spends a lot of time finding the right franchisees, because it views them as partners.

“The success of your business depends on your franchisees. If they’re not making money, your entire business can collapse. Treating your franchisees like a revenue stream is a sure way to failure,” says Mukheibir.

“So, we treat franchisees like partners in the business. We visit stores regularly, and spend at least a day in each one. We also hold conferences where we explain the strategy of the brand and ask for input from franchisees. It’s important to us that franchisees feel as if they are part of a bigger organisation. We also believe that the brand is stronger when everyone involved is moving towards a common goal.”

Related: Jean-Pierre Seger Gives His Franchisor Perspective

Stay in touch with company-owned stores

To better understand the challenges of franchisees, Cash Converters also operates company-owned stores.

“These stores are a great place to test new ideas. So, we run pilot programmes in our stores, and then roll them out across our network, says Mukheibir.

“We also need to understand what challenges our franchisees face daily. Franchises fail when franchisors lose touch with what’s actually happening on the ground, which is why we operate our own stores.”

GG van Rooyen is the deputy editor for Entrepreneur Magazine South Africa. Follow him on Twitter.

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Company Posts

Muscle And Grill Is Your Daily Chef. We Provide Fresh, Nutritional Food At Affordable Prices

It isn’t always easy to stay in tune with both body and mind. We do all the prepping for you so that you can keep up your pursuit of greatness.

Muscle and Grill

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Muscle and Grill is a healthy fast food establishment based in South Africa. In the face of modern South Africa, lives spent on the go require a fuel to match their aspirations while maintaining a delicious, fast and fresh service.

As our lives swirl into life’s vast depths of opportunity, our bodies are often the product of poor health habits, while trying to keep on the move to achieve our goals. Muscle and Grill challenges this. We want to be able to support the South Africa of tomorrow by offering the food your body needs to keep reaching new heights – to keep pushing the boundaries of accomplishment with health food convenience.

At Muscle and Grill we’ve got you covered. We provide nutritional fast food that is fresh and affordable. We have your health at heart. You could start your day off with some free-range scrambled eggs or fresh oats – for lunch a mixed bowl of rice, protein and fresh vegetables – or to round off your day, replenish your mind and body with a hearty health-infused burger and all its wholesome goodness. We have not forgotten that home constitutes a hungry family who have all been active, so grab a lean beef pasta salad with some greens on the side to go.

Related: SA Fast Food Franchising On The Rise

It isn’t always easy to stay in tune with both body and mind. We do all the prepping for you so that you can keep up your pursuit of greatness.

About us

It was once said that great ideas are born from ones’ frustrations. That is exactly how Muscle and Grill came about. Having no real on-the-go option to stay healthy, or having the time to prepare to be healthy, became a huge frustration for us. We struggled to find enough hours in the day to keep up with a busy lifestyle and still eat healthy while on the move. Our work came first and our lifestyles suffered.

The vision for Muscle and Grill is to make it possible to stay healthy on the go. We want healthy food to be easily accessible for all walks of life.

Our mission is to provide quality, healthy fast-food. The food we provide is delicious and will keep you coming back for more.

Concept

muscle-and-grill

Muscle and Grill works on an almost self-service basis. The point of sale system is customer operated where you can select what meal you would like to have. Once payment has been processed electronically the kitchen staff will receive the order and prepare it to spec. Muscle and Grill will be a completely cashless business, making it super-efficient for consumers and business owners.

Related: 3 Crucial Considerations For New Multi-unit Franchisees

The concept of Muscle and Grill is partnered with Puré Frooty. Puré Frooty is a self-service smoothie bar which prepares smoothies for you at the touch of a button. You can have a store with or without a machine – the choice is yours. Both concepts look to promote the idea of healthy living on the go.

We’ve looked to compliment our values by looking after that which grounds us. Our packaging and utensils are all eco-friendly, as we believe ‘going-green’ is not just a choice of eating but of the environment too.

So, when you are ready to join the next revolution in the fast food industry contact Muscle and Grill at info@muscleandgrill.co.za or visit the website at www.muscleandgrill.co.za to inquire on our franchise options today. Achieve your goals, stay on the move and look after yourself through Muscle and Grill.

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Company Posts

Nando’s Is Firing Up The East

Carlos Duarte has been part of the Nando’s brand since inception. When his brother Fernando co-founded the flamed grilled chicken brand in 1987, Carlos soon participated in its success and today owns four highly successful franchises in Johannesburg — three in the east and one in the south. Here’s how it all began.

Nedbank

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Vital Stats

  • Player: Carlos Duarte
  • Franchise: Nando’s
  • Position: Franchisee
  • Visit: www.nandos.co.za

What were you doing before becoming a franchisee?

I was in the audio visual technology field, as an employee. Then I joined Nando’s as an assistant manager in the Savoy and Rosettenville corporate stores. Franchising was my first experience of entrepreneurship.

Why did you decide to become a franchisee?

When my brother, Fernando Duarte, launched Nando’s in 1987, I noticed its quick growth and wanted in on the action. Being assistant store manager prepared me for when the opportunity to run my own store came along soon after.

What prompted you to partner with Nando’s?

I joined Nando’s in 1991 as a joint venture partner. At the time, Nando’s hadn’t yet franchised its operations, and the JV partnership meant the brand owned 51% of the business, while I owned 49%. My first franchise store was in Edenglen in 2001.

Related: (Watch) Why Nando’s Is Clucking Its Way To The Top

Describe some of the challenges of running not one, but four franchise locations

At the Edenglen store, we initially battled with sales and getting feet into the store. To be honest, I think the area was overtraded at the time, so it wasn’t the best location. Since acquiring the store in Lambton, Germiston, another in Greenstone and a third in Comaro, I’ve learnt to be cleverer in how I do things — and how I handle some of the same challenges — and learn every day from the brand itself.

Name some of the benefits you’ve experienced as a Nando’s franchisee

Nando’s is 31 years old this year. We’re in 30-odd countries worldwide with thousands of stores across the globe. As franchisees, we leverage off the dynamism of an operational business that’s known for its marketing — customers talk about our ads and they love our food.

What kind of support do you receive from Nando’s as a multi-unit franchisee?

Besides the popular marketing campaigns that attract customers, Nando’s has an extensive training manual along with a skills development training consultant who comes to the store for two days to help staff understand and implement it. The training is really effective — it has to be as this industry involves a very high turnover of staff and new skills need to be taught often.

Why is it important for a franchisee to have a good banking partner?

As a franchisee, your bank should understand your business — from operating costs, to overdraft needs and revamping expenses — so it has cash available for loans that can be approved quickly, with minimal hassle. On the technical side, a reliable mPOS device is imperative, especially for us, because 30% of our sales volumes are from home and office deliveries. It’s a fundamental method of payment every bank should provide its customers of a similar nature.


What advice do you have for budding franchisees on seeking out a good franchise brand and banking partner for their business?

  • Do your research to ensure you’re partnering with a brand that is established, well-known and expect to pay a fair price for that franchise.
  • Be aware of how the franchise brand is perceived in the market and what location opportunities are available to you as a franchisee.
  • Choose a banking facility that always has the funds available to grow your business.
  • Ensure the bank understands the brand’s business model and where you’re falling short.

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Franchisors

Make Your Business A Good Neighbour

Take your business from invisible and struggling to a thriving neighbourhood landmark.

Richard Mukheibir

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Is your business invisible to your customers? You may have fewer customers than you would like because your business does not seem relevant to those in your neighbourhood. This is an even bigger mistake than not being able to reach beyond your direct trading area.

To appeal to people – customers – you should also present your business as a group of people who help other people. This can be helping supply them with goods they need to buy, helping provide them with loans or simply being a reassuring and consistent presence in your neighbourhood.

As our Local Area Marketing Manager, Juan Botha, tells Cash Converters’ franchisees, this is about blending and fitting in like a neighbour. It is about give and take. And all of that adds up to community engagement.

Related: Effective Ways To Bring Customers To Your Door

Here are six of his top tips:

  1. Introduce the family: Cultivate a friendly, welcoming atmosphere in your shop or office. Introduce new staff to regular customers. Make sure that new customers can get to know staff through your in-store welcome boards and name badges.
  2. Find your partners: Identify the gatekeepers in your community and create partnerships with them. Think about approaching sports clubs, schools, church groups, sewing circles and book clubs.
  3. Snatch some selfies: If you have local celebrities as customers, take a selfie and post it on your social media: “Guess who came to say hello today . . .” Build relationships with local heroes and you will be able to call on them to host your in-house fun day or charity drive.
  4. Give back to business: Be involved in local business chambers and groupings as more than a participant. Show you are a good business neighbour by facilitating speed networking, hosting a speaker or sponsoring a sound system or catering for the next meeting.
  5. Adopt a cause: Identify a local charity and rally support for it.
  6. Help the community: Launch or participate in a community project – anything from an area clean-up or helping repaint school classrooms to planting trees or a community vegetable garden.

Building relationships helps you build your business’s reputation. That is because you can make people start to feel a certain way about your business and influence them positively towards you. Then, when they need something that you supply, you will be top of mind.

That neighbourhood warmth creates a sense of ownership. These prospective customers will already know how you can benefit their lives and so are more likely to become your regular customers.

They will be acting on the fact that people remember you for the experience you give them. As top American writer Maya Angelou said, their memories will be shaped by how you make them feel – not how or what you make them think. Relationships may be intangible but they can bring real value to your business.

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