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SME's - why is franchising not more popular in Africa
Written by: Dr. Rob SmorfittArticle Overview: Why are franchises so seldom seen in Africa?
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Free Download - SMEs – SMEs struggling in South Africa. Why? By Dr. Rob Smorfitt |
SME's - why is franchising not more popular in Africa
Franchising has found a happy home in South Africa, but you seldom see franchises in other African countries, or at least not on the scale that they are in South Africa.
Is the problem the lack of spending power in these countries? Are the markets too small? Is poverty too big a factor in these economies?
Even South Africa has found this to be a problem. However the South African franchises have also found a solution. Some of the franchises have launched small format stores to cater for lower traffic volumes. These are seen in petrol stations, and exhibition halls and other low traffic areas where a normal format store would not be cost effective.
Also, why so few indigenous franchises. South Africa has generated a fair number of it's own franchises and some like Nando's have taken their product internationally. Why not other African countries?
There are some meals, such as samp and beans and bunny chow for example, which I believe are uniquely African, but which could easily be turned into a successful franchise opportunity.
So what is stopping Africa from entering this lucrative market?
Rob Smorfitt
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Article Tags: Africa, entrepreneur, entrepreneurship, franchising, SME, SMME, Smorfitt, South Africa
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About the Author: Dr. Rob Smorfitt RSS for Dr. Rob's articles - Visit Dr. Rob's website  Have an MBA and a PhD in entrepreneurship. Three key areas of ongoing research are entrepreneurship and innovation in large business strategy, the impact of legislation on SME development and SME finance. Run my own SME blog at http://sme-smb-smme.blogspot.com as well as an entrepreneurship and innovation for large businesses blog at http://innoveur.blogspot.com I have been self-employed since 1982. I have started or purchased in excess of 50 businesses since then. Most were sold again and a few were shut down because of a lack of profitability. Many were run by staff or family while I worked full time in my bigger businesses. Author of 6 books. Written articles for various magazines, newspapers and websites. Experienced in research within developing countries.
Click here to visit Dr. Rob's website  
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Related Forum Posts
Re: In-House or Outsource?
- Unfortunately, in the South African context, very few SMEs see outsourcing as an option. They believe it is too expensive, and they are paranoid that someone will "steal their ideas".
I believe that the three main functions that cannot be outsourced are marketing, sales and strategy. These must be done in house I believe. If you do not have the marketing skills then get them. Hire a consultant or attend a course, but get the skills. Even if you use a consultant, you need to understand what marketing is about, as no one knows your market like you do. Marketing is made to seem difficult and complex, but everyone who really understands their markets, can easily learn to do their own marketing.
In South Africa, labour legislation is extremely inflexibile, and consequently labour broking is a large industry. This is an ideal starting point for SMEs in South Africa, as it is a legally complex area, whih comes with severe penalties.
I say do it!
Rob Smorfitt
Is The E-Myth The Ultimate Franchise Guide?
- Ever since the E-Myth made its way through to becoming one of the most popular books for entrepreneurs, the number of small business owners who have come to me discussing franchising has exploded.
Is the E-Myth the reason why so many companies are now looking at franchising their business model?
Are there any other resources you can suggest for new franchise owners or people considering it as an option?
Any franchising horror story?
- I am always writing about the benefits of franchising in this forum.
Although I don't own a franchise I do believe in franchising is a great business model.
Do any of you have horror stories to share about franchising?
Re: need advice
- Africa is a pretty big place I think it is a question of where in Africa you would like to open a call centre. South Africa for example actually has plenty of call centres already operating, so it would very much depend on what part of Africa you are considering.
MichelleJ
Re: STARBUCK - Licensing vs Joint venture
- [quote="bmueller47":czemqiul]I often come here to learn something, therefore I would like to know what is the real practical difference between licensing and franchising. I might have an answer, but you are at the forefront with your knowledge.[/quote:czemqiul]
Very good question. Although I am not an attorney, I will do my best to highlight what I believe are the main differences between franchising and licensing.
First, here in the US, franchising is very regulated buy the Federal Trade Commission. Not anyone can franchise, you have to go through various steps. Licensing doesn't come with as much regulation.
The franchisee can expect to have a very close relationship with his franchisor. In most cases, the franchisor will offer training, and on-going support. The franchisee will be able to use the franchisor's copyrights, trademarks, logo and so on. The franchisee is like the public face of the franchisor. This is I think the high value of franchising. Also, a franchise agreement will most likely define territories.
The relationship between the licensee and the licensing company is much looser. In most cases, the licensee won't be able to retain the rights to trademarks, company name, etc and will have to establish his own identity in the marketplace. Licensees rarely get a protected territory which means you next door neighbor could be your competitor...
Obviously, franchising is more expensive than licensing because you get a certain "safety". Again, franchising is highly regulated whereas licensing is not.
There are many other differences between franchising and licensing but I think these are the main ones.
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