Trends in Franchising
Although fast food and restaurant concepts pioneered franchising and dominated the sector for decades, this is no longer the case. This does not mean, however, that food chains are on the retreat. On the contrary, established food brands continue to expand their presence and new ones are coming on stream all the time.
A case in point
Famous Brands Limited, the JSE-listed owner of leading brands including Steers, Debonairs, Wimpy, House of Coffee and Fishaways, now operates a total of 1 165 units. Revenue for the year 2005/6 amounted to R669,2 m, an increase of 44% on the previous year. This, combined with improved operating efficiencies, led to an increase of 38% in earnings per share and enabled the company to push up dividend payments for the full year by 67%.
CEO Kevin Hedderwick is understandably proud of these results. More importantly perhaps, he is also extremely confident about the company’s future prospects, expecting rampant growth to continue until at least 2010. He has firm plans in place to open 140 new units during the coming year. Beyond that, he has set a target of at least 100 new units per year over the medium term.
Leveraging diverse strengths
Famous Brand’s success record is impressive, but this is not where it all ends. If one looks beyond shareholder interests for a moment, it becomes clear that the company’s development impacts positively on the creation of new enterprises and employment opportunities. This has been made possible through the proper implementation of franchising by combining the power of a large corporate with the hard work and dedication of individual franchisees.
The end result? Without doubt, a whole that is greater than the sum of its parts. Taking this one step further, if one considers that there are about 400 franchise concepts active in this country, it becomes clear that for franchising, the sky is truly the limit.
Inroads into other sectors
For the past two decades at least, the franchise sector has expanded beyond food. Forward-thinking entrepreneurs have adapted the concept to the needs of a steadily growing number of other industry sectors. This way, franchising’s growth is almost unaffected by temporary hick-ups in the economy.
Especially retailers and all manner of service providers are beginning to make their presence felt. Household names like Pick ‘n Pay, Italtile, Pam Golding, Boston Business College, Specsavers and Coastal Hire illustrate the wide variety of sectors that can be franchised.
Especially in the case of retail and other site-dependant sectors, the main factor slowing down growth is a severe shortage of good sites. Perhaps this is the reason why more recently, mobile franchises offering a wide range of services from home cleaning to computer repairs make significant inroads. As many other ‘firsts’ in franchising, this trend evolved in the United States, popped up in the UK next and is now making inroads in South Africa.
In addition to the ‘who’s who’ of traditional franchised brands, whichfranchise.co.za lists a number of mobile franchise opportunities. We expect this sector to experience above-average growth in the near future and you can rely on us to keep you informed. All you need to do is visit often!