Franchising and Africa

With the 2010 FIFA world Cup approaching and the globe’s tenacious soccer fans getting anxious.

One’s attention is brought to the locale of this year’s most prolific sporting event. Africa can sometimes be considered the Globe’s forgotten continent when put in the same category with Europe, North and South America and Asia.

Having worked in the International franchise world for over ten years, I am here to open business investors minds and ideas to the prospect of investing in this untapped resource and hotbed for business growth. My perspective is one from the world of franchising and licensing, but this business arena is many times indicative of the overall business market.

Rules and laws that make sense and are governed are good for business in general, but particularly for the franchise and license world. With the advent of the Consumer Protection Act this year in South Africa, it is clear that more and more so, the laws and regulations of franchising and licensing are gaining in their rigidity and structural integrity. These are signs that a defined and fruitful franchise industry for both franchisees and franchisors is potentially right around the corner.

Franchising has the potential to drastically change the employment landscape of several countries throughout the African continent. The beauty of an event like the FIFA World Cup is that it has the potential to provide a catalyst and quite literally turbo charge the growth and development that is already set in motion throughout the African business climate.

The small business sector is without doubt the answer to unemployment and overall economic strength. In every great economy throughout the history of mankind, the small business owner is the one who literally feeds global growth. Franchising is part of this growth and has been so in many great economies.

In the United States, each franchise unit creates and maintains on the average thirty-three jobs through direct and indirect means. Australia has also seen remarkable results in job creation and overall economic growth through franchising. It is estimated that with a relatively strong franchise market in Africa it could create over 1 million new jobs per year for the next several years.

Over the past five years, the international franchise community has worked closely with many African business leaders and governments to communicate to them the importance of franchising and the impact it can have on their business communities and economic standing. Job creation, poverty alleviation, economic growth and African empowerment rank high on Africa's economic recovery agenda. Franchising, with its advantages of using a proven business model, systems transfer, start-up support and ongoing operational assistance could be the preferred type of business to use as a conduit in addressing many of the economic challenges of Africa.

The bottom line is that African business people are hungry for a marketplace that is conducive to a competitive, entrepreneurial marketplace that would allow for free competition and protection of intellectual property. Over the past four years, growth in revenue from franchise outlets in South Africa has grown 48% per year. The model is working and looks to expand that kind of growth into other African countries throughout the continent.

In tandem with this growth, the U.S. franchise systems that do business on an international basis have reported considerably more activity and interest in their brands and franchise models from throughout Africa. Requests have ranged from placement of advertisements and screening of potential master license purchasers, to market research.

For example, Florida-based Sign-A-Rama currently has locations of the retail sign outlet in South Africa and has recently expanded into Botswana, Nigeria, Tanzania, Kenya, Uganda and Rwanda. Most international franchisors doing business in Africa or considering doing business have an enormously high level of interest in the African market because of the availability of prime locations and areas to locate franchise operations throughout the continent.

Africa is showing signs of growth, development and opportunity and Franchising could be the vehicle that launches the African business world into a new era. The question is….who from the Global business community will be involved and who will be sitting on the sidelines “watching the game”?

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