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How franchisors are shifting to confront the challenges of Covid-19

Franchises have been an integral part of South Africa’s cultural and business landscape, through good times and bad, for over 40 years – and Covid-19 is forcing the sector to innovate like never before.

South Africa’s affinity towards franchises dates back to the early 1980s, when a Johannesburg restaurant placed a single advertisement in a local newspaper seeking franchisees for their new burger chain idea.

The advertisement generated hundreds of enquiries, and within two years it had expanded to a chain of 15. Today, that humble restaurant, now known as Steers, has more than 600 branches – and it remains one of the most successful businesses of its kind in South Africa.

But South Africa’s franchise story is bigger than a single burger chain. There are more than 800 franchise businesses across almost every commercial sector in the economy – from automotive operations and supermarkets, to home improvement, beauty and wellness.

Collectively, franchises contribute some 15.3% to the country’s GDP – a figure that puts it in the top five worldwide. And their resilience, even during economic downturns and tough macro economic conditions, have consistently made them attractive businesses to run.

TOUGHEST CHALLENGE YET

Although historically the franchise sector in South Africa has withstood economic volatility, nothing could fully prepare it for the impact of Covid-19.

‘None of us expected this to happen,’ says Sapna Naran, group marketing manager at Sorbet. ‘You always expect other economic and environmental factors to come into play, but not something at this magnitude. It was a shock to all of us.’

Nedbank economist Busisiwe Radebe says that most businesses in South Africa have been hit hard by Covid-19 – but she still favours franchises over independent operators.

‘Covid has had a negative impact across the board,’ says Radebe, ‘but I think you are always safer with a franchise than without. Although the smaller mom-and-pop stores may be nimbler than franchises, they’re simply not going to have the muscle behind them that the franchisee has.’

STRENGTH IN NUMBERS

Trudi van Niekerk, chief executive officer at Nando’s Licensed Markets, believes that customers are going to make choices based on brands that they know and trust.

‘The support of a franchisor on a strategic business level, as well as helping to navigate all the new regulations around Covid, and the buying power which the scale of a large franchised brand brings, will definitely put franchisees in a more favourable position to survive than those that aren’t franchised,’ she says.

 


Read the full article here: Partners24

Article Source: Partners24

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