Sunday Times Franchising: 2020 by SundayTimesZA

WWW.BUSINESSMEDIAMAGS.CO.ZA

2020

WHAT YOU NEED TO KNOW ABOUT THE POPI ACT WHY THE TANDEM FRANCHISE WORKS

DRYVAR FOODS SAâ&#x20AC;&#x2122;s newest food delivery service

THE EVOLVING REAL ESTATE BUSINESS

FINDING OPPORTUNITIES FOR RECOVERY IN OUR

NEW NORMAL Primary Logo

Primary Logo

Secondary Logo

Franchising2020_Cover_Final.indd 1

Priven Reddy, CEO, Dryvar Foods

2020/09/17 3:16 PM

Full Page.indd 1

2020/09/02 10:48 AM

Full Page.indd 2

2020/09/02 10:48 AM

Full Page.indd 1

2020/09/01 11:06 AM

www.businessmediamags.co.za

Published by: PIcasso Headline, a proud division of Arena Holdings Hill on Empire, 16 Empire Road (cnr Hillside Road), Parktown, Johannesburg, 2193 PO Box 12500, Mill Street, Cape Town, 8010 www.businessmediamags.co.za

Contents Sponsored feature

DRYVAR FOODS CEO Priven Reddy shares the story of his start-up business

EDITORIAL

Editor: Anthony Sharpe Content Manager: Raina Julies rainaj@picasso.co.za Contributors: Beth Amato, Samantha Barnes, Trevor Crighton, Delia du Toit, Ryland Fisher, James Francis, Caryn Gootkin, Anél Lewis, Kim Maxwell, Puseletso Mompei, Nia Magoulianiti-McGregor, Monique Verduyn, Lisa Witepski Content Co-ordinator: Vanessa Payne Copy Editor: Brenda Bryden Digital Editor: Stacey Visser vissers@businessmediamags.co.za Cover Image: Courtesy of Dryvar Foods DESIGN Head of Design: Jayne Macé-Ferguson Designer: Mfundo Archie Ndzo Advert Designer: Bulelwa Sotashe SALES Project Manager: Roman Ross romanr@picasso.co.za | +27 73 253 9440 Sales: Andre Potgieter, Andre Theunissen PRODUCTION Production Editor: Shamiela Brenner Ad Co-ordinator: Johan Labuschagne Subscriptions and Distribution: Shumiera Fredericks shumiera@picasso.co.za Printing: Novus Print MANAGEMENT Management Accountant: Deidre Musha Business Manager: Lodewyk van der Walt General Manager Magazines: Jocelyne Bayer

THE FRANCHISE ASSOCIATION OF SOUTH AFRICA Entrepreneurship, leadership, collaboration and business survival

REGULATION

In this issue of Franchising, the Franchise Association of South Africa shares how it is in times of crisis that the franchise model is tested. They add that those with strong, resilient structures and healthy franchisor-franchisee partnerships will survive and go on to prosper and become even stronger.

Why the tandem model works

ECONOMY Access to finance, the rise of e-commerce and how to survive post-COVID-19

ENTREPRENEURSHIP

HOSPITALITY

HEALTH AND BEAUTY New trends and recovery strategies

HEALTH AND HYGIENE How a global pandemic has revived this service industry

PETROL STATIONS What you need to know about the fuel service franchise before investing your money

RETAIL Why the second-hand goods stores are now cashing in

Innovation in times of adversity

AUTOMOTIVE Gearing up for recovery and growth

Finding opportunities in uncertain times

FINANCIAL SERVICES Are financial services businesses franchisable?

Unpacking the Industry Code and POPIA

SYSTEMS

REAL ESTATE Innovation and rapid recovery

EDUCATION AND TRAINING How COVID-19 prompted swift online innovation

IMAGES: XXXXXXX

COPYRIGHT: Picasso Headline. No portion of this magazine may be reproduced in any form without written consent of the publisher. The publisher is not responsible for unsolicited material. Franchising is published by Picasso Headline. The opinions expressed are not necessarily those of Picasso Headline. All advertisements/advertorials and promotions have been paid for and therefore do not carry any endorsement by the publisher.

Looking to the future

FRANCHISING

Franch_EdsNote/contents.indd 3

2020/09/17 6:44 PM

Full Page.indd 1

2020/09/16 4:49 PM

Full Page.indd 1

2020/09/02 9:21 AM

Full Page.indd 1

2020/09/09 1:34 PM

Full Page.indd 1

2020/09/09 1:36 PM

Full Page.indd 1

2020/09/14 10:39 AM

SPSP ONS ONS ORED OREDF EFAT E AT URE URE

Food and more on the move Not your average takeout delivery service, this business aims at offering the ultimate food-fulfilment service. By RYLAND FISHER

riven Reddy is used to disrupting industries. Now he has set his sights on disrupting food deliveries and the entire home delivery market. The 38-year-old tech billionaire, originally from Chatsworth in Durban, recently launched Dryvar Foods. The company will have franchising opportunities, says Priven Reddy, the CEO of Dryvar Foods and Kagiso Interactive. What the company aims to do, over time, is give away at least half of their delivery bikes to previously underprivileged youth who show an aptitude and willingness to own their own business. “If you come from a disadvantaged background and you have the skills to grow into logistics, we will empower you with a free bike and help you scale up to own at least five bikes. That is how we intend to develop more entrepreneurs. “My thinking is that, if people have a vested interest in your company, they tend to perform better. People who own the fleet will work better and be more committed to the brand. “We are also offering delivery franchises. For between R160 000–R180 000, franchisees can get five bikes, fully kitted with mobile phones, uniforms and bags.” Reddy says he is passionate about developing young entrepreneurs. “I am always trying to see how I can help the next great entrepreneur. I was lucky. I was born at the right time and everything fell into place: the high-speed internet, the info tech boom, and the launch of app stores. Today it is difficult for start-up entrepreneurs to take off because

Priven Reddy

there is so much red tape. Maybe one in 2 000 tech projects will become successful.” Reddy says that the seed for Dryvar Foods was planted three years ago when he launched an e-hailing app called Dryvar. “It did not work because we had too many problems with taxi associations. “Our drivers were threatened, kidnapped and assaulted. We did well in Phoenix in

Durban, but had to stop the service because our drivers were being extorted daily. “While we were doing the e-hailing service, we also realised that a food delivery option would be ideal for us.” Launched about two months ago, Dryvar Foods currently operates only in Durban, but plans to enter Cape Town and Johannesburg shortly. ›

“My thinking is that, if people have a vested interest in your company, they tend to perform better. People who own the fleet will work better and be more committed to the brand.” – Priven Reddy, CEO, Dryvar Foods FRANCHISING

Franch_Cover Story - Dryvar Foods_1.indd 9

2020/09/17 3:22 PM

SP ONS ORED F E AT URE

Reddy says they want to own the entire value chain. “We are going to own the fleet, employ the drivers, create employment and ensure greater safety.” He adds that they do biometrics and background checks before they hire their drivers, and now, with the COVID-19 restrictions, “we supply our drivers with masks and we have trained them in safety protocols. We screen our drivers twice a day and wash their uniforms every day. We have also launched tamper-proof seals. When your food comes to you, it has a holographic seal. If a driver tries to open the packet, it says, ‘Void. Do not accept’. “All our drivers work directly for us, so there is accountability there.” On top of takeout, Dryvar Foods has started including groceries in its offering. “Our aim is, within 24 months, to be the number-one food-fulfilment platform in South Africa. We want to be the first choice for deliveries, whether you want groceries, fast food or gourmet meals from a restaurant, whether you want frozen dinners or fresh fruit and vegetables,” says Reddy.

BEYOND FOOD Despite being so new, Dryvar is already looking beyond food. “We want to deliver

anything that can fit into a delivery bin within 60 minutes, whether it is stationery or a bunch of flowers,” says Reddy. “Our big picture is to extend our network in collaboration with Amazon. Like Mr D works with Takealot, we want to be Amazon’s fulfilment agent.” He says that Kagiso Interactive, the mother company of Dryvar Foods, has “worked with Amazon on the technology part for Dryvar Foods”. The company will use artificial intelligence driven by Amazon to determine customer behaviour. “Our app will look at how often you order certain things and then recommend similar items to what you have ordered, based on patterns. It will also understand weather patterns. For instance, if Cape Town is very cold at the moment, it would recommend that you order something that will warm you up. It is about contextual awareness.” Reddy says that he hopes to have an exclusive relationship with Amazon at some point in the future. “We do not plan on only being in South Africa. We have already started making our way into the Netherlands, Germany, the United Kingdom and Lebanon. Because of the markets we are entering, it will allow Amazon to offer small item delivery within 60 minutes, in any market place across the globe.”

“We want to deliver anything that can fit into a delivery bin within 60 minutes, whether it is stationery or a bunch of flowers.” – Priven REDDY, CEO, dRYVAR FOODs

ABOUT PRIVEN REDDY Priven Reddy is the CEO of both Kagiso Interactive and Dryvar Foods. Kagiso Interactive is a mobile applications development agency.

FUTURE PLANS A year from now, Dryvar Foods will not be a separate company, but it will be part of the Dryvar Group of companies, says Priven Reddy. “As part of the same company, you will have the Dryvar taxi service, Dryvar Foods, Dryvar electronics, flower pots, groceries, even household help. It is almost like a concierge service for your life.”

FOOD DELIVERY IS BIG BUSINESS The COVID-19 pandemic has allowed Dryvar Foods to upscale the food delivery business, says Priven Reddy, CEO of Dryvar Foods. “When we started the company, we did not expect COVID-19 to push more people to order food from home. People who did not want to order groceries online previously are now doing so; people who did not order takeout regularly are now scared to sit in a restaurant and are ordering in instead. There is a greater demand out there.”

IMAGES: SUPPLIED

NEXT STEPS

FRANCHISING

Franch_Cover Story - Dryvar Foods_1.indd 10

2020/09/17 3:23 PM

Full Page.indd 1

2020/08/28 1:53 PM

A DV ER T ORI A L

F R A NCHISE A S S OCI AT ION OF SOU T H A F RICA

FRANCHISING

LOOKS TO THE FUTURE Can the flame of entrepreneurship be reignited? By AKHONA QENGQE, chairperson of the Franchise Association of South Africa

ranchising has at its heart the spirit of entrepreneurship, but amid the COVID-19 pandemic, the question is if the entrepreneurial flame can be reignited for future growth. The franchise sector, which in South Africa is represented in around 14 different business sectors, posted an estimated turnover of R734-billion in 2019, equivalent to 13 per cent of GDP. It has over 800 franchise systems operating through 48 000 outlets and employing close to 500 000 people – representing the highest and most diverse range of entrepreneurial endeavours. The sector is the most suited to lead the post-COVID recovery. Tapping into the wave of innovation that change will no doubt bring about – from online trading and innovative robotics to a new wave of ethical consumerism and global activism, mobilising creative and innovative responses, seeing the gaps in the market, and redesigning and re-engineering for the future – is what entrepreneurs all over the world will focus on. And where there are entrepreneurs ... there are franchisors and franchisees. Despite the doom and gloom of our current health and economic situation, the board of the Franchise Association of South Africa (FASA), in its dealings with members of the association, has concluded that “we wager that the franchise industry will make a faster

800

Franchise systems

48 000 Outlets

and better recovery post-COVID than most other business categories”. Listening to franchisors and how they have quickly jumped in to assist their franchisees during the COVID-19 crisis can only stand the sector in good stead as it forges ahead to recover and rebuild. The success of franchising is largely due to the following guiding principles. • Individual business owners simply do not have the network expertise that they can tap into like a franchised system. Nor do they have, for example, the marketing expertise, a wider business view and knowledge of how others have tackled problems and found solutions. • The ability to augment their business model quickly, interpret consumer behaviour, identify problems and recognise how to solve them. • Franchisors tap into technology and use the information they glean from their systems to benchmark the way forward for the business. They analyse customer trends, growth spots, declining products and services, reasons for the change in consumer behaviour, and how to adapt products and services to the ever-changing needs of their customers quickly – crucial for the survival of businesses today.

“Listening to franchisors and how they have quickly jumped in to assist their franchisees during the COVID-19 crisis can only stand the sector in good stead as it forges ahead to recover and rebuild.” – Akhona Qengqe, CHAIRPERSON, FASA 12

• Even if individual- or family-owned business owners belong to small business networks or other industry bodies, these organisations – although they offer help and assistance – will never have the intimate knowledge and understanding of their business models that a franchisor and fellow franchisees have. • Franchisors and franchisees not only have access to the business minds within their brand, but also across similar business categories in the franchise business sector as well as the broader franchise industry. • Franchises, in general, are far more nimble, adaptable and quick to market with clever and real solutions than individuals or freestanding business owners.

500 000 Personnel

FASA hopes that franchising’s sound principles will instil confidence in the business sector for development funders, banks, landlords and other stakeholders to play their part in the sector’s recovery. The banking fraternity has a huge responsibility to acknowledge the unique benefits of franchising as well as the sector’s successful track record and how they have benefited from this sector over the years. Now they need to come up with funding solutions that are less risk-averse, with simple application processes that can stimulate growth for franchisors by way of rapid distribution growth. This, in turn, would create jobs and stimulate disposable income. Never underestimate a tough and resilient franchise industry full of talented and highly motivated people who excel during times of extreme stress and undue pressure. Their innovative thinking and unrelenting desire for success will help kick-start the South African economy, and get the wheels of job creation and consumerism steaming ahead. Akhona Qengqe

FRANCHISING

Franch_FASA - 4 Pager.indd 12

2020/09/17 9:48 AM

F R A NCHISE A S SOCI AT ION OF S OU T H A F RICA

A DV ER T ORI A L

DID YOU KNOW?

Minuteman Press International has launched a new initiative, Bounce Back South Africa, to help give back to businesses in local communities that have been hit hard by the COVID-19 pandemic. The initiative is available right now, free to business owners. Source: FASA

LEADERSHIP

LESSONS LEARNT

IN A CRISIS Franchise leaders have been sharing their experiences in trying to confront and manage the challenges of COVID-19, writes TONY DA FONSECA, MD of the OBC Group and immediate past chairman of the Franchise Association of South Africa

ranchise leaders around the world all agree that the very nature of franchising as a business not only calls for continual innovation, but also relies on the combined efforts of both franchisor and franchisee. This, it seems, could be franchising’s saving grace. Franchising is represented by the strength of the collective and highlights the importance of partnerships, which, if harnessed in the right way, can help us overcome this crisis. It has forced us, as a collective, to relook new channels and new ways of doing business, accelerate plans for introducing new products and services, and change our media and customer strategies. We have always known that the franchise business format works in good times. Now we must all prove that it will also work during the challenging times. I believe franchising can do this and that we will bounce back stronger from this. In the case of COVID-19, franchises never experienced anything of this magnitude before, nor had time to prepare for it. Now, they face new leadership challenges every day to steer their franchisees through the ruins to recovery. Franchisors share the following valuable lessons through the International Franchise Association.

HANDLING THE TOUGH QUESTIONS

Tony da Fonseca

Even though the unknown brings with it many unanswered questions, don’t shy away from being brutal in assessing the business, where it’s at and where it is going. Of primary importance is the protection of your staff and customers under the health regulations. A franchisor needs to analyse the financial state of the business carefully – both for the franchisor as the

“Franchising is represented by the strength of the collective and highlights the importance of partnerships.” – Tony da Fonseca, former chairperson, FASA

principal and for the franchisees that are operating. Investigating avenues to reorganise, reinvigorate and reset the business must be the priority.

LISTEN AND COMMUNICATE While a franchisor may not be in a position to ensure the way forward, it is important always to answer stakeholders’ questions almost before they even ask them. More importantly, put yourself in the shoes of your stakeholders – whether they are your franchisors, your suppliers, or your customers – and recognise their challenges and fears. Then assure them that, as a collective with everyone playing their part, there is hope and a way to forge a viable recovery.

BE TRANSPARENT WITH ALL STAKEHOLDERS Face your challenges head-on and address the hard issues with all stakeholders. Above all else, maintain the trust you have built up with your franchisees and stakeholders. This may mean being brutally honest and not side-stepping the important issues that affect everyone. Addressing challenges headon, assessing the situation currently facing every aspect of the business and then finding workable solutions going forward will address the negative, allay fears, and take the next steps collectively.

TAP INTO PEER FRANCHISE NETWORKS The franchise community and especially those that are members of FASA all subscribe to a code of ethics and share common values. In times of crisis, use this core group of peers as sounding boards to help when difficult decisions must be made. Other franchisors might operate in different business sectors, but they all share the same franchise principles and have all been affected by COVID-19. Arrange virtual meetings with fellow franchisors to discuss common challenges, explore new tactics and gain fresh perspectives on how to move forward. There is no question that franchising – with its tried and tested business format, and its principle of duplication and network support - is in a far better position to weather the COVID-19 pandemic, pick up the pieces and emerge stronger than ever.

FRANCHISING

Franch_FASA - 4 Pager.indd 13

2020/09/17 10:00 AM

A DV ER T ORI A L

F R A NCHISE A S S OCI AT ION OF SOU T H A F RICA

COLLABORATION

THE NAME OF THE GAME Strong franchisor-franchisee relationships are key to the success of the franchise system, writes EUGENE HONEY, legal advisor, Franchise Association of South Africa Until the Franchise Industry Code is adopted and an ombudsman appointed, and due to the nature of franchising and the often tenuous relationship between franchisor and franchisee, FASA affords its members free mediation services as part of its membership fee.

THE IMPORTANCE OF BEING A FASA MEMBER The franchise sector has not been spared during this pandemic and many fledgling franchise brands may not survive these hard times, or they may be faced with survival challenges or disputes with their franchisees. But, thanks to their business structure of duplication, strong support and a culture of working together, most established franchised brands have fared far better than independent businesses.

It is especially in these hard times that franchise businesses need the support of an industry representative that can guide them, act on their behalf, lobby government and ensure the stability, protection and recovery of this important sector, which in 2019 contributed close to 13 per cent to the country’s GDP. For many years, FASA identified the need in the South African franchise industry for an effective, alternative dispute resolution process. The intention is to provide both franchisors and franchisees with an opportunity to resolve disputes between them in a consistent, effective and efficient manner.

Thanks to their business structure of duplication, strong support and a culture of working together, most established franchised brands have fared far better than independent businesses. FASA worked closely with government to develop and refine a new Franchise Industry Code, which includes a robust mediation process, additional provisions aimed at regulating behaviour within the industry and providing for certain matters not dealt with by the Consumer Protection Act (CPA).

DID YOU KNOW?

You can browse the FASA franchise directory for accredited franchises for sale in South Africa, Africa and globally. As membership to FASA is voluntary, many new franchise brands believe that they don’t need to be members. They proceed to run their businesses as they see fit – until they encounter legal disputes with their franchisees or statutory problems for being noncompliant with the requirements of the CPA, which has a section specific to franchising. Had those franchise brands been members of FASA, their disclosure documents would have been compliant as the association, on application, ensures that a franchisor’s documents are all fully in line with the regulations of the CPA. And, if they needed help and assistance by way of a mediation session, as a member this would be offered free of charge. Now, more than ever, with an industry code in the pipeline, all franchise businesses should become members of FASA to get the backing and credibility stamp from the industry’s only representative body. This will provide them and all potential and existing franchisees with peace of mind. The best advice to anyone looking to buy a franchise is to ensure that the franchise they are buying into is a member of FASA.

FRANCHISING

Franch_FASA - 4 Pager.indd 14

2020/09/17 10:00 AM

IMAGES: SUPPLIED

he relationship between franchisor and franchisee is of the utmost importance, more so in these trying times. Now there is greater pressure on franchisors to up the level of communication and engagement with franchisees to ensure that as a group they weather the storm together and come out relatively unscathed and stronger for having worked together. As one franchisor said: “We’re all in this together. It is in all our interests – as franchisors, franchisees and suppliers – to work together for our ultimate survival.” The very nature of franchising as a collaborative business structure lies at the core of franchising’s success. The adage in franchising that you cannot have a successful franchisor without successful franchisees will sort the wheat from the chaff. And, those franchise companies that work together to fight and overcome the challenges will come out stronger.

F R A NCHISE A S SOCI AT ION OF S OU T H A F RICA

A DV ER T ORI A L

SURVIVAL OF THE FITTEST

TURNING THE FRANCHISE BUSINESS BACK ON By learning from the experience of franchisors globally, the business is regrouping and adapting, reports the Franchise Association of South Africa

lobally, we have been living in unprecedented times these past six months, facing a future that looks shaky and uncertain at best. Never before has any business experienced having to stop their activities completely, and then turn an entire system back on. Due to its unique business format, franchising was able, in many cases, to modify its business models to stay afloat, draw on combined talent and resources, and regroup to look to the future. Here are some of the critical lessons gleaned from franchisors.

ADAPTABILITY IS KEY Traditionally, the franchise industry has successfully weathered difficult economic times, with adaptability being a primary aspect of its DNA. When a crisis occurs, the franchisor is already looking at how it can adapt so its franchisees can keep moving forward. That is the beauty of “the collective” made up of franchisors and franchisees who, in times of crisis, come together to tackle the challenges, find solutions and forge a new path. A good example is those sectors that turned to online trade and home deliveries to keep their businesses going until they were able to resume full services. Others accelerated plans for new products and services to fill customer needs.

NO ONE-SIZE-FITS-ALL SOLUTION

This pandemic will prove to be the test that separates the men from the boys. Those franchisors that set up solid, ethical operations with good systems and had a strong culture of franchisor-franchisee relations will be able to work their way back to profitability. Those that chose not to abide by franchising’s stringent business practices as prescribed globally and by the Franchise Association of South Africa (FASA), and ran dubious operations could see the demise of their franchise brands. Compared to independent, stand-alone businesses hard hit by the lockdown, franchised businesses, due to the very nature of the franchise format of partnership with strong support systems in place, fared far better.

REWRITING THE RULE BOOK With franchising so reliant on hard and fast franchise agreements and stringent operation manuals, the pandemic certainly threw a curveball in terms of how to deal with system closures and the restarting and reshaping of a franchise system. While there will have to be some restructuring, good business judgement and good communication will make for a stronger and more resilient franchise industry. Now more than ever, the role of FASA is crucial in bringing together franchise brands to analyse the impact of the pandemic, to band together to lobby government for assistance in rebuilding the economy and to re-establish the sector as an important contributor to the country’s GDP. Both FASA’s current chairperson, Akhona Qengqe of KFC, and immediate past chairman, Tony da Fonseca of the OBC Group, agree that it is in times of crisis that the franchise model is tested. Those with a strong, resilient structure and healthy franchisor-franchisee partnerships will survive and go on to prosper and become even stronger.

IMAGES: SUPPLIED

There is no one-size-fits-all solution for reopening franchise systems post-COVID-19. With FASA Logo franchises in around 14 different business categories in South Africa, the challenges facing franchisors varies – impacted by the regulations, its sector, the size of the franchise group, its maturity, business culture and most importantly its leadership. Those franchisors who got involved in finding solutions – from easing the royalty responsibilities to negotiating with landlords and suppliers – will be the ones to emerge stronger. A franchise brand’s track record and reputation will no doubt stand them in good stead as they navigate getting back on their feet again.

That is the beauty of “the collective” made up of franchisors and franchisees who, in times of crisis, come together to tackle the challenges, find solutions and forge a new path.

3 | FASA | FASA & IFE Brand Principles Guideline | May 2015

For more information: Phone: +27 11 615 0359 Email: enquiries@fasa.co.za Website: www.fasa.co.za

Prepared by Worx Group

FRANCHISING

Franch_FASA - 4 Pager.indd 15

2020/09/17 10:01 AM

Full Page.indd 1

2020/09/11 12:35 PM

Full Page.indd 2

2020/09/11 12:35 PM

Full Page.indd 1

2020/09/11 12:43 PM

Full Page.indd 2

2020/09/17 12:18 PM

ADAPTING TO CHANGE

Valuable lessons from the Covid-19 pandemic Facing a global pandemic not only pulls communities together, it teaches us valuable business and life skills. Standard Bank’s Head of Franchising, André Beck, shares his insights into what we can learn from Covid-19 to build better businesses for the future. The Covid-19 pandemic has been devastating to many businesses in the hardest hit sectors. In your view, will there be any positive outcomes?

customer expectations? A high adaptability quotient is critical to sustainability and success in a post-Covid-19 world.

Business owners have seen that their businesses do not survive in isolation. They are inextricably linked to the economy, their communities, their employees and each other, which means we need to work together, support each other and do what’s best for the entire community – not just individual balance sheets. Many businesses have always operated like this, but I believe there will be an uptick in overall reasonable and ethical practices, particularly towards employees, as a result of what we have collectively experienced in 2020.

What are the biggest sector trends you have noticed as a result of the pandemic?

How has the pandemic created new cultures within businesses? Franchisees used to wait for their franchise managers to visit them before addressing challenges or concerns, but these are now handled immediately. We are closer than ever to our clients for the same reason. We can log onto our systems and instantly reach colleagues, clients or other members of our networks, and it’s not only made us more empathetic and collaborative, but we’re finding incredible solutions to the problems we’re collectively facing as a result of the pandemic.

What is the single most important quality a business should embrace right now? Adaptability. There are many aspects businesses should be focusing on, but they all come down to this trait: How quickly can you adapt your business model, products and service offerings based on new insights, data, operating conditions and

Full Page.indd 1

There has been a fundamental shift in every industry. For example, many quick service restaurants are opening ‘dark kitchens’. These are also known as ghost kitchens, cloud kitchens or virtual kitchens. They refer to central kitchens where orders are placed, cooked and then collected for delivery. The result is a larger focus on deliveries instead of customers coming into stores, smaller stores and lower rentals – all while catering to new customer demands. There has also been a significant uptake in e-commerce and online retail solutions. This covers 3D virtual tours and selections that support customer experiences through virtual platforms, as well as partnering with delivery companies to offer online ordering and deliveries. We’ve also seen brands investing in apps that support overall customer experiences. For example, imagine an app that allows a customer to order a cappuccino from their car while filling up with fuel, ensuring limited in-person contact. Our clients are increasingly investigating our contactless payment solutions, which highlights this shift in consumer behaviour.

Business owners have realised that it’s more important than ever to know who their customers are and what they need. How does this impact on-theground decisions for franchisees? Every day businesses generate hundreds – even thousands –

2020/09/14 11:09 AM

Full Page.indd 2

2020/09/14 11:09 AM

Full Page.indd 1

2020/09/16 1:49 PM

REGUL AT ION

Cracking the code

ealthy franchises both create and spring from healthy franchisorfranchisee relationships. But inevitably, where there are business partnerships, there will be disputes. Franchising in South Africa has long been governed by the Consumer Protection Act (CPA), into which franchising regulations were introduced in 2011. The Franchise Association of South Africa (FASA), however, felt the industry needed a system that regulated industry behaviour and also provided for an alternative disputeresolution process, and so formulated an Industry Code.

“One of FASA’s main goals is the promotion of ethical franchising.” – Eugene Honey, Adams & Adams

The FASA Industry Code was released for comment earlier this year. What does it mean for the industry moving forward? By ANTHONY SHARPE Eugene Honey of Adams & Adams, FASA’s legal advisor, says one of the most significant aspects of the consultation process was the incorporation of FASA’s Code of Ethics and Business Practice Guidelines – a move that was requested by the National Consumer Commission (NCC). “One of FASA’s main goals is the promotion of ethical franchising. So, with the NCC’s blessing, we embarked on a process of refining the code, arriving at one comprised of two key provisions: a mechanism for resolving disputes between franchisors and franchisees; and a code of conduct that regulates matters not necessarily addressed by the CPA.” The code provides for the establishment of a Franchise Industry Ombud to mediate disputes. Honey says first prize for the ombud will be to resolve disputes “informally, costeffectively and expeditiously”. The code also explicitly sets out Eugene the obligations of franchisor and franchisee, including those Honey pertaining to legislation, advertising, discrimination and dignity.

BREACHING THE BANK The mammoth Experian data breach of August this year, which saw the personal data of 23.4 million South Africans being compromised, was just one of four big breaches this year alone. A recent report by IBM Security found that, among the companies surveyed, the

average cost of a data breach was a staggering R40.2-million. Average time required to identify a breach was 177 days (compared to the global average of 207), and 51 days to contain (compared to 73 days globally).

POPIA and franchising

ranchisors and franchisees have until July 2021 to become compliant with the Protection of Personal Information Act (POPIA), so it’s imperative to make clear their respective data responsibilities to avoid breaches and reputational damage. The act governs how data can be collected, shared and used, with the aim of preventing data subjects from discrimination and theft. While the act doesn’t preclude you from marketing to customers or potential customers, it does stipulate how you may

IMAGES: SUPPLIED

DID YOU KNOW?

POPIA requires all business websites to have a privacy policy outlining how they utilise information, as well as a cookie notice and policy. Email disclaimers should also be updated accordingly. Source: POPIA

do so. “The biggest change under POPIA is that you can only market directly to potential customers electronically, for example, by SMS and email, if you have their consent,” explains Jesse Wrench of corporate law firm Michalsons.

THE BUCK STOPS HERE Key for the franchise model is establishing who is responsible for what. “A franchisee and franchisor will probably be jointly responsible parties under POPIA,” says Wrench. “It is very important that the franchise agreement clearly sets out who owns the data and databases, and who is responsible for managing these. This is especially true if data is at the heart of the business. Often it will be the franchisor but not always; this depends on the business model. The franchisor should do most of the work for franchisees; this is much more effective than letting each franchisee figure it out,” explains Wrench.

“A franchisee and franchisor will probably be jointly responsible parties under POPIA.” – Jesse Wrench, Michalsons

If a franchisee is found to have flouted the law and is the responsible party, they will be fined or sued for damages. “If the franchisor is held liable for the acts of the franchisee, the franchise agreement normally states the franchisee indemnifies the franchisor and the franchisor can recover the damages from the franchisee,” says Wrench. Of course, the reputational damage of such a breach will negatively affect everyone. New franchise agreements should explicitly define each party’s data responsibilities, particularly if the parties are jointly responsible. “We should review all existing franchise agreements – especially the confidentiality, data and IP clauses – and, if necessary, amend the agreement,” concludes Wrench.

FRANCHISING

Franch_Regulation (FASA Industry Code).indd 23

2020/09/16 6:47 PM

ECONOM Y

COVID-19

ith South Africa already facing a recession before COVID-19 hit, businesses have been feeling the pinch like never before – and even tried-and-tested franchises are no exception. Business owners, franchised or not, have had to come up with creative ideas to remain sustainable. Some franchisors opted to lower franchisee fees during the lockdown, while others helped renegotiate leases with landlords. Sean Stegmann, CEO of Cash Crusaders, says the second-hand goods chain rolled out digital sales channels during lockdown. “We’d been working on a digitisation

Sean Stegmann

Will franchises remain a safer bet in the economic aftermath of the pandemic? DELIA DU TOIT investigates strategy for some time now, which includes an e-commerce and WhatsApp commerce service. The pandemic forced us to roll this out sooner than planned, but it’s already working well.” This is one of the reasons Stegmann believes franchises remain a safer business model and can contribute to rebuilding the economy. “By being part of a franchise network, you’re immediately afforded a plethora of insight, knowledge and advice, giving franchisees more stability than standalone entities. You immediately have brand presence and a footprint across a region or an entire country, and access to training and upskilling for employees, which could create much-needed jobs.”

“By being part of a franchise network, you’re immediately afforded a plethora of insight, knowledge and advice.” – Sean Stegmann, CEO, Cash Crusaders

Financial access

s lockdown regulations were eased, the Franchise Association of South Africa called on the banking sector to support the franchising industry. Yet financing is hard to come by as financial institutions become more riskaverse in these trying times. Anita du Toit, an independent franchise consultant, says though financing was previously more accessible to franchisees than independent entrepreneurs, banks are now taking a closer look at the industry in which a franchisee will operate. “Some industries are better positioned for the current conditions, such as hardware, automotive repairs, courier services, wellness and weight loss,” says Du Toit. Though loan interest rates are linked to the lowered prime lending rate, banks assess applications individually. “Where franchisors offer additional support to survive these difficult times, such as extended terms for

stock purchases, applicants could get a better rate,” explains Du Toit. “As always, applicants should start by applying to their main private bank, where their consumer profile might make it easier to secure financing.” Still, says Du Toit, franchisees remain better positioned to secure funds than independent loan applicants. “All the major commercial banks have divisions specialising Anita du Toit in franchising, so that is an indicator of banks’ appetite for franchises, which are generally seen as more successful than start-ups.”

“Applicants should start by applying to their main private bank, where their consumer profile might make it easier to secure financing.” – Anita du Toit, franchise consultant

ONLINE SHOPPING BECOMES A THING Online shopping has grown exponentially in SA during the pandemic, and experts predict sustained development. According to Nielsen, 37 per cent of South Africans say they are shopping more online, compared to the 8–10 per cent of shoppers who’d made an online purchase in the year before the pandemic. Where fashion, travel and entertainment used to be the frontrunners, groceries and essentials have now gained a massive slice of market share. Still, access remains a barrier, as only 58 per cent of South Africans have internet access.

The age of e-commerce

hough South African e-commerce is in its infancy, market research company Euromonitor expects sales to double this year after a boost during lockdown. A survey conducted by Visa found that 64 per cent of South African shoppers bought groceries online for the first time during lockdown. Local e-commerce franchises are still few, but this might soon change. Anthony Phillips, CEO of Ready Made Stores, which sells ready-to-launch dropshipping stores, says the franchise has seen consistent growth in its 12 years of operation – with a large spike during lockdown. “We’ve had to hire more staff to cope with the influx. Investors are getting on board too: Lebo Gunguluza (Dragons’ Den SA) recently stepped in to run our partner franchise DropShipClub.” Online trading offers many advantages, especially now, says Phillips. “Online businesses aren’t constrained by geography and could still sell during lockdown, including in overseas markets. Dropshipping, especially, is a low-risk option, as dropshippers don’t keep stock, instead relying on manufacturers to ship directly to buyers.” Unfortunately, dubious online business offers abound. Phillips says those interested in becoming franchisees should be vigilant. “Look for franchises with longevity, a good reputation and the necessary systems and support.”

IMAGES: SUPPLIED

Franchising in the age of

Lebo Gunguluza

FRANCHISING

Franch_Economy.indd 24

2020/09/16 6:46 PM

Full Page.indd 1

2020/09/07 1:31 PM

Start Your Online Business in 24 Hours | Change your Future, today

Everything you need to start selling worldwide, delivered in 24hrs! Not everyone is a graphic designer, technician, marketeer, social guru and business person all in one, which is why we start you on the next level with a live site indexed in Google and taking trafﬁc. Everything you need on day 1.

“

Prompt, efﬁcient & kept me informed & updated. Would recommend to anyone. S tuart

Your Ready Made Store

200 + Products Google Indexed

Marketing & Technical Support

BuyAnythingForYou | General Store

YourGreatStore | 20,000+ Products

KingdomOfShoppers | 1000+ Products

RMS Partner Franchise | Free Store

CityEnd Shop | 2000+ Products

TheBabyBigStore | 5,000+ Products

247 Health & Safety | 200+ Products

KingdomOfFashion | 1000+ Products

YourBiggestStore | 10,000+ Products

TheLoveOfVegan | 200+ Products

HealthyGreenPlanet | 200+ Products

BigTimeShoppers | 30,000+ Products

www.ReadyMadeStores.co.za Info@readymadestores.co.za tel: +27 31 940 9515

Tag Online.indd 1

2020/09/17 12:21 PM

EN T REPRENEURSHIP

COVID, franchising and entrepreneurship, unlikely allies?

he pandemic may have shut down some industries, but it created opportunities for others, which is good news for entrepreneurs. It’s been a busy time for the Franchise Association of South Africa (FASA). According to acting CEO Shereen Davids, the organisation has received a substantial number of calls from entrepreneurs who have a concept that they believe could be franchised. This comes as no surprise to Amith Singh, national franchising manager at Nedbank. “The economic climate – and ensuing pay cuts and retrenchments – means that many South Africans are looking for a tried and tested business model; hence a surge in the interest in franchising.” That said, the pandemic has changed what consumers are looking for from a franchise. Brands that will do well are those that put more convenience in the hands of the consumer, Singh says, or that offer ease of

Entrepreneurs with an eye for possibilities are feeling optimistic, says LISA WITEPSKI accessibility. Consumers are also looking to brands that can enhance the way of life they have now adopted. The DIY, maintenance and office solution sectors, for instance, are thriving, thanks to more time spent at home.

A SURGE IN ONLINE LEARNING Edtech is another area where solutions are being hungrily devoured by consumers in need. For example, the Spanish-based e-learning platform Smartick was piloted in South Africa in 2017, but has found a far more receptive audience since its formal launch last year. Country manager Phillip van Ziegler says it is well placed to reach its goal of 50 000 students within the next five years.

“The economic climate – and ensuing pay cuts and retrenchments – means that many South Africans are looking for a tried and tested business model.” – Amith Singh, national franchising manager, Nedbank

Meanwhile, brother and sister duo Moses and Simangele Mphahlele are driving learning support through their company, eThuta. While the company has provided support for learners in Grades 1 to 12 since 2014, they saw an opportunity to promote self-learning during the pandemic. EThuta is providing tablets loaded with the educational curriculum to aid learners unable to attend school during lockdown. The success of the pilot programme encouraged the Mphahleles to franchise the eThuta brand under Franchising Made Easy. The first franchise will launch in January 2021 Amith and turnover is expected Singh to exceed R20-million within the next five years. Other industries to watch include AI and robotics, which have experienced a boom since the world shifted online, while the meal delivery and courier services set up by entrepreneurs to provide assistance during lockdown may have the potential to flourish as a franchise format.

New entrants to franchising MONEY SAVVY KIDS

IMAGES: SUPPLIED

Kathryn Main established Money Savvy Kids, a financial literacy programme, in 2015 and launched a franchise model in August 2019. The brand now boasts five franchises, but has had to adapt to the current business environment. “With COVID-19, we had to do a full pivot and move our content online; our business model was previously face to face,” Main says. This has affected projected growth for the next six months.

Akhona Qengqe

THE DAILY COFFEE EXPRESS An extension of The Daily Coffee, which began franchising in 2015, The Daily Coffee Express allows franchisors to operate a branded, fully operational and professionally designed trailer-mounted food and coffee service. The brand was introduced earlier this year, and one franchise has already become operational. Adriaan de Bruyn, CEO of The Daily Coffee Group, explains that a further three trailers are being built and that plans are to roll out 15 franchises per year.

A CRITICAL ECONOMIC CONTRIBUTION “If there is one sector that continues to be viable and has the robustness to recover and re-establish itself, it’s the franchise sector,” says Akhona Qengqe, chairperson of FASA. “It is a testament to the strength of the franchise business format, with its principle of ‘being in business for yourself but not by yourself’, that we are seeing franchisors and franchisees unite in the common goal of mutual support and working through the challenges they face.”

FRANCHISING

Franch_Entrepreneurship.indd 27

2020/09/16 6:45 PM

HO SPI TA L I T Y

No reservations

Ocean Basket

Lockdown restrictions have forced many restaurants and takeaway facilities to innovate, as TREVOR CRIGHTON discovers “Under lockdown, some sit-down restaurants – particularly those in the finedining space and many of the township restaurants – couldn’t participate in any attempt to pivot away from their core business. “So, for one-man bands, the little local or selected brand restaurants, the option to open up takeaways did help to pay some bills, but it’s not something that will have saved them.”

GOING DARK Dark kitchens represent an emerging global trend where brands eschew seating areas

“Some sit-down restaurants make a good business out of takeaways or deliveries, but it will never be their core business.” – Grace Harding , CEO, Ocean Basket

Turning adversity into diversity

The Dark Kitchen

ockdown hasn’t been kind to a single element of the food-service industry, but it came as a particular blow to experienced restaurateur Larry Hodes, who launched his concept kitchen, The Dark Kitchen, two weeks before President Ramaphosa confined South Africans to their homes and brought the economy to a halt. Hodes’ physical restaurant spaces, Arbour Café and Voodoo Lily Café – both in Birdhaven – and Calexico at 44 Stanley, also ceased trading, leaving him with a huge challenge. But it’s the pivot of Hodes’ Voodoo Lily Café into the Gourmet Grocer that really caught the eye. He and his wife, Annie, had been toying

DID YOU KNOW?

with ways of opening a grocer-type retailer for a few months when inspiration dawned just before Mother’s Day in May. “We were looking for ways to help people celebrate Mother’s Day under lockdown,” says Hodes, “and we sent out a message the Wednesday before on social media to ask our partners and community if they had any unique, artisanal products they were looking to sell to mark the occasion. The response was overwhelming, and in the space of 24 hours, we had turned the concept into the Gourmet Grocer in a brilliant collaboration with local suppliers.” He’s now looking to franchise both The Dark Kitchen and Gourmet Grocer to support local suppliers wherever the franchise opens. He’s also started a franchise premium coffee brand, Coffefe, to add to the mix. “Community is always going to be at the heart of our concept. That’s why, in looking to franchise Gourmet Grocer, we’re focusing on using local suppliers and sticking to our values to support other small local businesses.”

Larry Hodes says he’s seen that some restaurants rely on alcohol sales for as much as 55 per cent of their business, meaning that beverages are responsible for as much as 75 per cent of profits. Alcohol sales weren’t a major component of his sales before – except when hosting events – so his restaurants didn’t take as big a hit.

DID YOU KNOW?

The Restaurant Collective estimates that there are more than 13 000 sitdown restaurants employing 500 000 people in South Africa. and storefronts in favour of delivery-focused, centralised kitchens where orders are prepared and dispatched. Real Foods Group, owners of Kauai and Nü Health Food Café, launched chicken brand Free Bird at the end of May, venturing into the dark kitchen arena and trading as a virtual brand around Cape Town, Sandton and Pretoria with deliveries via Uber Eats and Mr D. Real Foods CEO, Dean Kowarski, says that as a group they had seen growth in deliveries before the pandemic and even more of a shift during lockdown as customers stayed home. “The increase in demand for deliveries makes a strong case for dark kitchens, but customers still want a tangible brand presence. Ideally, there should be a balance between physical and dark kitchens,” says Kowarski. “With the easing of restrictions, we are back on track to launch at least two physical Free Bird restaurants by the end of the year.”

Lucky Mazibuko

THE ZONE EMDENI PUB AND GRILL, SOWETO: MANAGING SAFETY AND SAVING JOBS “We can manage our customers’ safety effectively. We are able to educate, sanitise and protect our staff and customers. “We can save jobs and our businesses, contribute to the GDP and sustain the promotion of tourism under difficult circumstances.” – Lucky Mazibuko, The Zone, Soweto

IMAGES: SUPPLIED

cean Basket CEO and Restaurant Collective representative, Grace Harding, says that it’s challenging for a sit-down restaurant to pivot its model to survive the effects of the COVID-19 pandemic. “Sit-down restaurants are very different from takeaway places,” explains Harding. “The model is centred around welcoming people to dine on your premises. Some sitdown restaurants make a good business out of takeaways or deliveries, but it will never be their core business.

FRANCHISING

Franch_Hospitality.indd 28

2020/09/16 6:44 PM

Full Page.indd 1

2020/09/16 1:49 PM

Full Page.indd 1

2020/09/08 10:41 AM

HE A LT H A ND BE AU T Y

RECOVERY ON THE CARDS? Can the health and beauty sector survive COVID-19? By PUSELETSO MOMPEI

he industry was decimated under lockdown, says Tanya Dimas of the South African Association of Health and Skincare Professionals. “Both big chains and smaller, independent businesses suffered immensely.” After heavy lobbying, the industry was able to open up at the end of June in lockdown level 3, albeit with stringent requirements. The new protocols, while necessary, are a massive burden on already overextended operations. “Businesses that have had no income for months had to bear the additional costs of procuring extra sanitisers, protective gear and thermometers to open safely,” explains Dimas. “Larger businesses may have had more cash reserves to cushion these extra costs, but it has been a challenge for all. “People are craving some normality and are looking for tools to help them cope with these stressful stressful times. Services where we can expect to see an uptick include massages and relaxation therapies, as well as mental wellness, stress reduction and improved health. As people Tanya resume normal work and school routines, many more will Dimas seek grooming services such as hair and nails.”

“People are craving some normality and are looking for tools to help them cope with these stressful times.” – Tanya Dimas , South African

Association of Health and Skincare Professionals

SURVIVAL MODE Peace of mind is more important than ever in an industry where services are highly tactile. As clients return, business owners have had to demonstrate a higher than usual level of care and professionalism, and anticipate the concerns of patrons. “Even though we generally have stringent standards of hygiene, in the era of COVID-19, businesses have taken extra steps such as identifying hotspots in premises, putting in measures to limit the number of people occupying a common space, and having deeper cleanings between treatments,” says Dimas. With retrenchments and closures now reaching crisis proportions, many professionals have gone into survival mode. “Most professionals in the industry are women and we have seen a spirit of entrepreneurship being stirred up, with some going freelance, opening up mobile services or coming up with innovative ways of earning an income,” says Dimas. While it’s too early for these shifts to be quantified, Dimas anticipates that we may be experiencing changes that will rock the industry forever.

MEN LOOKING GOOD Karen Hill, owner of two Sorbet Man Franchises in Johannesburg, says that male grooming is the fastest-growing segment in the health and beauty industry globally, and the trend is no different locally. “We’re seeing a massive surge in the demand for men’s grooming services and products. “Grooming isn’t restricted to one segment; guests at Sorbet Man are of all ethnicities and ages, from teenagers to great-grandfathers. They are professionals, engineers, farmers, doctors, politicians, students, and everything in between.” Haircuts, shaving and pedicures are often the starting point for men’s journey into grooming. Now that it has become “socially acceptable” for men to groom and care about their appearance, they are starting to see the benefits of what ladies have known for aeons. Hill says some men pencil in a grooming session before important meetings and events to boost their confidence. With South Africa’s harsh climate, men are becoming more proactive in addressing environmental damage and the risk of skin cancer. Protective skincare products are top sellers. Male-focused salons like Sorbet Man have gained popularity because they have created an environment that feels safe and comfortable.

IMAGES: SUPPLIED

NEW TRENDS According to the recently released Health and Beauty Spa Industry in South Africa, 2020 report, one of the latest trends within the sector is that spas have responded to a rising need for mental wellness, stress reduction and improved health with additional services such as nutritional assessments, counselling, holistic personal wellness plans and coaching. Wellness tourism grew faster than other tourism, and there has been an increasing interest in alternative treatments such as yoga, reiki, mindfulness sessions and sound, light and water therapy. More spas were also offering medical aesthetics treatments, which include microneedling, chemical peels, laser and intense pulsed light treatments. Other trends include demand for tandem or group sessions and mobile spas.

OPPORTUNITIES FOR SMES There are many franchise and entrepreneurial opportunities in the sector including nail bars and mobile spas, which have been growing in popularity at company events, and wellness days as well as among people who prefer to have these treatments at home. Manufacturing and selling product ranges to spas and other retail outlets is an opportunity for SMEs. Source: Health and Beauty Spa Industry in South Africa, 2020

FRANCHISING

Franch_Health & Beauty.indd 31

2020/09/16 6:34 PM

HOW LONG DOES SARS-COV-2 LINGER ON SURFACES?

With the global pandemic reinforcing the importance of keeping homes, offices, and surroundings safe and clean, the hygiene industry is certainly enjoying a boom. By CARYN GOOTKIN

leaning businesses have grown steadily in popularity with many people now outsourcing this vital function. “Cleaning services and occupational health and safety franchises are experiencing high growth due to the pandemic,” says independent franchise consultant Anita du Toit. “Service-based franchises offering essential services tend to weather economic storms better than most sectors as they are considered necessary rather than nice-to-haves. However, extreme lockdown conditions and protocols required for COVID-19 compliance have given this category a massive boost.” In many ways, cleaning businesses make perfect franchises because they: • are affordable with low barriers to entry • have low overheads • provide repeat business • have strong branding and marketing material • offer comprehensive training • offer an opportunity to work from home • operate during family-friendly office hours. “In addition, cleaning and occupational health and safety are categories with defined standards in place, especially for health and safety in the workplace,” says du Toit. “These businesses usually have specific standards of operation to ensure that they deliver consistently and that services are standardised. They also often have well-developed branding and proven business systems, which are crucial for franchised businesses. Any potential franchisee should verify that these requirements are met before signing up with such a franchise. Franchise buyers must also insist on receiving

a copy of the disclosure document of the franchise to consider together with the franchise agreement before committing to any type of franchise.”

FEW REGULATORY REQUIREMENTS Businesses offering COVID-19 cleaning services do not currently have to conform to any uniform standards in terms of what should be treated, when, how and with what products. It is only fumigation services that must be approved by both the local authority and Department of Health.

“Service-based franchises offering essential services tend to weather economic storms better than most sectors.” – Anita du Toit, franchise consultant “There are no specific regulations on cleaning in general or sanitisation specifically for COVID-19 in South Africa,” says registered occupational hygienist and vice president of the South African Institute of Occupational Safety and Health, Harold Gaze. “The only authorised accreditation body is the South African National Accreditation System, which has not yet accredited any organisation in the cleaning and hygiene industry. To obtain a form of recognition, some cleaning companies have been certified under ISO 14000 or ISO 9000, but neither offers certificates specific to cleaning. Although not required by law, some cleaning companies opt for an Approved Inspection Authority to certify that the premises are fit for reoccupation.”

JOB CREATION The hygiene and cleaning industry is perfectly positioned to employ unskilled labour as it needs teams of cleaners. Cleaning franchises provide their franchisees with comprehensive training so it easy for someone with no previous experience to learn all the necessary skills quickly.

Mopping up the market KLEENBIN When Kleenbin entered the market in 1997, it was the first service in South Africa to design its own mobile, trailer-based bin-cleaning facility. “The business model is based on two simple premises: garbage bins are breeding grounds for bacteria and foul smells; and every area has a municipal waste collection day on which occupants must put their black bins outside their property,” says Matthew Munro, marketing manager for Kleenbin. “Nobody enjoys cleaning their refuse bins, so a service that offers a hygienic, complete sanitisation service without requiring the client to do anything – as their bins are out in the street on bin day anyway – is attractive to most property occupants.” With its simple premise and easily replicated formula, Kleenbin franchisees can easily set up their own business in a new area. “Franchisees pay R253 000 upfront, which buys them guidelines and marketing collateral, computer hardware and software, and a Kleenbin trailer, cleaning materials and consumables,” says Munro. “We currently have more than 60 franchisees in South Africa and have just opened our first international franchise in Texas. We are looking for new franchisees, especially as our client base expanded by more than 10 per cent in the period May to August this year. We feel extremely blessed that we were able to keep going and grow through these difficult times.”

The Specialists Founded in 1978 and franchised in 1984, The Specialists is a cleaning, hygiene and pest-control company with 70 franchisees in

FRANCHISING

Franch_Health & Hygiene.indd 32

2020/09/16 6:32 PM

IMAGE: ISTOCKPHOTO.COM

CLEAN SWEEP

“Information regarding the viability of SARS-CoV-2 on various surfaces continues to evolve,” says general practitioner Dr Orit Laskov. “It seems to behave like most other coronaviruses in that it prefers hard, smooth and nonporous surfaces, for example, a kitchen counter rather than a carpet or a doorknob rather than paper. The virus has been shown to last anywhere from an hour to several days on surfaces, but experts are still debating exactly how long it remains virulent or highly infectious.”

HE A LT H A ND H YGIENE

South Africa, Zambia, Botswana and eSwatini. “We are always on the lookout for successful entrepreneurs with a passion for servicing customers and growing our customer base,” says managing director, Veran Kathan. “We are expanding our footprint in Africa, with specific opportunities available in Ghana, Mozambique, Namibia and Kenya. There are also franchises for sale in South Africa, costing between R1-million and R3-million, plus a joining fee of R150 000.” Lockdown has brought The Specialists many new customers. “Our biggest growth has been in the corporate, SME and government segments,” says Kathan. “In response to the pandemic, we have also expanded our range of services to include disinfection, deep cleaning and sanitisation.”

Service Master Service Master entered the pest-control industry in Durban in 1964 and franchised its business in 1985. “We are thrilled that so many of our original franchisees are still going strong today,” says Susan Steyn, national development manager, Service Master SA. “Each of our 11 franchises – with three more opening soon – has a large territory to service to enable them to operate a viable and successful business with room for growth.” Service Master is currently expanding with a special discounted offer for new franchisees. “We are waiving our usual once-off branch purchase/buy-in cost, so a starter pack costs just R46 000 including VAT,” says Steyn. “This low initial outlay covers all the equipment, chemicals, marketing materials, software and

IMAGE: ISTOCKPHOTO.COM

THE AIR THAT I BREATHE The World Health Organization advises opening windows whenever it is possible so that fresh, clean air can replace stale air. “The novel coronavirus can remain viable in droplets in stagnant air,” says Dr Orit Laskov. “This means that ventilation can reduce the spread of the virus by improving indoor airflow. If the space you want to ventilate doesn’t allow for enough natural airflow, mechanical methods, like air conditioning, should be introduced, preferably without recirculating the air.”

training needed to start operating, making a franchise affordable for entrepreneurs looking to join. We work hard to ensure new franchisees succeed, supported by a network of other Service Master franchise holders and a franchisor with extensive hands-on experience. Our low monthly franchise fees, which only start from month six, mean that franchisees can quickly see a return on their investment.” Monthly service contracts are the bread and butter of the business and offer the highest profit margins. “Pest control services are a need, not a want,” says Steyn, “and are often required in municipal bylaws as an essential service. Once contracted, it’s easier to add services like window cleaning and microbial fogging.”

GOING GREEN Consumers are pushing for eco-friendly cleaning materials and methods in their homes and offices. Global GreenTag is one recognised certification standard that reassures customers that products have been made in the most planet-friendly way possible. Cleaning businesses are going to have to take this trend seriously to maintain market share.

FRANCHISING

Franch_Health & Hygiene.indd 33

2020/09/16 6:33 PM

SYS T EMS

Tandem franchising is an innovative way to get started in business, reports BETH AMATO

he initial cost of setting up a franchise can be hefty (usually close to R1-million) and many South Africans simply don’t have access to the capital necessary to get a business off the ground. But there is a solution. Tandem franchising is run as a joint venture between a franchisorappointed mentor and a franchisee. This involves lower initial capital input and poses less of a risk to the franchisee than a traditional franchise agreement. Eric Parker, one of the original shareholders in Nandos and a consultant and partner at Franchising Plus, explains that the beauty

“It makes sense to enter an agreement with an existing and trusted staff member.” – Eric Parker,

partner at Franchising Plus

“The current economic downturn makes tandem franchising an attractive option for corporates too,” says Parker. “If an employee is allowed to run a company branch, sales will certainly be increased and costs reduced. We’ve seen marginal branches become profitable.”

DID YOU KNOW?

South African Breweries (SAB) was one of the first pioneers of tandem franchising, enabling former employees to franchise the company’s distribution arm. Westonaria Beer Distributors was funded by SAB in 2005 and co-owned and managed by former employee David Mooi. Mooi had worked for 15 years in the company’s sales and distribution network and went on to employ 44 people.

Eric Parker

WHY TANDEM FRANCHISING? The tandem-franchising model makes it possible for a dedicated and hardworking BEE franchisee to acquire outright ownership of the franchised business over three to five years. At this point, the mentor withdraws and the arrangement converts to a standard franchise agreement. Source: Franchising Plus

TANDEM-FRANCHISING OPTIONS Component

Implementation Summary

Mentorship programme

Mentor (experienced manager) appointed by the franchisor.

Equity

Franchisee purchases minority stake, often as little as 10 per cent, to be increased over time.

Financing/ joint venture

Franchisor holds majority share until bought out. The balance of capital requirement is financed by a financial institution.

Source: Franchising Plus

Source: South African Breweries

The franchisee-franchisor

relationship

lay.Lab is a creative educational business offering sensory and “messy” play experiences for children and teens to improve physical and social development. Here, children, their teachers and caregivers are found on the floor, engaging in structured activities including things like paint, water and sand. Play.Lab founder and owner, Lianne Godfrey, started the business in 2015 in Cape Town, but its rapid growth and her limited capacity meant that franchising Play.Lab was the best option. Her franchisees need to invest wholeheartedly in promoting children’s health and wellbeing. Many of the people who approach Godfrey about opening a Play.Lab franchise are young mothers aiming to earn an income, but who still have time for family activities and responsibilities. “I am passionate about uplifting women, especially mothers, through entrepreneurial ventures,” says Godfrey. “I hope that these women triple their incomes and employ

GETTING THERE The average percentage of ownership by previously disadvantaged individuals has improved from 17 to 20 per cent in 2019. Source: The SA Franchise Market report

Play.Lab

others too.” Godfrey says that a substantial part of the franchisor-franchisee agreement is ongoing mentorship and support. A seven-day training session covering common business practices is part of every franchisee’s on-boarding package. Franchisees also learn about the materials used and are guided through stringent health and safety protocols. “I see my franchisees as part of a big family,” says Godfrey. “I am in touch with them all the time. I believe in open communication channels. All our ideas and discoveries are shared.”

GOLDEN OLDIE Steers is South Africa’s oldest franchise and has 522 stores worldwide. It opened its first store in Johannesburg in 1963 and started franchising in 1965.

IMAGES: SUPPLIED

Working together

of tandem franchising is that it focuses on support, mentoring and long-term cooperation. It is also ideally suited to black economic empowerment (BEE) initiatives. He says that many tandem franchisees have worked at the franchise for some time and are experienced in day-to-day operations. “This benefits the franchisor in the tandemfranchising deal: the franchisee is someone who is invested in the business already. It makes sense to enter an agreement with an existing and trusted staff member. In time, the franchisee can buy the franchisor out.

FRANCHISING

Franch_Tandem Franchising.indd 34

2020/09/16 6:25 PM

Full Page.indd 1

2020/09/16 1:49 PM

Full Page.indd 1

2020/09/09 1:41 PM

F IN A NCI A L SERV ICES

Are professional service businesses franchisable? SAMANTHA BARNES crunches the numbers on two franchises finding success in professional services

BUSINESS DOCTORS The co-founders of Business Doctors, Rod Davies and Matthew Levington, have selected and supported more than 40 successful franchisees, identifying key attributes. “They are entrepreneurial, are results-driven and community focused through strategic partnerships such as business chambers,” says Steve Sutton, CEO of Business Doctors South Africa. “They have a passion for business and the need to make a difference. Business Doctors are business owners first and foremost, giving these franchisees a deeper understanding of their clients’ struggles and needs.” Sutton says the Business Doctors franchise has created hundreds of jobs and is assisting thousands of business owners to increase the value of their businesses. “Sales have grown by more than 30 per cent year on year, largely driven by increased SME support and development.”

established a business consultancy with a fellow CA(SA). “We soon realised there was a great need to service individuals and SMEs in tax,” says Schoeman, executive director. The Tax Shop was established in 2001 and grew rapidly. In 2007, they franchised the concept. The business now has 73 offices throughout southern Africa, including Namibia, and offers services in accounting, payroll, tax, business advisory and various fields. In 2020, The Tax Shop was approved as an accredited company for assisting learners from The South African Institute of Tax Professionals.

“We soon realised there was a great need to service individuals and SMEs in tax.” – Bernard Schoeman, executive

director, The Tax Shop

THE TAX SHOP

Steve Sutton

This is a very successful accounting and tax franchise. After qualifying as a chartered accountant CA(SA) , Bernard Schoeman spent a few years in the UK before returning home, where he

DID YOU KNOW?

A Level 1, 100 per cent black-owned business, Business Doctors was awarded gold in the FNB Business of the Year 2019 and achieved a top 10 position in the National Small Business Chamber’s South African Small Business Awards. Source: Business Doctors

“Our franchise is unique in South Africa,” says Schoeman. “It is based on concepts we observed in the USA and elsewhere. It has been incredibly rewarding to see individuals achieve their dreams. Our philosophy is making our clients’ lives easier.” Schoeman sees a growing market for consultants. “Many companies are discovering that they can outsource their accounting, payroll, tax and other business functions at much less cost than employing somebody full-time.”

New way to trade in foreign currency

IMAGES: SUPPLIED

ccredited by the Franchise of clients if they cannot do so themselves Association of South Africa as for whatever reason. The enterprise the only foreign exchange and is accredited with Sasfin Bank, Mercantile banking franchise in the country, Bank, Investec Bank and GroBank as BeztForex confirms its real a business introducer and foreign competitive advantage is “obsession with exchange intermediary. customer service”. “Scarcity of human resources means “We provide a very that banks are not readily personalised service,” says available to assist clients managing director, Rudi with complex foreign Bezuidenhout. “Clients can exchange and global transact from their home, trade transactions,” says office or anywhere. Their Bezuidenhout. “One of the transactions are safe as biggest challenges facing they use the accounts that importers and exporters they directly hold with our involved in cross-border banking partners.” currency payments is Rudi BeztForex is mandated how best to manage and Bezuidenhout to act and trade on behalf mitigate the impact of

volatile currency markets on their business operations.” BeztForex endeavours to establish a hedging trading facility with their partner bank, without the placement of margin, or signing of guarantees or surety. Clients can convert their existing facility into a working capital or overdraft facility. With imports and exports of goods and services contributing almost 60 per cent to South Africa’s GDP, BeztForex serves a sizeable market.

FAST FACT

BeztForex has been operating since March 2012 and is currently one of the largest FX brokers in Sasfin Bank. Source: BeztForex

FRANCHISING

Franch_Financial Services.indd 37

2020/09/16 5:58 PM

AU T OMO T I V E

Tiger Wheel & Tyre lost 90 per cent of its turnover during lockdown.

GETTING THE WHEELS TO

TURN AGAIN Automotive franchises offer more benefits than risk and are well supported by the franchisor, writes MONIQUE VERDUYN

utomotive after-market franchises come at a high price, between around R1.5-million and R2-million, but they provide an opportunity for entrepreneurs to buy a business in a box – from parts suppliers and panel beaters to tyre and battery sales, repairs, and carwashes – and to benefit from proven systems and processes. Usually, there’s less risk involved because you’re not starting a business completely from scratch. But in April this year, the automotive industry shut down when South Africa went into level 5 lockdown. “We lost 99 per cent of turnover,” says Chris Farrar, managing executive of TI Auto Investments, the holding company of Tiger Wheel & Tyre, Tyres & More and other automotive franchises. “Our executive worked harder than ever on scenario planning. We are now hopeful that the drop will be mirrored by a similar recovery.” Farrar says the automotive sector was in for a shake-up regardless. “We were all juggling industry challenges before the pandemic. Sectors like workshops and tyre retailers were overtraded. A bit of thinning out will allow

those that survived to have healthier businesses in the long run. We hope to recover to about 90 per cent of 2019 levels, which requires a total reset of our cost base.”

SHARING RISK AND LEARNINGS For many franchisors, franchising is simply a route to market, enabling the distribution of their brands. TI Auto Investments is a little different because the company owns 50 per cent of all its stores. “We are not just a network,” says Farrar. “We are in business alongside our franchisees, in the trenches with them. If the market goes cold we can make decisions and implement changes and new mechanisms quickly to help stores be sustainable. Shared learnings have also led to a sense of camaraderie, especially in these tough times.” The company’s buying power came to the fore in negotiating with suppliers over the past six months. “A key benefit for franchisees of being part of a system like ours is that our executive team took the lead when it came to negotiating with Chris landlords, many of whom are not the most helpful in times of Farrar crisis,” says Farrar. “We pushed them for support, and we are continuing to renegotiate leases. Previously, tenants paid often-exorbitant rents regardless of business performance. Now, joint partnerships and shared risk are called for. We need to be invested in success together to help small businesses thrive.”

“We are in business alongside our franchisees, in the trenches with them.” – Chris Farrar, MANAGING EXECUTIVE, TI Auto Investments

Keeping an eye on vehicle crime

up to R950 000. The structure of the Digicell franchise means that franchises should see a return of investment in the first year. “If they follow the simple guidelines, the business is immediately profitable,” Bester says. “We don’t ask for marketing fees and we don’t charge franchises a percentage of their turnover. Market-related pricing means that the franchise can earn recurring revenue, which makes up for quiet months.”

FAST FACT

Figures released by the SAPS and Stats SA show that in 2019 there were 125 076 thefts from or out of vehicles and 48 324 thefts of vehicles or motorcycles.

IMAGES: SUPPLIED

ehicle crime is an endemic problem in South Africa, and it keeps the vehicle- and fleet-management industry buoyant. But the state of the economy and the increased risk of both obvious theft, such as looting or hijackings, as well as less noticeable pilfering of fuel or loads, has meant that the difference between profit and insolvency is slim. “In the digital fleet- and fuel-management sector, franchise operators who are not cognisant of this are often the ones who run into financial difficulty first,” says Lee Bester, distribution manager at vehicle-tracking franchise Digicell. Franchisees shouldn’t run into too much trouble upfront: set-up costs start at around R500 000 for smaller businesses and can run

FRANCHISING

Franch_Automotive.indd 38

2020/09/16 5:56 PM

PE T ROL S TAT IONS

Fuel for thought Opening a petrol station is not for the faint of heart. JAMES FRANCIS looks at the ins and outs of such a venture

etrol stations can be very resilient investments. Even in the tough economic conditions preceding COVID-19, the industry was offering healthy yields, leading some to call the industry recession-proof. It is a fact that, come rain or shine, people need fuel. But as if to balance this advantage, opening a fuel station is not a cheap or quickly realised opportunity. “Most people think that when they have a piece of land they can build a service station,” says Reggie Sibiya, CEO of the Fuel Retailers Association. “But there are many regulations that need to be fulfilled before building a service station. The process may take five years or more.” There are two distinct paths: one is via a franchise and the other is a dealer-owner station. Costs vary, but the cheapest options emerge at franchise level. A station also needs considerable running capital – often more than R1-million a month – and a steady, disciplined managing culture, including staff training. Reggie Sibiya

WEIGHING THE OPTIONS Franchise sites do much of the legwork, particularly regulatory and zoning requirements. But the franchisor maintains ownership of the station and property, while the franchisee buys into a lease to run the site, which could be revoked for one of several reasons.

“There are a number of regulations that need to be fulfilled before building a service station.” – Reggie Sibiya, CEO, Fuel Retailers Association

On the other hand, a dealer-owned station needs to run a gauntlet of approvals, including nearby rivals opposing it, and a station can take at least two years to build from scratch at significantly monthly costs. But in return, such a site avoids franchise fees, doesn’t need franchise approval to try new things, and gets a

Q4 petrol station, Morokeng, North West

Q4 ENTERS THE MARKET Q4 is one of the newer players in the filling station market. It was licensed in 2006 as a wholesaler and launched its first filling station around a decade later. According to Q4’s retail manager, Johan Marais, there are currently 20 stations across the country, including three diesel depots, built on a franchising model.

much larger portion of the Regulatory Accounts System (RAS), a guideline that benchmarks the operating costs of a petrol station. Owners of assets that require capital investment tend to get the most benefit from RAS.

DID YOU KNOW?

Entry prices for a franchise petrol station start at around R2-million, though typically a station can cost between R8-million and R12-million. Source: Fuel Retailers Association

More than just fuel

IMAGES: SUPPLIED

uel is the overwhelming revenue stream at a petrol station. Among South Africa’s more than 4 600 stations, up to 80 per cent of their revenue comes from the pumps. Yet it’s a volatile revenue stream, as the margins are set in specific numbers and not relative to fuel-price changes. So even if the price of fuel goes up, station owners don’t make more profit, says Sbonelo Mbatha, director and co-founder of PetroCONNECT. “The margin on fuel is typically about 10 per cent. Price fluctuations have a huge impact on petrol stations. Contrary to what many people think, higher petrol prices hurt petrol station businesses.” Reasons for this include fees from card charges, lower volumes at high prices (motorists typically order fuel by the rand and not the

litre), and crime such as leaving without paying. Such conditions can severely stretch working capital. To hedge their bets, stations are adding extra retail options such as convenience stores, food and beverage outlets, and car washes. Emerging choices include workshops, car and trailer hire, laundry services, courier delivery spots, and electric vehicle charging facilities. The Fuel Retailers Association notes that such services can be profitable, but are also often loss-leaders that attract more clients to the fuel portion of the station. Additions typically piggyback on franchising partners: a fuel franchise will

have certain brands with which it works. Whoever has the lease for the franchise site is limited to those choices, yet might enter into separate agreements with them, albeit with the franchisor’s support and blessing. At larger sites, the station portion may have nothing to do with the other stores. Dealer-owned stations have more barriers to overcome, but they can partner with any brand, including sharing premises with other businesses, regulations pending, and don’t need permission from a franchisor. This can offset the costs of the station and help the dealer own capital assets – a significant pipeline to greater profits.

“Contrary to what many people think, higher petrol prices hurt petrol station businesses.” – Sbonelo Mbatha, Co-founder, PetroCONNECT FRANCHISING

Franch_Petrol Stations.indd 39

2020/09/17 3:51 PM

RE TA IL

Cash is still king

he Cash Crusaders franchise experienced something strange after the country moved to level 3 lockdown in June. Instead of people streaming in to sell their wares when the group was permitted to start trading again, new goods started flying off the shelves. Cash Crusaders CEO, Sean Stegmann, says they were anticipating “queues with customers eager to sell,” but the opposite happened. “We realised bank payment holidays, the introduction of the Temporary Employee/Employer Relief Scheme, and closed restaurants meant people had been sitting on cash.” He says Cash Crusaders outlets are “entrenched” in the community and customers preferred travelling Richard the shorter distances to their Mukheibir stores rather than heading for malls further away. With kids being homeschooled, games, game consoles, laptops and cellphones were in high demand. So while second-hand purchases were down 10 per cent in August

A strange thing happened on the way to the second-hand goods and money-lending market during COVID-19. By NIA MAGOULIANITI-MCGREGOR compared to August 2019, new goods enjoyed a 50 per cent growth. Less second-hand stock available also pushed the move to new goods. “This is a recession-proof model,” says Stegmann of his franchise. He is looking forward to eight new stores opening within the next three months.

GOING FOR BROKE Cash Converters says their pawnbroking – or secured lending (up to R20 000) – and unsecured microfinance (up to R4 000) business has proved increasingly popular

for customers who need easy access to cash “without going through piles of paperwork and possible rejections from financial institutions”. While loans were 30 per cent quieter than last August, CEO, Richard Mukheibir, says he expects the downturn to be shortlived. “We expect the demand for cash will increase as the consequences of COVID-19 begin to bite into the economy and as people’s expenses start to increase after eating out and socialising more.” Even in these difficult financial times, he says 75 per cent of customers come back for their goods on the pawnbroking side. For the other 25 per cent, their goods are then put on the retail floor.

“We expect the demand for cash will increase as the consequences of COVID-19 begin to bite into the economy.” – Richard Mukheibir , CEO, Cash Converters

Casualties, comebacks and calamities owned by Long4Life, managed to survive months of forced lockdown, but has since reopened. Extensive marketing campaigns to maintain consumer awareness with help from employees in the form of food vouchers, meant the group was saved to file and paint another day. • Homey: All Jack’s Paint franchises are still operational despite some suffering depending on how lenient landlords were in the first five weeks of lockdown, says marketing manager, Ryan Waldauer. With retailers trading normally again by May 1, DIY picked up big time. “We saw three of our better months in a long time.”

TIME TO GET ONLINE Retail franchises need to embrace e-commerce and consider scaling down their physical footprints, says Stefan Terblanche of Argility, which provides IT solutions for retail and supply chains. “There’s either total death of the retailer, where your brand is killed, or there’s rationalisation: for the sake of survival, you scale down and shift towards e-commerce.”

Jack’s Paint Melville’s Lorraine Cox says five weeks of customers locked up at home looking at neglected paintwork saw the industry “skyrocket”. • Cheers: While a bottle of brandy was selling for R400 in the shadow market during lockdown, Liquor City was firmly corked. Though no one is popping the champers just yet, what with restricted trading hours continuing, a company spokesperson says guidance from the franchise team pre-COVID-19 prepared franchisees for the crisis. Most had no debt, were not overstocked and had the right complement of staff.

A recent report from Statistics South Africa shows that retail sales in June were 7.5 per cent lower than 2019, while the second quarter showed sales down 22.8 per cent compared with last year.

IMAGES: SUPPLIED

• Food fight: Certainly the COVID-19 domino effect has hit 50 stores of Domino’s Pizza franchises now liquidated after Taste Holdings failed to find an investor for a business already teetering pre-lockdown. That’s as Spur Corporation, whose sizzle has been fizzling since last year, is trying to claw back into a “protracted period of recovery” after local operations saw sales decline by over 80 per cent in May. Franchise and marketing fees were discounted throughout lockdown. • Face it: Sorbet franchisees breathed a collective sight of relief as the company,

FRANCHISING

Franch_Retail.indd 40

2020/09/16 5:53 PM

“ ... if you are PRESSED FOR TIME, come to the most EXCLUSIVE, EXECUTIVE, cleaners in town, we will REVIVE your garments!”

Levingers.indd 1

2020/09/17 12:13 PM

Full Page.indd 1

2020/09/16 4:52 PM

RE A L ES TAT E

he real estate industry has been severely impacted during the 2020 coronavirus pandemic. Many agencies effectively shut down for two months and then struggled to find their rhythm, thanks to erratic deeds office reopenings. But there were few signs of a slowdown for one Pretoria real estate business. “Unlike many other agents, we were busy right through lockdown,” says Wendy Hoffman, one of three co-owners of Chas Everitt’s Pretoria franchise. “June was actually our best sales month since we opened 18 months ago.” The local franchise had technologies in place to notch R70-million worth of residential sales in three months until July, despite the hard lockdown. In contrast, many competitor agents were barely operational during April and May.

REMOTE WORKING WITH BENEFITS Hoffman says their management team attributes much of its success to using the Nomad real estate sales model, a system introduced in South Africa by Chas Everitt International nearly three years ago. Its Pretoria and Sandton operations adopted the model exclusively some time ago, and

Widening the circle A franchise model based on centralised support and remote working systems has given one real estate company a lockdown leg-up, reports KIM MAXWELL

“NOMAD definitely gave us the edge during hard lockdown.” – Wendy Hoffman, co-founder, Chas Everitt Pretoria

its North Coast operation in KwaZulu-Natal launched Nomad in July. The real estate sales platform is designed for agents working remotely to have access to centralised business support systems, national and international marketing platforms, and quality training. “The system allowed us the freedom to operate as a stand-alone business, where we can structure our time and effort in ways that maximise our earning potential,” says Hoffman, outlining the benefits for her 55 agents. Wendy Hoffman

Traditionally agents operate in a “fixed farming area”, meaning they may only canvas and sell in specific suburbs. Nomad’s openarea system means its agents may list and sell anywhere. Importantly, the system liberates principals and agents from desk fees and offices, allowing the former to reduce overheads and the latter to retain more commission by working remotely only using a laptop or cellphone. “It enables agents to offer clients really exceptional service no matter where they are, and earn more at the same time,” says Hoffman. “It definitely gave us the edge during hard lockdown.” Hoffman says their Pretoria agents operate from home as a base but have cluster meetings regularly to discuss buyers and available stock. “The management team is still actively involved on the sales side. That keeps us in touch with what is happening and also with what agents are experiencing in the market on a daily basis,” says Hoffman.

Snapshot of success

acqui Young is the new principal of RealNet MacYoung Mossel Bay. The real estate veteran decided to make the switch after operating as an independent agent at MacYoung Realty. “This new franchise is my first solo venture after years of working with my husband, Trevor,” says Young. “Many highly successful women are heading up RealNet franchises around the

PROPERTY WRAP

IMAGES: SUPPLIED

n the August 2020 FNB Property Barometer, analyst Siphamandla Mkhwanazi reported a bounce back in South Africa’s property sales, reflecting an unexpected rapid recovery in market activity since lockdown restrictions eased. “Our initial expectations were for the pandemic to have a more chilling and lingering impact on activity,” says Mkhwanazi. “In contrast, the volume of new mortgage applications has rebounded beyond prelockdown levels, across the price spectrum.” Reasons for this rebound might include: • pent-up lockdown period demand • record-low mortgage rates are incentives for first-time buyers • behavioural shifts: homeowners reassessing their housing needs after lockdown.

country, so I’m looking forward to this new phase in my career. “My team needs the best tools and resources to be able to do well. RealNet offers a national marketing platform and referral network, enabling us to expose our clients’ properties to a much wider audience of potential buyers and conclude more sales quicker.”

MAJOR MOVES Johannesburg real estate enterprise Lew Geffen Estates (Pty) Ltd has new owners. Savukazi Properties, owned by Hloniphizwe and Masechaba Mtolo, will operate as the new Johannesburg franchise Hloniphizwe Motolo trading as Lew Geffen Sotheby’s International Realty. Lew Geffen remains chairman and owner of Geffen International Realty Franchises (Pty) Ltd trading as Sotheby’s International Realty, South Africa.

FRANCHISING

Franch_Real Estate.indd 43

2020/09/17 5:03 PM

EDUCAT ION A ND T R A INING

Learning curve Despite its mostly negative impact on industry, the lockdown has given some education franchises reason to smile, writes ANÉL LEWIS

he Franchise Association of South Africa warned in June that 80 per cent of franchising outlets would not survive if they could not resume normal operations. Yet for some, such as the educational franchises that have managed to adapt and step into the breach as schools closed, there have been positive spin-offs. Mini Chess, a play-education programme that develops critical skills, took “a big knock” in April as lockdown started, but it is now seeing an increase in new enrolments. “Education is one sector that has experienced a Marisa complete disruption van der Merwe globally,” says Mini Chess founder and CEO, Marisa van der Merwe. “And we found ourselves caught in the middle.”

DID YOU KNOW?

Globally, more than 1.2 billion children are learning online outside of the classroom. Source: World Economic Forum

When schools closed and extracurricular activities were suspended, there was an even greater need for programmes that could supplement online learning. Adrie Schoeman, CEO of Master Maths, also saw numbers drop as household income was affected and priorities shifted. “The lockdown forced us to move quickly to only online support, which from a technology perspective was not difficult as we already had the platform in place and many of our learners had access,” says Schoeman. However, the downside is that some of the learners did not have computers at home or money for data. Mini Chess also had its challenges. “We immediately moved online in early April with

the MC-Online pilot, which had been in the pipeline for some time. But we reached less than 50 per cent of our market online and it was difficult to reach our sponsored communities,” says Van der Merwe. Mini Chess offered payment packages and special arrangements to retain clients. But Van Der Merwe says Adrie the lockdown has had Schoeman positive outcomes for Mini Chess. It encouraged the development of the company’s own online platform and led to the establishment of a portal for its nonprofit programme. “Looking back, COVID-19 was the instigator for a lot of growth in our company.”

“THE LOCKDOWN FORCED US TO MOVE QUICKLY TO ONLY ONLINE SUPPORT, WHICH FROM A TECHNOLOGY PERSPECTIVE WAS NOT DIFFICULT.” – ADRIE SCHOEMAN, CEO, MASTER MATHS

bridging the technology gap companies and mobile network Other partnerships have also providers such as MTN and sought to bridge the technology Vodacom helped reduce gap. Siyavula, an e-learning the costs associated platform, provides free access Nearly 90 per cent of with online learning. to curriculum-aligned open students in sub-Saharan According to the Internet textbooks for Grades 4 Africa do not have access Service Providers’ to 12. Aware that many to computers at home, and Association of South households do not own a a staggering 82 per cent do Africa, over 1 000 local smartphone or computer, not have internet access, websites are either the Department of Basic according to UNESCO. already zero-rated or Education and the SABC in the process of being launched a multimedia learner approved for free access over support initiative to provide fixed or mobile data. educational programming.

FAST FACT

IMAGES: ISTOCKPHOTO.COM, SUPPLIED

ack of access to computers and/or internet connectivity for students limits their educational opportunities. Cue a global pandemic, which effectively moved all teaching online, and this divide has widened, with far-reaching repercussions for our country’s already unequal education system. When schools closed in March, the government responded swiftly by zerorating educational platforms aligned with the national curriculum, enabling learners and teachers to access content for free. Publicprivate partnerships with telecommunications

FUEL ONLINE “Fuel’s vision is to enable every organisation on the African continent to have a learning management system to empower and uplift employees securely and effortlessly. Our clients have maintained and improved training delivery to hundreds of thousands of frontline workers across Africa throughout the COVID-19 pandemic.

Our innovative low-bandwidth solution has enabled them to train employees on their own devices without incurring data costs. Our social peer-to-peer learning and webinar tools have aided learners in getting the required education, while still feeling connected during challenging times.” – Gavin Gamsu, CEO, Fuel

FRANCHISING

Franch_Education & Training.indd 44

2020/09/16 6:27 PM

Full Page.indd 1

2020/09/14 11:02 AM

Full Page.indd 1

2020/09/14 11:03 AM

Sunday Times Franchising: 2020

Articles inside

SYSTEMS

REAL ESTATE

PETROL STATIONS

EDUCATION AND TRAINING

RETAIL

AUTOMOTIVE

FINANCIAL SERVICES

DRYVAR FOODS

ECONOMY

HEALTH AND BEAUTY

HEALTH AND HYGIENE

ENTREPRENEURSHIP

REGULATION

HOSPITALITY

THE FRANCHISE ASSOCIATION OF SOUTH AFRICA