Exploring the benefits of franchising: Insights from the Standard Bank Franchise Summit
Business franchise owners shared the benefits of different franchises at the Standard Bank Franchise Summit on Wednesday. Standard Bank Economic Insights believes that there is a positive outlook for the South African economy for franchises.
Peter Moyanga, Franchisee Multi-store owner for McDonald's, said that he owns 18 McDonald's restaurants in Gauteng, Mpumalanga, Northern Cape, and the North West provinces. 'I employ more than 800 people who fall under the age of 18-35. There are advantages when you start a franchise business; this includes there being less risk vs starting a new business as you have something that is already successful.'
Moyanga added that with a franchise, there is trademark and goodwill. 'The experience of business is also not a prerequisite for franchise business. I first had a dream of opening a restaurant while I was a student in 1981 when my uncle took me to a restaurant in Johannesburg. I started to do my research by reading and asking questions about what it means to open a restaurant business. I was determined to be a business owner, and for me, the key to this is passion, control, independence, achievement, growth, creativity, designation, and persistence.'
Moyanga said that when he opened his first McDonald's store, he faced challenges as he had partners that were supposed to come on board, but unfortunately, they let him down.
'Lucky for me, it was Standard Bank that came on to assist me to be able to open McDonald's stores in South Africa. The cost of acquiring a franchise is much higher and more set and less flexible than, for example, when you open your own business. But that's the cost of being there. Franchisors need to be independent in their business. At my stores, we start our people right down at the bottom from high school, and we grow them. Other people in my business started with me 18 to 20 years ago, they're still there,' Moyanga said.
Sheldon Tatchell, the founder of Legends Barber, said that he comes from a community called Eldorado Park in Johannesburg. 'This community, as you know, is inflicted with violent crime, and I learned the skill of barbering in my community at the age of 14 years old. Fast forward to 2011, I was working at a bank; however, I still dreamed of becoming a full-time barber. A dream that was really becoming a reality, but taking baby steps in the process. I can only remember that I had a clipper and a chair, nothing else.'
Tatchell added that he would go on a scooter to customers, driving all over as a mobile barber. 'While riding on a scooter, I had this vision of a mobile bus, being fully equipped with all the steps needed to give haircuts. In 2013, I had a bus that made this services mobile. Two years later, there were 30 Legends shops across the country. We faced challenges during the COVID-19 pandemic in 2020, where the beauty industry was closed for four months. Legends Barbers relaunched in June 2020, and we have rebounded with over 75 stores in five countries.'
Lee Langenhoven, Senior Manager, Economic Insights at Standard Bank South Africa, said that he believes that the South African economy is heading in the right direction. 'For the foreseeable future, there is a good chance that there could be another decrease in interest rates following last week's interest rate cut. I do think there could be most likely, probably with a 60% probability, another 25 basis points reduction, which would not necessarily come at the next meeting in July, but could maybe be put on hold until September. But I do think that 25 basis points would be the last one.'
Langenhoven added that if you look at just spending patterns, across the economy, confidence seems to be returning. 'To a certain degree, certainly a little bit better than a year ago. If you look at growth in retail trade sales year on year, this is real, real growth. We see over the last few months that the price of retail sales grew at an excess of 7% towards the end of last year.'
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