Franchising: The year that was

17 January 2018 by Morne Cronje

2017 has been a year fraught with challenges for both consumers and business alike. South Africa has however remained an eye-catching destination for international brands looking to expand their businesses; none show this more than franchising in South Africa. Even in what is said to be tough year, South Africa has managed to attract global franchise brands.

A recent example of a global franchise brand coming into South Africa is Popeye’s, an American brand best known for its spicy chicken. They launched here in July 2017. That is on the back of Krispy Kreme and Burger King having recently launched too - even with our challenges, we still offer growth opportunities to global entities.

Some key take outs from the year that was in franchising are:

More clothing and fast-food brands: Retail franchising continued to grow in 2017. Over the past few years, we have seen more global brands like Burger King, Dunkin’ Donuts, Pizza Hut, Krispy Kreme, Dominos, Starbucks and clothing brand Cotton opening their stores in South Africa.

Growth in quick-service restaurant segment: People still value a restaurant experience. Consumers, though looking for convenience and reasonable options, still value the idea of sitting and enjoying a meal in the traditional sense. More businesses have now jumped on this bandwagon and we are starting to see more and more that fast food spaces are also playing in the “sit-and-serve” space.

Use of Online and digital channels: More franchises have embraced online and mobile methods technology to reach their customers faster, easier and relatively cheaper than the usual above the line approach. We are also seeing businesses receiving online orders from their own or third party apps which enable the consumer to order from wherever they are and whenever they want to.

Value for money: In these tough economic times, consumers will continue to ask why they should spend money in your business. If businesses ignore this, consumers are likely to shift their attention to competitors.

As we wrapped up 2017, it is important for the franchising sector to reflect on the trends that shaped the year that was. In my view, franchising remains one of the key sectors that will continue to grow steadily despite the slow growth environment. This is a trend that we have been monitoring without fail over the past years.

About the author: Morne Cronje is Head of Franchising at FNB Business