Franchising gives ambitious aspirant entrepreneurs and international investors an opportunity to invest in their own business with the guidance and support of a successful business enterprise.
South African soil is ripe for franchisees, according to the Franchise Association of South Africa’s chairman, Tony da Fonseca. “The sector already contributes 13,3% to the country’s GDP, generating an estimated R721 billion through its 845 franchise systems, 40 528 franchisees and employing 343 319 people.”
“Franchising is perfectly poised to play an even bigger role in furthering small business development, skills transfer and job creation,” according to Regus.
Despite the current tough economic climate in South Africa, buying into a local franchise still presents a lower risk of failure or loss of investment than starting your own business from scratch. But how do you get started? Read on.
Why should local entrepreneurs consider an up-and-coming South African franchise?
SA’s economic growth must come from private enterprise and the SME sector and franchising is the ideal vehicle to grow the small business sector.
The biggest benefit of becoming a South African franchisee is that securing finance for a franchise business opportunity is easier than financing an independent business. This is because most commercial banks are specialised in and familiar with the franchising industry, allocating dedicated products and services to franchise owners.
Good franchise support reduces risk for banks and investors, so ensure the franchise opportunities you are considering check the boxes of all the required traits of a franchise in South Africa, including:
- Training from successful business operators, with access to a franchise support network
- Being part of a brand means that all franchises share a similar design and layout, the same product, the same service and product quality
- Operational support from the franchisor in areas such as financing, accounting, employee training and human capital management.
- Franchise opportunities in South Africa aren’t just attractive for local aspiring entrepreneurs. Global citizens also stand to gain from launching a business with an up-and-coming franchise or an established franchise brand.
Why should international investors consider investing in a South African franchise?
Although franchising is not new to South Africa, locally, it is still a relatively young concept, creating growth opportunities with returns above the global average.
The current and consistent value of the rand makes investment in South African franchises attractive for international investors. Investing in a South African franchise requires lower capex compared to investing overseas, plus the franchise market in South Africa is robust and growing.
South Africa is among the top ten countries worldwide that is projected to have the greatest average annual GDP growth from 2016 to 2050; in 2050 the country’s GDP is predicted to have increased by 3.7%.
Additionally, government has committed to support small businesses and entrepreneurship, a move which could have a highly positive impact on growth and innovation within franchising.
What is the risk of investing in traditional franchises versus new, innovative franchising opportunities?
Traditional franchise systems may not be as innovative as new brand opportunities but seek to mitigate risk and ensure return on investment rather than fuel entrepreneurial spirit. Established franchises have to attentively avoid market saturation and consumer fatigue, but often enjoy top-of-mind consumer awareness.
Up and coming franchises require more capital than traditional franchises for development, but an emerging franchise is likely to have more locations available for you to choose from.
“If you start as part of their first few franchisees, you will have room to grow and expand your territory,” notes Franchise Help. “Show your strengths and capabilities and you could earn your surrounding territories. Once the territories are taken, you will not have this opportunity.”
While certain sectors may be saturated, strong brands with good brand equity will always thrive in competitive environments.
“A lot of emerging franchises have actually been in business for a long time, so they may have a strong business model, they’re just new to franchising,” says James Vitrano, General Counsel and Vice President – Global Franchise DevOps, Ruby Tuesday.
“Those brands present a good opportunity for savvy investors who are looking for a proven model with a low investment cost.”
What questions should you ask when considering a franchise business opportunity?
Investing in a potentially profitable franchise business opportunity requires thorough research into the best franchises to own, the most lucrative franchise investments, acquiring franchise finance, understanding a franchise agreement and what goes into owning a franchise in South Africa.
Here are some of the questions you should ask yourself before you decide to invest in a franchise opportunity:
- Is the franchisor reputable with a proven track record?
- Am I looking for an established brand or up-and-coming franchise opportunity?
- Do I have the necessary experience to enter into a business in this particular sector?
- What are the capex requirements and how much can be financed?
- What are the monthly fees (including royalty, marketing, back office)?
- Have I checked the legal requirements?
- What support will I receive from the franchisor?
- What is the success and failure rate of this franchise?
- What is the dispute resolution process?
- Can I get references from other franchisees in the brand?
Now that you have a better idea of whether you want to own a franchise, it’s time to consider franchise investments that tick all the boxes of a successful franchise business opportunity.
Investing in an IWG Franchise
Why invest in an IWG local franchise?
The Regus franchise opportunity offers early adopters a chance to enter into this growing market and diversify their investment portfolio.
The International Workplace Group (IWG) Global Workspace survey found that 79% of businesses see flexible working as a driver to success and are using these spaces to reduce capital and operational expenses. Flexible working locations also help businesses minimise unnecessary assets, manage risk and consolidate their portfolio.
“The market for flexible offices has tripled in size globally since 2006 and annual growth is around 13%, according to international real estate company CBRE (Community-Based Research and Evaluation),” notes Joanne Bushell, MD for IWG Plc. Africa
What is the Regus franchise opportunity?
The IWG has been running successful workspaces, such as the Regus and Spaces brands, since the group founded the industry in 1989.
Today, with nearly 2.5 million customers and a presence in close to 3 300 locations, they have a footprint that spans 120 countries and 1 100 towns and cities.
The flex-office market has reached a tipping point and IWG is now seeking franchise partners to help drive the pace of their global growth strategy.
IWG has launched an opportunity for those looking to invest in an exciting sector with the capacity for huge growth. IWG is seeking partners with the right skills, drive and finance to work with to develop their locations across South Africa.
A brand with deep market awareness and customer understanding, offering franchisees the opportunity to get involved early, on the first steps of a franchising journey in an industry set for growth.
Why is IWG a profitable franchise investment?
Investing in a flexible workspace and co-working franchise opportunity offers you an opportunity to diversify away from traditional franchise markets, and benefit from strong cash returns while earning an attractive return on investment.
IWG is the leading global workspace provider, with an unparalleled network of office, co-working and meeting spaces for companies to use in every city in the world.
IWG has been running successful workspaces for almost thirty years and has developed its business model through the various economic cycles. IWG boasts a proven operating model that provides partners with a highly attractive return on their investment.
What are the benefits of buying an IWG franchise?
IWG’s range of office formats, as well as its growing mobile, virtual office and workplace recovery businesses, enable people and businesses to work where they want, when they want, how they want and at a range of price points.
South Africa is leading the serviced-office sector in Africa, with the largest and most mature market, according to IWG. The demand for workplace flexibility is becoming increasingly urgent, driven by employees and employers, by customers and by cost-conscious accountants.
Some of the benefits of buying an IWG franchise include:
- Industry leader: Regus is the industry leader in the global serviced-office sector and is South Africa’s largest provider of flexible workspaces.
- Proven business model: A proven business model and track record of performance in South Africa have helped Regus establish a varied customer base – from large multinationals to small businesses using Regus locations every day.
- Established systems and processes: Regus has well-established back office systems with 24/7 client support, favourable pricing – through the Regus supply chain network – and central sales support to provide sales leads and new client introductions.
How can you become a Regus franchisee?
Step 1: Send IWG an email. Get in touch with on franchise.SA@iwgplc.com
Step 2: Regus will send you the application: IWG will send you more detailed information on the franchise opportunity, a basic application to give an understanding of who you are, what your experience is, what your investment capability is and what regions or areas you are considering.
Step 3: Complete the application and send back. Send IWG the completed application form so that its skilled and experienced team can assess the information and schedule a meeting to present a complete franchise solution.
Step 4: IWG will schedule a meeting with you. Details regarding locations and site evaluation as well as development plans and timelines, training and the steps to opening your IWG franchise business will be discussed in this meeting.
Contact For More Franchise Information
If you have the drive, resources and commitment to lead the workspace revolution as an IWG franchise partner, get in touch with IWG’s Franchise Team.
Alan.vanderwesthuizen@regus.com – Head of Partnership Growth – South Africa