Although SA’s R100 billion plus food retail franchising business was lucrative and had a minimal failure rate, it was a difficult environment that required newcomers to have huge amounts of business management experience and capital, patience and a willingness to learn, according to Thabiso Ramasike, Standard Bank’s head of franchising.
Entering the food retail sector was made more difficult by the fact that it was among the most expensive franchise sectors, and previous experience in retail or in managing related ventures was a critical success factor for prospective entrepreneurs wanting to crack the industry.
According to Ramasike, a small retailer’s franchises sells for nothing less than five million rand, while category “A” super brands go for anything up to R45 million, and as a result, franchisors and banks usually insist on newcomers having prior experience or else expect them to be prepared to go through “a very steep learning curve”.
He noted that prospective players should always consider starting small, and then graduating into the big league over a period of time. Read more.