From fried chicken to ice cream and body-building supplements, international franchises are making inroads into Africa, tapping into consumers’ hunger for their brands as developed markets stagnate.
Hilton Hotels, owned by asset manager Blackstone, Yum Brands’ Kentucky Fried Chicken and the fashion retailer Mango are some of the companies driving the growth of franchising in Africa. Others in the fast food, automotive and education sectors are also expanding into the continent.
Franchising creates opportunities for African entrepreneurs and provides jobs in the formal sector, while for brands it is a chance to enter a new market at a lower cost and with a business partner who is familiar with the terrain.
“It’s an inexpensive means to expand using the money of others,” said Kendal Tyre, editor of a new book on franchising in Africa. “You have a franchisee who is coming in and paying a franchise fee to have access to your system that you’ve developed over some period of time.”
However, weak judicial systems, corruption and poor infrastructure are still deterrents for potential franchisors. The repatriation of profits from some African countries can also be difficult and there are concerns about the protection of intellectual property.