Franchising seen growth area for Nigerian SMEs as Africa Franchise Centre launched in Lagos

Franchising has been identified as the next growth area for African small and medium start-ups. This was disclosed Tuesday when the Africa Franchise Centre (AFC), a groundbreaking initiative, was formally unveiled in Lagos.

The AFC is set up to “rescue African SMEs and create prosperity on the continent”, by acting as a recruiting center, and providing an alternative means of growth, franchising, which eliminates the major risks and uncertainty associated with starting up a new brand.

The initiative was set up after the study of growth of small and medium enterprises (SMEs) in Nigeria, which identified indiscipline, poor work ethnics, lack of structures and transparency as key reasons for the lack of success in SMEs beyond infrastructural and financial pitfalls.

Ademola Abbas, special adviser on overseas affairs and investment to Akinwunmi Ambode, the Lagos state governor, who represented the governor at the event, described the initiative as a welcomed development from the private sector.

“The launch of AFC will enhance the opportunities of our youths by taking advantage of franchising that would expose them to international trade relations” he said.

Jennifer Woods, commercial attache, at the US Commercial Service in Nigeria estimates the Nigerian market of franchising to be worth $100 billion.

“Franchising is still relatively unpopular in Nigeria despite its increasing growth in other African countries especially South Africa,” said Tony Zammarieh, managing director of Eat ‘n’ Go, a franchisee of Domino’s Pizza and Cold Stone Creamery for Nigeria, adding that understanding franchising is important for anyone wanting to embark such journey.

“One must weigh its pros and cons,” he stressed.

According to Zimmarieh, there are five important reasons why one might be attracted to franchising, including brand’s name, which is of the most value to both the franchisor and franchisee; training and support, the franchisor must provide the training and support needed in design, supply chain, launch of new product; and responsibilities as franchisee must deliver the same standard as the franchisor.

Others are cordial relationship between the franchisor and franchisee because a franchise is a teamwork; and lastly contractual obligations, for both parties must follow the obligations stated in the contract in order to facilitate a smooth running operation.

Pat Utomi noted that “in franchising, discipline is key”. He said that despite the high returns on investments in Nigeria, people do not want to franchise their businesses.

Ejike Ekwebalu, managing director of Africa Franchise Center, announced at the occasion the major programs of AFC to be initiated in 2018, which include publication of ABC of franchising in Africa due in Q1 2018; public road shows in Nigeria, South Africa, Kenya and Egypt also in Q1 2018.

Other programs are AFC Expo, which is set to be annual and to take place in the second quarter of 2018 and AFC Capacity building initiative taking place all year long will include training, financing and partnership.