Topic: OVERVIEW OF FRANCHISNG

Abbey Mutumba- +256 712 683334 (MBA,BCHM, NEVI International)

abbeymutumba@yahoo.co.uk; abbedax08@yahoo.com; amutumba@mubs.ac.ug

Franchising Researcher/MUBSFranchise Development Executive / Abbedax

3RDFRANCHISING AWARENESS WORKSHOPTHEME: ENTREPRENEURSHIP AND JOB CREATION THROUGH

FRANCHISING IN UGANDA(July 28, 2011; Hotel Triangle Kampala)

Content

• Overview of Franchising• Your Challenge• Studies on the theme• Q&A• Way Forward

Overview of Franchising What is Franchising?

• The practice of contractual replication of a successful, time-test and proven business model by franchisees with permission and guidance (flexible, adaptable, mutual success-driven support) of the franchiser in right environment.

• Commercial Vs Social/Micro-franchising

• It is a collaborative strategy where both parties are committed towards mutual success and multiplier benefits to other stakeholders in the market.

• Franchising is for any organization that enjoys proven success and uses a branch network or any portfolio organization

• Franchising Parties/Stakeholders include the franchiser, franchisee, franchising lawyer, government bodies, the relevant professionals, and other stakeholders

• IT IS ONE OF THE WORLD’S PROVEN ENTREPRENEURSHIP, JOB AND WEALTH CREATION STRATEGIES in countries like USA, China, UK, India, Malaysia, Brazil, South Africa, Egypt, Zimbabwe, Kenya, and very soon Uganda among others.

• HOW DO YOU BENEFIT?

Entrepreneurship and Job Creation Benefits• No matter which form and/or type of franchising, the following benefits await you as a;

1. Franchisee- Safer and more easier to succeed in starting-up your business - Your own business With support/parenting from the time-tested and proven franchiser--etc

2. Franchiser- Using other people’s money (OPM) and entrepreneurial efforts/abilities to quickly expand the business especially in unfamiliar and complex markets like Southern Sudan - Extra revenue and profits from the franchise fees--etc

3. Any other party or stakeholder such as a franchising consultant, lawyer, and accountant among others. LET US BRAINSTORM NOW!!! At least 5 benefits per category?

Your Challenge (opportunities and threats)

• Success belongs to those who are ready for the opportunities and threats

• Franchisers are aggressively starting to target the youths in their franchisee recruitment and selection programs e.g Valpak Entrepreneurship Award Program (Tammy, 2010)

• The world’s leading brands are now entering Uganda and East Africa through franchising, which is a entrepreneurship, job and wealth creation strategy- OUR THEME TODAY

• Our government is including the promotion of franchising into Uganda’s national competitive strategy besides other initiatives

• The up-coming Abbey’s Franchise Show which will bring out the untapped franchising opportunities for you in East African towns like Arusha, Bujumbura, Kigali, Kisumu, Iganga, Masaka, Fort Portal, Arua, and Eldoret

• THREATS: Franchising Environment, Few local Franchiseable Brands/Franchisers, and the Youths (universities and schools) are not yet involved BUT Tammy 2010’s article titled ‘Youth Movement in Franchising’

7

New graduates Small entrepreneurs Unemployed Redundant labor from Privatization Women

TARGET GROUPSTARGET GROUPSTARGET GROUPSTARGET GROUPS

Source: Social Fund for Development- Egypt

Example: SOCIAL FUND FOR DEVELOPMENT “ SFD”

EGYPTIAN FRANCHISE DEVELOPMENT ASSOCIATION “EFDA””

Example: SOCIAL FUND FOR DEVELOPMENT “ SFD”

EGYPTIAN FRANCHISE DEVELOPMENT ASSOCIATION “EFDA””

vocational trainingthrough production:

dressmaking, carpentry car mechanics,

metal works, construction, shoemaking, etc

vocational trainingthrough production:

dressmaking, carpentry car mechanics,

metal works, construction, shoemaking, etc

community programmes:

crèche, youth club,library, internet café,

art promotion

community programmes:

crèche, youth club,library, internet café,

art promotion

trainingwithout production:

computer applications, commercial subjects,

academic coaching centre, arts

trainingwithout production:

computer applications, commercial subjects,

academic coaching centre, arts

Young Africafranchises

each department to local teachers /

entrepreneurs

Young Africafranchises

each department to local teachers /

entrepreneurs

AN EXAMPLE: Entrepreneurship and Job Creation through franchising development through training +

training through franchise (Source: Young Africa Franchise in Gambia)

Young Africa – integral training of underprivileged young people

2 centres in Zimbabwe (2001 & 2005), 1 centre in Mozambique (2007)

Choosing the Right Franchise Partners

RightFranchiser

(Franchiseable Brand)

Favorable FranchisingEnvironment-Franchising awareness

-Associations-Franchising

laws-Infrastructural development

Right Franchisee

(Preparedness)

Franchise Strategic Fit-Complimentary

resources- Cultural fit at several levels

- Shared innovations-Competitive

corporate image- Mutually beneficial working relationship

Mutual Franchise Success

Studies on Entrepreneurship through Franchising• General agreement among the respective researchers that

franchising is a better entrepreneurship strategy especially for those who are less experienced/disadvantaged BUT have the POTENTIAL

• Selected Findings & Conclusion by Mutumba, (2010) on ‘ Perception of Franchise Purchase as an Entrepreneurship Strategy’ -Lecturers, consultants, teachers, facilitators, policy makers, etc who have proper understanding and positive perception of the franchising strategy motivate and properly guide their clients using SUCCESSFUL CASE STUDIES, and VICE VERSA

- The findings disagreed with Watson & Kirby, (2004) whose findings showed that respondents within the lower age brackets (the youths) have the lowest level of understanding of the franchising concept.

Selected Implications and Further StudiesI. Lecturers/facilitators need to be guided on how to choose the right

case studies and where to encourage and/or discouraging their customers about franchise purchase as an entrepreneurship or business start-up strategy in Uganda and East Africa.

II. More Ugandan franchising research, development, and publications is needed

III. ANY SUGGESTIONS FROM YOU?

Areas for Further Studies; 1. A bigger study that includes other dep’ts of other business schools

universities, institutes, and secondary schools that teach/facilitate on areas of ‘Entrepreneurship, Job Creation, and Franchising’

2. A research survey on a similar topic like ‘The Public Perception and Efficacy of Franchise Purchase in Uganda’.

Job Creation through Franchising: CASE STUDIES

1. McDonald’s (the world’s leading food service retailer, with more than 30,000 franchise restaurants serving 52 million people in more than 100 countries), as at 2009. How many jobs has it created now?

2. Uganda’s Warid Telecom has grown to 50 AREA FRANCHISEES, each one running about 700 outlets/shops, each outlet employing at least 20 staff, which continues to create an estimated 70,000 jobs for you and me. WHAT ABOUT THE LIKES COCA COLA, PEPSI COLA, WHITE ROSE, THE PETROL STATIONS, NAKUMATTIS, SHERATONS IN UG?

Some Franchiseable Brands for You• International Franchisers

• Uganda’s Local Franchisers (1st 3 brands are Current franchisers, MUBS & UgaChick can become)

• In Botswana the total number of people employed is among three sectors

• 15% by franchised businesses.• 25% by parastatals and independent

private business.• And 60% by our

government.The franchised businesses thatTake up 15% of employment;Commercial banks, retailChains, restaurants and Agencies

Source: Botswana…………

EMPLOYMENT RATE IN BOTSWANA

Parastatal &Independent

Government

Franchisebusiness

Challenges for the development of franchising in Botswana

• In Botswana we do not have a regulatory body to monitor good business practice between franchisers and franchisees.

• A lot of Batswana have no capital and some very little earnings to put together and present as contribution to financial institutions. These people though are new to business and therefore need mentoring to equip them with skills necessary to run successful businesses.

• With mentoring institutions and access to capital we can eliminate the start-up problems mainly experienced by Batswana entrepreneurs.

• It is imperative to consider which products and services appeal to the Botswana market because of a small population we have hence limited spending power.

Good News for Uganda• CICS• FIN Uganda• This series of

Franchising Awareness Workshops

• More leading franchisers eyeing Uganda

• Likelihood of local Franchiseable Brands- My Thesis

• Ministry of Finance, MTTI, Justice, etc are starting to focus on promoting franchising-related interventions

• AfDB• FASA• Potential donors are

becoming aware and interested

Back to You

• Lessons?

• Q&A after our BREAK TEA

• Way Forward for your entrepreneurial journey?

THANK YOU+256 712 683334

abbedax08@yahoo.com

You are welcome to Abbedax, Abbey’s Franchise Show, and

FIN Uganda- Franchise Investment Network of Uganda