Franchise Development: A Scalable Model for Retail Growth

Franchise development is a proven method to scale retail businesses rapidly and effectively. While with organic growth you can only grow your retail business as fast as your company’s resources and capabilities can handle, with franchising your brand can replicate successful retail business format and use resources of franchisee(s) and their local expertise and insights. Franchising limits the capital burden and operational risk on the parent company to some degree. For retail brands, franchising is an advanced potential way to unlock expansion into regional and international markets while retaining their brand equity, operational processes, market penetration and share.

Whether you have a retail business start-up or, an incubating scaled retail chain, franchise development gives you a template to achieve growth, or scale, while maintaining some control. Franchise development is particularly advantageous in the retail sectors with food & beverage, fashion, wellness, and convenience retail. Most retailers have a set of replicated processes, developed training systems with good quality control quality assurance systems that could be replicated in perpetuity once the retail business was franchised, which developed a franchise network that could grow as consistently as permitted.

Franchise development is also a way to create new entrepreneurs that add jobs at the local level with potentially meaningful social and economic benefits. The intent of this article will cover where franchise development fits in with market entry strategy, retail growth and market expansion at a franchise level, especially what and where high-growth opportunities, such as Africa, with retail chain expansion and advisory experts.

Why Franchising is Ideal for Scaling in Africa

Africa’s retail sector is changing rather quickly as a result of changing consumption patterns, increased urbanization, and digital penetration. Nonetheless, current issues related to cultural norms, regional regulations, and infrastructure suggest the franchising model could be helpful. Retailers can scale with less investment risk by working with established local franchisees who have a deeper understanding of their target market. The franchising model encourages local ownership, while delivering a standardized customer experience, a critical balance in the African retail market. The franchising model provides retailers with a method to operate, engage, and expand into emerging markets while avoiding corporate and logistics complications.

The histories of certain franchises in Africa such as established supermarket chains and quick-service restaurants represent the scaling potential of the region. Domestic and international brands are now bringing Africa into their progressive roadmaps to lead to their growing youth and urban middle class.

With the right guidance and support from local retail chain expansion professionals, businesses can find partners, appreciate the nuances of the market, and build flexible business models. When done right, franchising is not just an option for growth but also a viable long-term sustainable retail growth model to be adopted for African-based markets.

Strategic Expansion Roadmap is the Need of the Hour

Franchise development requires an effective expansion roadmap. The plan outlines where, how and when a brand expands by franchising. An expansion roadmap typically includes market prioritization, market feasibility location studies, competitor benchmarking, legal frameworks and brand readiness. When a business has no structure surrounding its roadmap to the market, it risks being inconsistent, overextending the brand and having poor franchisee performance.

A structured expansion roadmap is particularly important for Africa, where business space can differ dramatically between cities and types of business environments and countries. The expansion process tends to be smoother and with less friction when an effective expansion roadmap is in place. Retailers need to consider factors such as limits to scalability, infrastructure, consumer behavior and capability of suppliers when building an expansion roadmap as well as the availability of the franchisee.

This strategic plan can also help bring internal teams, franchise partners and even investors into alignment around a common growth objective. With experts in Retail Chain Expansion consulting of Growth Advisory firms, that have a data-driven and local perspective on the brand’s expansion roadmap, is certainly the best path to driving franchise growth.

Franchise Development as a Retail Growth Strategy

Franchise development is more than just a growth tool, it’s an actual retail growth strategy. For brands with aspirations for growth on a regional or global scale, having franchise options enables fast track and expansion across regions with minimal capital investment. The franchisee operates the business (daily operations, employee development, customer engagement) while the brand provides support, training, and oversight. Franchise models are an ideal environment for power-sharing; Owner/Operator with Limited Capital, the Brand looking to invest their time and opportunities into regional or global markets with a controlled offering.

The dual-ownership model creates both flexibility and speed while still adhering to required brand standards. When instituted with the proper accommodations (onboarding, supply-chain network, reporting and compliance) a brand franchise development strategy may facilitate exponential and sustainable growth in regions such as Africa, that also have low operational unit costs and network of local stakeholders.

Retailers need to develop frameworks for growth that take into consideration regional factors and both franchisee capabilities; far too often I have observed the pointless dilly-dallying decision-making timeframe created when brands cannot take advantage of proven existing franchise growth options. Integrating a development framework, on either a regional or global scale, allows faster brand visibility, increased profitability and the timely capture of untapped markets before competitors arrive. When development planning is assisted with a defined roadmap and clear objectives; including franchisee and brand objectives, franchise-led growth is more tenable and consistent in delivering competitive advantage on the way to building retail dominance.

Market Entry Strategy through Franchising

Moving into new markets—particularly international markets—requires a market entry strategy that is well-thought-out. Franchising is becoming an increasingly popular option because it supports and values both adaptability and scalability. For retail brands, compared to other market entry strategies, franchising can enable access into new regions with the most simple and effective approach by having a local operator who is aware of the social, cultural, legal, and operational aspects of the new market. This saves the brand the work of learning about a new territory from the start.

Retail has the added benefit of being able to enter new regions through franchising at a relatively minimal financial risk level while developing their brand in an organic way. In contexts such as in Africa, through franchising, a brand can also enter smaller cities and peri urban areas, which would otherwise be too expensive to manage and operate as a retailer directly.

Franchising also helps in reducing regulatory risk and speeding up licensing or approval where the entry of the brand is permitted through arrangements with and based on other stakeholders in the market. In order to best leverage the entry aspect of franchising, it is imperative to create a powerful franchise system with manuals, marketing toolkits and performance review systems so the franchisee can have the clarity and consistency to operate with. Working with retail chain expansion consultants can also reinforce this market entry strategy, as it ensures that the brands growth aligns with the individual needs of consumers in each regional area, and the realities of a brand as a business.

Role of Retail Chain Expansion Consultants

Strategic consultants for retail chain expansion are specialists who facilitate the development and implementation of franchise strategies for retail brands. Consultants will conduct an analysis of the future retail brand in order to support franchise expansion. This includes assessing the level of market viability for a franchise in new markets, developing viable franchise models vs. methods of expansion, creating franchise legal documents, and selecting qualified franchisees.

The analysis conducted by consultants can provide information using customer data, real estate availability, credibility of partners, competition analysis, etc., which is invaluable in order to mitigate expansion risks. For brands wishing to develop in complex areas of the world, such as Africa, consultants can assist brands with compliance issues, cultural nuance adaptation, and training protocols for the unique market requirements. Consultants utilize their skill set and knowledge in order to develop workable and replicable models so all franchisees are able to provide customers with the same customer experience.

FAQs