Monday, 30 October 2017

IFEJ leads awareness creation on promoting franchise business

Adnan Adams Mohammed

The Institute of Financial and Economic Journalist (IFEJ) in partnership with Voltic Ghana Limited has organized a training workshop for selected economic journalists and some franchised business owners in Accra last week.

The workshop aimed at educating the journalist on the operation of franchised business, the opportunities available in the area of business as well as increase attention to the business area which could attract billions of dollars to the economy.

According to the statistics by the Voltic Ghana, its franchised outlet; Cool Pac, which produces sachet mineral water, employs over 4000 Ghanaians and contributes millions of Ghana cedis to the economy monthly in taxes and levies as well as providing the public good drinking water.

The Cool Pac supplies to the public 27,000 bags of treated water contributing good and healthy living.

According to Raymond Gbetivi, Sales and Marketing Manager of Voltic Ghana, franchising is one of the important drivers in economies.

Figures available indicates that, in the USA, there are over 780,000 franchise businesses that directly employ over 8.8 million people and account for over US$890 billion in direct economic output.

Also, 90% greater success rate in franchise business according to Entrepreneur Magazine. After 7 years in business, franchised businesses were still operating at a rate of 91% as opposed to 20% of individual startups from research

In South Africa, KPMG report in October 2016, indicates that out of over 31,050 franchise outlets, 26 percent are owned by previously disadvantaged individuals, employing 323,519 people nationally.

However, Ghana and Nigeria has a little more than 100 franchise companies.

Report from US embassy 2016 concludes franchising will help in strengthening Ghana’s economy in the near future.

Years ago in Ghana, UAC, the predecessor of Unilever created entrepreneurs among the womenfolk through the “Passbook System”.

Women traders were supplied with wax prints by UAC in UAC branded shops which they sold at a commission. It helped a lot of them to start their own small businesses.

Some benefits from venturing into franchise business includes but not limited to: minimal start up risk; ability to compete with big businesses; training and support; ease of market penetration; easy access to capital; and better-quality management.

Others are: speed in growth; increased profitability; and access to brand identity, a tried and tested successful method of doing business, a proven marketing, distribution and logistics systems, financing etc

Lawyer Kwame Jantuah, a legal practitioner and a business owner, in his presentation gave a brief history of franchise business. He said, franchising finds its roots in ancient China and was used primarily by governments throughout the Middle Ages.

It first appeared on the US scene after the Civil War and became a force to be reckoned with in the post-war 1950’s. It boomed in the 60’s, policed itself in the 70’s and matured in the 80’s.

Since the 1990s, it has continued to outstrip the achievements of the rest of the US economy and franchising in the US today is the primary vehicle that has successfully taken small businesses and grown them into national chains.

Overseas, American franchisors are a world force to reckon with, with the transfer of business technology being widely viewed as a stabilizing force in emerging economies.

Consequently, we now see promising growth in international franchising and overseas franchisors using the franchising model to gain a foothold in the US market.

He however, defined franchising, as a business model wherein an individual operates out of their location of a larger, more established company.

“We can define a franchise as that type of business arrangement where a license is granted to a person or business to use the name, business process and products/services that have been successfully developed by another company. Franchising is a system for expanding a business and distributing goods and services to meet a higher consumer demand and is based on a relationship between the brand owner and the local operator to skillfully and successfully extend one’s established business system”, he explained.

Industry Players and other business operators are, therefore, advocating for regulations for franchising in Ghana.

Raymond Gbetivi, believes a legal framework for franchising is critical for the growth of small and medium scale enterprises.

Ghana currently has no legal framework to govern or guide the operations of franchising.

This means businesses operating under the system are challenged in so many ways to maximise its operations.

If there is a framework, it is easier to there is the need to promulgate laws. If there should be a dispute between franchising companies, it will be difficult to tackle”

According to him, “we encourage students out of school to start something but nobody seems to be thinking about how franchising can help entrepreneurs. It is important for SME development”.

Under franchising, well-established and big businesses grant permission to new and small entities, under special arrangement, to use their brand for same products.

Executive Director for think-tank Centre for Economic and Business Research, Gordon Newlove Asamoah, Ghana consumes a lot of services which means, “we can have foreign companies coming together through the local ones and have partnerships with the multinational companies. We can tap from their technology and management platforms.”

He is positive this will not only strengthen businesses but make it lucrative to create more jobs.

According to available statistics, about 80 percent of businesses are unable to survive after seven years in operation.

President of Institute of Financial and Economic Journalist (IFEJ), Lloyd Evans, says it is incumbent on journalists to open up the discussion and set the agenda to compel legislators to see the need to create a framework to enhance trade and commerce.

“Industries, the media, the association of Ghana Industries (AGI) and other stakeholders must come together to push for this”.