By UDO IBUOT
NIGERIAN enterpreneurs have been urged to embrace the concept of franchising to grow and survive their businesses. They should also seek favourable franchise agreement terms that should not only be flexible but also include a termination right with no fees or capital contribution in the form of key money, depending on the circumstances.
Managing director of Food Concepts Limited, Mr. Deji Akinyanju, who made the remarks at a seminar on the evolution and development of franchising in Lagos, said that as practiced worldwide, the business strategy involved a trade name owner giving the right to someone to operate its trade name with a specified binding agreement.
Akinyanju said that franchising has a huge potential of stimulating economic growth, since it is easier to operate a winning, tested concept; but stressed, however, that there was need for the development of a franchise fund, lease fund and property.
Noting that there was no efficient funding for franchise development in the country, Akinyanju said,Â â€œbanks offer debt at 25 per cent over three years. This is too high and short. Every cost is also very high. Property acquisition, renovation costs and infrastructural costs (boreholes and generators) are increasing daily. A typical store costs N75 million. Businesses have stopped investing and even the banks have stopped lending.â€
Akinyanju said the Nigerian International Franchise Association (NIFA), was working to protect the interest of franchisers and enhance franchising on regulatory grounds between the sub groups as they emerged.
Managing director/CEO of Tradeways Express, Mr. Larry Chinekezi, in his presentation, said there has been misunderstanding of the concept of franchising as one of simply selling the right to replicate a business to an investor. He noted that while that may give an insight into the concept of franchising, it did not capture its very essence, especially in an emerging economy such as ours.
Chinekezi listed factors that led to this development to include the metamorphosis of the economy from a manufacturing to a service economy, rapid technological advances, increasing tendencies of women to work as well as the increasing yearning for occupational independence among the populace.