Franchises as Tools for Economic Devt


Raheem Akingbolu writes on the importance of franchising in a developing economy, citing the Chicken Republic brand

Any country with a population of over 170 million inhabitants should be a viable market for businesses catering to various consumer needs. Sadly, this assumption does not necessarily hold true in Nigeria, on account of varying factors hampering the growth potentials of the business communities across the country. With dwindling global oil prices, and no sign of it abating anytime soon, the Nigerian economy seems to be heading for a forceful embrace of alternative survival strategies.

Economic recap
The Nigerian economy has enjoyed sustained growth in the recent past, with annual real GDP increasing by around 7per cent over the past decade. The non-oil sector though has been the main driver of growth, with services contributing about 57per cent, while agriculture and manufacturing contributed about 21per cent and 9per cent respectively in 2014. The Nigerian GDP now includes booming service-oriented industries like telecoms, information technology, real estate, music, online sales, fast food outlets, airlines, and film production. With its recent rebase, the Nigerian economy has become the largest in Africa. This economic situation could, however, be compared to a horse riding on the lungs of a weak sheep, considering population size, infrastructural decay and over-reliance on a unitary source of foreign exchange. To further enhance the country’s economic growth potentials and actively engage the virile working class, energising the Small and Medium Scale sector is almost a necessity. With an unemployment rate of over 7.5per cent, increasing population rate of around 4per cent per annum, over 69per cent of the entire population living below the UN stated poverty threshold, the pressure on the economy is immense.

In developed and advanced economies of the world, SMEs have a higher survival rate, the reason simply being that there is recognition of their importance to GDP growth. There is a constant and deliberate effort on the part of the governments in these environments to provide incentives that enable SMEs to thrive; consequently, they have become the fulcrum for growth and development. In Nigeria, the absence of verifiable data is a problem, but reports have it that there are an estimated 34 million SMEs across the country. If we go by this figure and the definition of SMEs as a business with staff strength of between 10 to 100 and/or an asset base of between N5million to N500million or realises a turnover of less than N100m per annum, there is justifiable optimism for improved GDP and an upward trajectory in economic growth.

Entrepreneurial growth

A proven business model is the adoption of franchises by budding entrepreneurs. At its simplest, franchising is the adoption of an existing brand and business system. Typically, the brand owner (franchisor) would have established a proven marketing system that has a strong brand image. The franchisee benefits as they do not have to incur the upfront costs of developing & building a new brand. A distinct example of a franchising arrangement in Nigeria that has benefitted from the franchisor’s unique brand is the Chicken Republic brand; the fastest growing chicken chain in West Africa specialising in offering Authentic West African spiced chicken meals. As at the last count, 25per cent of over 60 Chicken Republic outlets currently operating across Nigeria & Ghana are owned by franchisees whilst four of the six outlets that the brand launched in 2015 were franchise stores. This shows an upward trend in the adoption of Chicken Republic franchise by dynamic entrepreneurs. The benefits of owning a Chicken Republic franchise include the selling power of a well known & loved world class brand, shorter time to opening; initial training and ongoing support; assistance in finding an optimal site; lower costs through group purchasing; use of an established business model; national and regional advertising campaigns.

It has often been said that the SME sector is the engine of any vibrant economy. A more efficient and productive SME sector means more and better products and services for our country. It also means a better and more skilled workforce for the nation, core contribution to our GDP and an improvement in the real sector, all of which are capable of playing a pivotal role in upturning the present dip the economy is witnessing. A reinforcement of the concept of franchising in the minds of both existing and prospective players in the nation’s SME sphere could be the difference between the survival or otherwise of their business ventures. The example of Chicken Republic with the strides it has made in this regard may just be the way forward.