Nairobi News

What's Hot

Why you need to go the franchising way

After being in employment for two decades, John Avoga thought it wise to venture into entrepreneurship.

With the immense experience he had acquired in the hospitality industry, it was only wise for him to explore the industry that had taken most of his work life.

However, after careful calculations, instead of starting from scratch —where he would have to build a brand name, generate a supplier’s list, have a ready clientele, and do aggressive marketing solely— he chose the franchising path. 

He is now a part of the Kula Korner family, and his speciality falls under the outside catering division.

When he was still in employment, he helped individuals set up businesses related to the hospitality sector. However, one notable thing was that although there were success stories, most of the start-ups struggled in their teething years.

Lack of capital, building a client base, getting reliable suppliers, marketing and advertising were some of the struggles that faced the budding entrepreneurs.

Aware of the challenges in the market, Mr Avoga looked for an alternative. Luckily, he was widely read and aware of the options that franchising presented.

And so he sort for the chief executive of Kula Korner, Dominic Kosen, arguably one of the franchising gurus in Kenya, and realised his dream of being an entrepreneur.

Studies show that in the developing world, over 90 per cent of start-ups are franchises, an indicator that the trend is picking up fast.

Entrepreneurs choosing this path are inspired by several factors; a sure way of realising success being key. With the many years of establishing a business, the franchisor’s system has been tried and tested, minimising cases of failure.

After being in the market for a long period, clientele base is bucket full and unlike any other start-up, being a franchisee automatically wins clients.

A start-up also need not to worry about the advertising and marketing expenses since the franchisor suffers the cost.

Besides, a franchisor issues a franchisee with a list of suppliers that come with negotiated rates and specific standards that suit the brand.

In the case of Kula Korner, the franchisee and the employees are separately taken through the induction period where they are taught about the brand, service delivery, signature recipes and layout said Mr Kosen.

Mr Avoga’s outside catering for instance, automatically receives business from the franchisor whenever he gets an outside catering event to attend.

Getting financial help is not strenuous as the brand backs the business. Usually, a start-up will in most cases be harassed or be given little or no financial aid by banks. 

The management of the franchisor is always within reach and when a franchisee is experiencing trouble in business, they are called upon to help.

The assurance that a franchisor has all the answers always sets an entrepreneur’s mind at ease.

“Franchisees usually ride on the brand name and are relieved of any stress as they come to us (franchisor) when facing any problem,” added Mr Kosen.

Additionally, a franchisor plays a great role in approving the location that the business will be set-up. Although this helps a business owner realise huge traffic it is meant to control quality too.

However, this model of business is no free tour; the venture is guided by rules. In the event that any rule is broken, the agreement is breached. After continuous violation and enough warnings from the management, a licence can be revoked.

If you are planning to get into the field, expect impromptu visits from the franchisor. The unannounced trips are meant to verify if the standards of the brand are being met.

The venture calls for strict adherence to the set rules as franchisors never allow additional services or goods to their product portfolio.

Shortcomings

Although franchising offers great opportunities to both parties, the model has seen slow up take in Kenya.

The high capital injection required notwithstanding, industry insiders also cite lack of information on it rewards to local investors as another reason for its failure in the market. 

For instance, it will cost an entrepreneur between Sh5 million and Sh7 million to be a franchisee of Kula Korner.

The one-off revenue caters for the standard kitchen equipment, five-year licence, restaurant furniture, branding among other necessity.