As executive chairman of Equinox Group Ltd, Mohammed Asibelua leads an organisation credited with energising Sub-Saharan Africa, with the investment group managing diverse interests across a range of industrial sectors. As the leading investment group in Nigeria today, Equinox Group Ltd has gained a significant competitive edge through its experience, relationships, knowledge and capital strength. This article will take a closer look at franchising in Nigeria and its potential to benefit not only franchise owners but also wider society and the overall economy.
Franchising is the practice of purchasing the right to use a brand and its business model for a set period of time. The company or individual that acquires the franchise is known as the franchisee, while the owner of the franchise is the franchisor. In return for a financial consideration, the franchisor gives the franchisee a licensed privilege to do business, while also assisting in marketing, training, managing and merchandising the business.
Common examples of franchise businesses include petroleum marketers like Mobil and Total and fast-food services. The hallmark of a franchise is the fee paid by the franchisee to the franchisor in return for the right to adopt the franchisor’s brand name, mode of operations and – in some cases – supply chain.
Franchises are becoming increasingly common in Nigeria today. For individuals contemplating purchasing a franchise, there are some general pros and cons to consider, although the financial viability of each individual franchise will depend to a large extent on the industry, franchisor’s offering, makeup of the market and the fees or royalties involved.
A franchise is a tried-and-tested system involving a successful brand. As the brand name and efficacy of the business model is already well established, this eliminates the need for potentially costly trial-and-error methods associated with developing new systems. In addition to receiving franchise support, franchisees also typically spend far less on marketing. Franchises usually find recruiting staff easier too, as jobhunters are more likely to apply for openings with a well-known brand than an unknown entity. Brand alone draws the best applicants, providing franchisees with access to high-quality talent pools.
In return for licensed use of the brand name and business model, franchisees generally pay start-up costs and make annual royalty payments. Franchisees are required to disclose financial information with the franchisor, enabling them to track the operational success of each franchise.
Franchises are a popular business model in both emerging and developed nations. Franchising has generated new incomes and enhanced living standards in communities all over the world, ensuring economic growth and skills transfer. For new start-ups and SMEs, franchising offers a tried-and-tested means of nurturing and developing entrepreneurial talent, promoting good corporate governance and transparency. As the Nigerian Government explores opportunities to diversify the economy and boost employment across the country, foreign franchisors with well-known brands are seizing lucrative opportunities to expand their operations in Nigeria.
Presenting the optimum conditions for its budding franchising industry to flourish, Nigeria’s food and food-related segments in particular continue to command significant attention. For international franchises, Nigeria’s burgeoning fast-food industry presents an extremely attractive climate. With a population of circa 160 million, the highest population of any Sub-Saharan country, Nigeria’s emerging middle class is currently fuelling a boom in income spending. Attracting more than 40% of all imports to West Africa, Nigeria also ranks among the top three consumer markets in Africa. Benefiting from in-depth local knowledge, human capital, expertise and ample access to collateral, Equinox Group Ltd is ideally positioned to launch international franchises in Nigeria. The company is actively purchasing retail franchising opportunities in this rapidly growing retail sector.