The managing consultant and convener Franchise Business Development Services, (FBDS), Mr. Chiagozie Nwizu, said that businesses operating the franchise model have the least failure rate because they are proven businesses.
He also said that franchising helps a business seeking expansion to access funds at no interest from investors seeking opportunities to own a profitable and proven business.
Nwizu stated this in Lagos at the Franchise Matching Making forum, According to him, “Investors are called franchisees, who obtain a right or license under the franchisor whose proven and successful business model they leverage to own a replicated business set up 100 per cent at their own cost. Through this licensing, the franchisor entrepreneur who could have been having difficulty sourcing expansion funds will have access to other people’s money to expand their brands.”
He said that franchising remains the globally- most proven business growth and expansion model, “So when we talk about creating access to local and global markets, franchising is known to have helped worlds most expanded brands to get into unfamiliar territories and compete well, and in many cases dominate.
“If you visit Nigerian Malls, you will realise a strong presence and in some cases, dominance of foreign franchises. This is despite how uniquely tough the market is. A brand like McDonalds through franchising has sustained its growth and standards long after the demise of its owners, expanding into 117 countries and operating over 37,000 outlets,” he added.
The convener explained that the opportunities of the franchise model were immense, however for Nigeria, franchising was proving to be an emerging disrupter in the SME space, as it creates new trends of opportunities.
“This is because there is a wide range of franchise businesses out of the pool of over 37 million businesses in Nigeria. Most of the businesses are micro-franchises that require affordable investment capital. With a focus on developing a franchise culture where a new breed of profitable, proven and scalable businesses are standardised and franchised, the prospective entrepreneur will have a better chance of owning a business that suits his areas of interest, skill, and passion and pocket size.
“Compared to starting a new business with little or no experience, with over 80 per cent chance of failure in line with current trends, franchising without doubt creates more innovative ways of developing businesses,” he explained.