Franchising Plus recently collaborated with FNB to host a “Planning for the future” franchise event at its regional offices in KZN. One of our speakers was Craig MacKenzie, Co-founder of Debonair’s Pizza, who shared his experience with us on how important it is to build an attractive franchise.
“During my second year at varsity, Andrew Harvey and I started Debonair’s Pizza out of the back of my brother’s supermarket bakery in Pietermaritzburg. We opened our first Debonair’s in September 1991”. Craig got the idea from his travels to the US prior to starting university.
Craig says that while a number of trusting suppliers provided credit, he did not have the capital to roll out company stores. Franchising was consequently an attractive option, but it was key to build an attractive franchise.
He summarised the elements of an attractive franchise opportunity as follows:
- Deliver an exceptional return on investment
- Franchisees have many investment options and the potential return on investment is an important consideration. Franchising Plus’ rule of thumb is that a good franchise delivers a return on capital investment (and after drawing a market related salary for the franchisee) of about 3-4 years
- Robust Cash Flow
- Sales should not be seasonal but should provide adequate cash flow throughout the year, while enabling the franchisee to draw a salary.
- A good franchise opportunity should survive any economic climate and competition
- Appreciation over time
- There should be longevity of demand for the offering –a good franchise is not a fad.
- There should also be longevity of the physical capital equipment or business tools. Well-designed stores should last well in terms of outfitting and equipment to sweat the assets before a revamp is necessary.
- Growth of the franchise is critical.
- There should always be scope for growth, even if it is beyond South African borders.
As Craig said: “From a potential franchisee perspective an exceptional return on investment is vital. In order to sustain the business in the long term innovation across all aspects of the business is essential and as with any business, if you fail to plan you plan to fail. Planning should always go hand in hand with trend analysis and sector specific research. In South Africa we typically have the benefit of having access to international best practice which can be included in future strategies.”
The success of the Debonair’s Pizza brand bears testament to the ability of South African franchisors to build robust and attractive franchises. From humble beginnings and a dream to have 50 stores, Craig and Andrew were recently invited to the opening of the 500th Debonair’s store.
Franchising Plus is proud of our association with FNB in bringing you world class franchise events where you can learn from the greats in SA franchising.