Franchises taking root in Kenya

By Brian Yatich

Franchising proves biggest job creator as world’s largest franchises come to Kenya

Franchising has taken off in Kenya, with some of the world’s top franchises, such as real estate franchise Coldwell Banker, launching in the country. The rise comes as global research shows franchised businesses to be the most profitable, the fastest growing, and the biggest job creators, during the global downturn.

Gavin Bell, Founder of the Kenya Franchise Association that Franchises are more successful and more resilient than other businesses thanks to the sharing of resources and prominent marketing.
“The Kenyan market is ripe for the franchising model, they also accrue rapid, collective business knowledge and market position.”

According to the Franchise Association of South Africa, In Africa, South Africa has moved the most rapidly into franchising, which now accounts for 12.5 per cent of the country’s GDP, generating turnover of R465.27bn (Sh3,362bn) and employing more than 323,519 people, Franchising sees small business buy into a large brand, gaining a readymade business model, including software, ways of doing business that are proven as revenue earners, staff training, and heavy marketing.

“Franchising is one of the most powerful and cost effective ways of thriving during periods when standalone businesses are under pressure,” says Danielle Callaway, the Managing Director of Coldwell Banker Kenya, currently launching in Kenya as part of the world’s largest real estate franchise network.

According to 2014 research by the British Franchise Association, franchising has continued to expand in the UK throughout the recession, having grown by 11 per cent since the start of the British downturn in 2008. At the same time, the number of employees in UK franchised businesses has grown by 20 per cent, to now 561,000 employees.
The British research also found that franchises are performing well financially, despite the economic challenges, with 92 per cent reporting they were profitable, and 49 per cent saying they were quite or very profitable.

The International Franchise Association now predicts employment growth in the franchise sector will continue to outpace the growth of employment in all other businesses economy-wide, as it has in each of the last four years.
In Kenya, franchising is dominated by food businesses, which also dominate franchising globally, according to the US Commerce Department.
Recent food franchises to launch in Kenya include KFC, Subway, Naked Pizza, Cold Stone Creamery, andDomino’s Pizza, joining longstanding South African franchises, such as Debonairs Pizza, Steers and Spur.
But the model is now accelerating in other sectors too, with Coldwell Banker, opening as a local franchisor for up-market real estate businesses, which will join a global sales force of 82,000 agents, in 13,500 offices.

“The instant step into world class business practices and services delivers immediate competitive advantage and higher returns on investment for previously standalone businesses,” attests Ms Callaway.
Indeed, Coldwell Banker Kenya is expected to trigger a series of realignments in the domestic real estate sector, as it partners with multiple local brands in deploying its global systems.
Other real estate franchise companies that have set-up base in Kenya include Knight Frank, from the UK, and Pam Golding Properties Kenya, a franchise of South Africa’s Pam Golding Properties.
However, these are franchises that have set up as a single business in Kenya, whereas Coldwell Banker Kenya is now opening the door to local franchising, as it partners with a range of existing local real estate businesses.