Survival and Growth: Franchising in Africa

Grit & Growth

What are the obstacles and opportunities of franchising in Africa? While this business model is still in its infancy there, entrepreneurs like Grace Munyirwa of Vine Pharmaceuticals in Uganda are embracing it to grow and scale, while experiencing significant challenges along the way. Hear a story of struggle and success and gain insights from Chiagozie Nwizu, a franchise expert in Africa who has dedicated his career to educating entrepreneurs and investors on the power and pitfalls of the franchise model.

Grace Munyirwa is a self-educated entrepreneur without any formal business training. But that didn’t stop him from growing his pharmacy business to 36 shops across the African continent. Unfortunately, overexpansion, credit mismanagement, and success got the best of him. “We were walking on water and everything we were touching was turning to gold; pride got ahead of us. And so we opened locations that were not sustainable. We opened locations that were not supposed to open at all,” Munyirwa recounts.

As a last-ditch effort to save Vine Pharmaceuticals, Munyira turned to franchising. While franchising is hugely popular around the world, in Africa it’s still very early days, with little to no formal legal structures, franchise associations, training, or local history to build from. Chiagozie Nwizu is trying to close that knowledge gap.

“For us to make progress with the franchise model in Nigeria, we will need to begin to have the smart franchiser and the smart investor — and being smart is being franchise-literate,” Nwizu explains.

Munyira had to build his franchise model from scratch in Uganda, adapting it to meet his specific needs. One way he did that was by taking on more of the financial burden than is usual for a franchiser. Instead of asking his franchisees to pay rent on their stores, he kept that responsibility. And he had to carefully choose the type of franchisees he wanted to work with — people who already knew and cared about the culture vs. investors.

“Sometimes people with money don't understand that you take a long time to make good money. They want to simply invest the money and maybe leave a son or the wife there and then expect this to grow. That couldn't work. So I chose not to go that route,” he explains.

Nwizu calls Munyira’s approach a micro franchising model which allows franchisees to slowly build their equity in the business. Supporting franchisees is another key element to success, according to Munyira. “The team at headquarters is really a support team. Their role is not just to drink pina coladas. Their role is to look out and see what can really help the shops perform better. When these shops win, we win,” he explains.

Nwizu believes franchising is an important tool for the future of African business, where a high percentage of family-run businesses fail after the first generation. Franchising can change that. Munyira agrees. “What really, really hurts me, and that may be peculiar to this part of the world, is that many businesses die after the founder dies. I want to have a story that can really help the company survive way beyond its founder, that Vine is still existing way beyond my lifetime.”

Listen to Munyira’s first-hand experience with franchising and Nwizu’s insights on what it takes to build a franchise model that works for your business.

Resources:

• Tackling Access to Finance: The Potential of Franchising in Nigeria

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