Franchising Development for Rwanda

Franchising is a vehicle for small business (SME) development and offers many channels of business opportunity to the aspiring entrepreneur. Franchising can stimulate local entrepreneurship, create opportunities for self-employment and provide new employment. It is useful for transferring skills, fulfilling financial independence and encouraging an entrepreneurial culture. Because franchises are usually based on proven business models, their chances of success far exceed independent business ventures and consequently are less risky to finance.

“Owning a franchise allows you to go into business for yourself, but not by yourself.” “A franchise provides franchisees with a certain level of independence where they can operate their business. A franchise provides an established product or service which may already enjoy widespread brand-name recognition. This gives the franchisee the benefits of a pre-sold customer base which would ordinarily take years to establish.Franchises may offer consumers the attraction of a certain level of quality and consistency because it is mandated by the franchise agreement.”[International Franchise Association]

Business format franchises use a franchisor’s product, service and trademark, but also the complete method to conduct the business itself, such as the marketing plan and operations manuals. Business format franchises are the most common type of franchise. Some popular forms of franchising include:

- Fast food
- Service (education and training, health, fitness, security, cleaning, real estate, etc)
- Restaurants
- Building and construction
- Business services (advisory, staffing, internet, event planning, etc.)
- Retail
- Automotive
- Maintenance
- Retail-food
- lodging

In South Africa, franchising is used as the preferred vehicle for expansion by companies active in fields as diverse as automotive products and service, food, entertainment and leisure activities, home maintenance and repairs, business services, and retailing. In 2008, the franchising sector contributed 12.5 percent to South Africa’s GDP, and created 67,000 jobs. In total, franchisors and their franchisees employed over 460,000 people in 2008.

The spectacular success of franchising in South Africa encouraged a group of professionals from the Private Sector Federation (PSF) and the Rwanda Development Board (RDB) to meet for the purpose of exploring the potential of franchising as another vehicle to promote SME development, entrepreneurship and stimulate new investments in Rwanda. The group solicited and received a commitment of assistance from the Franchise Association of South Africa (FASA).
Further meetings are planned to examine the challenge of establishing a permanent franchising industry in Rwanda.

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