RETAIL: Innovative Concept for 2010 and Beyond
Recent Gauteng Business News
Innovative Franchise Concepts (IFC), a company that bridges the gap between corporate enterprise development funds and the beneficiaries they are intended to reach, has been awarded a tender by the Metropolitan Trading Company that will see it change the face of street vending in Johannesburg.
IFC’s Fast Forward Cafe is an innovative franchise that helps to transform existing food street vendor stalls into formal, branded outlets. Specially designed moveable trading units are positioned on viable commuter routes and areas with a high density of workers, residences or office parks. From these branded units, street vendors can cater to a range of different customers, using a menu of up to 120 items designed to meet the needs of the morning and evening commuter, and the lunchtime customer. Each vendor will receive two daily deliveries from a distribution centre, courtesy of a driver who in turn owns his own business.
“Street vending is a thriving industry but it hasn’t been formalised in any way and is often regarded as a social evil to be expunged. However, it provides a vital source of income to many people who can’t find jobs and are looking for an honest way to make a living,” says Lee Grant, co-founder of IFC.
The MTC tender will help to formalise the street vending sector, providing thousands of jobs and creating hundreds of sustainable small businesses. It will also upgrade the streets of Johannesburg in preparation for the 2010 Soccer World Cup, and forms part of the broader mayoral vision to turn Johannesburg into a world class host African city by 2030.
In addition to being able to leverage the lucrative opportunities expected with the arrival of 2010 Soccer World Cup tourist, street vendors benefit from strong infrastructural support, the power of a professionally marketed brand and access to all-important bulk buying power which they can never achieve as an independent operator.
This, together with a business basics training course and continuous on the job training, which will teach them how to manage finances, stock, costing, staff and customers, will allow them to turn their businesses around and see them make a sizeable profit.
But perhaps the most significant benefit comes in the form of funding. “IFC sources funds from companies who are looking to invest in sustainable small businesses and thereby earn enterprise development BBBEE points,” says Grant.
These funds are managed independently by NEDA (National Enterprise Development Association), a non-profit organisation set up specifically for that purpose. A Fast Forward Cafe costs R158 000 ex VAT, 50% of which is sourced through ED funding and 50% of which the individual franchisee needs to service. The franchise fee includes shares in the distribution centre.
“This might sound like a lot, but it works out to approximately R92 per trading day (Including VAT), and we’ve built the repayments into the purchase price of franchisees’ stock. So in essence they pay it back daily, in manageable amounts, without having to think about it,” says co-founder Shawn de Bruyn, adding, “Research has shown that a personal investment in a business is critical to ensuring the entrepreneur works to make the business successful.”
Countless existing businesses stand to benefit from IFC’s Fast Forward Cafe model too. “Many companies are keen to invest in the development of small businesses but finding beneficiaries and providing the kind of mentorship and support required often proves too difficult,” says Grant. The result is that companies’ 3% of net profit after tax allocated to ED goes unspent and thousands of potential beneficiaries lose out on funding.
Fast Forward Cafe will provide companies with a new opportunity to invest their ED funds and earn valuable BBBEE points. “NEDA is able to combine the contributions of several companies to offer real support. Funds are syndicated so no contribution is too small. Large corporates and small businesses alike can contribute,” Grant explains.
IFC plans to roll out multiple different franchise concepts, of which Fast Forward Cafe is just the first. These will be tailored to meet the enterprise development spending needs of businesses in various sectors, allowing companies to invest their money in up- and downstream industries related to their business. “All of these franchises will be underpinned by sustainability and ensuring that the money reaches the right beneficiaries. They will provide businesses with the opportunity to see a real return on their ED investment,” concludes Grant.
Business News Sector Tags: Retail|