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The importance of revamping in franchising

Some companies are managing to stay ahead of the curve through technology.

Manny Nichas, manager for new business at Fournews (which owns News Café, Moyos and other brands), says these are hard times for franchise operators due to weak economic conditions, but especially for brands that do not regularly rebirth themselves.

Menlyn Park Ocean Basket franchisee, JJ Senekal, agrees: “You have to revamp the brand every five to seven years to stay successful. This is a proven fact in franchising. If you don’t do that, your brand begins to look tired and you lose customers.”

Greg Mommsen, director of Col’Cacchio pizzeria group, says one of the prime reasons for the success of the group is that it is constantly reinventing itself through innovation. The menu items are updated every six months, and the customer offering is constantly reviewed and expanded.

On-demand purchases and deliveries are now a major trend in the food industry, and some companies are managing to stay ahead of the curve through technology. Col’Cacchio does this by offering customers an application-based loyalty programme, but senior to this is the need for a quality product that will keep customers coming back.

Laurette Pienaar, national franchise manager at Nedbank, says it is important for franchisees to build up cash reserves and savings for future projects and unexpected expenditure, such as store revamps.

“Small in-store revamps and monthly maintenance payable from monthly cash generated from your business are encouraged, and can include replacing old furniture, buying new equipment, as well as servicing and repairing existing equipment.

“As a franchisee you need to have a cashflow that can accommodate these.”

Because franchise outlet agreements require revamps and upgrades of trading spaces every five to seven years, in addition to monthly maintenance and repairs, Pienaar says franchisees have to set aside savings to accommodate major periodic revamps. Turnover is likely to be lower while the revamp is underway.

“These revamps usually entail a full makeover of the store and can include everything from new wallpaper or paint to a complete restructure and expansion of the store with new equipment. It could also include new signage to comply with brand standards and requirements,” says Pienaar.

The cost of a major revamp can vary from R300 000 to R4.5 million, depending on the concept and size of the store. Always remember to take cashflow implications into consideration for the time that your store will be closed.

Nedbank provides flexible and cost-effective financial packages that take into account the franchisee’s present position and future goals. Lending forms an integral part of business success and Nedbank provides packages customised to the needs of each franchise concept. These finance packages include funding for new store setups, financing for resale transactions, as well as revamps.

Brought to you by Nedbank Franchising.

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