Abbey Mutumba
14 March 2010
opinion
Uganda's indigenous business brands stand to benefit or lose in the East African Common Market that we recently joined. Our Kenyan counterparts are already enjoying more of the region's business and employment opportunities in the hotel, banking, health, manufacturing, and other related sectors.
Many Kenyan brands are now present in Uganda and the region because of their superior market preparedness among other competitive advantages. Our local businesses that are inadequate in terms of the number of successful national and regional branches might find it very difficult to continue surviving and competing against the well-established rivals within the region and internationally.
Opening up more branches using your money and people will be quite challenging for Uganda's leading brands of retail businesses, car dealerships, manufacturers, and the service-related businesses which have limited resources for expansion. Such challenges present franchising as a safer, faster, more profitable and sustainable business expansion strategy for our fledgling businesses compared to other alternatives that will require them to use their own money, people, local market understanding, and at their own risks.
I advocate for our indigenous leading brands to consider becoming franchisers instead of persisting in the habit of always buying franchises from foreign multi-nationals corporations. Yes, our indigenous Ugandan brands can become the region's leading name or business-format franchisers. Trade-name franchising is more profitable and realistic for Uganda's small and medium size enterprises like Uhuru Restaurants.
If our indigenous business chains are not aware of the opportunities available then the academia, media, the likes of Private Sector Foundation Uganda, among others, have to promote franchising awareness/appreciation of the mutual benefits and feasibility of our indigenous business chains to become regional franchisers as we enter the EA Common Market.
Our more established business chain needs to appreciate that business-format franchising will involve selling franchise rights (Ugandan franchisers) to independent operators (franchisees) within East Africa. It will mean allowing them to use the attractive brand name, trade mark, unique colours and symbols, proven business systems, and other benefits at a franchise fee while receiving on-going/royalty fees from these franchisees. For example, our very own potential Ugandan franchisers can sell their proven business-formats to highly-motivated and financially strong franchisees in the country and in the region.
Our businesses will also increase their regional market presence using these franchisees' own resources and at their own risks. More entrepreneurs in our region will also start their own businesses/be self-employed with more chances of safer, profitable, and faster business success using Uganda's proven names because franchising is a strategy of mutual success. Our country will benefit in terms of more patriotic promotion of Uganda's brands, tax revenue, foreign direct investment, intellectual property/innovation transfers, and more capital inflows from the region and internationally.
For more sustainable competitiveness, franchising for regional expansion will have to start with domestic franchising, and then through 'experimental involvement' before going into 'active involvement'. Our Ugandan franchisers need to first sell their franchise rights to local operators within Uganda. Then our franchisers will go into testing their franchises within the region through pilot branches at exemplar locations within our five countries.
The active involvement stage will then draw in 'Made in Uganda' brands fully selling their proven-franchises throughout the region. Our government is supportive of regional franchising-related initiatives like the BBL, law and tax reforms, better roads, and ICT infrastructural developments. Development partners are also improving our region's franchising environment.
Mr Mutumba is a franchising researcher at Makerere University Business School.
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