New franchise fund launched to help young entrepreneurs
In order to stimulate job creation, Business Partners Limited has announced the launch of a new R107.03 million Franchise Fund.
The fund is a new and innovative platform backed by the Development Bank of Southern Africa (DBSA) aimed at allowing young and previously disadvantaged entrepreneurs, with limited assets and access to capital, to qualify as franchisees.
The total Franchise Fund consists of R48.65m from National Treasury’s Jobs Fund (R38.92m for financing and R9.73m for technical assistance), as well as R58.38m from Business Partners Limited.
According to Christo Botes, Executive Director at Business Partners Limited, a specialist risk finance company for formal small and medium enterprises (SMEs) in South Africa, the Franchise Fund aims to create jobs through entrepreneurship via franchised businesses.
He said: “Purchasing a franchise in South Africa can be quite onerous given that the franchisor normally requests a 50 percent own contribution.
“This fund will provide affordable franchising opportunities to those who would otherwise not have had the opportunity to acquire a business.”
Botes explained that the Franchise Fund is only open to franchisors who have been accredited by SA Franchise Warehouse and Business Partners and that comply with certain minimum requirements, such as proper founding documents, full Franchise Association South Africa (FASA) membership and accreditation, successful track record and subscribing to jointly support the new franchisees.
He said that the Franchise Fund financing model also requires a minimum own contribution of 10 percent of total financing from the entrepreneur.
“Government’s Jobs Fund finances 50 percent of the total financing requirement, less the own contribution, and Business Partners Limited finances the remaining 50 percent of the total financing requirement.”
The Franchise Fund has certain key deliverables over the next 2.5 years, according to Botes. “Our key outcome is to provide funding, training and mentorship to 125 viable and long term sustainable franchises, with most applications for finance ranging between R600 000 and R2 000 000, and in the process also facilitate the creation of more than 700 jobs.
“These newly employed individuals will not only be empowered as a result of the training they will receive, but also build a solid employment record.”
Botes added that the challenge with start-ups is the technical assistance required and the affordability of the costs related to the support required.
As a result, a portion of the funds from Government’s Jobs Fund have been allocated specifically for technical assistance.
The funds disbursed for technical assistance carries a zero percent interest rate for the entrepreneur and this funding is only payable upon completion of all other business financing debt being repaid.
“The applicants, or franchisees, are required to undergo a thorough screening process and formal training program facilitated by SA Franchise Warehouse.
This includes ensuring that the entrepreneur is sure of the franchise brand he/she wants to pursue, as well as whether the sector is in fact best suited for him/her.
The Franchise Fund, which officially began the process for applications at the beginning of 2014, has already completed its first few deals and drawn from the Franchise Fund.
For a list of franchise brands which have been accredited in terms of the rules of the Franchise Fund refer to www.safw.co.za
5 minutes with... Janthana Kaenprakhamroy, CEO, Tapoly
Founder and CEO of award-winning insurtech firm Tapoly, Janthana Kaenprakhamroy heads up Europe’s first on-demand insurance platform for the gig economy, winning industry awards, innovating in the digital insurance space, and leading with inclusivity.
Here, Business Chief talks to Janthana about her leadership style and skills.
What do you do, in a nutshell?
I’m founder and CEO of Tapoly, a digital MGA providing a full stack of commercial lines insurance specifically for SMEs and freelancers, as well as a SaaS solution to connect insurers with their distribution partners. We build bespoke, end-to-end platforms encompassing the whole customer journey, but can also integrate our APIs within existing systems. We were proud to win Insurance Provider of the Year at the British Small Business Awards 2018 and receive silver in the Insurtech category at the Efma & Accenture Innovation in Insurance Awards 2019.
How would you describe your leadership style?
I try to be as inclusive a leader as possible. I’m committed to creating space for everyone to shine. Many of the roles at Tapoly are performed by women and I speak at industry events to encourage more people to get involved in insurance/insurtech. Similarly, I always try to maintain a growth mindset. I think it’s important to retain values to support learning and development, like reliability, working hard and punctuality.
What’s the best leadership advice you’ve received?
Build your network and seek advice. As a leader, you need smart people around you to help you grow your business. It’s not about personally being the best, but being able to find resources and get help where needed.
How do you see leadership changing in a COVID world?
I think the pandemic has proven the importance of inclusive leadership so that everyone feels supported and valued. It’s also shown the importance of being flexible as a leader. We’ve had to remain adaptable to continue delivering high levels of customer service. This flexibility has also been important when supporting employees as everyone has had individual pressures to deal with during this time. Leaders should continue to embed this flexibility within their organisations moving forward.
They say ‘from every crisis comes opportunity’, what opportunities do you see?
The past year has been challenging, but it has also proven the importance of digital transformation in insurance. When working from home was required, it was much harder for insurers to adjust who had not embedded technology within their operating processes because they did not have data stored in the cloud and it caused communication delays with concerned customers at a time when this communication should have been a priority, which ultimately impacts the level of customer satisfaction. This demonstrates the importance of what we are trying to achieve at Tapoly in driving digitalisation in insurance and making communication between insurers and distribution partners seamless.
What advice would you give to your younger self just starting out in the industry?
Start sooner, don’t be afraid to take (calculated) risks and make sure you raise enough money to get you through the initial seed stage.