It's boom time for entrepreneurs opening franchises in rural areas, says Standard Bank South Africa

The economic boom in the Northern Cape, thanks to the opening of several new mines, has seen rural towns and centres flourishing and exponential growth in the number of franchises that have set up business in new shopping centres, says Standard Bank South Africa.

"There is widespread new prosperity in this province, covering rural areas like Kuruman, Hotazel, Kathu, Beeshoek and Postmasberg. With the opening of 13 new iron ore and manganese mines during the last three years, the province has seen an influx of people and growth in the shopping centres and franchises needed to serve them," says Simone Cooper, Head of Franchising and Enterprise Development at Standard Bank South Africa.

The region now claims the country's largest concentration of engineers living anywhere in South Africa. "The impact of the increase in population has certainly been felt by Standard Bank," she says. "One example is that our client base at our Kuruman branch has grown by more than 30% in the last year."

Standard Bank South Africa statistics show that the Northern Cape has also become a go to region for many prospective franchise owners, with an upsurge in entrepreneurs wanting to take advantage of the economic boom. "We have seen an increase of 23% in franchising businesses operating in the region in the last year alone" says Ms Cooper.

Standard Bank South Africa's new clients in the region include many of the fast food franchises that have opened shop in the three new malls which have opened in the last year, and in strategic spots in town centres. The franchise businesses include a popular fried chicken brand, which now has more than 21 outlets in the province.

Not far behind are motor franchises, supplying everything from tyres to brakes and exhaust systems, that have mushroomed near key motor dealerships. Independent small and medium size enterprises (SMEs) providing services to the mines are also among the bank's new clients. These new businesses deliver services that range from contracted transport to maintenance for various mine operations.

"With the significant spike in transport activities, fuel companies have also been quick to identify opportunities. This has led to the opening of a number of new franchisee-operated petrol stations in the region," says Ms Cooper.

A noteworthy new entrant has been the renewable energy sector, with millions of rand being invested in solar projects linked to initiatives such as the South African Department of Energy's 3,725MW Renewable Energy Independent Power Producer (IPP) Procurement Programme. In addition to mining activities, programmes like this have created a number of opportunities for small businesses and franchises in the region.

"Many entrepreneurs realise that opening a new franchise in an urban area can bring challenges. The most obvious of these is the level of competition, with most of the highly-respected franchising brands operating in large metropolitan areas and concentrated in shopping precincts and suburban malls.

"Opening a franchise in a more rural area can place the franchisee in a strong business position, particularly if they are early entrants. Once a franchise store becomes available, it is common for people to move their families to a new location. The initial reluctance to leave the big city behind is often replaced by satisfaction with the decision, and the more relaxed lifestyle that smaller towns can bring," says Ms Cooper.

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