MARKET GROWTH OPPORTUNITY FOR U.S. FRANCHISES IN NIGERIA
With a huge population of about 160 million, Nigeria remains Africa’s most populous country and a gateway to the Economic Community of West African States, a regional group of 15 West African countries. Nigeria is a destination for over 40 percent of imports to West Africa and ranks third after Egypt and South Africa among Africa’s largest consumer markets in 2009.
According to the 2012 World Investment Report by the United Nations Conference on Trade and Development, Nigeria is an Africa’s biggest destination for Foreign Direct Investment in 2011 with $8.92bn and records over 20 percent of the total FDI to Africa.
The National Bureau of Statistics (NBS) reported that Nigeria’s unemployment rate increased to 23.9 percent in 2011 compared with 21.1 percent in 2010 and 19.7 percent in 2009.
Individuals, groups, corporate bodies, national and international agencies, and above all, the Nigerian government at all levels share a goal in common, i.e., jobs creation to reduce the unemployment rate and its social implications.
In his budget speech of 2011, President Goodluck Jonathan of Nigeria said, "Unemployment among our youth is one of our biggest challenges. The time has come to create jobs and lay a new foundation for Nigeria's economic growth.”
Nigeria’s large population is growing by 2.553 percent annually according to a 2012 estimate. This growth rate plus the effort of Nigeria’s government and other agencies to search for ways of incorporating millions of unemployed youth into the labor force and Nigeria’s reliance on imports have created a market expansion opportunity for foreign franchisors with good franchises that are capable of creating jobs.
Franchise Industry As a Vital Mechanism for Mass Job Creation
The franchising industry has proved itself to be a reliable mechanism for mass jobs creation. In the United States, for instance, the franchising industry employs over eighteen million people and provides annual payrolls of more than $229 billion. The case is no different in other parts of the world including Australia, New Zealand, United Kingdom, Ireland, Brazil, and South Africa that embrace the franchise concept as a method of creating job opportunities.
As the Nigerian government explores mass job opportunities for its unemployed citizenry, there is no better time than now for reputable foreign franchisors with good franchises to start expanding their operations to Nigeria to help create jobs and promote their interests. A few American, South African, and European brands have already established their presence in Nigeria. Currently, the foreign franchises operating in Nigeria include Crestcom International, Sign-A-Rama, Fastrackids International, IN2IT Inc, Domino’s Pizza, Cold Stone Creamery, KFC, Precision Tune Auto Care, Computer Troubleshooters, Southern Fried Chicken, Chicken Inn Fried, Creamy Inn Ice Cream, Debonairs Pizza, Butterfields, Chicken Licken, and Mochados Chicken.
Fast food, health club, hotel services, professional and service training, transportation services, telecommunications and distribution services are the industry sectors where franchising seems to be showing market growth opportunity in Nigeria.
In a paper presented by Dr. O. A Okongwu, the former director general of the National Office for Technology Acquisition and Promotion (NOTAP), he wrote, “ International franchisors have not expanded into Nigeria (compared to their expansion into Asia) largely because of ignorance of immense market opportunities in Nigeria and the absence of a franchise-specific legal and regulatory framework.” However, franchise agreement between the foreign franchisor and the Nigeria franchisee must be presented to the National Office for Technology Acquisition and Promotion (NOTAP) for the registration. NOTAP is a Nigeria federal agency and concerns itself with examining the quality of imported technology with a view to determining its price and to check fairly obvious abuses. In other words, the principal concern of NOTAP is to register contracts/agreements, which deal with the transfer and acquisition of foreign technology. Also, the main pieces of Nigeria’s legislation that regulates franchise relationship is fall under the Nigeria’s sales law.
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