Franchising has proven to be one of the most successful business models in recent years. In both developed countries and emerging markets, franchising ensures business growth and encourages entrepreneurship and skills transfer. It has generated new incomes and improved standards of living in countries where it has been practiced. More specifically, for existing SMEs and new business start-ups, franchising is a means of developing entrepreneurial talent, promoting good corporate governance, increasing transparency and attracting the informal business sector to the formal sector.
The analyses and points of view presented in this report have been validated through extensive discussions between the Franchise Business Development Services (FBDS) lead team of local and foreign consultants and key industry players.
Nigeria is a country comprised of people with a great entrepreneurial spirit – it has 37 million enterprises and approximately 64,000 businesses registered annually1. However, an estimated 80% of these new businesses fail within the first five years. This is due to various business environment constraints including lack of business planning and enterprise management capacity. According to South Africa 2014 franchise statistics, only 5% of franchised enterprises fail, compared to the 80% business failure rate recorded by independent businesses.
The consumer class in Nigeria is growing at a rapid rate; by 2030, it is estimated that about 160 million Nigerians (out of a projected population of 273 million) could live in their own households, having sufficient income for discretionary spending. Sales of consumer goods are therefore estimated to more than triple by then to USD365,548.4 million.
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