When a company is chasing growth there comes a time when tough decisions have to be made. Do you entrust strangers with your hard-built brand in franchise deals? Or do you go it alone?
Going it alone means slower progress, higher capital requirement and higher growth risk but allows for tighter control.
Franchise deals address the drawbacks of going it alone but at the expense of control.
That loss of control sometimes comes back to bite where it hurts.
Econet’s Need To Expand Retail Network
As Econet spread it’s wings across the country, physical retail shops had to be established.
The millions of subscribers need roofs under which to renew their lost or damaged lines. And boy do Zimbos renew sim cards. We must be the best (worst?) in the world, we simply have to be. Sim card replacement remains one of the main drivers of traffic into Econet shops.
Econet is not complaining too much though. They don’t replace for free after all. Sim sales account for around 0.2% of revenues in the industry.
Why switch so frequently as to damage or lose the sim cards at this rate? Is it the constant switching of lines between kambudzis and smartphones?
Power cuts give feature phones with excellent battery life greater utility. Smartphone dies on you, no worries, kambudzi is ready to serve.
Went on a bit of a tangent there. The point was that there was need for Econet to expand their retail network.
A customer failing to deplete their airtime because of missing APN settings is a customer who is far from purchasing more airtime. That customer service coupled with device and service sales make retail units money-makers.
That’s customer service paying for itself right there.
With need and profit potential established, to franchise or not became the question
Strive and the gang decided rapid growth was the way to go. Zimbabwe being what it is, the decision was a no-brainer – franchising was on.
Raising capital here takes otherworldly mastery even for juggernauts like Econet.
So, utilising franchisees’ capital was akin to stealing zadzadamas (candy) from babies. Let them take on the debt and risk to open shops in Econet’s name.
Who said expansion comes at the expense of working capital stability. They must not have heard of the cheat code called franchising.
The fly in the franchise milk
Econet took time to lay out the business plan, deployment strategy and to formalise an airtight franchise agreement. Time was and is set aside to train franchisees and try to align their goals with the company’s.
Even with all that done, buy-in is never 100%. Bad apples are a fact of life.
For years we’ve all experienced it. There are good Econet shop branches, acceptable ones and downright terrible ones. Consequence of the lost control over these owner-managers.
My Econet shop horror story
Recently I stepped foot in an Econet shop after a years long absence and had the worst experience ever in one. By a long shot.
After being bombarded with ads for the 4G MiFi Kambudzi for months I decided to get one, see what all the fuss was about. Who says nagging doesn’t work.
Now during that time I worked out of town but passed through town before shops opened and trekked back home after they had closed. Monday to Friday.
Weekend came and I strutted into the Kadoma Econet retail shop wielding my Zimswitch enabled debit card. Mistakenly thinking I’d be walking out with a KaiOS device.
I eyed the device in it’s glass cell and saw that the box said 3G. I asked one of the employees what kind of mischief they were up to. She actually tried to convince me that it was 4G capable despite the box. I was not amused. She then told me that they were out of the 4G ones.
I whipped out my card and told her to ring up the 3G mbudzi. Her face fell. ‘Sorry but we can’t accept card payments right now, the network is down,’ I was told. No worries, I thought, I’ll try next weekend.
Second and third tries
Second time lucky, I felt. Alas, I was wrong. Got the same reason – network down. I expressed my frustration as she tried to persuade me to pay in cash – USD. She had tried the same the first time. ‘Weekends are no good for card payments here,’ she went on. I left.
Third time was not the charm either but at least I got a definitive conclusion to the whole ordeal. Different lady employee that third visit.
‘We accept only USD for those phones,’ she said. Econet had not introduced such a policy. An ad I had received just an hour earlier quoted Zimdollars. I left for good then.
I ended up purchasing the phone in Kwekwe. The service there was good although the 4G capable one was out of stock.
That Kadoma franchisee and her employees are just trying to squeeze the USD out of Econet’s customers. All while the executives in Harare are none the wiser.
I don’t know the franchisee’s name but Econet I do know. When I vent the only names on my lips are Econet and Strive. Mr Masiyiwa’s boast is going to need editing,
I used a franchise model to open retail stores for Econet:Taken from Strive Masiyiwa Blog – #Update on franchising
We did not own most of the stores, but they all looked exactly the same and they sold exactly the same products. All the staff were trained by us, and they wore the same uniforms.
Only the skilled entrepreneur could notice these were not our shops.
This would mean all of us are skilled entrepreneurs because we can easily tell which ones are franchisee run.
That is the price a company can pay for the loss of control of their brand.
You can share your Econet shop horror stories in the comments below. They just might push Econet to tighten the leash on it’s franchisees.