I felt agitated after reading the Moody’s report on the state of the US economy...Now is the time to have a rethink, ignore those tell-tale signs and take a plunge. There are four factors why Franchisers should take a second look at Nigeria.

1. TIME TO CONSIDER GIVING OUT FRANCHISE TO NIGERIA
I felt agitated after reading the Moody’s report on the state of the US
economy.
The report states that there will be a lot more bankruptcies. Moody's places
283 companies on its bottom-rung list, up from 157 a year ago. Companies
exposed to consumer spending have it toughest. The industries most
represented on the list are media, automotive, retail and manufacturing.
Companies in the most acute danger are those with reduced cash flow and a high
debt load.
A lot of big, well-known companies are in danger. On the list: Advanced Micro
Devices; AirTran; AMR (parent of American Airlines); Chrysler; Duane Reade;
Eastman-Kodak; Ford; General Motors; JetBlue; Krispy Kreme; Palm; R.H.
Donnelly; Reader's Digest Association; Rite-Aid; UAL (parent of United
Airlines); Unisys; and US Airways.
Many of the other firms on the list are second- or third-tier suppliers to
automakers, airlines, and other troubled firms. Being on the list doesn't mean a
firm is destined for bankruptcy. But it does mean the company faces severe
constraints in terms of raising new capital, making new investments, and hiring.
Instead of expanding, it may be far more inclined to sell assets, streamline or
close divisions and lay people off to cut costs and raise cash.
America's malls are going to end up looking a lot different. The retail sector is
obviously getting hammered, with chains like Circuit City and Linens 'n Things
already out of business. Many other retail chains are in trouble. Also on the
bottom-rung list: Barney's; BCBG Maz Azria; Blockbuster; Brookstone; Claire's
Stores; Eddie Bauer; Finlay Fine Jewelry; Harry & David; Loehmann's; Michael's
Stores; Oriental Trading Co.; and Sbarro.
Again, this doesn't mean the company is doomed. But many of these firms will
restructure, close outlets, shrink, and find ways to transform themselves.
Restructure! Yes! Somehow, I missed a seminar on franchising coordinated by
Anayo Agu of the US Commercial Service, Lagos, Nigeria recently, what other
time would have been appropriate? Not with this dismal and moody report from
Moody!

2. Franchising is a business strategy that allows entrepreneurs with a successful
business (franchisers) to expand more rapidly than they might otherwise by
allowing other independent entrepreneurs (franchisees) to participate.
Opportunities in Nigeria and West Africa go well beyond the traditional
industries associated with franchising (retail and restaurants), and include
sectors such as oil and gas, telecommunications, transportation, education and
healthcare etc. The possibilities are almost limitless with returns on investment
well over 30% in some cases.
Paradoxically, Western franchisers were reluctant to exploit the opportunities
inherent in emerging African economies. Now is the time to have a rethink,
ignore those tell-tale signs and take a plunge.
There are four factors why Franchisers should take a second look at Nigeria.
a. With consumers shutting their wallets as a result of job security fears,
corporate revenues plunging and the credit crunch, franchising is a sure
way to transform your business,
b. More Nigerians; educated and worked in the US and Europe are returning
home for good. Engaging them would provide franchisers with top notch
managers of time and business,
c. Franchising provides your business with an international brand outlook,
recognized and patronized by loyal customers. The geographical labour
mobility created by the meltdown provides an opportunity to follow your
customers and clients to where they now operate or travel to. The trickle
down effects could be awesome.
d. Expect buoyancy from near neighbor patronage. Existing franchises such
as Shoprite, Game, Nandos, Wranglers and home made ones such as Mr.
Biggs, Sweet Sensation are reaping profits. Same apply to franchises in
other sectors as well. Whoever thought that fitness equipment would sell
in Nigeria? The buyers are local Nigerians, especially the women,
empowered by the fortunes in jobs in oil and gas, telecoms, financial
services etc, expatriates, foreign residents and politicians.
A World Bank study have shown that the corruption index, rule of law and other
enabling factors are worse in countries such as Malaysia, Russia, India and China
(all emerging economies that North American franchisers are so eager to get
into).
The US Ex-Im Bank export program has made the issue of franchising easier
for the franchiser (US company) and the franchisee (Nigerian company). The

3. Country Limitation Schedule recently released by the US Ex-Im Bank and
effective from February 26, 2009, provides Nigerian businesses and the public
sector with unfettered access to credit facilities of up to seven years if they
meet loan requirements. Infoplus/IBG Nigeria and Trade Credit Group render
this service to discerning Nigerian companies through a local US Bank serving as
the exporters’ underwriter.
Our Partner, Gregory S. Davis, past Director, office of Export Development,
California Trade, Technology and Commerce Agency and principal consultant,
IBG Global located in California, USA has carried out tremendous FDI study in
the US fast food franchises and would be willing to assist prospects looking to
open up discussions with major US food franchises.
For businesses that do no require franchising, opening an office or locating a
plant in Nigeria could be the harbinger of better prospects in coming years.
Consider the huge market, its reservoir of educated home grown human
resources and repatriates, citizens’ hedonistic desire for ostentatious brands
and the opportunities made available by the lack of adequate infrastructure.
Now, you know why Nigeria tops Africa’s investment index.
For inquiries, contact Ndudi Osakwe on ibgnigeria@gmail.com.