The Trade Mission delegates arrived in Lagos, Nigeria on Oct. 2 after successful stops in Nairobi, Kenya and Johannesburg. After a brief introduction to the market by Janelle Santerre Weyek and Rebecca Armand with the U.S. Commercial Service in Lagos, the group relaxed to get ready for a very full day ahead the next day.
The day began with a country briefing by the U.S. Commercial Service. With more than 170 million people and a growing middle class, the market is the biggest in Africa. If fact, the country is adding approximately 4-5 million people a year although 65 percent of the population lives in poverty. The U.S. is a big trading partner with Nigeria, exporting nearly $5 billion per year. Of course there are challenges for American brands operating in the country with corruption and fraud being two of the obstacles. The USCS personnel strongly suggested that any potential partners be thoroughly checked out and reminded the group of the International Corporate Profiles that the USCS does for American companies at a very reasonable at a cost of $600 – $1200 per company.
In addition, infrastructure and supply chain challenges remain specifically for food franchisors. If there was any doubt that there was money in the country, all the delegates had to do was look across the river from where we were staying to see two nearly identical $50 million yachts owned by the CEO of Fort Oil of Nigeria and Alhaji Aliko Dangote, founder of the Dangote Group whose interests include cement, sugar, beverages, real estate, oil & gas and steel.
Other challenges in operating a business in Nigeria include reliable power. The country has just begun the process of privatizing the power grid but frequent outages require that all businesses have a generator so that must be planned into any new venture in the country. American brands are highly prized in Nigeria and icons already in country include Coca-Cola, Pepsi, Exxon, Chevron and Franchisors KFC, Johnny Rockets, Crestcom International, Sign-A-Rama, Fastrackids International, Domino’s Pizza, Precision Tune Auto Care and Computer Troubleshooters.
The next event was a breakfast meeting which included Olayinka Babaloa, executive secretary of the Nigerian International Franchise Association and Femi Fajolu, managing partner of G.O. Sodipo & Co., a local law firm that specializes in franchising and is a member of the Nigerian Association. Others in attendance included Olukayode Olusunmade, master franchisee of Crestcom International and Chris Nahman, managing director of Johnny Rockets Nigeria who owns one location in Lagos with plans to develop additional locations. Also in attendance were executives from the National Office of Technology Acquisition & Promotion and from the American Business Council.
One of the first recommendations to the group on doing business in Nigeria was to hire local counsel. Between registering a brand with the National Office for Technology, Acquisition and Promotion (NOTAP) and Intellectual Property issues, it appears to be good advice. There was much discussion about the registration process with NOTAP and it was recommended that franchisors submit a draft of their franchise agreements prior to have them signed by partners so that any issues can be resolved prior to a deal with a Master Franchisee.
The franchisees advised the delegates that franchisors must be flexible and adaptable with their brands, products and systems in Nigeria. Because supplier chain issues and costs, Chris Nahman from Johnny Rockets had to adjust pricing on their burgers upwards to make a profit and still deliver the quality experience that the brand requires.
The U.S. Commercial Service personnel had lined up more than 120 qualified one-one meetings for the franchise delegates over the next two days so they jumped right in for a morning and afternoon of meetings. There was a brief break in the meetings to hold a Press Conference, hosted by Chief Edem Duke, the Minister of Culture, Tourism & National Orientation for Nigeria and included Jeffrey Hawkins, consul general of the U.S. Embassy in Lagos and Scott Lehr, senior vice president at the IFA. The media present were generally excited about the American Brands coming to Nigeria to explore the opportunities and fired lots of questions about the impact of franchising on jobs and opportunities for Nigerians to run businesses.
The evening was completed with a reception at the Civic Center on Victoria Island, just a short boat ride from the hotel. The franchise delegates and potential investors mingled and traded cards and stories about business in Lagos. The final day of the mission was spent in back to back one-on-one meetings with delegates having to race to airport to catch outbound flights to the U.S., wrapping up another successful trade mission for the franchise community.
Profile of a Franchisee in Lagos
Chris Nahman grew up in Nigeria. His father was born there and they raised their kids in Nigeria until Chris was 12. The family then moved to Los Angeles and stayed until he graduated from College. Upon Graduation, the choice was to look for a job in L.A. or move back to Nigeria and explore opportunities in business there. With fond memories of his visits to Johnny Rocket’s restaurants in Southern California, Chris inquired with the company about their plans for expansion in Africa and in particular Nigeria. After in depth conversations with Steve Devine, Johnny Rocket’s President of International at the time, Chris was ready to jump in! His first location is in Lagos and is a stand-alone location at about 2500 sq. ft. As Chris and the corporate staff, worked through the challenges with the supply chain in finding quality ingredients to deliver the Johnny Rocket’s experience, they realized that the pricing for a meal would have to be flexible in order to maintain quality and produce a reasonable profit. He advised that any franchisor new to the Nigerian market will have to be flexible and amiable to market pricing and finding the right mix of local and imported ingredients. He also cautioned that you need to understand the local competition, which in his case was Mr Bigg’s. This chain of over 170 locations sells burgers but specializes in meat pies and is credited with being one of the country’s first franchised businesses. With regular lines around the block to experience a Johnny Rocket’s burger, Chris is not looking back and is soon to open his next location in Abuja.
Profile of a Prospect in Lagos
Arif Hafiz is the Group Managing Director of Suzan General Trading. I had the pleasure of being introduced to Arif through a friend in franchising, Aslam Kahn, CEO of Falcon Holdings, the largest franchisee in the Church’s Chicken system, with over 150 stores in 12 states. Arif owns a number of Church’s Chicken stores in the U.S. but has more businesses outside the U.S. and is looking to aggressively expand in both Kenya and Nigeria with the right brands. With involvement in duty free shops in Kenya, Congo, Zimbabwe, Nigeria, Kyrgyzstan and Azerbaijan, five hotels in Kenya and vast connections to the right people including Chief Edem Duke, the Minister of Culture, Tourism & National Orientation in Nigeria who he delivered to a press conference as part of the Trade Mission, Arif seems set on launching U.S. brands in Lagos and beyond. Trained in chemical engineering and with an MBA, Arif progressed through the ranks of a number of companies including Emerson Electric and General Motors which brought him to the African continent many times so he saw first-hand the challenges and the opportunities available. He sees the market as wide open with little competition (for a while). Smart restaurant brands with the patience to work through individual supply chain challenges should be investigating West Africa now, says Arif.