Blue Chip Plans S. African Franchise


South Africas Blue Chip Lubricants has plans to establish a chain of franchise outlets – combination retail stores and distribution centers – the first of its kind in the domestic lubes market. Officials said they aim to open four outlets within a year and eventually to expand to 12.

Blue Chip co-owner Gary Marais said the company, which is based in Kya Sand, South Africa, chose the franchise route to expansion after meeting with a franchising consultant.

Our initial reaction was typical of most people – that franchising was really only suited to some sectors such as fast food, Marais said. But we were surprised to learn that franchising can be adapted to suit any business sector.

Established in 1983, Blue Chip makes and markets industrial and automotive lubricants at its plant in Kya Sand. The mining and engineering industries are among the segments in which it specializes. The franchise plan, developed in cooperation with Franchising Plus consultants, began with the establishment of a pilot outlet in Rustenburg, South Africa. Blue Chip owns that facility – a store and distribution center located in a warehouse in an industrial area – but has offered to sell it as a franchise outlet.

The company is now moving forward to set up additional locations under a plan that includes three tiers of ownership. Blue Chip will own some of the outlets as a way to keep close tabs on the business and the market. Some outlets will be joint ventures with franchise partners, while others – primarily in outlying areas of the country – will be wholly owned by franchisees.

Most outlets will be similar to the Rustenburg site – warehouses that double as stores and distribution centers. But Blue Chip said it is also willing to consider other types of arrangements.

The next two outlets are expected to be joint ventures in Cape Town and Kwa-Zulu Natal, and officials said they will move from there to other major cities and towns. They added that the company could eventually decide to establish outlets in neighboring countries, too.

Blue Chip officials said they view franchising as a way to build brand recognition and increase sales while at the same time offering business opportunities to South African entrepreneurs

Related Topics

Market Topics