Derek Smith of The Coffee Stop receiving his Best Newcomer award from FASA’s Chairman Rasheed Kathrada.PHOTO SUPPLIED Derek Smith of The Coffee Stop receiving his Best Newcomer award from FASA’s Chairman Rasheed Kathrada.PHOTO SUPPLIED
Sungula Nkabinde
Derek Smith, the managing director of Hot Dog Café and its subsidiary The Coffee Stop, creates small business opportunities for unemployed youth who do not have the key elements of business skills or financial capital.
He took double honours at the franchising excellence awards last weekend, where the Franchise Association of SA (Fasa) anointed The Coffee Stop as the Newcomer of the Year and Franchisor: Leading Developer of Emerging Entrepreneurs.
Adopting the same model that he uses for Hot Dog Café, Smith established The Coffee Stop with the objective of being an empowerment franchise, partnering with retailer Massmart and the National Youth Development Agency to assist previously disadvantaged young people in becoming small business owners.
The training programme recruits 15 individuals from the local community who participate in a six-month training and mentoring programme, where they are taught to work in and manage every aspect of the franchise. A cadet is then chosen and awarded a 51 percent loan (assisted by the franchisor) to purchase shares in The Coffee Stop store in which they trained.
The Coffee Stop also ensures that each franchisee has access to finance for his or her business loan and stands surety for the loan, while providing mentorship and coaching for the owner to ensure the success of the business.
Accounting and financial support are also provided by the head office on a continuous basis until the franchisee has paid off the 51 percent loan and is comfortable with the financial management of the business.
The Coffee Stop has grown steadily during its four years, with eight now in operation. To date no store has been closed since the first one opened in Nelspruit in 2007. It is Smith’s vision that, eventually, all Builders Warehouse outlets will have The Coffee Stop in store.
“I have always believed that franchising was the perfect business format to nurture enterprise development, but in order to establish either social franchising or tandem franchising, one needed the partnership of private enterprise and government financing bodies,” Smith said.
“With corporate businesses under pressure to get enterprise development points on their black economic empowerment (BEE) scorecard and with government financing agencies looking for ways to help train young people… (we) pioneered a unique mentorship programme.”
Tonie Roskell, the operations manager for The Coffee Stop, said all franchisees were BEE candidates and they did not need any business experience to start.
“What is important for us is the determination and enthusiasm from the individual and The Coffee Stop will provide the training and support necessary.”