Franchising is the Company’s primary engine for capital-efficient geographic scale. A controlled, well-supported franchise ecosystem allows Aurum Grill to reach 80 franchised restaurants, the substantial majority of its network, while the associated store capital is funded by franchisees rather than the Company.
Franchise economics
|
Item |
Terms |
|---|---|
|
Initial franchise fee |
R1.8 million |
|
Store development cost (franchisee-funded) |
R8m – R15m |
|
Royalty fee |
6% of turnover |
|
Marketing contribution |
3% of turnover |
|
Franchise agreement term |
10 years |
Franchisee support platform
Aurum Grill provides a comprehensive support platform, structured training programmes, operational manuals, integrated procurement systems, marketing support, site-selection assistance and ongoing operational audits, designed to protect brand standards and franchisee profitability, and thereby to sustain the royalty base.
|
STRENGTH Capital-light scaling with franchisee alignment Roughly R640m–R1.2bn of franchisee capital funds the 80 franchised stores at R8m–R15m each, capital that never appears on the Company’s balance sheet. The Company’s R550m raise therefore finances only 20 corporate flagships plus shared infrastructure, materially improving return on invested capital. The 6% royalty and 3% levy align franchisee and franchisor incentives around unit-level sales growth. |
|
ANALYST FLAG Franchise recruitment pace is a key execution risk The plan requires recruiting, funding and opening ~35 new franchises in FY2031 alone. Franchisee access to finance (typically requiring 30%–50% own contribution), site availability and brand traction at scale are real constraints. A slower recruitment pace would reduce royalty income and delay the network’s cash-flow inflection, as tested in the downside scenario in Section 23. |