Making a Franchise Boom

Yadhir Mooloo has given a sixty-year-old brand a makeover, turning it into a fast-growing R100 million business that’s on the lookout for franchisees.


Making a Franchise Boom

Vital stats:

What are the costs?

  • Set up costs:Up to R695 000 excl. Vat for a 40m2 store
  • Franchise fee: R120 000 excl. Vat
  • Royalty fee: R7 500 per month
  • Marketing fee: R1 500 per month

Yadhir Mooloo first cut his teeth in retail as a ten-year-old working at his grandmother’s takeaway business in Marabastad, near Pretoria. His entrepreneurial fervour was evident from an early age, and he made a lucrative living in his high school years, selling CDs to his classmates.

After a challenging three-year period in his first service station, Mooloo made a huge comeback in his second attempt in the fuel industry.

A number of successful retail ventures later, he entered the franchising world in 2008, buying a London Pie Company store in Hartbeespoort. Over time, he bought and sold several more food franchises, including a Scooters Pizza, which he later sold for such a great price that the franchisor asked him to come on board as a consultant. That’s when he formed Hays Business Consulting.

He was soon selling a store a week, and earning excellent money. Word got around and he was approached by Excellerate Holdings, which owned the Levingers dry clean and shoe clinic brand. He signed up for a one-year contract.

The birth of a franchise

Levingers

At the time, there were 27 Levingers stores in Gauteng, all owned by the company, and the strategy was to focus on developing a number of new franchise stores.

Putting his franchising experience to work, Mooloo helped the company build a franchise operations manual and a training manual to enable systems to be standardised across the new franchise stores they were aiming to launch.

“To prove my commitment to the brand, we bought the first Levingers franchise store which existed in Rivonia,” says Mooloo. “Within three months, we had tripled our turnover. We were so pleased that we quickly bought another three outlets.”

At the same time, he was in charge of selling stores, and he was meeting with lots of potential franchisees who were struggling to raise finance. Mooloo went to meet with the franchise business manager at Mercantile Bank to discuss ways of helping people to buy a store.

That manager became the first official franchisee when he and a business associate bought two outlets. Other franchisees soon included a partner from Ernst &Young, and an actual rocket scientist who had worked at NASA.

“Suddenly, these were the kinds of people we were attracting and I started to wonder what they were seeing that we weren’t,” says Mooloo.

Seizing the opportunity

In 2011, he set up a meeting with Gordon Hulley, CEO of Excellerate, and told him he wanted to buy Levingers. Hulley was not keen on selling, but the discussions continued.

After much negotiation, he agreed to sell the brand to Mooloo for a rather hefty price. Mooloo needed cash so he sold what he could of his existing assets and brought his dad on board as a partner. In October 2012, the deal went through. At that time, Levingers had a turnover of more than R45 million annually.

“From the moment we owned it, we started implementing news ideas. Our vision was to grow the company quickly. To do that we needed a strategic plan, which we started putting together with the ‘dream team’ of people we had employed.”

He entered into negotiations with Woolworths and Levingers secured the contract to do tailoring for its Trenery, Supersport and Country Road brands. Customers who require alterations on items they buy can take them to Levingers and have them altered free of charge.

Edgars soon followed suit, as did upmarket shoe company Spitz. Today, Levingers does dry cleaning, laundry, shoe repair, mending, and tailoring for most of South Africa’s premium brands. Never one to slow down, Mooloo is in discussion with Discovery Health’s Vitality team to become part of the loyalty programme.

Next, Mooloo began partnering with big corporates, whose employees are a captive market. Levingers now provides in-house dry cleaning, shoe repair, and clothes mending for large organisations like Rand Merchant Bank.

Breaking into a new market

Levingers_Owner

By 2013, Mooloo realised that to continue to expand the brand on a large scale, he had to broaden the company’s offering. Until then, Levingers was directly targeting only the LSM 8-10 market, providing a premium service at a premium price. He proceeded to buy out a number of independent dry cleaning stores and turn them into more affordable outlets, creating a new brand to fit the target market.

Today, Levingers has an annual turnover of well over R100 million, employs 357 staff (up from 111), and has never lost a franchisee since Mooloo took over. At present, only 27 of the 68 stores are owned by franchisees, but the plan is to up this number considerably. Mooloo aims to have a total of 100 stores across the country by November 2015.

From month one to month five, he says, new franchisees can expect to run at a loss.

“This is because we are a destination site, which means that it takes time to build a loyal clientele,” adds Mooloo, “After a month or two of breaking even, the franchisee is likely to start making a tidy profit. We are the largest dry cleaner in South Africa and expansion is happening rapidly. Also, because the brand is so well known, a fair share of business comes to stores automatically as soon as they’re opened.”

Offering customers more, creating new revenue streams

The introduction of additional product offerings into Levingers’ stores has been a huge growth and profit enabler.

The franchise has partnered with American company CGI to introduce ‘plastic surgery for leather goods’, a process that uses the latest technology to repair and dye any leather items, from wallets, belts, shoes and boots, to jackets, biker suits, couches, car seats, leather furniture and key rings.

This service is not only provided for consumers, but also to companies like Fielli, Bakos Brothers, Coricraft, Motani and Checkers House &Home. The CGI business has turned over more than R1 million in three months.

“One of the reasons this service is paying off so well for us is that consumers are more budget conscious than ever, and we are seeing far more requests for school bags and shoes, and other leather goods to be repaired rather than being replaced.”

To cut out the middle man, Mooloo launched Royal Shoe Components in 2013, to supply soles, tips, leather and polishes to Levingers. It has resulted in a 47% cost-saving for Levingers, and the business is turning over more than R4,5 million per month.

The ideal franchisee

Jackets

Business experience: The franchisee has to manage the business on a daily, weekly, monthly, and annual basis. Mooloo says that training is provided for new franchisees, as well as a turnkey operation, with sites chosen and leases negotiated on their behalf, but he prefers people who have some level of business experience.

A great attitude: For the employees and the customers who visit the store, the franchisee’s job is to make everyone feel at home. Without customers, the store is dead in the water. The franchisee must have the ability to make them feel valued, comfortable, and happy to come back. Above all, retail is a people business.

History of a premium brand

Originally founded by Peter Levinger, a specialist cobbler by trade, Levingers has operated as a dry cleaning store and shoe clinic for more than six decades.

A merger with The Shoe Hospital, a business operating mainly in the East Rand and southern suburbs of Gauteng, resulted in a steady growth of modern, clean and technologically advanced stores operating under the Levingers brand. In 2012 Levingers was acquired by Hay Business Consultants, and is headed up by CEO Yadhir Mooloo.

With its focus on offering a range of upmarket services and taking dry cleaning to a new level, the Levingers team has created an effective and highly profitable franchise model. With 68 stores currently operating in Johannesburg, Pretoria and Bloemfontein, Mooloo is aiming to expand the business into other provinces within the next year.

Monique Verduyn
About the Author
Monique Verdyun is a regular contributor to Franchise Zone. Franchise Zone is published by Entrepreneur Media SA. It offers advice and franchising opportunities in South Africa.

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