Strong and enduring stakeholder relationships are essential to our ability to create shared value in the short, medium, and long term.
We aim to constructively engage with stakeholders to understand and respond to their needs and expectations recognising that they impact the Group’s ability to create and protect value. Our stakeholder management approach relies on the management principles of positive partnerships, consultation and teamwork.
Our stakeholder management framework
Functional discipline representatives
Functional discipline representatives embed monitoring stakeholder engagement, including:
- Shareholder input and feedback through investor roadshows, one-on-one access, and virtual events.
- Monitoring social media for consumer reviews.
- Community involvement through CSI activities.
- The Human Resources (HR) department provides relationship monitoring mechanism.
- Employee feedback through annual surveys.
- Franchise partner feedback through customer service channels, including regular engagement, national representative forums and annual franchise forums.
Exco members
Exco members are allocated responsibility for overseeing different stakeholder groups, and accountability per stakeholder group is typically shared across more than one Exco member.
The Social and Ethics Working Group
The Social and Ethics Working Group supports the Social and Ethics Committee on an executive level to ensure effective stakeholder management within Famous Brands. The Working Group reports to the Social and Ethics Committee regularly.
Social and Ethics Committee
The Social and Ethics Committee is primarily responsible for overseeing stakeholder management. However, other Board Committees are also involved. The Audit and Risk Committee provides guidance on engagement with the JSE, funder institutions, shareholders and investors. The Remuneration Committee interacts with shareholders regarding remuneration decisions.
The Board
When required, the Board is notified of major concerns and opportunities to improve stakeholder communications. Board members may also directly engage with stakeholders on occasion.
Stakeholder communications
The Group’s stakeholder engagement strategy guides interactions with stakeholders. Our engagement strategies are based on the degree to which our stakeholder relationships and contribution influence the Group’s strategy execution.
We use the following criteria to prioritise the relative importance of our wide range of stakeholders:
- Our dependence on the stakeholder’s support to achieve our strategic goals.
- The stakeholder’s influence on our performance.
- The significance of risks and opportunities linking the stakeholder to the Group.
- The risks we face should we not engage constructively with the stakeholder.
Evaluating the quality of relationships with our stakeholders
We follow an internal assessment of our stakeholder relationships and have the following three categories:
The relationship is established and generates value, but can be improved
Mutually beneficial, good relationship, some opportunity for improvement
Strong, mutually beneficial relationship
1. Shareholders, market analysts and prospective investors
Exco member accountable
Darren Hele, Nelisiwe Shiluvana and Celeste Appollis
Relationship quality
Key risk
Deterioration of investor confidence.
Capitals impacted
Our shareholders and prospective investors provide financial capital for growth, while market analysts guide on valuation and prospects. Shareholders, market analysts and prospective investors seek reassurance that Famous Brands presents an attractive investment proposition, sustainable growth and are interested in:
- Prudent capital allocation and sustainable financial performance, despite low economic growth, the impact of load shedding on franchise partners and Famous Brands operations.
- An appropriate and well-considered remuneration structure.
- Strong corporate governance, and ethical and competent leadership.
We respond by clearly and regularly communicating our investment case and delivering on our long-term strategy. Management has extensive industry experience and is guided by a highly competent Board.
2. Funding institutions
Exco member accountable
Darren Hele and Nelisiwe Shiluvana
Relationship quality
Key risk
Breach of debt covenants and undertakings to the primary lender.
Capitals impacted
Funding institutions provide financial capital for growth and facilitate balance sheet support. They seek a mutually beneficial relationship where their funding supports our Group’s growth plans, which will build Famous Brands into a better and bigger customer. They expect Famous Brands to apply responsible capital management and timely payment of interest and capital as well as compliance with debt covenants.
We have cultivated support and long-term relationships with our bankers. We maintained our track record of meeting funding obligations and complying with covenants. We proactively manage our debt maturity profile.
3. Franchise partners
Exco member accountable
Darren Hele, Derrian Nadauld and Philip Smith
Relationship quality
Key risk
Deteriorating relationship due to our failure to meet their expectations.
Capitals impacted
Franchise partners represent our brands and are our primary revenue driver. They seek a franchisor who is responsive to their needs and is prepared to invest in the relationship. They expect:
- Return on investment.
- World class brands, quality products and efficient marketing spend.
- Efficient and competitive Supply Chain.
- Advice on selecting attractive locations for their restaurants.
- Ongoing business management support.
We view our partnerships as long-term relationships that require ongoing attention, and our franchise partners’ insights and contributions are welcomed. Our dedicated operations teams ensure franchise partners receive support in managing a successful restaurant in the areas of finance, marketing, design and development, training for franchise partners and their employees, and procurement. Our Manufacturing and Logistics operations strive to consistently and timeously supply high-quality products.
We will continue to evolve and improve our engagement with them to enable us to harness the unique and valuable insights they can provide.
Engaging with franchise partners
The Franchise Association of South Africa estimates that the country’s franchise industry contributes around 15% (R721 billion) to GDP. The Small Business Institute notes that approximately 70% of small businesses in South Africa fail in the first five years. However, franchisees have an advantage over other entrepreneurs as they receive ongoing assistance from franchisors.
Famous Brands applies full business format franchising, in which the franchise partners use the franchisor’s entire business concept, including the name, trademarks, copyright, know-how, and other intellectual property.
As a franchisor, we take our obligations to franchise partners seriously. We regularly engage with them, provide ongoing business support, and continually enhance our brands.
Franchise partner recruitment
We receive a steady stream of franchise partner applications, primarily through referrals from existing franchise partners, landlords and our broader network. Franchise partners are attracted to our brands, long track record, and reputation for sound and ethical franchise network management.
We encourage applicants to engage with at least three existing franchise partners to understand the brand and what it takes to run a restaurant. Our franchise disclosure document contains all the contact details of existing franchise partners for that brand.
While most potential franchise partners require bank funding, they need sufficient unencumbered cash to manage their monthly repayments and cover their working capital requirements.
When evaluating potential franchise partners, we look for people skills, organisational ability, financial and business management knowledge. Famous Brands completes criminal and credit checks on all new applicants. Strong people management skills and experience are essential, as operating a restaurant requires directing employees and interacting with consumers. Franchise partners must have some entrepreneurial spirit but also be comfortable operating within the franchise system. We seek franchise partners who want to be owner-operators and not investors.
New sites are often offered to existing franchise partners who have expressed an interest in building a multi-franchise network.
Lease negotiation
The right site, floor size, and favourable rental terms are essential to ensure a business’s initial and ongoing success. We assist with site selection, negotiating and managing franchise partner leases, key landlord relationship management and rental benchmarking. We may step in to support franchise partners with renegotiating rentals, should the economy shift or foot traffic dwindle.
Developing a site
We use geographic information systems to determine whether a site is viable. This technology provides demographic data for an area, including population, age brackets and income, while tracking economic activity, competitor activity, and transport flows into the area. This enables us to analyse whether the site is over or under-traded and have the consumer numbers to support the business case.
We support franchise partners by managing all new restaurant fit-outs. This ensures that the look and feel of all new restaurants meet our stringent requirements. We have specific equipment requirements and work with the franchise partner to select and manage equipment suppliers and contractors. We negotiate the best pricing for franchise partners through our longstanding industry relationships. Restaurants do not open until Famous Brands signs off the project.
We open a Company-owned restaurant where a site meets all our criteria but cannot find a suitable franchise partner and may sell it once the right applicant is identified.
Franchise documentation
We provide a franchise partner applicant with a disclosure document to assist them in evaluating the franchise business case. The document is only provided after they have signed a non-disclosure agreement. It includes extensive information about the franchisor, the franchise, financial projections, full costs and fee breakdown.
Franchise partners sign a franchise agreement when joining a franchise. This legal document outlines the terms and conditions the franchise partner and franchisor must adhere to. Our franchise information system is a repository for legal documents, including franchise and lease agreements. The typical franchise agreement is for five years, after which it is either renewed or terminated.
Franchise partners receive access to an online operations manual that includes information on our brand, operational standards and recipes.
Onboarding
Our comprehensive onboarding process usually takes 14 weeks for a new franchise partner. It includes training the franchise partners and their employees and support for selecting and interviewing employees.
For Leading Brands, franchise partners can access an online training platform with modules on operating the various franchises. We also offer classroom training and practical in-store training, both at the new restaurant and at other restaurants.
Before a restaurant opens, we host a soft opening event for friends and family to allow the franchise partner to test the systems and employees.
Engagement
Franchise partners receive a visit from their franchise manager at least once per month. During this visit, the franchise manager conducts an operational audit and consults with the franchise partner on the business’s health. The franchise manager also discusses the upcoming menu promotions and incentives offered to franchise partners who achieve their targets.
Franchise managers look after between 20 to 25 franchise outlets. Franchise partners can escalate their concerns to an operations manager or regional manager.
Franchise partners receive a monthly newsletter on upcoming promotions and topical industry issues. Leading Brands franchise partners have access to an online portal to access marketing material for local marketing activities.
Famous Brands has set up National Franchise Forums for each brand. This is intended to be a consultative forum where franchise partners provide input. Through regional roadshows, Famous Brands shares its plans for the year ahead.
Margin support
Franchise partners benefit from our vertically integrated Supply Chain. Famous Brands sources products, negotiates pricing and ensures that products meet our standards. We are mindful of keeping our price increases low and not passing through frequent increases. Price certainty assists franchise partners with their planning. Product prices to franchise partners are the same, regardless of their distance from our distribution centres.
4. Consumers and prospective consumers
Exco member accountable
Darren Hele, Derrian Nadauld, and Philip Smith
Relationship quality
Key risk
Loss of market share due to failure to meet our consumers’ demands.
Capitals impacted
Our consumers’ continued loyalty and patronage are essential to our ongoing sustainability. We maintain and gain market share by meeting consumers’ demands and leading in the categories where we compete. We value and act on our consumers’ feedback. Consumers trust our brands to deliver:
Our brands must remain relevant and accessible and offer value to maintain and gain market share. We improve the consumer experience through innovation, excellent execution and continuous improvement. We maintain our standards through the following:
- Regular restaurant reviews, audits and mystery shopping to ensure our high standards are maintained.
- Prioritising food quality and safety across the Supply Chain.
- An ongoing restaurant revamp programme to continue meeting our customers’ expectations.
- Innovation to keep up with evolving trends such as investing in consumer-facing technology and rollout of loyalty programmes.
- A call centre to manage queries and complaints and monitor online and social media reviews to identify issues.
Read more about how we manage our brands, respond to consumer trends in our operating context and our investments in consumer-facing technology.
5. Civil society and community
Exco member accountable
Darren Hele, Philip Smith, Derrian Nadauld, Andrew Mundell and Jabulani Mahange
Relationship quality
Key risk
Reputational damage to Famous Brands due to the actions of an unethical CSI partner.
Capitals impacted
Our continued licence to operate depends on a sound relationship with civil society and the community. Our CSI partners seek sustained, dependable support and an association with a reputable brand. Civil society expects Famous Brands to operate in a way that reduces our negative impact on the environment. We are also expected to treat our customers, employees and communities responsibly.
Supporting the communities where we operate is a key component of brand building for our Leading Brands, who run programmes to support long-standing CSI partners. In addition, our franchise partners also support the communities where they operate, both in South Africa and beyond. In 2024, we contributed R17.2 million (2023: R16.4 million) for CSI programmes.
Read more in our CSI report.
Our environmental policy outlines our commitment to responsible environmental practices. It identifies critical focus areas and objectives regarding reducing our environmental footprint and contributing to a more sustainable operating environment.
Read more about our sustainability report and our environmental report.
6. Suppliers and business partners
Exco member accountable
Darren Hele, Philip Smith, Derrian Nadauld and Andrew Mundell
Relationship quality
Key risk
Our suppliers and business partners lose confidence in our ability to fulfil their agreements and contracts.
Capitals impacted
Our suppliers and business partners support Famous Brands in fulfilling our obligations to franchise partners by supplying important products and services. Many of our business partners contribute to the Group’s strategy execution and expect timely payment, fair treatment and a long-term, mutually beneficial relationship.
Our contractual arrangements facilitate quality and food safety adherence, and transparent, healthy relationships with suppliers. B-BBEE status and compliance are important when selecting suppliers or business partners. Our procurement and planning teams interact with suppliers frequently to ensure successful partnerships. We are working to improve our internal processes and fulfilment of commitments to suppliers.
Suppliers which are B-BBEE-compliant are eligible to participate in our annual supplier awards.
Read more in our transformation report.
7. Employees
Exco member accountable
Darren Hele and Jabulani Mahange
Relationship quality
Key risk
Failure to attract and retain the right calibre and skills required to meet our strategic objectives.
Capitals impacted
We value our people and aim to create a safe, harmonious and productive work environment. Employees expect Famous Brands to recognise their contributions and invest in their growth and development. They want their leaders and managers to demonstrate ethical and competent leadership. We offer our employees:
- Fair remuneration and recognition.
- Equal opportunities and career development.
- Training and skills development.
- Safe working environment and job security.
- Good corporate governance, ethical and competent leadership.
Our employees are appropriately remunerated, incentivised and developed. We support the principles of transformation in South Africa, and our transformation policy and strategies aim to uplift historically disadvantaged individuals. We are committed to creating a learning culture.
Read more in our human capital report, remuneration report and transformation report.
8. Trade unions
Exco member accountable
Jabulani Mahange
Relationship quality
Key risk
Poor labour union relationships lead to animosity and potential strikes.
Capitals impacted
We protect employees’ rights, including the rights to non-discrimination and freedom of association. We have recognition agreements with three trade unions, and 26.3% of employees are unionised. Trade unions seek the following on behalf of their members:
- Sustainable earnings and job security.
- Fair remuneration and recognition.
- Equal opportunities, training and career development.
- Safe working environment.
We acknowledge and respect the role of trade unions and engage professionally and cordially to find common ground on all matters. By demonstrating that we are an employer of choice and a good-faith partner, we can continue to enhance our existing mutually respectful relationship.
Read more in our human capital report.
9. Government and regulators
Exco member accountable
Darren Hele, Celeste Appollis, Nelisiwe Shiluvana, Ntando Ndaba and Jabulani Mahange
Relationship quality
Key risk
Failure to ready the business to comply with new legislation.
Capitals impacted
Famous Brands is a responsible corporate citizen that pays its tax, complies with legislation and regulations and is committed to the principles of transformation. In addition, we support the government’s developmental agenda through our CSI activities and responsible use of natural resources.
We have systems and structures in place to monitor changes to legislation, assess the implications of any changes on our operations and communicate this to relevant stakeholders. Maintaining our Level 2 B-BBEE status is an important management priority.