Now serving South Africa: investment team lands Domino’s Master Franchise Agreement – Graimark Inc. African American capital management firm is major partner in New South Africa Pizza Co. LLC
Eric L. Smith
Graimark Inc., a Detroit-based African American-owned capital management firm, announced its first multimillion dollar international investment deal as lead partner in New South Africa Pizza Co. L.L.C.
The new company has been awarded the Master Franchise Agreement for South Africa from Domino’s Pizza International. Graimark owns 90% of the investment deal. The remaining investors comprise Associated Ventures Inc., a company formed in 1994 to research and develop international trade opportunities, and Rob Williams, a black South African entrepreneur. At maturity, the investment is expected to generate $100 million in sales and create 4,500 jobs in 164 stores.
“Our research shows tremendous opportunity in South Africa in the general pizza market, and particularly in the service-oriented pizza delivery market,” says Charles Allen, one of the partners of Graimark Inc., “This is an exciting time for our company.
Graimark was formed by Allen of Detroit and Philadelphia attorney Handsel Minyard. The company was founded in 1988 and became one of the few black-owned real estate investment companies that handled properties for the U.S. Resolution Trust Corp., formed in 1989 to manage the assets of failed savings and loan associations. The company, which has a staff of 30 in Detroit, Richmond, Va., and Philadelphia, handled more than $1 billion in properties in different cities for the RTC. In an attempt to diversify his interests, Allen said the franchise agreement with Domino’s was an ideal opportunity.
During the first 18 to 24 months of operation, New South Africa Pizza will focus on establishing corporation-owned stores. The first stores will open in Johannesburg. Then, New South Africa Pizza will target three major urban centers for development: Greater Cape Town, Greater Durban and the Gauteng Province, including Pretoria.
“Not only will we employ several thousand South Africans, we’ll also be providing business to South African vendors and contractors, and sub-franchising opportunities to South African entrepreneurs,” says Minyard, Graimark executive vice president.
Minyard adds that everything used in getting the company up and running will be manufactured or purchased in South Africa, including flour, dairy products, building supplies and “scooters for delivery.”
“There is a lot of activity going on in the country now relating to foreign investment that hadn’t been there for a long time. It’s particularly so for investors who come with a product that can contribute to their economy,” he says.
But Allen also recognizes that along with the potential rewards, there are risks and pitfalls unique to doing business in South Africa.
“There’s the question of the stability of the government,” says Allen. “There’s Mandela, who is an aging worldwide statesman, and there’s also the problem that South Africa has yet to repeal many of the laws and high taxes that act as a detriment to foreign investment.”
But with that in mind, Allen says the potential rewards of the venture are staggering. He says the franchise agreement gives him a free hand in developing Domino’s as a high-profile market name in a country ripe for new capital.
“We own the rights to the marketplace and basically act as Domino’s Pizza in that region for the next 10 years. We can appoint self-franchises and receive royalties pursuant to our franchise agreement,” says Allen. “It’s an ideal opportunity to be able to contribute to South Africa’s economic growth, and at the same time we can expect a reasonable rate of return for our investors.”
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