Cash Converters’ 3-in-1 business model

The Cash Converters business model offers aspiring franchisees the freedom and flexibility of entrepreneurship within the framework of a tried-and-tested franchise business model.

We spent some time with our Group Marketing Manager, Nicole Gundelfinger, unpacking why this model is well-positioned for a post-Covid economy.

What is the overall unique selling point to buying a Cash Converters franchise?

a. Many people don’t know that Cash Converters boasts over 35 years of success globally, and 28 years locally right here in Southern Africa. We have managed to successfully combine three not-so-glamourous industries – buying and selling pre-loved goods and secured and unsecured money lending – under one professional roof. Take a walk into one of our stores and expect to be pleasantly surprised!

b. Furthermore, our owner-operator franchisees invest in a tried-and-tested business model that is as close to recession-resilient as possible. This is more pertinent than ever as we weather the current COVID-19 crisis. Through both good and bad economic cycles, our franchisees soon realise that they have bought into a business with a “recipe” to run a profitable business year on year.

What are the 3 different revenue streams?

a. Firstly, it’s the buying and selling of pre-owned household items,

b. Secured money lending (which is a loan against your goods),

c. And lastly unsecured money lending – a loan against your salary

Let’s talk in more detail about these streams.

Our business is built on the buying and selling of second-hand goods; it was only with the advent of the National Credit Act that we ventured into loans. We buy good-quality household items from our customers, we clean them, and then put them on our retail floor for sale. It’s a no brainer for our retail clients – the same item that you could buy in a traditional retail store, but for half the price of new. It’s a good way to extend the life cycle of items, which is gentler on the planet, and it’s a great way for consumers to maximise their spending power.

When the NCA came into being, we moved into pawn broking – or what we call “Cash Advance”. This is when a customer brings us an item of value and exchanges it for cash in hand – there and then. We store the item safely and securely for the period of the loan term – up to 30 days, and when the customer comes back to collect their item, they pay us the loan amount, interest and fees (as per the Act), and take their item home. It’s a convenient way to walk out with instant cash – and all legally compliant. If a customer does not come back to collect their item, we sell the item on our retail floor and the loan is extinguished.

We also do a SMART loan, where we transact with a customer who wants an unsecured loan – this is a loan against a salary. A customer will bring in their documentation, and we will score them for affordability. If the loan is granted, we put money onto what we call a Cashies™ Card – which works just like a debit card. We deduct the total amount repayable from the customer’s bank account via a DebiCheck mandate after their next salary run.

When you put all components of our business together, it makes for a compelling and sustainable franchise opportunity.

Nicole Gungelfinger’s 10+ year career spans across digital agencies, product development and digital marketing. She is Google AdWords Certified, and a skilled Facebook paid media advertiser. Her current role requires extensive stakeholder management across the African continent.

*This article was updated in 2022

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