Is buying a franchise business the best choice for you?


Although franchising is hailed as the one of the safest options to getting into business, with a failure rate of only 10% compared to independent businesses that have a failure rate of over 90%, it still is a decision that must be taken with serious consultation and self-examination. Running a franchise and working within the parameters of a strict operating format may not suit everyone and the pressures put on running a franchise is not for the faint-hearted. Besides the obvious legal and financial aspects to buying a franchise that need to be considered, understanding what you are letting yourself in for is as important.

Understand the concept of Franchising

We cannot emphasize enough the importance of understanding exactly what franchising is and how it operates. Many people have a vague idea that you simply acquire a franchise, open the doors and ‘Bob’s your uncle’ – you are now rich and successful! You must fully understand what the implications are of signing a franchise contract that contractually locks you in for a fixed period of time (anywhere from 3 to 10 years) or why you have to pay an upfront fee or ongoing management service fees. If you have any doubts on any of these issues, you need to go back to square one and really understand the concept of franchising. Start reading up on franchising – the internet, both locally and internationally – has a wealth of information on franchising, which, in its principles, is the same all over the world. Become familiar with the common terminology used in franchising – from what the difference between a franchisor and franchisee to what each side’s obligations are.

Choose a Franchise business that you’ll enjoy

Don’t let the idea of being your own boss cloud your judgement or be swept away by the allure of a well-known brand – or, worse still, want to become a fast food franchisee because you love the food they serve! Once you are on your feet, twelve hours a day, day in and day out, dealing with staff problems and surly customers, you may not be that enthusiastic and the franchise bubble will burst before you get a chance to enjoy the fruits of your labour. Choose a franchise concept that you understand, are familiar with or even have some expertise in. Fast food may appeal to the maverick in you but a solid automotive or DIY option might be more up your street. Be realistic about your expectations and your ability to manage a stressful business and identify a sector that you know will stimulate you and which will give you great pleasure.

Do your homework and choose well

Franchising is well-known for being the innovator of new ideas and concepts – a trait that makes this sector exciting but it can also be the harbinger of one-year wonder concepts – those trendy fads, like bead shops and scrap-booking that are here today and gone tomorrow. Wonderful ideas and passing fads don’t make for long-lasting business ventures and you could be buying into a concept that is set for failure. Above all else, check the sustainability of the financial model – those with innovative products and services, protected technology and new growing markets make ideal businesses. Opting for a strong, established brand is always a safer bet but a franchise that has saturated the market might not give you the best returns as you have to share the proverbial pie. Look at the competition as well as most new and successful concepts will soon have copy-cat businesses which can dilute profitability.

Find the right ethical fit

You may love the product or service you are investigating and admire the success of the brand but have a niggling feeling that the principals of the business are not what they make themselves out to be. Any uneasy instinct from your side needs to be taken as a warning sign – not necessarily that the opportunity is flawed but that it doesn’t fit in with your own value system and just isn’t a good fit. A franchise relationship between franchisor and franchisee is much like a marriage – you are stuck with each other for the duration of the agreement and it is in both your interests that there is trust and transparency and a genuine compatibility.

The same applies to the product or service that you will be investing in. You need to believe in the product, in the service that is rendered and that the whole operation has integrity. Consumers today put integrity and transparency above all else and with the power of the social media, and will not hesitate to destroy a company, product or service that does not live up to its promise and reputation.

If you are ready for a change or are looking to invest in a franchise, then you must attend FASA’s Franchising for Africa Conference which will give you a head-start in finding out all about franchising, listen to the experts, network with stakeholders in the industry and set you on the road to success. Visit FASA for more information and to book.

FASA Franchise Association South Africa
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