What is the best piece of advice you would give a franchisee?
Owning your own business is hard work, but it can be rewarding. The franchisor-franchisee relationship should have the common goal of partnering to grow the business for the long term. That relationship should be based on trust and integrity, mutual respect, and open honest communication.
It is like being part of one big family. Therefore the franchisee should select a franchise that can deliver this type of relationship.
What are some of the most common misperceptions among franchisees?
Firstly, that buying a franchise is not hard work – a franchise business needs ‘hand-on’ involvement from a franchisee (owner-operator), particularly in terms of customer service, and building the sales and operational efficiencies.
If not, it could cost the franchisee money. At Kauai, all our franchisees are actively involved in their businesses. We do not appoint franchisees who are looking purely for an investment and will employ managers to operate the stores.
Secondly, that a franchise system is too restrictive, and a franchisee cannot do their own thing. The long-term strength of a franchise system is reliant on the entrepreneurial skills of franchisees. A franchisee should have a mindset to innovate and continuously improve, always engaging and challenging the franchisor through partnering dialogue.
What are the most important steps that a new franchisee should take when starting out?
Do your homework thoroughly to make an informed decision. This includes researching the industry, franchisor background and history, spending time in an outlet, and documenting a business case and site selection.
What do you think the ‘next big thing’ in franchising is?
In South Africa, we are likely to see growth and strength of the true franchisor brands and a shake-out of the ‘cowboys’, particularly with the introduction of the Consumer Protection Act. Within the quick service food industry it is healthy food, which Kauai is well positioned to capitalise on.
What do you think the biggest challenge currently is for the franchising industry?
Since the recession in 2008, store operating margins have recovered but not to the same levels as pre-2008. It requires continuous focus to grow the sales and take costs out of the business. The cost of real estate space, particularly for smaller brands wanting to grow fast is still a stumbling block. And then last, but not least, getting funding for franchisees within required timelines.
Why do you think franchising is a good option for people wanting to run their own businesses?
It is the best and most efficient option to become your ‘own boss’, but without all the associated risks of starting your own business. You buy into the strength of a brand, acquire the correct skills to operate the store, get shared best practice to operate the store and have the franchisor alongside you partnering to grow your business.