Landing On Your Feet

Even franchisees can fall victim to start-up mistakes. Here’s how to be a franchise start-up success.

Landing On Your Feet

While franchises provide a much less risky business start-up option, deciding to invest in a franchise network also provides the important benefit of allowing franchisees the opportunity to capitalise on the relationship and resources of their franchisor, something many independent business owners don’t always have access to.

Related: Thinking of Everything

And, as a new franchisee, while it is important to know what approach to take with your franchisor, it is just as important to be aware of the most common mistakes many franchise start-ups make despite the support and resources they receive from their franchisor. Below are a few top-tips to ensure you set your franchise up for success.

Adopt a franchisor-knows-best mentality

Don’t be a know-it-all. Listen to everything your franchisor tells you to do and follow it meticulously as they know best and normally have a wealth of previous experience in terms of what works and does not work.

Tap into the franchisor’s operational and marketing expertise

Take advantage of the franchisor in respect of their operational and marketing expertise in order to determine what might work best for your store in your area. Speak to their allocated operational staff and continually ask for advice, information and assistance.

Do not be scared to approach them for assistance, they won’t think that you’re ignorant and will appreciate your honesty.

Set aside additional working capital

Always have enough back-up working capital for all the little things the franchisor might not have told you to include in your start-up capital or working capital for the first three months of the business.

For example, a mistake that many new franchisees in the restaurant or fast food business often make is not to budget for the internal and external gas connections, enough gas and spare gas bottles, the lockable gas cage that holds these gas bottles, as well as the annual subscription to the South African Musicians Association which gives them the right to play music in their establishments.

Maximise cash flow

Consult franchisors in respect of the expected quiet and busy months during the year in order to plan your cash flow requirements properly. This will prevent over- or under-staffing during these periods and can either improve or negatively impact your cash flow in the business.

Make the most of the franchisor’s marketing resources

Ensure wherever possible that you get your fair share of the franchisor’s marketing spend for your business.

During your start-up phase or quiet periods ask the franchisor to organise special marketing promotions and special offers for your business.

Request benchmark guidelines

Ask the franchisor what their benchmark guidelines are during the start-up period in terms of expected turnover, gross profit margin, total expenses and net profit. This will allow you to plan accordingly.

Be open and honest

Try and foster an open, honest, co-operative working relationship with the franchisor in order to get the best out of them. Refrain from constantly being hyper-critical of their advice and assistance, or they may shy away from assisting you should things go wrong.

Get to know the technical support staff

Ensure that you have the names and contact numbers of all the technical support staff and suppliers of equipment and stock. This will prevent any undue delays when assistance is required in solving any problems or hiccups.

Related: Finding the Right Franchise Fit

Plan for the unexpected

Keep as much spare cash in reserve as possible. This will cover any unexpected maintenance costs for equipment not under warrantee or guarantee, or for any after-hours plumbing and electrical emergencies.

These costs are often more than expected, especially if they relate to air-conditioners, dishwashers, stoves, fridges, gas equipment and lighting.

As a new franchisee it’s ultimately your livelihood at stake, and the more you do to plan for and protect it, the better! Happy franchising!

Kenneth Fisher
About the Author
Kenneth Fisher is the CEO: Business Finance SME South Africa of Real People. He has 29 years' experience in the field of small business financing, training, sales, marketing and franchising.

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