What is the best advice you could give stakeholders of a franchise?
It is crucial to have a strong, well cemented relationship between the franchisor and franchisee. Establishing such a relationship is one of the most important issues that a franchisor deals with, in addition to growing the franchise network and growing sales and profits. Without this healthy relationship, even a great brand can fail.
The foundation of such a relationship should be built through a programme that allows franchisees to achieve their goals;communication channels that allow franchisees’ concerns and issues to be heard and addressed;and franchisors always being in touch with the franchisee.
What are some of the most common misconceptions among franchisees?
A cardinal mistake that franchisees make is thinking that they do not have to work hard because the business will deliver the desired goals on its own. Running a franchise is like running any other business and requires a lot of work. It is more than a full-time job – and that’s the bottom line about any business!
Another mistake most people make is to get the first available franchise brand once they decide to go the franchise route. It is important for franchisees to acquire businesses that are in line with their interests and what they are passionate about, instead of just going for what is available.
What are the most important steps that a new franchisee should take when starting out?
Acquiring a franchise business can be rewarding, but does require serious consideration. Some of the important steps to take are:
- Doing thorough homework about what the chosen franchising business entails, so that they have the correct expectations
- Ensuring that it’s feasible
- Understanding the brand that is being bought
- Understanding the local market and finding the right location
- Having an ‘own’ contribution of about 40% to 50% of the start-up costs
- Bringing plenty of passion and energy to the venture.
What is the ‘next big thing’ in franchising?
We are going to see more collaborations between brands, such as fast food players and supermarket retailers, or food retailers and fuel retailers. This trend is going to be the ‘next big thing’ because of the value proposition such collaborations bring. Collaborations of this nature have been shown to drive customer traffic into the businesses, and volumes are what franchises need.
What do you think the biggest challenge is for the franchising industry?
The biggest challenge facing the South African industry today is how to deal with the proliferation of new brands that are entering the market. These new entrants generally do not have a track record, yet they have massive expansion plans and sometimes grow too fast too early. This creates a problem for banks, and prospective franchisees are often vulnerable.
The other related challenge is the ease with which a business can be franchised, often without a requirement to subscribe to the industry requirements of ethical franchising.