What is the most common financial mistake made by new franchisees?

While there are a few, one stands out.


While there are a number of mistakes that can be made by new franchisees, the most common are incorrectly interpreting projections with actual income – which means a franchisee is not retaining or reinvesting profits into the business to build equity or reserves.

Another mistake is to confuse gross and net profits. An inexperienced franchisee may then take this money and spend it on luxury items or take a salary, only to discover that money is meant to pay suppliers and staff.

Ethel Nyembe
About the Author
Ethel Nyembe has had a varied career ranging from Public Relations and Media to Banking. Starting with a media career that included radio and television (presenting, scriptwriting and producing) at the South African Broadcasting Corporation (SABC), she moved on to a position as an Account Executive in newsprint at Business Day. Ethel wrapped up an eleven-year media career as the Deputy General Manager for Sales and Marketing for Sunday Times in 2004. 2004 marked Ethel’s introduction to a career in banking, where she began a six-year tenure at First National Bank. In the first quarter of 2010, she joined Standard Bank, where she is currently the Head of Small Enterprise, Retail Banking, South Africa. Ethel is passionate about the entrepreneurial spirit South Africa holds, and has served on several business boards, as well as on the boards of co-operatives in the Johannesburg city centre and Economic forums in Gauteng. She has a keen interest in sport and the social upliftment of the community.

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  • http://www.ecokaya.com Executive Diretor Tania Tome

    Very good article. TT