Franchising is one of the most popular business models in the world today, with its ability to duplicate existing successful small businesses in different locations and with different owners. It is especially popular among entrepreneurs who are going into business for the first time, as there is a considerable amount of training and support available.
“Buying a franchise is like getting a pattern for that jumper you like, or that recipe for that ‘to-die-for’ chocolate cake. You have in your hands the formula to make things happen, but it’s up to you to activate either the pattern or the recipe. Similarly, a franchisor only provides you with a blueprint for business success — he will give you the tried-and-tested recipe, but he won’t bake the cake for you,” explains the Franchise Association of South Africa (Fasa) on its website.
In many franchises, the power of the brand is paramount. Consumers and clients visit franchise businesses because they recognise the name and have had previous good experiences at other stores in the franchise.
Fasa’s advice to potential franchisees is to choose a business that is affordable, enjoyable, that provides support and training and an acceptable financial return. Fasa said the key to success is the relationship between franchisor and franchisee. The latter buys the right to expand a tried-and-tested business model in a certain area for a set number of years. By investing capital, time, effort and motivation, and through the help of the franchisor’s branding, manuals, training, products and so on, a franchisee should be able to make a success of his or her business, says Fasa.
Franchisees pay a start-up fee to the franchisor when buying the business, and also pay monthly fees for the use of the brand and towards costs such as advertising and marketing the business.