Have you considered owning a franchise but
you’re not sure about whether it’s the right decision for you? There are quite
a few good reasons why you should at least do the homework around it and
possibly consider it.
Have you considered owning a franchise but you’re not sure about whether it’s the right decision for you? There are quite a few good reasons why you should at least do the homework around it and possibly consider it.
Owning a franchise can be a great business success. We have all seen branches of stores performing very well and always imagine that the owner must be making plenty of money. But is owning a franchise the right decision for you?
Despite a struggling economy, South Africa’s franchise sector has grown steadily and continues to make a strong contribution to the South African GDP across its various sectors, according to Franchise Association of South Africa’s (FASA’s) 2018 survey of the industry.
With an estimated turnover of R721-billion, the sector contributes 15,7% to the total South African GDP, has over 850 franchised brands and around 41 000 outlets.
“The franchise system has weathered the economic downturn better than other business models,” said Ms Vera Valasis, FASA Executive Director.
“The continued growth of new franchise concepts proves that franchising is the entrepreneurial heart of any economy – its growth might be temporarily curbed due to economic influences, but it remains the one business sector that is always innovating and has the highest success rate.”
Here are a few reasons why you should consider taking the plunge:
1. More likely to succeed
According to entrepreneurmag.co.za, a franchise has more chance of success than an independently owned business. A franchise is an established brand with proven methods and processes. The brand also has an already established reputation and market presence, making promotion much easier for you.
2. Access to support
Most franchisors offer franchisees invaluable support to help them make a success of it. A good franchise head office will be there to answer your queries and help you make decisions for the better of the business. Remember they have a tried and tested recipe for success that they’ll be willing to share and help you implement.
3. Easier access to financing
When considering buying a franchise you might see that banks are more open to possibly lending you the financing to make it happen. If a franchise is a highly successful brand, then your risk of failure might be lower, and chances are better that the bank will recover their money. While buying into a franchise will not guarantee you’ll get the money, there are many other factors that need to be considered, it might mean the bank will likely take the position of the franchise itself into consideration as well when reviewing your application.
Most franchises have limits to the number of stores within a geographical area. So, buying into one guarantees enough market share for your franchise without competition. Franchisors take great care in researching areas and the market that lives there before approving a franchise. It should give you peace of mind to know that the homework has been done and that there would be a need for the service or product you’ll be providing.
5. Easy marketing
Typically, the franchisor takes care of marketing on a national scale. Of course, your franchise will have to contribute to these costs, but you won’t have the hassle of creating marketing materials or advertisements. You won’t have to worry about creating designed ads and videos and coming up with appropriate messaging for your brand – your head office with a team of qualified marketing individuals will take care of it. You might have to book your own local marketing, but your materials will be supplied by your head office.
Valasis believes that on a global front, our changing world is opening opportunities on the franchise horizon. “As spending patterns change, entrepreneurs will be looking at business sectors where there is an appetite for franchising and flourishing new industries will start to see the light. Niche markets are also offering one-of-a-kind franchises that give one the opportunity to get in on the ground floor of a new franchise trend.”
If you need more information on franchises and what it could mean for you, it might be a good idea to visit the International Franchise and Entrepreneur Expo. In a first for KwaZulu-Natal, Ithala Development Finance Corporation will be hosting the Franchise Association of South Africa’s (FASA) flagship event on 8th and 9th March this year.
Happening at the Durban Exhibition Centre, the expo will bring together franchisors, potential franchise buyers, potential franchise suppliers and businesses looking to franchise and find business opportunities.
Seats are limited, so make sure you secure your place now. To register, visit www.ife.co.za.
Tickets are available online at R50 per person per day or R100 at the door, children under the age of 16 get free entry.
For more tips and inspirational stories visit the Ithala blog at www.myithalastory.com.