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Thinking of going into franchising?

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A lot has been said about franchising being one of the resilient sectors in our economy as it contributes approximately 13,3% to South Africa’s GDP. Thus, people might consider the route of owning a franchise in their entrepreneurial journey.

Morne Cronje, Head of Franchising at FNB Business says, “Franchising has a lot of advantages than starting a business from the ground up as the failure rate in franchising is less than 10% compared to the high failure rate of traditional start-up businesses.”

Cronje shares the following factors that should be considered when going into franchising:

  1. Conduct research – Deciding to open a franchise can be daunting and exciting at the same time. Potential franchisees need to do a thorough research on the franchise industry before taking the actual steps to open one.
  2. Choosing a franchise that suits you – There is a wide variety of sub-sectors in franchising and entrepreneurs needs to select one that appeals to their interests and ambitions. The rule of thumb says; it is better to choose a sub-sector that you are passionate about. For example, if someone is passionate about food, it may be worth looking at franchises that appeal to such a passion.
  3. Shadow franchisees – Spend at least one day with a franchisee to get to know more about how they run their business. This will give you an insight on how franchisees (one who purchases a franchise) spend their time and what the key focus areas are to run a successful business.
  4. Location, location and location – If the franchisor (owner of the overarching company, trademarks, and products) has not identified a site, a franchisee will need to start looking for a location. On the other hand, if the franchisor proposes a site, you should still do an in-depth analysis to check the viability of the location. Check out the site with respect to size and affordability, access to utilities and security, proximity to your target market, visibility and availability of parking. The location of competitors is another important consideration.

“Just like any other business, don’t just go in franchising blindly; understand the pros and cons of the industry. It is highly recommended that you consult before choosing to own a franchise. At FNB, we provide financial and operational tools that are designed to accelerate and support the growth of franchisees,” concludes Cronje.

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Alan Straton

Chief Cook, Bottle Washer and Broom Mechanic at MyPE
Passionate about Port Elizabeth and definitely NOT packing for Perth. Alan's ethos is epitomised in the words of Nelson Mandela; "I have fought against white domination and I have fought against black domination. I have cherished the idea of a democratic and free society. If need be, it is an ideal for which I am prepared to die." See more articles by Alan.