• Expert Advice

How to take the best advantage of your franchise opportunities

You are a winner that generally starts a lemonade factory when life gives you lemons. Or at least that is what you aspire to be. But sometimes your lemons go squishy before you have the opportunity to act. South Africa’s expanded rate of unemployment is currently sitting at 45,5% as per StatsSA. This is a frightening statistic that could be devastating. The alternative is to rather look at franchise opportunities and buy your own employment within an established franchise system. After all, your risk of failing in a franchise is so much lower than trying to start a business from scratch. Right?

A pension down the drain

That is exactly what Jenny Jenkins*, a grandmother of two, thought when she was retrenched late in 2020. Jenny failed to secure alternative employment and decided to explore the options in franchise opportunities. At first, she was ecstatic about all the franchise opportunities that she came across. Eventually, she settled on an option in the beauty industry. The promotional material that she received was immaculate and the staff was excited and friendly. All went well until she paid over the majority of what should have been her pension, as a franchise fee.

Do your homework

Eric Parker, Partner and Franchise Development Consultant of Franchising Plus, explains that this is a common mistake that a lot of potential franchise owners make when they work through franchise opportunities. “It is not unusual to be fooled by flashy promotional material and empty promises of astounding franchisors. Do your homework thoroughly.” Eric advises that you should get a list of existing franchise owners and talk to them personally.  Also, talk to franchise owners who were not provided by the franchisors as possible names. This is where you separate the wheat from the chaff.

Know your franchise rights

It is imperative to have all the required information that you need to make an informed choice. This includes the disclosure document and franchise agreement. You should also avail yourself of the content of Section 5(6) of the Consumer Protection Act. This clause makes it clear that a franchise buyer is protected prior to and after signing a franchise agreement. ‘In fact, you have a 10-business day cooling-off period, as per the Consumer Protection Act,’ added Eric. If in doubt you should contact the Franchise Association of South Africa, FASA.

Age does matter in franchise opportunities

It is important to take the age of the franchise concept into consideration.  Younger franchise concepts will offer you the opportunity to be more entrepreneurial. People often have the misconception that you should only invest in older franchises. “There are so many exciting new concepts on the market and buying early can have a variety of benefits.  This is of course if you have got an appetite for slightly more risk,” continued Sasha-Lee de Bod Smith, Partner and Franchise Development Consultant at Franchising Plus. “People tend to stare themselves blind at existing franchise concepts which will cost you the arm and leg of your entire family. When you invest in very established brands, you purchase a paint-by-numbers system with no opportunity to add your creative genius.”

Get the bank to be your partner

You might have received a small fortune in pay-outs when you were retrenched or received your pension funds, but it is always a good idea to get the bank in as your partner. The bank employs well-educated franchise specialists who would be able to assist you to make the right choice applicable to your circumstance. The banks will not invest in a sinking ship. If you do not get the go-ahead from your bank, it is a telltale to rather continue your search for alternative franchise options.

Birds of a feather flock together

Choose a franchise category that fits your personality, interest, aptitude, and circumstance. John Hadebe* learned this lesson in triplicate. He always wanted to open his own restaurant and when the opportunity came to buy into an existing restaurant franchise in the North of Johannesburg, he was over the moon with excitement. Unfortunately, John did not take into account that he had three little ones at home. Being at his restaurant seven days a week till midnight wreaked havoc on his family life and ultimately ruined his marriage.

In another situation, Isabel Venter, a devoted sustainable living enthusiast, bought herself a bottled water franchise. Isabel initially felt chuffed that she helped people purchase healthier water. It did not take long to realize that plastic water bottles are one of the biggest contributors to waste in the world.  If your main source of income is the main source of pollution, you end up with a massive clash of conscience.

Don’t skip the test

“Doing a franchise fit test should be a non-negotiable in your search for the perfect franchise for you,” advised Eric Parker. “There are so many variables to take into consideration, which might seem like an overkill at the time, but will pay off exponentially when it helps you to make the right decision.”

If you select your franchise through WhichFranchise you have the opportunity to an extended test (called the Franchisee Potential Pro E-test) that will look at parameters such as your enterprising potential, independence potential, career fit, and analytical orientation. Nothing in life is completely risk-free, but if you have done this franchise fit test, the likelihood of success becomes exponentially higher.

Ultimately, it is important to not only check the track record of the franchise system that you are buying into, but also the track record of the franchise consultants that they employ. You will be rewarded for all the time and effort that you have invested in your homework.  After all, you do not want to end up in the same predicament as Jenny, John, or Isabel.

Franchise Opportunities Abound

Life might be dishing out squishy lemons that nobody is interested in at the time.  All the permutations might seem completely overwhelming and you might slump back into questioning whether the world still needs lemonade.  With the right direction from experts that genuinely do care and can provide you with the correct tools, you can still open up your lemonade factory and provide the world with sunshine in a glass to infinity and beyond.

Visit WhichFranchise for more assistance in viewing suggested franchise opportunities.

*All names have been changed to protect the privacy of individuals.