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Melissa Eva- Ask the Expert – Franchising Plus Consultant

Melissa completed her Baccalaureus Legum (LL.B) degree in four years at the University of Johannesburg in 2007.

She has also completed a Certificate in Bank Credit at the Milpark Business School in 2010.

Melissa held various roles within the FNB Commercial Franchising Division over a period of four years, where she gained a wealth of experience in the evaluation of risk, financial management and creditworthiness involved with the financing of franchise businesses. As one of the judges on the panel for the 2010/2011 Accenture Enablis Business Launchpad competition, Melissa has also been exposed to the assessment of entrepreneurial ideas of Small to Medium Enterprises.

Melissa Ontong, Franchising Plus Consultant

Melissa’s Franchising Expertise

Melissa has been a franchise consultant at Franchising Plus for over 6 years. Melissa’s strengths include franchise financial modelling, franchise documentation, franchise strategy and implementation.

Melissa has worked on a number of exciting projects, including a Standard Bank Franchisor Incubator project. This project entailed taking 10 black owned businesses through the Franchise By Numbers course, franchise strategy and preparation and then still assisting them in franchising their businesses, these candidates were given the one-on-one consulting, which, ordinarily they would not have been able to afford.

Other projects Melissa has worked on include:

  • Development of the franchise business model for the Distribution of the Daily Sun newspapers in the informal trade.
  • Expansion strategies across a number of industries including funeral services, medical services, health and beauty, restaurant and food services, building and construction as well as retail concepts.
  • Reviews and audits on existing franchise groups in order to review the franchise and develop a strategy for further expansion.
  • Business modelling in order to assist international brands with their entry into South African market.
  • Social Franchise strategies with Government Departments (medical and Information Technology fields).

Take advantage of Melissa’s franchise experience and expertise, by asking her a question.

I’m interested in a particular franchise that sounds a really exciting business, the only concern I have is that it is a new concept. Should I walk away because of this or if I do my research is a new franchise still a viable option? What should I look out for?

Most experts seem to agree that when it comes to selecting a franchise, well-established brands with a track record of success should be given preference. This may be the safest route, no doubt about that, but is it realistic? After all, every concept was a start-up once – someone somewhere had to take the plunge or the franchise would have never gotten off the ground.

In view of franchising’s growing popularity, new concepts appear on the market all the time. Some of them seem to be real gems in the making; those who get in on the ground floor can expect to grow with the brand and should have it made.

But what about the risk? It is greater, no doubt about that, but not necessarily unacceptable. We are not advocating that you should rush out and join an unproven franchise concept without careful evaluation of its bona fides. What we are saying is that some new brands may develop into exciting opportunities and deserve your attention.

Having said that, there is no doubt in our minds that being the first franchisee of an emerging network increases the level of risk. It follows that careful evaluation of the pros and cons of joining such a network becomes even more important than would otherwise be the case. You also need to be a special person, comfortable with being a pioneer.

How do I get started in franchising? I have the ability to make a success of any venture but I do not have the necessary start-up capital.

What we have to tell you may sound harsh but at the end of the day, realism must prevail. You cannot start a business without funding, and a franchise is no exception. Banks including are willing to provide loans to franchisees of credible franchise networks but only if the applicant is able to make a reasonable contribution from own resources. The actual amount varies depending on the borrower’s risk profile, the standing of the brand and the business’s cash flow projections but as a rough guide, a bank will lend 40-50% of the required total.

I work as a project manager for a large parastatal and currently earn about R50 000 per month, plus perks. I have R200 000 in cash to invest and want to know whether starting a franchise would secure me a higher income.

No business is without risk and an investment of R200 000 would enable you to start a relatively small business. With sufficient hard work, you will eventually earn more than what you earn now, and you will also create a capital asset. Realistically speaking, however, this will take several years. Given your level of earnings, and if increasing your income in the short term is your only motivation, you may be better advised to stay an employee for the time being. If you build up some more capital over time, you will eventually gain access to a larger operation with higher income potential.

I want to be a franchisee and have written to the franchisor of a brand I love. Now I worry how I will cope if they turn me down. Do you think I should spread the risk by approaching several franchisors?

Becoming a franchisee should not be a passive process whereby you express interest and hope to be accepted. Talk to several franchisors and evaluate the opportunities they offer before settling on the one that suits you best. Unless you do that, you will never know whether you have made the right choice.