Franchising is a different business model, That it involves paying the franchisor an initial franchise fee, as well as ongoing royalties. Not to mention the initial and ongoing training and support the brand offers.
First, let’s look at choosing a brand that’s right for you. While many variables play a role in choosing the franchise brand that fits, experience has shown passion is often the most important. If you love what you do, success is more likely.
And what are some of those other things?
- How much money you’re able or willing to borrow,
- Job skills required for success (technical vs. people skills)
- Hours of operation (business-to-business vs. late-night fast food)
- How many units you want (single unit vs. many vs. area developer)
- Your management style (hands-on operator vs. running a business)
- A succession plan (have one in place before buying)
What is your personality/temperament? Are you better off working on your own, or with others? Do you like to set your own hours or show up at the same time every day? Can you obey a franchise system’s rules, or do you need to chart your own course? Do you like managing people or being left alone to do what you love? And finally, are you willing to commit for the next 10 or 20 years?
Is there a need for the product or service in your area? And if there is, has that need already been met by existing businesses? How big is the pie? One percent of a huge market is better than 20 percent of a smaller one. (Competition includes non-franchised businesses, too!)
The application process
The application process will most likely include a credit record check, a questionnaire to be completed and even a psychometric evaluation to test your personality fit. The franchisor will want to determine the following:
- Many franchisors want to know what you already know about them, their franchise opportunity, and why you are interested
- What type of experience do you have?
- Have you managed staff?
- What are your financial and administrative skills?
- What do you like to do and what are your strengths?
- Do you plan to be an owner manager and work in the business?
- What locations or territories you’re interested in and if you would consider alternatives?
Many of the questions will focus on your financial situation. The franchisor will want to know about your personal assets (and liabilities) to make sure you have enough resources to operate the business in case it runs into unforeseen financial difficulty. While you may be able to raise finance from a bank, you will still require a portion of unencumbered cash. Many popular franchises are inundated with requests from interested parties and may take some time to evaluate your application.
From the day an entrepreneur starts a business, he exposes himself to certain risks. Even before the first employee is hired, a business is at risk, making it important to have the right insurance in place.
List of franchise opportunities available in south africa