Is franchising the right business model for me?

Buying a franchise is a significant investment and a long-term commitment. There are pros and cons to franchising, and it operates in a very specific way, so it must suit your personality.

If you have examined all the facts and decided to go ahead, it’s important to select the right franchise to reduce your risk of failure.

Franchising pros

These are some of the advantages of buying a franchise:

1. A functioning system: there is no need to develop your own operational processes and you can start trading from day one.
   
   
2. Ongoing support: you should receive support to ensure your business runs smoothly. The fees you pay to the franchisor cover marketing expenses, legislative compliance, new product innovation and any group purchasing discounts.
   
   
3. Branding: you don’t have to stress about building your brand while trying to get your business off the ground. An older franchise offers an established brand, whereas a younger franchise allows you to grow alongside the brand.
   
   
4. Less risky: according to the Franchise Association of South Africa (FASA), franchisees have a failure rate of less than 10 percent compared to independent start-ups, which have a failure rate of up to 90 percent.
   
   
5. Easier to grow your business: you may be able to buy additional areas or outlets, depending on your franchise structure.
   
   
6. Easier to sell: a franchise is more sought-after than an independent small business. Highly profitable franchise outlets are seldom advertised as they are snapped up by existing franchisees looking to expand their operations.

Franchising cons

These are some of the disadvantages of buying a franchise:

1. The cost: a franchise may be more costly than starting your own small business; there is a joining fee, and you must adhere to the franchisor’s standards for fittings, equipment, and furniture.  
   
2. Limited creativity:  you must be adaptable and adhere to established procedures. There is no room for innovation or changes to the business model.
   
   
3. Conflict potential: the franchise operations manager’s regular visits may interfere with operations and lead to conflict. You must understand that their role is to reduce business risks and you need to manage this potential conflict.
   
   
4. Royalties or management fees: these have to be paid monthly to the franchisor, even if you run at a loss. Royalties are calculated based on turnover or gross profit, depending on your agreement, and it is your responsibility to ensure that the business is successful.

Franchising and your personality type

Franchising suits a specific personality type, as it is fairly rigid, and you have to follow the franchisor’s processes. Make sure you are comfortable with this and fully understand your own personality type before you invest in a franchise.

A franchise is best suited to a left-brained thinker who is more logical, analytical, and orderly.

Right-brained thinkers, who are more creative and imaginative, may battle with the rigidity, as the system doesn’t allow for divergence from the franchisor’s way of operating.

Finding a good franchise

Consider the following when looking for a good franchise:

• Most banks have a franchise department, so speaking to the franchise specialist at your bank can be helpful. These specialists have a wealth of knowledge about franchising developments and trends.
  
  
• Tap into the information provided by FASA, Franchise Direct, and Franchising Plus.
  
  
• Engage with existing franchisees to gain first-hand information.
  
  
• Find something that interests you, and don’t be motivated solely by money.
  
  
• The franchise must be profitable for both you and the franchisor.