The Recession has taken its toll on just about every aspect of business and, although the franchise industry has fared better than many others, growth has still been slower. If you’re thinking about how to expand your franchise operation, consider these frequently asked questions about getting new franchises…
Should I expand my franchise operation?
Franchising is not a get-rich-quick scheme, as many entrepreneurs seem to believe. If you are serious about growing your business, be aware that you are in for some serious investment – in terms, of time, money and effort. Before you expand your business, first ask yourself whether you’re really up for the extra work. If you’re exploring franchising for the first time, ensure that your intellectual property (branding, products and services) is protected, and that you have enough funds to invest in the franchising process – you’ll need to pay a franchise consultant to help you with a franchise development plan and implementation plan, and a franchise attorney to draft a franchise disclosure document and franchise agreement. You’ll also need to invest in a pilot franchise to assess whether franchising is viable for your business. If you’re already a franchisor, do research to assess whether the marketplace can accommodate more franchises. Consider the African, as well as the South African, market. If you’re considering more franchises as a means to boost your bank balance, think carefully about whether the return is worth the investment. It may make more sense – and be more lucrative – to work at increasing sales at existing franchises.
Will advertising my franchise operation help me to find new franchisees?
It’s quite simple – to sell franchises and expand your franchise operation, people have to be aware that you have franchises for sale. Promoting your franchise on a platform like Franchise Finder is an excellent, cost-effective way to access your target market of would-be franchisees. In addition to advertising franchises for sale, continue with a strong marketing and publicity campaign for your brand, through all available channels. Stimulating brand recognition is essential for attracting customers and franchisees, since strong franchise brands tend to attract interest organically – prospective franchisees almost always prioritise enquires about franchising opportunities with big-name franchises, like KFC franchises.
What should I include in my franchise information pack?
When prospective franchises enquire about a franchise opportunity in your franchise operation, you will need to provide them with a franchise information pack. Include the following information:
- A description of your franchise system
- Company history and background
- Number of franchises in your franchise operation, and how long they’ve been operational
- Compelling reasons why a franchisee should invest in your franchise system (unique selling points of your franchise)
You will also need to provide a Franchise Disclosure Document. This is a requirement in terms of the Consumer Protection Act, No. 68 of 2008, and failing to provide prospective franchisees with this legal document is an offence. Your franchise disclosure document must contain:
- Details of the franchisor’s experience and qualifications
- Franchisor and franchisee obligations
- Financial projections
- Names and contact details of existing franchisees.
How do I assess whether prospective franchisees are suited to my franchise?
It’s crucial to be choosy about selecting franchisees to expand your franchise operation – they could make or break your business. Here are some guidelines to follow:
- Does the candidate meet your financial requirements?
- What is their work ethic? Do they see franchising as more than a job?
- Does their personality gel with your own? Are they easy to get along with?
- Are their personal circumstances conducive to making a serious commitment to your franchise operation?
- Do they meet the specific criteria of your particular franchise? For example, if yours is a child-oriented franchise, are they interested in children and have relevant experience with children in an environment similar to the one in which your franchise operates?
Author: Franchise Finder, Online Directory of Franchises and Business Opportunities in South Africa