How to choose a franchise
What are your dreams and goals
Owning a franchise is a perfect opportunity to find something that matches your dreams and goals. They can explore the dreams you hope to accomplish through franchise ownership and determine your skills and preferences so that the companies you investigate match well with your passion and interests.
Do your research: is there a demand for the franchise
Speak to franchisors and franchisees that were and are currently in the business. They will be best equipped to tell you what the current landscape is like, and if there is appetite for that particular business. It might be your dream to own a nail salon, but if there isn’t a demand for this service, your business will most likely fail.
Decide on which business sector you would like to operate in and monitor the competition
Select a sector that you enjoy working in and investigate the potential growth and whether it will be sustainable in the long run. Once you have narrowed down the most suitable industry, analyse the geographical area in which you want to operate and determine whether there is a market for the type of business. It is healthy to have some competition. It keeps you on your toes and your business relevant, but you don’t want to be in a position where there is so much competition that they put you out of business.
Support from franchisors and franchisees
You will need to get the proper training and support from your franchisor so that your business can be a success. Make sure that this plan is in place before you decide to take anything on. Try to spend at least one day with a franchisee. This is the only way you can get an accurate idea of how franchisees spend their time and what they are doing to make them successful. In this way you can build a relationship with the franchisee which will allow you to get more honest and detailed questions.
Potential for growth
Investigate whether the business opportunity has potential for growth and longevity. If you invest in on a whim, your business might be no more after a few years. So do your homework and invest in something that is long-lasting.
Franchising is a good market to be in if you’re going to go into business, but competition is big. There are a number of international entries into the South African Franchising market and everyone is playing for market share, which is becoming less and less. The consumer is becoming more price-sensitive and the variety in the market means that people are spoilt for choice.
“If a franchisee is to succeed in the industry, it is important to know what your core business is and develop a strategy around that,” concludes Cronje.
To find out more, visit: https://www.fnb.co.za/business-banking/franchises/franchises.html