FRANCHISING: THE NEXT STEP FOR YOUR BUSINESS? how to turn A step-by-step guide on re pi your business into an em
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avern, liquor store, restaurant, spaza shop... It doesn’t matter what type of business you own. If it is successful enough, you may soon start contemplating the opportunity to duplicate your enterprise and franchise. If you are unsure about what it all means and where to start, we have compiled a few tips and tricks to assist you in your pursuit of growing your business to greater heights!
What is franchising? Franchise operation owners – that would be you – basically sell the rights to their business’s brand to the franchisee, the person who owns and runs a duplicate version of your business.
How do I turn my business into a successful franchise? Step One: Analyse your business’s franchising potential Before you start, ask yourself, realistically, if your business is the right type to become a franchise. Your business model has to be easy to replicate and your business concept must appeal to both customers and franchisees. Step Two: Consider the financials There is no special financial requirement to turn a business into a franchise, however, since you are asking people to invest a large amount of cash into your brand, it would be wise to ensure that both your shop and the potential franchises that follow would be profitable. Step Three: Get some help from a franchise consultant Securing the services of a consultant is the best way forward when it comes to converting your business into a franchise, as they will be able to guide you through the legal requirements involved in the process and assist you 12
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with the nitty-gritty details you may not have considered. They will also be able to help you to choose the model to suit your business. Step Four: Register your franchise For many, the challenge of paperwork, forms to fill in and bureaucratic rules is a scary one but don’t give up just yet. With the help of your consultant, this step can go a lot faster. Step Five: Get yourself some franchisees It’s time to attract your potential franchising parties – but how? First, get inspiration from looking at how other franchises work. Take Shisanyama for example. It has a website, separate from its main business-to-consumer site, that is dedicated to those interested in franchising. This website details every single expense involved in becoming a Shisanyama franchisee. But remember, the higher the cost of entry, the longer it will take for your franchisees to make a profit, and consequently the less attractive your franchise will appear to them. Now that your franchise is up and running, here are a few vital ingredients needed to continue along the path to franchising success:
The Devil is in the Detail There is a general rule of thumb in the franchising business that the better you outline what makes your business work, the better the opportunity for the franchise to thrive. From detailing exactly what your staff earns monthly, and how you store your meats and when and where you cash up, to the music you play and the colours you use in your branding, get everything down on paper. Chesa Nyama is a great example of why this is necessary. Whatever Chesa Nyama restaurant you walk into, whether it is in Cape Town, Johannesburg or their soon-
to-be branches abroad, you can expect exactly the same experience.
Finger on the Financial Pulse Any good business owner has a strong idea of the financial situation their outlet is in, thanks to audited financial statements, and possibly the help of an accountant. A financial statement will not only give you a crystal clear outline of the ins and outs of your business, but it will also allow you to give estimates to your potential franchisees, easing them into the future of their outlet, should they follow instructions correctly. Don’t be nervous to hire an accountant. They can be a valuable asset in the growth of your business.
Time to be Picky It pays to be selective when it comes to the kind of people who you want to buy into your franchise. In screening potential franchisees, you will want to ensure that they are financially viable and will not bring your name into disrepute, should their management or their finances become strained. The management skills, commitment and administrative skills you have developed from running your business should be present in them. Turning your business into a franchise holds as many risks as it would as a stand-alone. Remember, if it isn’t already successful, making it into a franchise won’t better the situation. Although it may seem as though responsibility falls on each franchisee individually, it is actually up to you to manage the reputation of your franchise as a whole, which means dealing with an outlet individually if quality becomes questionable, or if they bring in a lot of complaints to your brand. Take the leap of faith! If the time is right, and your business is on par, you have the potential to populate the world with your business’s logo.
