Any successful business owner with a growing business should consider franchise development as an option for expansion into new markets. This is true for small-to-medium businesses, as well as large businesses. Franchising can be an extremely effective and efficient method of business expansion, given the right components. The process requires a methodical approach and careful strategic planning, along with targeted and professional marketing processes. Franchise Development for South African Businesses is available through DTC!
Franchising in itself is a viable avenue for entrepreneurs and individuals that want to become entrepreneurs, especially in South Africa because it promotes the well-being and development of the people of the country; by improving the standard of living, healthcare services, education and alleviating poverty.
Reasons for Purchasing a Franchise:
Power of Numbers
A franchise investment is suppose to provide you with benefit from the power of numbers. This includes marketing assistance. Every franchisee pays a small advertising fee and the franchisor manages the ad fund. This helps develop brand awareness and can help grow your customer base. However, you need to ensure that the money you contribute is spent in your market. If you are the first location on the West coast, and the franchisor has fifty locations on the East coast, you may not receive value.
A good franchise can take advantage of their franchisee network by negotiating better pricing for any business need. This can include initial costs such as furniture to ongoing supplies, inventory and other business needs. However, ensure that the franchisor flows the cost savings on to you as a franchisee. Some franchisors will negotiate the price lower but then charge the franchisee more than expected.
One of the biggest advantages of franchising to you participate in building a brand on a local or national basis. This allows consumers to frequent your business because they are familiar with your brand and comfortable with your offering. However, ensure that your location is within reasonable distance from existing franchisees. This ensures brand awareness. Being the first location in a new state, your business will not benefit from brand awareness.
A franchise system should provide adequate training programs to enhance your business skills prior to opening your location. This includes key methods and strategies proprietary to the specific franchise and best practices in operating any business.
A franchise system should offer real estate assistance to help you find the right site and negotiate the best possible deal on your location. This is extremely important because being one block away from the action can be detrimental to the future of your business. A franchise system should offer construction benefits in helping you design the layout of the business and select the right contractors.
A franchise system should give you ongoing operational support. Franchisors have staff that help you. However, one should talk with existing franchisees to ensure that support is beneficial and reliable. You will need someone to rely on as you grow your franchised business. This is why you invest. So you can have the support.
You should also receive support in managing your operations. This includes POS software, accounting software and management tools to review your business operations, analyse your costs and benchmark to other franchisees in the system to ensure you are operating efficiently. Again, you are buying a franchise for the support. It needs to be there so you can benefit from your investment and ongoing royalty fees paid.
Culture and Development
A franchise needs a track record of success. There is a development strategy that grows a franchise company slowly and for the mutual benefit of both the franchisor and franchisees.
This development strategy can be understood by speaking with senior management and assessing the culture of the franchise system. If existing franchisees have a poor view of management or are frustrated with the way the franchisor is implementing changes, charging fees or operating the franchise these can be red flags that question the long-term value of this investment.
Franchise Development for South African Businesses in Practical Steps
When developing a franchise programme for a business entering the franchise industry, there are several essential steps that need to be taken in order to effectively model the franchise concept, protect the franchisor, and have a solid franchise model that can be easily duplicated.
The first step in franchising a business emphasises the importance of approaching the market from a targeted and planned perspective. To accomplish this, a business owner must first draft a sound business plan for the expansion programme.
When drafting this business plan, it is important to include the legal documents and marketing approach for your business. It is important to have the following:
- A good profile for the target buyer of the franchise system;
- Well-defined franchise fee, royalty and advertising fund model; and
- Financial model that makes sense for both the franchisor and the franchisee.
A franchise system should have a fully documented and defined operations system. This allows the franchisee to learn the business model and understand the required standards set forth by the franchisor.
Franchise operation manuals, training manuals, location manuals, and other documentation should be developed professionally and with extreme detail. This makes the process as smooth as possible and protects you from any risks that you might take on in the franchise development process.
A good franchise development model should have thorough and complete documentation and franchise training in place to duplicate and repeat the elements of what had made the original corporate location successful.
The final stages of the franchise development programme should incorporate the marketing element of the franchise process. The franchise marketing plan should incorporate the channels with which the franchise will be marketed and sold, the media outlets and lead generation sources that will be used and the unique value proposition for the franchise concept.
Franchise collateral material namely brochures, pamphlets, and fliers should correctly sell the business as an opportunity for potential franchisees. The training, franchise support, brand and business model should be the franchise hot buttons to selling or marketing your franchise concept to potential buyers.
Contact us for assistance with and information on franchise development for South African businesses.