With retrenchment increasingly affecting more and more South Africans across all income brackets, franchising is increasingly attractive for many individuals who want to become part of a stable business concept, with proven systems.
Franchising offers franchisees the right to practice and use another person’s business philosophy, with the franchisor giving the franchisee (the buyer) the right to distribute its products, methods and trademarks for a percentage of monthly sales and/or a royalty fee. This also includes training, advertising and other support services. In the USA today, almost 4% of businesses are franchises.
Franchising holds a special allure for a number of reasons. It’s not as risky as a start-up venture and according to the 2008 Standard Bank Franchise Factor Survey, franchising offers a 98% success rate, compared to a dismal success rate for other start-ups.
Businesses for which franchising works best often have the following characteristics: a good profitability track record, broad geographic appeal; they are relatively easy to operate; often they are inexpensive to operate. Read on…