“Corporate helped me to gain the relevant experience that has enabled me to manage my business successfully,” says Pick n Pay franchisee Rudolf Bornman. “Retail is very complex and as a good manager/owner you need to understand all aspects of the business to make it a success.”
Whether you’re considering signing up to run the newest location of a supermarket chain, printing store or fast food franchise, its critical to consider how this decision could impact your financial, professional and family lives.
To make a successful transition from employee to employer and business builder to business owner, choose a franchise and establish the following:
1. Count the cost implications
Confirm upfront the total investment required to purchase, setup and operate the franchise. If you if you don’t confirm this number before signing a franchise agreement, you may find yourself running out of money before you’ve taken off.
“Granted, some franchisors may be willing to take a down payment as low as 20% to 25% of the total,” says money coach Jim Casparie. “But you’d better have excellent credit and a net worth in excess of R1 million.”
Once you’ve established the amounts due for the franchise fee (which is in most cases non-refundable), rent, initial inventory, royalty payments and marketing fees, choose a source of finance. “Many people can actually afford a bigger franchise opportunity than they think,” says Casparie.
2. Establish the level of support offered
Leaving your nine-to-five in pursuit of financial independence is less daunting when you have the assurance of an established and tested concept, already being run successfully. But, it’s essential to ascertain the level of support you can expect from your franchisor once you join the network.
Speak to current franchisees when conducting your due diligence. Ask some of questions about initial and ongoing to establish if you will be entering a supportive environment or left to your own devices.
“It’s great to learn from your mistakes. It’s even better if you can learn from those of others so that you don’t repeat them,” says international speaker, published author, executive and business coach Gordon Tredgold.
3. Plan for the end at the beginning
While franchising may seem like a great way to become a business owner with training wheels, you need to ensure you’ve drawn up a long-term plan, before signing up to be a franchisee. “Are you planning to leave the franchise to your children, are you looking sell it or do you plan to just run it for a couple of years and then get out?” are some of the questions you need to ask yourself, says Tredgold.
“The better you know and understand your end game, the easier time you’ll have selecting the right kind of franchise opportunity, which fits you in the short term, and supports your long-term objectives.”