Friday, March 16, 2007

The uprise of franchises in South Africa

It seems that more people are choosing the franchise option when starting out in business than ever before. With statistics showing a 49% rise in the number of franchises available over the last two years, it is evident that the promise of a proven low cost model for creating the business of your dreams is an attractive one.

Do remember that many franchises may not be the promised land it pretends to be and strong due diligence supported by good market research and a few conversations with other franchise holders and customers is a must before you sign on the dotted line.

A few basic questions to ask here are as follows:
1) Who are the shareholders of the franchiser?

2) Who are the officers and directors of the franchiser?

3) What is the business experience of the franchiser's directors and officers?

4) Have any of the franchiser's directors, officers or shareholders gone bankrupt or convicted of any criminal offense in the last 7 years?

5) How many years has the franchiser been operating?

6) How many years has it been offering franchises?

7) How many franchises does the franchiser have?

8) How many units are corporately owned?

9) What is the franchiser's financial condition? Have you received its most recent audited financial statements? Is the franchiser a member of FASA?

For further help on what to look for in a franchise look at the SABusinessHub guide to franchising in South Africa here and for details on the relevant research click here

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