With the world of franchising constantly changing and growing, the variety of opportunities also expands, offering potential franchisees a wider choice of activities than ever before. However, there are tried and tested ways of finding that elusive business opportunity which is tailor-made for you.
Simone Cooper, Head of Franchising and Enterprise Development at Standard Bank, says “Potential entrepreneurs have two things in common. The first is a passion for business; the second is a desire to be self-employed so that they can build a personal legacy.”
“It is these two personal attributes that people should look to when deciding on a franchise in which to place their hard-earned cash. Bear in mind what you are passionate about and consider a franchise that will satisfy and sustain your interest. When this is done, you will be halfway towards identifying the perfect business,” says Ms. Cooper.
Getting to the point where you are ready to make a business commitment can be achieved by following several practical steps:
1. Looking at yourself and what you want from life
The business you select should reflect your character. The chances are that if you are outgoing and sociable, a business in which you have minimal contact with people will not suit you. Similarly, a business that is in line with your interests, experiences and the activities you enjoy is likely to keep you happily involved for years to come.
When it comes to lifestyle you should be asking yourself several hard questions. These include:
- Am I willing to move to another centre to achieve my business ambitions?
- Do I or my family have the funds to support us while I build a business from scratch?
- Am I prepared to put in the long hours needed to succeed?
- Will I like what I am doing enough to make sacrifices worthwhile?
- Will I be happy making a commitment that could take up years of my life?
2. Minimising the possibilities of regrets by researching all the sectors you find attractive
If you know what your major interests are, look at what sectors of franchising offer you the best ‘fit.’ You could find something that you had not previously considered attracting your attention.
3. Consider the franchise brands available and what each offers.
When you have found the sector that most appeals to you, consider the franchise brands available. Examine them critically and decide for yourself:
- Which are the strongest in the sector?
- How well established the brands are and if they have national or regional representation.
- Whether they have good reputations and happy franchisees.
- Speaking to franchisees and finding out if they receive the support they expect from the franchisor and if the stock they require is readily available.
- Spending time at a franchise to evaluate what the demand for products and services is.
4. Fully understand expectations from both a franchisor and franchisee perspective
The more questions you ask, the less likely it is that you will have regrets later. Before putting your signature on contracts, make sure that:
- You have checked just how solvent and solid the franchisor is and whether they are facing any legal action.
- You carefully examine the Franchise Disclosure document and check that it covers the above salient points.
- You go through the Franchise Agreement document carefully and make sure that all queries you may have are satisfactorily answered. Ideally, get an independent expert to examine the Franchise Disclosure document and Franchise Agreement for you.
- You fully understand what your financial obligations are, how much unencumbered cash you may need and what could impact on your finances. In particular look at clauses that may:
– Compel you to undertake expensive store refurbishments at set periods.
– Require you to have capital over and above your initial fee to buy stock.
5. Start looking for existing opportunities, or put yourself in line for a new store
6. Get the funding together
Once you have the support of a franchisor, it is easier to apply for bank funding, as many banks are familiar with the strict franchisee selection process undertaken by major franchisors. The franchisor will often support your application by supplying funding requirements in detail.
“From this point on the bank will step in and do its own assessment. At Standard Bank we believe that meeting financial criteria is not the only step required for a loan. We also pay attention to the person applying for assistance. After all, he or she is the key to the success of the enterprise. Who an applicant is, and how passionate he or she is about franchising, is just as important as the money they require,” says Ms Cooper.
Article contribution by Magna-Carta