The term FRANCHISE is sometimes loosely bandied about in the market place where entrepreneurs are wanting to expand their brand footprint by selling “Franchises”.
A Franchise differentiates itself from other forms of business ownership in four distinct areas:
- A Proven Brand and Operating System
The Franchisor grants to the Franchisee the blue print where all Franchisees operate under a common brand and operating system.
- On-going Support
A Franchisor has an on-going commitment to support its Franchisees over the contractual period which is normally dealt with in the Franchise Agreement.
- Monthly Fees
A Franchisee, has an on-going commitment to pay the Franchisor a monthly Management Services Fee in exchange for the continuing right to use the brand and operating system over the contractual period which is normally dealt with in the Franchise Agreement.
- Consumer Protection Act, 68 of 2008
Both the Disclosure Document and Franchise Agreement must be Consumer Protection Act compliant in terms of Section 7(2) of the Consumer Protection Act No. 68 of 2008.
Be sure too that the Franchisor has an Operations and Procedures Manual in place which you are at liberty to ask to have a look at prior to making any commitment.
When buying a Franchise make sure that it is REALLY a Franchise!
Kevin Antonie
CEO
SA Franchise Brands
