How to select a franchise

It can also be a great idea as a first business. You don't have to think up your own innovative idea, and often you'll be given some support and guidance along the way which can make the whole process a lot less intimidating for first time business owners. There are some things you need to carefully consider before buying a franchise.

Firstly, think about what you like to do. What type of business can you see yourself running? If you are a very health conscious person, a fast food chain might not be ideal. Do you want to run it full time, or as a side job? Do you have a suitable location? Again, buying a burger chain might not be ideal if your proposed spot is right next to a busy McDonalds. Be brutally honest with yourself during this step, so that you don't end up with a business that is entirely mismatched to your needs and wants.

After that, you need to consider how much money you can afford to invest into your new franchise. Work out your numbers accurately and carefully, and consider funding options. Also make sure that you have enough money to support yourself initially when the franchise opens, as most businesses won't be profitable from the outset. Buying into an established franchise can be very expensive, but be wary of very cheap cost structures - they are unlikely to be good options in the long run.

Consider reputation as well. If you want to run a franchise, you are essentially paying for their reputation and the trust that comes with being associated with a well-known brand. Think about whether the brand is established in your area, or whether it is well-known elsewhere and your area is just waiting for the day they have access to branch of your selected franchise. If so, this is a good starting point. This is not to say that lesser known franchises cannot be successful in certain fields, but exercise caution. Check out their performance of late, their track record, and speak to other franchisees to determine whether they are satisfied with their franchise. Another thing to consider is that a less established brand may end up making you more money due to lower buying costs, but you will probably have more leg work to do initially in order to convince potential clients that you provide a high-quality product or service and are serious competition for more established brands.

If you are new to the world of business ownership, it is recommended that you select a franchise that will offer you support, training and guidance. Ask what kind of training and support they provide, how much of it, and whether current franchisees find this sufficient. Will they help you in areas you are less experienced in, such as marketing or bookkeeping? Do you want somebody to help micromanage your business, or do you want to be left to your own devices?

Finally, consider competition and actual need for your product or service. Your ideal is probably an industry that is not too crowded or too thinly populated. A new franchise may struggle in the face of very established brands unless you are in a prime location or have decided to buy into a very well-known chain. If there is no competition, it is probable that the industry doesn't lend itself too well to franchising. Again, if you are choosing a smaller industry, make sure there is a real need for your franchise. If there is very little activity within your chosen sector, it could be that there is simply nobody willing to pay for that product.

You are now ready to start looking for more specific franchising opportunities. There are many sites which help you sift through options in South Africa. You can start with whichfranchise or SAfranchisebrands but really, there are countless sites to help. Start by looking in your industry, and then narrow down your options as you go along based on location, competition, previous performance etc. If you already have a franchise in mind, start looking for further information on the process and details of franchisee agreements with this brand.