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Franchisee Advice

4 Key Questions for Prospective Franchisees

What to ask when you’re researching a franchise opportunity – and how to get the answers.

Jeff Elgin

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Sometimes knowing which rocks to look under is the secret to discovering what you’re looking for. Though there are many topics to explore when researching franchise opportunities, years of experience have shown that if you want to make sure a franchise is a good one, you need to ask four key questions:

1. How well does the franchisor prepare new franchisees to succeed?

This is a broad question but it is also the most important one of all. When you acquire a franchise, what you’re supposed to receive is a proven system for producing predictable results. The bargain you make is that the franchisor will teach you everything you need to do in order to succeed and you’ll follow its direction.

In order to evaluate how well a company prepares new franchisees, you’ll need to do three things.

  1. First, evaluate its training programmes to make sure that all functional areas of the business are completely covered and that systems are in place to assist you as you learn how to operate the business.
  2. Second, evaluate its initial unit opening support systems to ensure that you will have all the assistance you need with every facet of opening a new outlet. That means site selection, lease negotiation, financing, construction, supplies and inventory, and finding and training employees.
  3. The third area you’ll need to evaluate is the franchise’s front line support staff. You should make sure that these people know everything about the operation of a new unit and that they will be there for you when you need help. As the saying goes, in a good franchise you’re in business for yourself but not by yourself, so make sure this is the case.

2. How strong is the ongoing support?

After you get your first unit up and operating, you’re still going to need plenty of assistance to deal with the issues and problems that every business owner faces. So you need to know how well the franchisor is set up to provide ongoing support, assistance and training to help you deal with the challenges you’ll face.

You should also evaluate the franchisor’s ongoing efforts to make its franchisees more successful by maximising their collective purchasing power. Successful programmes can provide savings on supplies and inventory that offset most or all of the ongoing royalty fees a franchisee is required to pay the company, so this is a key factor to consider.

3. How good is the marketing programme?

In order to succeed, you need to attract enough customers to support your franchise. A good franchise opportunity will provide support to both initial and ongoing marketing programmes in order to produce those customers.

The initial marketing programme needs to drive enough trial customers into your business to solidify your primary customer base. Make sure you confirm that the company has specific strategies and tactics to accomplish this and that its programme works consistently in various markets around the country. Ongoing marketing programmes need to drive enough new customers to the business to offset attrition and meet growth goals. Check that the franchise has strong and consistent year after year same-store sales growth and that this result is accomplished by increasing customer numbers and not simply via price increases.

4. How much money can you make?

Many people looking at franchise opportunities naturally consider this to be the most important question, and there are two good potential sources of information to answer it. First, many of the best companies publish their earnings information in their Franchise Disclosure Documents. If they do, this will save you quite a bit of time in finding an initial answer to this question.

Whether the franchise you’re researching publishes this data or not, you still need to verify the information through the second source: calls to existing franchisees. You need to determine how much money a mature unit makes after operating for a few years.

You also need to know how the first year or two looks financially – when units typically reach the break-even point – and how much money franchisees need to subsidise their operations before they reach that point.

Be sure to compare the income expectations to the total investment size to confirm that the return appears to be reasonable. Finally, analyse how many of the existing franchisees own multiple units as a way of increasing their total earnings from the business.

The process you should go through in answering all of these questions is threefold. First, get the official answer to the question from the franchise company. Second, talk with multiple existing franchisees to validate, confirm and perhaps expand on the official answers. Finally, go back to the franchisor to clarify any conflicting information you have received so that you are confident that you have determined the correct answers.

Consolidating your answers

When you have the answers to these four questions, you’ll know if you have found a good franchise opportunity. If any of these four areas are weak, you should pass and find a different franchise.

Once you find a company that meets your expectations in these critical areas, make sure you match up well with the people involved. You should like them and feel comfortable about working with them. If you become a new franchisee, you’ll be in a very close relationship with these folks for years, so you need to be sure that everyone is on the same wave-length in terms of values and goals.

Jeff Elgin has developed a consulting system that matches pre-screened, high-quality prospective franchisees with the franchise opportunities that best fit their personal profile.

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Company Posts

Col’ Cacchio: A Passion For Pizza

Greg Mommsen left the IT industry to join the restaurant trade and set up Col’Cacchio Bryanston in 2003. Greg is now a director at the Col’Cacchio group and shares the success of the 25-year-old brand and his journey as both franchisor and franchisee.

Nedbank Franchising

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Greg Mommsen

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  • Player: Greg Mommsen
  • Franchise: Col’Cacchio
  • Established: 1992
  • Visit: colcacchio.co.za

What are your daily challenges and advantages, as a franchisor, in both corporate and franchisee stores?

col-cacchio-pizza

With the ownership of corporate stores we have the opportunity to test and trial new products, IT upgrades and new innovations within our corporate structure upfront. This way we can gauge the success of these initiatives without disrupting the franchisees.

Due to the hands-on nature of Col’Cacchio restaurants, it’s proven to be successful when restaurants are owner-operated.  This becomes a challenge with the corporate stores where reliance is placed on managers to run the restaurant.

Catering to the individual needs of corporate and franchisee stores from an operational support point of view can also be challenging.

Related: Col’cacchio Holdings Launches First Base

What contributes to the success of Col’Cacchio as an iconic Italian franchise?

Italian franchise

We have taken our time to expand the brand and have rolled out new stores at a slow and steady pace. Choosing the right franchisee partners and the right sites has been key to our success and sustainability. It always remains a major focus for the brand to produce products that are best in its class, and we take great pride in having a hand-crafted and exclusive product offering.

How do you continue to stay relevant in a niche market?

pizzeria-niche-market

To ensure that we are on trend with the market, we constantly reinvent ourselves through innovation. Our menu items are updated every six months and we continually broaden our offering to ensure that we evolve to stay ahead of the curve. We strive to be the consumer favourite in Italian food and offer a premium product that is of the best quality, value and overall experience.

Col’Cacchio has a great application-based loyalty programme that puts us at the forefront of change. On-demand purchases and deliveries have become a major trend in the market and we are currently evolving our online ordering solution to accommodate this need.

Related: Col’Cacchio Launches Mio

What qualities do you require your franchisees to have?

pizza-franchise-south-africa

Our franchisees have to be resilient entrepreneurs with good business acumen. However, too much entrepreneurial flair is not ideal, as franchisees need to understand and be willing to work within the brand’s guidelines and standards.

To be a restaurateur, you have to be comfortable with non-traditional trading hours and be customer service focused.

With ample new pizza brands entering the South African market, how has this affected your business?

new pizza brands

In general, the food industry has been active with the development of new brands in South Africa. We embraced this as an opportunity to develop a smaller Col’Cacchio offering with a slightly limited menu and more focused on takeout and delivery in order to cater for this segment of the market.

We continue to focus on leveraging off the strength of our existing brand by offering the best quality handcrafted products.

The menu has expanded to include light meals and breakfast in a wide range of healthy options, including gluten- and wheat-free bases and pastas, as well as carb conscious, low calorie and vegan-friendly dishes. We’re also in the process of revamping many of our restaurants, to ensure that our stores have an updated, fresh look to increase our appeal to a wider audience across the various parts of the day.

Related: The Pros & Cons Of Owning A Restaurant Franchise

Why is it important for successful franchises to have a strong relationship with their banking partners?

v-and-a-pizza

Funding is critical to the development of new restaurants. Having a great banking partner that understands your business, the industry as well as its risks is pertinent. This plays a big role when it comes to specialised funding solutions and ensuring the application process is quick and easy.

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Company Posts

Leading SA Franchise Group Cash Crusaders Continues On Its Growth Path

The company is growing from strength to strength thanks to its recession-proof business model that is built around three profit centres – specially imported new goods, secondhand trade and secured financial lending.

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National franchise group Cash Crusaders continues to show positive growth results despite a rollercoaster economy. The 1,7-billion-rand company saw an impressive 13% year on year same store growth between 2015 and 2016 with figures remaining favourable in 2017.

The company is growing from strength to strength thanks to its recession-proof business model that is built around three profit centres – specially imported new goods, secondhand trade and secured financial lending.

New store openings

The results speak for themselves. This year, the brand opened its landmark two-hundredth store in Soweto (the second store for the area), with ten new store openings following in quick succession including Mayfield Square, Robertson, Raslouw, Vryheid, Tembisa, Parow Station and Lydenberg.

Related: What Franchise Model Is Right For You?

By the end of the year, the total of new stores is expected to reach 214.

Cash Crusaders is South Africa’s largest secondhand retailer – three times the size of its closest competitor- and hasn’t stopped growing yet, with new store openings scheduled well into 2018.

A sure thing for franchisees

The brand is seen as a lucrative business opportunity for franchisees, most of whom own more than one store.

“The investment that the franchisor makes on innovation, research and development ensures we stay ahead of competition, remain relevant in the industry and persist as a strong player over the long term,” says Franchisee Damian Ohajunwa

With a successful track record of more than 20-years, Cash Crusaders is seen as a ‘sure thing’ business opportunity by potential franchise owners who see to  benefit from a proven three-tier profit system and an existing customer base.

3 Customer drawcards

Cash Crusaders’ unique business model incorporates three distinct product offerings, namely private label new goods, secondhand goods and secured loans, all of which translate into good sales figures.

Cash Crusaders’ directly-imported private label goods include home theatre systems, home and car audio, DJ equipment, musical instruments and household appliances. For value-conscious consumers, these quality products present a less-expensive alternative to big brands, a trend that’s becoming more pronounced in South Africa’s tough economic climate.

A reliable business partner

Cash Crusaders unique business model ensures franchisees have the support they need. A highly-experienced team are on hand to offer advice, planning, training and ongoing support from day one. It’s a symbiotic relationship that benefits everyone.

Business owners form part of the Cash Crusaders network, and are equipped  with a proven system of operation, thorough training and all the tools needed to succeed. The Projects Department work closely with franchisees, giving them the full benefit of their expertise from day one.

Related: Savvy Sales Skills To Grow Your Franchise Footprint

“Set up was assisted greatly by Operational Management who was involved from the get-go, from lease negotiation to build out costings and contractor sourcing. The final quality of workmanship was exceptional,” franchisee Christo Burger.

Dedicated to raising the industry

cash-crusaders-capitalThe proudly South African brand is dedicated to empowering entrepreneurs to be in business for themselves and helping them grow every step of the way.

Cash Crusaders has also shown its commitment to raising and changing the public’s perception of the secondhand  industry by advocating honest trading and regulating secondhand trade in South Africa through its association with National Association of Franchised Secondhand Dealers (NAFSHD).

The group is also a member of The Franchise Association of South Africa (FASA) and proudly subscribes to the FASA code of ethics and business practices.

“Make no mistake, Cash Crusaders is not just another secondhand business. We maintain the highest standards and ethics, and have gone above and beyond to change the public’s perception of the secondhand trade by proudly demonstrating our honesty, integrity and legitimacy,” says Cash Crusaders CEO  Sean Stegmann.

R300 000 start-up assistance

Cash Crusaders is the only franchise group that offers financial assistance to help entrepreneurs find their feet. If a potential franchisee has R800 000 in unencumbered capital, Cash Crusaders will give them R300 000 start-up assistance to cover initial running costs. T&Cs apply.

“Franchising is our passion, and our network of Franchisees are our family. From the outset, we pledged to partner with entrepreneurs who share our vison – innovative thinkers as committed as we are to building this brand. We want to do business with you and work together to ensure the success and profitability of your business. You’ll soon come to appreciate our “Make It Happen” attitude,” says Stegmann.

dont-take-chances-on-your-store

For more information about the franchise opportunities available, please visit www.cashcrusaders.co.za

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Franchisee Advice

Want To Leave Customers Grinning And Vowing To Return? Do The Following

These five quick tips will keep your customers coming back for more.

Basil O’Hagan

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happy customers

1Admit when something has gone wrong

Customers will respect your willingness to admit a mistake and effort to rectify things.

2Focus. Pay attention to customers

Don’t go into autopilot when serving them.

Related: Zappo’s Customer Service Excellence Comes Down To Company Culture

3Aim to be an expert

Don’t just be an expert salesman – be an expert in whatever your customer is interested in. The ability to offer genuine advice (instead of a generic sales pitch) is something customers will come back for.

4Pay attention to new customers

Aim to make new customers regulars by offering the sort of service they don’t receive anywhere else. A free gift can be a good idea as well.

Related: Go Above And Beyond With Your Customer Service

5Make customers feel valued

There’s nothing worse than being ignored by staff when you’re in need of service. Always be on hand when help is needed. Never chat on the phone when a customer is waiting.

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