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Franchisee Advice

Save on your Franchise Start-Up Costs

When starting your franchise, there are times when you should pay for convenience and efficiency, and times when you shouldn’t.

Jeff Elgin




Most franchise owners will tell you that they could easily have saved quite a bit of money from the costs incurred while opening their first units. This begs the question:

If this is such a universal truth, then why didn’t the franchise companies show them how to save this money as part of their training?

The answer is that they probably did.

The biggest money waster in terms of start-up costs, by far, is impatience of the franchisee. Most new franchisees are thrilled and excited to get going, as they should be, and they can’t wait until their new franchise opens for business. If there are two ways to do something, and the faster one costs more money, most new franchisees opt for speed. Those kinds of choices can really add up to a lot of money and in many cases the time gained doesn’t really produce any long-term value to offset the increased costs.

The secret to reaching the best result in terms of start-up costs is balance. If you picture the cost vs. speed quandary as a continuum, you don’t want to be at either extreme. Trying so hard to save money that you never open the business isn’t going to be any better for you than spending too much to open a little sooner than you otherwise would.


Where to Find Savings

There are five common expense categories where most start-up cost savings are found. Some of these are quite easy to take advantage of while others require some extra work or expertise. The old adage that ‘time is money’ applies to virtually every category since you’re usually trading some of your time to get the financial savings. The key areas to focus on include:

1. Franchise Company Fees

Though most good franchise companies don’t negotiate their fees, occasionally you’ll find one that does. If this is the case, make sure you save as much in this area as possible. Contact existing franchisees to determine what kind of deal they received so you have a ballpark idea of what’s possible. If you’re not comfortable negotiating yourself, use an attorney or someone who can drive the best bargain.

2. Turnkey Packages

Many franchise companies offer a turnkey package where nearly all you need to start, is available in a package from the franchisor or a third party vendor. In either case, the package is often chosen because it’s so convenient. Keep in mind that convenience is what is being sold in these packages – not the best value or lowest price. It’s quite common to learn after the fact that the components of a turnkey package could have been acquired by the franchisee for a significantly lower overall cost. The tradeoff, of course, is that the franchisee has to invest the time and effort to source and purchase each component to get the savings.

3. Construction Costs

Most franchises have a physical location and that site needs to be prepared according to the specifications of the franchise. There are a few simple things that can produce significant savings in this area. First of all, get multiple bids for the work that needs to be done. You won’t believe the variances you’ll see in the bids from one contractor to another.

Second, give a little thought to what you might be willing to do yourself. As an example, if you’re renting a 1 200-square-foot bay in a strip centre and the construction bid says it’s going to cost you R10 000 to paint the walls a simple off white colour, you may want to consider painting it yourself.

4. Equipment, Signage and Fixtures

This is a substantial expense category for most franchises and there are two big secrets to saving money here. The first is, again, get multiple bids on everything. It takes a little more work but you’ll see price variances of as much as 100% on things as simple as a standard sign for your business. The same is true of the cabinets and other fixtures. In terms of your equipment, you may be able to realise big savings from buying used items. Some franchises don’t allow the choice but most will allow you to source and purchase used equipment as long as it meets guidelines.

If you’re opening a business with a commercial kitchen as an example, you can potentially save a ton of money. Used equipment is readily available for many businesses and your franchisor should know of good sources in this area.

5. Lease Terms

This can be a huge category in terms of potential savings and it’s an area where you want expert advice and assistance if you’re not experienced yourself. This expertise is found in a good commercial realtor but you’ll also want an experienced real estate attorney familiar with the local market. All leases are negotiable to some extent, but most leases don’t initially offer a number of concessions that may be obtained through negotiation.

Use both your realtor and your attorney to determine what’s standard in the current marketplace in terms of items like the square foot rental rate, the Common Area Maintenance (CAM) charges, free rent periods, construction allowances and other economic terms. Then you have a baseline to use in determining if you’re getting a really good deal instead of just an average one. A good negotiator can sometimes get a landlord to include tens of thousands of rands in build-out costs into the lease that can be direct savings to you.

Learn From Others

As a final thought on this topic, remember that it’s easy to determine which areas will produce the most savings for you in whichever franchise you select.

All you need to do is ask the existing franchisees. Again, this will take some of your time but it will be an investment that can pay you big dividends in savings on your start-up costs if you’re willing to learn from their experience.

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.


Franchisee Advice

What To Know About Franchising Your Business

For many businesses, franchising is an excellent route to growth, opening up new opportunities and markets. Laurette Pienaar, National Franchise Manager at Nedbank, unpacks why it’s worth considering this route.

Nadine Todd




Vital Stats

  • Player: Laurette Pienaar
  • Position: National Franchise Manager
  • Company: Nedbank Limited
  • Visit:

What type of business is ideally suited to the franchise model?

Franchising has been proven successful across all industries, including the automotive, food, entertainment and retail industries. However, several key qualities ultimately determine a concept’s ability to successfully become a franchise.

Firstly, the business model must be scalable and able to be repeated in several locations. Secondly, there must be demand for the products sold and, thirdly, the franchise model must be proven as profitable.

Related: (Infographic) 7 Digital Marketing Strategies For Franchises

Why is franchising a good growth option?

Franchising is often used as a cost-effective growth strategy for businesses. A key benefit of this strategy is that no capital layout is required for a new franchised store as opposed to corporate-owned stores.

Franchised stores are also proven to be more successful than corporate-owned stores. This is mainly due to the fact that the franchise owners have a vested interest in the store, whereas corporate stores are supervised by a manager. Franchising is therefore also a great way to build your brand.

What should business owners focus on?

Franchisors should set up good infrastructure to support their franchisees, including good upfront and ongoing training to both the franchisees and their staff, the correct legal advice and assistance, and a strong operational team to assist franchisees daily.

Many successful franchisors provide support by expanding through vertical integration, which provides franchisees with logistics, supply chain security and product consistency.

Several franchisors advocate a structure with both franchisee and corporate-owned stores. This enables a franchisor to keep in touch with the daily challenges franchisees experience and new products and solutions can be tested at a corporate store before being rolled out to the franchise network.

How can franchising consultants assist business owners?

Franchise consultants provide daily operational support to franchisees. They are responsible for daily store visits to assist with quality checks, process flows, supplier relationships and, often, financial assessments. They are a helpful soundboard on any improvements to be made in the business model and can convey suggestions to the franchisor.

Related: The Secret Sauce To Great Franchise Leadership

What challenges should business owners be aware of?

Businesses looking to franchise need to ensure that their business is teachable to others. Overcomplicated products and systems may deter franchisees from investing in your brand.

Franchisors have to do ongoing introspection regarding their company culture. For example, does the culture promote innovation and inspire franchisees and consumers, which ultimately is a culture worth investing in?

New franchisors’ selection criteria for franchisees are often not sufficiently thorough and comprehensive. For a new franchisor, it is important to choose good quality franchisees and to have strict selection criteria to ensure that your brand remains reputable and stable during fast-expanding cycles.

What lessons can be learnt from SA’s successful franchises?

Businesses looking to expand through franchising should consider setting up several corporate-owned stores first. This assures potential investors that your business is based on a proven model with a track record and supportive infrastructure.

There is not always a one-size-fits-all model. Many franchisors have created custom models to accommodate and adjust to the need of a specific property or consumer market. A great example of this would be the food industry where many franchisors offer shopping centre concepts, drive thrus and kiosk or express concepts. Consider this when developing your model.

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Franchisee Advice

Develop Digital Marketing Competency In 3 Simple Steps

Conquering the digital revolution needn’t be daunting. Polish up your tech skills and watch your digital marketing prowess increase throughout your franchise.

Diana Albertyn




As a franchisor, digital marketing may be proving to be a challenge due to the unique structuring of the business.

“The very nature of franchises is ‘structured’, however, when it comes to marketing, that structure often lacks,” says Marcela De Vivo, Founder and CEO of Gryffin Media.

Franchisors and franchisees often struggle to reach common ground when looking to achieve different marketing goals. While the franchisor needs to control the brand in its entirety, the franchisee wants to market their business using particular strategies suited to their location.

Research has found that smartphones are the biggest influencers of 82% of users when they make their in-store purchase decisions while. It’s for this reason that the importance of digital marketing for franchises has increased.

Here’s how to harness its power of influence, amplify foot traffic and solidify brand loyalty:

1. Recruit digital natives and early adopters

As much as you’re the leader of your franchise network, there are franchisees in your chain you could learn from. The global increase in millennial franchise owners means it is highly likely that you’ll be able to identify early digital adopters within your franchise network.

“The best people to learn from are those who have been in your shoes before,” says Matt Forman of the Franchise Centre at Griffith University.

“Encourage and support their efforts and use them as case studies to demonstrate to the rest of your franchisees the value of digital marketing, and how to do it right.”

2. Invest in training your team

“Each digital competency level requires more education and resources in order to integrate digital marketing with your physical stores,” says Forman. For this reason, regularly investing in continuous training for your team so as to ensure they keep abreast of any new and emerging trends.

Proactivity and adapting to the constantly evolving digital landscape led KFC to open a LinkedIn account for its founder and mascot Colonel Sanders. KFC’s out of the box tactic is a fresh approach to what has long been considered a B2B platform, under-utilised as a B2C platform.

3. Apply custom targeting techniques

The discovery of new and small businesses is being fuelled by Google searches, social media and online reviews, making these platforms a goldmine of invaluable tools.

Leveraging certain custom targeting techniques like easily searchable keywords and exposure on other reputable and high-traffic websites, gives your franchise’s digital marketing efforts a boost. This results in an effective campaign, favourable reviews and meaningful and lasting interactions with consumers “whether it’s a reply to a Facebook comment or a retweet,” says Entrepreneur’s Emily Conklin.

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Franchisee Advice

How To Hire Skilled Workers For Your Franchise

Your staff run your business – you just have to show them how. This is why employing the best people for the job is essential.

Diana Albertyn




According to the Franchise Association of South Africa (FASA) 2017 Franchisor Survey, one of the main challenges facing franchisees is finding the right staff.

“Staffing your franchise can be one of the most challenging parts of running a successful business. Without a great team of employees, you cannot run your business effectively,” says Saxon Marsden-Huggins, founder of WebRover.

These three tips could help you find the best employees for your franchise outlet:

1. Don’t hire in haste

While you may be rearing to go and keen to fill gaps to speed up profitability, research your candidates thoroughly.

Related: Insights On Recruitment That Could Affect Franchise Performance

As the job applications keep flowing into your inbox, keep in mind that not all of them qualify for the positions available – it may even be a small percent who are actually viable candidates. This is why your hiring process should include:

  • Taking the time to thoroughly screen CVs to develop a short list
  • Creating a carefully crafted list of interview questions
  • Setting aside adequate time for thorough interviews
  • Getting to know the candidates through a second round of interviews to confirm your choice.

Giving the hiring process dedication and attention will ensure you get the cream of the crop, contributing to the long-term success of your franchise.

2. Demonstrate support in the workplace

While you can instil the necessary skills into new recruits, it’s difficult to train for culture. This is why choosing the right employees from the beginning will make the rest of your franchise management system will run more smoothly.

“The manner by which you run the franchise will influence employee perceptions of the brand as well,” says Hireology’s Erin Borgerson. “Your staff must become ambassadors of your franchise system to attract the target consumer market.”

The best way to do this is encouraging staff to give you their honest feedback. Your commitment to creating and upholding a positive culture will result in increased loyalty from your current staff and a superior pool of applicants.

Related: 3 Things You Should Consider Before Buying Your First Franchise

3. Offer appealing incentives

When advancement opportunities are clearly communicated, staff is keen to hear how they can get there, as they have career goals of their own. Encouraging this ambition will draw good employees to your franchise.

“Helping employees understand the steps to advancement helps them to view their current job as an important part of a career with an upward path, not just a pay cheque for this week,” say financial reporting technology experts at Qvinci.

Performance bonuses and employee benefits incentivise staff’s efforts, therefore increasing their income alongside the profit of the business. “This serves to make employees a part of the business and not merely people ‘who work there’,” they explain.

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