As a 25-year veteran of the franchise industry and a multi-brand franchisor, I’ve seen tremendous growth in the popularity of franchising. However, a number of misconceptions about franchise ownership still exist, and if you accept them at face value, there’s a good chance you’ll be robbing yourself of an opportunity that can be not only financially rewarding, but also personally satisfying. Before you make up your mind, it helps to know the facts.
Here are eight franchise myths that will help you realistically evaluate whether buying a franchise is right for you:
1I’ll only be successful if I find the right business
Many of us define ‘right’ as what we’re already good at. But don’t limit yourself. Define your transferable skills from the corporate world: delegation, management, marketing, etc.
If you had them in one type of business, you can easily use them in another.
2I’ll instantly know the right opportunity when I see it
Many people want to fall in love with their business at first sight. That’s an emotional decision, not a career choice. You have to take the time to learn about the details and nuances of an opportunity to understand its potential. You simply can’t do that when you make a determination based only on what you feel today.
3I can’t be in a business I know nothing about
Of course you can. It’s natural to want to stay in your comfort zone and stick to areas you have experience in. But as a franchise owner, your job is running and growing your business, no matter what it is. Remember, you have transferable skills. That’s your strength. You can hire people who know the details. Your road to success is buying into and learning the franchise system – which is already a positive working model – and then using your talents to make it grow.
4There’s no freedom in a franchise – corporate dictates everything
This is one of the most pervasive myths about franchise ownership. In actuality, there’s tons of room for individuality. The franchisor ‘dictates’ only one thing: the basic system – the framework, if you will – that’s already proven successful. Beyond that, you’re in charge. You’re managing your business. You decide who to hire and fire, how to market your location and how to promote it regionally. Keep in mind that the franchisor wants you to succeed, because if you don’t, they don’t. It’s a win-win situation.
5Franchises stifle creativity
Again, this is patently untrue. The only limitations you have are those that have already been proven to generate income. This might include signage, uniforms, formulas, protocol, and so on – the basics that allow you to represent the brand and your own location as professionally as possible.
But it’s completely up to you to think up new ideas and make suggestions to corporate. In fact, most franchise parent companies encourage suggestions, because it’s where they get many of their best ideas. McDonald’s corporate, for example, didn’t come up with the inspiration to start selling breakfast. The concept of the Egg McMuffin was developed by a franchisee.
6I can’t afford a franchise
Sure you can, if you look at it for what it is: an investment in your future. Most franchises can be established for well under R400 000, and some can be started for as little as R48 000. Your only payments to the parent company are a one-time franchise fee and weekly or monthly royalties, which are usually determined on a case-by-case basis.
Beyond that, your out-of-pocket expenses are the same as they’d be for any business – salaries, local advertising, etc. The difference is you have the support and training of the franchisor, which will help you ramp up to full speed far more quickly than you could on your own.
7I’ll have to quit my job to become a franchisee
Many franchise concepts are specifically designed for people who are working other jobs. In fact, a large percentage of franchise owners are passive rather than full-time investors.
8I can only be successful doing something I love
Believe it or not, businesses based on an owner’s background have the highest failure rate. Your franchise business is a vehicle to the lifestyle you’re seeking. If you limit your choices to what you’re familiar with or good at, you’re placing yourself at a major disadvantage by ignoring a huge number of possibilities that are outside your realm of past business experience.
Can franchises still fail? Sure they can. But the vast majority of the time this is due to the owner deviating from the system and cutting corners by using inferior materials or altering formulas. The key to making it as a franchisee is consistency. If you don’t adhere to the groundwork – which, once again, is in place because it works – your chances of success will drop dramatically. You want to leave the habits from the corporate world where they are and bring along your marketable and transferable skills.
How Your Fast Food Franchise Can Attract Quality-Conscious Consumers
In a world where customers are becoming increasingly picky about where they dine and what they pick from a menu, it can be challenging to meet demands.
“Major foodborne illness incidents and outbreaks seem to be increasing. Even innocent or careless mistakes can sicken guests and ruin a restaurant’s reputation,” says Francine Shaw, President of Food Safety Training Solutions Inc. “Foodborne illnesses are 100% preventable and could be avoided if food service organisations adopted a food safety culture.”
Following a listeriosis scare in South Africa early in 2018, consumers have become more conscious about the foods they eat. Today’s customer is more concerned about the cleanliness of the food they buy over its taste.
“How food is sourced, prepared and served is uppermost with many diners demanding transparency when it comes to where they spend their hard-earned money.” – Franchise Association of South Africa (FASA)
The addition of more nutritious choices to your menu may be attracting health-conscious consumers, but it’s the quality of the regular – and perhaps popular – menu items that may win over consumers concerned with quality and not just calorie content.
Here’s how you can ensure your customers are at ease with having their next meal at any of your franchises nationwide:
1. Ensure everyone knows why and how it’s done
Even with buy-in from the top-tier, your food safety efforts will be futile if not incorporated into every training touch point and may appear to be optional, when they should be a priority, says Chris Boyles, vice president for The Steritech Institute. When you have well-trained workers who understand the ‘why’ behind food-quality policies, momentum is built and a culture of food safety is created.
“Through encouraging genuine, comprehensive behavioural shifts, your franchise will protect the brand, safeguard employees and sustain a reduction in risk,” Boyles adds.
2. Build food-quality impetus across the network
As a company that serves food to the public you’re in a position of great responsibility. It’s important to pass this message down to your franchisees too. “Co-operation between the franchisee and their employees in this regard cannot be stressed enough,” says Marcel Strauss, Managing Executive of The Fish & Chip Co. – which was voted the top fish brand in 2012.
To get your franchisees on board with tightened food safety regulations, ensure they’re aware of the looming food-quality changes you’re planning on implementing and the ROI for your brand. This enables them to make budgetary allowance for certain credentials and technology you may require to meet certain standards of food safety.
3. Tell your customers every chance you get
Give consumers a glimpse into your production process by including your quality mission statement on customer-facing materials such as your website, social media pages, profiles on external review sites and menus. “Use stories, images and videos to show your practices in action,” Katy Jones, Chief Marketing Officer at FoodLogiQ explains. “Take customers behind the scenes into internal discussions. Practice is the way you demonstrate your commitment.”
To incorporate quality and safety messaging into customer relations, you need collaboration between your food safety managers and marketing managers.
The Future Of Franchising Looks Smaller (And Fancier)
Franchises are adding smaller locations and reduced menu options, as niche markets emerge, to attract the customer of the future.
As the owner of a thriving franchise, you’re well aware of the fact that fluctuations in the world economy has both negative and positive effects on business. When it comes to your successful franchise, tough times could mean adopting new trends or seizing gaps, potentially resulting in a new franchise concept you wouldn’t have otherwise thought of.
“The buzz word in global franchising is ‘flexibility and adaptability’,” according to the Franchise Association of South Africa (FASA). “Whether a result of a need to inject some life into stagnant franchise brands or as a result of the new world order brought about by the recession, franchising is embracing alternative and options in a big way.”
You can do this by either devising innovative areas to franchise or allowing more flexible ways for franchisees to operate to help with their bottom line. FASA has earmarked these as some of the biggest franchising trends in 2018 and beyond:
Smaller, more cost-effective franchise models
When franchisees don’t have high franchise fees and start-up costs to worry about, they can focus more on what customers want, and deliver. The added benefit of smaller spaces include having fewer employees and reasonable rental.
Among the new frontiers in franchising are the food court losing its legacy as the preferred setting for food franchises, as service stations increase in popularity in the industry. A number of brands – like Steers, Debonairs and Mugg & Bean On-the-Go outlets – are co-locating with major fuel retailers to create fully-integrated accessible centres.
Niche markets are offering one-of-a-kind franchises
“The opportunity to get in on the ground floor of a new franchise trend is also on the rise,” notes FASA. This could be offering a unique gourmet food experience in your outlets or a ‘green’ space of energy saving technology in your operations.
“Consumers have gained control of what they want,” says Morné Cronjé, head of franchising at FNB Business. “It is no longer about what you have on the menu, but how your product or service can be tailor-made to what a customer really wants.”
Founded just five years ago (2013), RocoMamas boasts over 60 franchise outlets, clearly responding to the essence of this trend –allowing consumers to build their own burgers without having to pay for items they’d rather leave out.
Stay ahead of the game
For long-term success, franchisors who want to expand their business should start exploring beyond present circumstances and current predictions.
“2018 will no doubt bring its challenges, however for every challenge there is a window of opportunity to explore. We are advising franchisors to scrutinise these trends carefully, it can definitely give them a boost for 2018,” says Cronjé.
As Consumers’ Tastes Change Can Your Franchise Keep Up?
More of your customers are eating in, and if you’re not packaging, portioning and pricing your food accordingly, they’re heading to a retailer that does.
It’s generally believed that it’s cheaper to cook your own breakfast, lunch or supper than to go out and pay a much higher price for the same food in your fridge at home. But today’s consumer’s live fast-paced lifestyles – so food is becoming more about convenience.
31% of 6 022 middle-to-high income South African earners surveyed by BusinessTech, put eating out and entertainment at the top of their list of things they’re most willing to cut their spending on in 2018 to save money. Research by supermarket giant Pick n Pay correlates, reporting an increase in customers buying quality convenience food, not just to entertain at home, but for dining at home.
Consumers are empowered by variety
You’ve heard about the ‘fast casual generation’, aka Millennials? They are demanding healthy, affordable eating experiences. But do you know how this affects the future of the food industry, and your business in particular – because they’re not the only ones adapting their lifestyles.
An increasing number of food brands and chefs are compelled to create complete ranges of new, convenient meal options that are not only packaged, portioned and precooked attractively, but affordable too.
The fastest growing sector of retail foodservice for the past four years has been the convenience store sector. Non-traditional avenues of distribution are growing, gobbling market share while establishing new patterns of consumption, price points, and customer loyalty.
Shoppers are becoming value-focused
A savvy franchise would acknowledge that although pre-packaged and pre-cooked convenience food isn’t a new trend among consumers and supermarkets, it is gaining popularity. “Some of the most notable trends in 2017 were an increasing shift to convenience foods as customers looked for both value and convenience,” says Pick ‘n Pay’s Head of Marketing, John Bradshaw.
Value for money and healthier food choices will continue to be top of the convenience food list for consumer in 2018, as more shoppers cut down on luxuries.
“We’ve seen significant growth in the number of customers looking for an easy way to enjoy a good meal without the cost of eating out,” says Bradshaw.
But he cautions that South African shoppers have always been value-focused, and while the most significant shift Pick ‘n Pay has seen is how all its shoppers, no matter what their income levels, are watching their budgets.
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