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Researching a Franchise

Investing in a Foreign Franchise

What to know when researching a franchise based outside of South Africa.

Jeff Elgin




Investing in a foreign-based franchiseposes an exciting business dynamic, as it gives franchisees a fantastic way totake advantage of business concepts that may not exist in the domestic marketor that have a unique twist. That said, this dynamic also raises a number ofquestions in the minds of many prospective franchisees. Some of the most commonquestions one hears in relation to foreign-based franchises include:

1.How safe is investing with a foreign-based franchise?

The same disclosure requirements that applyto a domestic franchise also apply to any foreign company that comes into South Africa tooffer franchise opportunities. The franchise must provide you with a fulldisclosure document containing information on key mandated factors. They arealso subject to the same consumer protection rules in terms of their behaviourduring the process of selling their franchise. Also, you can use the Internetto find out information about any company anywhere in the world. Mostprospective franchisees don’t find any significant difference in the researchprocess of a foreign-based franchise company compared to any other, so the factthat they are foreign-based should not, in and of itself, affect your risk in anegative way.

2.What corporate structure do foreign-based franchises typically use in the newcountry?

Most successful international franchises,in either direction, use a “master licensing” arrangement. In this scenario,the franchisor finds a domestic partner that they contractually agree willdevelop the franchise in the selected country. In the case of foreign-basedfranchises, this is the most typical structure we see. The foreign-basedcompany will research the franchise business in the new country, then interviewand select a master licensee that will own and control the franchise rights inthis market. The foreign-based company may own some percentage of this entityor may simply require the entity to pay it fixed or variable fees in exchangefor the development rights. The most common alternative to this structure isfor the foreign-based company to create a wholly-owned subsidiary in the newcountry and then hire local employees to run the operation.

3.What extra research do I need to undertake?

It’s always a good idea to check out thetrack record of any franchise company in relation to their past results. In thecase of foreign-based franchises, you effectively have two companies you shouldresearch: the local master licensee and the foreign-based main franchisecompany. In relation to the local master, you want to make sure you have atrack record of performance sufficient to demonstrate that they know what theyare doing and can help you to be successful. You also need to know that theyare strong enough financially to last and support your efforts long term. Inrelation to the foreign-based franchise company, you may want to gatheradditional information about the franchisor’s operations in other foreigncountries to see how well they follow the standards and values you’re used toin South Africa.Also check on the financial strength of the parent company in case the masterlicensee in the South Africaencounters difficulty and needs to be supported in some manner by the parentcompany.

The benefits of investing in a foreign-based franchise

Thebenefits are many and in some respects are similar to those associated withbuying into any franchised business. Perhaps most obvious is the fact that thebusiness is established and has a model that has been proven to work.Franchises with an international footprint and the proliferation of branchesthat come with it, generally have systems that have been extremely well tested.In many instances, you will be able to leverage the credibility of aninternationally recognised brand and use it to build partnerships and attractclientele. As a local franchisee, you can draw on the collective strength,experience and expertise of a global group with a track record.

4.What if I am the first South African franchisee?

There’s an old adage used in relation tosmart money investing in franchises: “When in doubt, send a scout.” The simplefact is that being the first franchisee, or even part of the first group offranchisees, in any system under any circumstances always involves far morerisk than waiting until later. No matter how much experience a franchisor haselsewhere, each country they go into is different. Until they are tested in thereal world, the company simply doesn’t know how well their operating systems,marketing, training and brand are going to work. If you do decide to be a testsubject for them in their new South African operation, one advantage you may haverelates to bargaining power. The very least you should do is negotiate for someform of an early bird discount of costs, such as the initial franchise fee (oreven better – a large special marketing test allowance paid for by thefranchisor). This approach will help you, but it still doesn’t change the factthat you will be entering the business with a fair degree of uncertainty.

What are the red flags I should be on thelookout for with a foreign-based franchise company? There is really just one,and that involves the transition of their opportunity into a different culture.There are many examples of U.S.-based franchises that have struggled when theytook their concepts to a foreign country because of cultural or languagebarriers. Make sure you have taken this into consideration prior to making anyinvestment. If the company has not been operating in the domestic South Africanmarket long enough to prove the effectiveness of their concept, you haveexactly the same risk as with any other startup franchise – you don’t know forsure that it’s going to work well and should therefore be cautious.

One final piece of advice: When in doubtabout anything, ask the franchisor. Don’t be bashful about this, since theyhave probably been asked the same thing by many others before you and shouldhave the answers to your tough questions all ready to go. Research thoroughly,take the time to do this right, and you should be fine.

Some Drawbacks

A newbusiness idea may allow you a unique opportunity to establish a foothold in themarket, but it often means educating the consumer about an entirely new productor service category. Word about trends that are well known overseas may nothave reached our shores yet and it will be up to the local representatives ofthe international franchisor to build the brand and increase awareness aboutwhat the new market category has to offer. This typically requires a bigmarketing budget so it’s critical to ask probing questions about the company’splans for marketing and concept roll-out. Is the local franchisorrepresentative committed to educating the market or is that something you asthe franchisee will be expected to do? If so, what kind of marketing materialwill you be provided with and what back-end support systems are in place toassist you? Another factor to consider is fees. If the franchise fees arepayable in foreign currency, you will need to factor a fluctuating exchangerate into your planning, something that can have enormous and ongoingimplications for your business.

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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Choose A Job You Love, And You Will Never Have To Work A Day In Your Life

Join Col’Cacchio’s 26-year-long love story.





Vital Stats

  • Joining fee: R125 000
  • Monthly management fee: 6% of turnover
  • Monthly marketing fee: 2% of turnover
  • Total investment: approx. R2.5m to R4.2m (turnkey) Size: 140m2 to 350m2
  • Unencumbered cash (before loan): 50% of total investment

(Above figures exclude VAT) 

“Owning your own restaurant is like owning your own future.” – Dominic Dempers, Franchisee Durbanville, Belvedere & Meadowridge Cape Town

We’re looking for passionate franchisees who will love our brand as much as we do.

Why you should join this delicious success story


  • Assistance with site selection & lease negotiation
  • Store design & build
  • Full training provided for management and staff
  • Marketing & operational support
  • Product innovation & menu development
  • Efficiency in all systems
  • Healthy margins.

Related: 300 Business Ideas To Inspire You Into Entrepreneurship


“Our journey started with a single restaurant on the foreshore with the aim to serve the very best pizza around” – Greg Mommsen, Business Developer Director

“Watching this brand grow and empowering people has been immensely rewarding. We have staff that have been with us for over 20 years. It’s like a family, we work hard, we laugh, we cry, we celebrate and of course, we eat a lot of pizza.” – Michael Terespolsky, Founder and Managing Director

“Becoming a franchisee is an amazing opportunity to join the family and become part of the Col’Cacchio success story. We’re 100% behind out franchises at every step, making sure that we all continue to learn and flourish” – Greg Mommsen, Business Developer Director 

“It has been filled with challenges along the way, but all the rewards have made every moment worth it.” – Michael Terespolsky, Founder and Managing Director

Related: Got An Awesome New Business Idea? Here’s What To Do Next

Visit or call Tarryn Godley on 084 800 7264 and let’s get this adventure going.

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Smoothie Franchise Opportunity: Puré Frooty Is A One-Of-A-Kind Smoothie Franchise Business

Looking for the next greatest franchise opportunity? Puré Frooty Smoothie is a highly perfected Australian business model launching in the South African market that doesn’t require extensive shop fitting or a large workforce.

Pure Frooty Smoothie




Vital Stats

Puré Frooty Smoothie is a unique business model to the South African market. A delicious, fruit filled smoothie will be created at the touch of a few buttons.

An Innovative Franchising Concept

This innovation in the healthy smoothie industry is ground breaking for South Africa. The machine is manufactured in Australia by a highly skilled team. It took six years to perfect this business model for the consumer market.

The vision of Puré Frooty Smoothie is to offer convenient on-the-go smoothies for anyone. The experience and quality will always be of the highest standard. We aim to be a staple convenience in malls, schools, office parks and hospitals. This is a platform that will allow for self-growth for passionate entrepreneurs.

Our mission is to create a unique customer experience. We want to satisfy the nutritional needs of customers by providing quality smoothies. Puré Frooty Smoothie will be packed with all the goodness a smoothie should offer.

Related: Why Your Franchise Should Adopt A Shared Value Business Model

The four values we pride ourselves in are:

  1. Convenience
  2. Consistency
  3. Quality
  4. Customer Satisfaction.

Why Consider This Franchising Opportunity


Extensive research into the business model and market

Puré Frooty Smoothie was an idea, researched widely, by people looking to simplify the business process for the consumer and business owner. There was a gap in the market for simplified customer service and a demand for a quicker turnaround time.

Simplified process for setting up a business

For an entrepreneur it can be very overwhelming to start or buy a new or existing business. There are so many crucial decisions that need to be made from the beginning and new concepts to adapt to.

Puré Frooty Smoothie simplifies that drastically:

  • Free-standing machines: The business model revolves around a free-standing vending machine which needs to be visited to refill and maintenance.
  • No shop-fitting required: There is no need for shop fittings or a large work force. All that is required is an inside space for the machine with a power supply.
  • Minimal human resources needed: In terms of a work force, you could either do it yourself or have one person to assist you. There is also a part time involvement where refill station teams can refill and maintain the machine.
  • Cashless business: The business is completely cashless so there are no worries of a note jam, full cash canister or insufficient denomination rand values. More importantly the machines would do a higher turnover than an ordinary vending machine so safety of no cash is important.
  • Easy tracking of stock and performance: A cloud-based system is linked to the point of sale which allows you to monitor your performance and stock from the back-office platform at any given time.
  • Efficient handling of maintenance: With a live point of sale system, the business is linked to a software which monitors the operations of the machine. Should anything malfunction an immediate notification will be sent with a diagnostics report.
  • Human error is eliminated: Everything is done with a computer which leaves little to no room for errors. It is self-order and very user friendly.

Related: SA Fast Food Franchising On The Rise

Why Will Customers Love It

Puré Frooty Smoothie offers a vending machine that can produce a delicious smoothie in forty seconds. An informative touch screen ordering panel which displays all the nutritional information of the smoothie ordered and has the current news and weather.

No time wasted for the consumer. In fact, it’s a learning session disguised as a waiting period. The machine has two wash cycles after every smoothie is made to be freshly prepared for the next smoothie, business hygiene is important.

Consumers live in the fast lane. We are looking for something quick and most times we would like to be healthier. With the hustle and bustle of today’s life every little bit helps. Puré Frooty Smoothie fills that gap in the market.

Interested in Becoming A Franchisee?

Visit our Franchise Info Page for everything you need to know about how to become information a Puré Frooty Smoothie Franchisee owner.

You can also call or write to us:

Phone / 012-942 6360
Email / 

Want to know more about this franchise? Watch the video below for more.



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Researching a Franchise

4 Top Tips To Find Your Best Franchise Opportunity

The President’s recent Job Summit highlighted the critical need to reduce unemployment. The franchise sector employs 369 573 people, 93 percent employed by individual franchisees rather than franchisors.

Richard Mukheibir




Several years of strong sectoral growth combined with business opportunities that are often backed by an investor safety net is making franchising the top choice for many who want to own their own business.  This assessment is based on the strong foundations of my own experience of establishing Cash Converters nearly a quarter century ago and the recent results of Franchise Association of South Africa (FASA) annual industry survey.

These figures show that the SA franchise industry has grown its turnover by 55 percent from R465 billion in 2014, when FASA conducted its first survey, to R721 billion in 2017. Alongside this, the sector’s contribution to South Africa’s GDP has expanded by 62 percent, from 9.7 percent in 2014 to 15.7 percent in 2017.

The President’s recent Job Summit highlighted the critical need to reduce unemployment and boost the national economy by growing business and stimulating job creation. The franchise sector employs 369 573 people, 93 percent employed by individual franchisees rather than franchisors.

Franchising can be a win-win for franchisees. It enables you to make your dream of running your own business come true as well as contributing to providing much-needed new jobs.

These factors make franchising a particularly attractive option for those wishing to start their own business. But with 865 different franchise systems active in the country last year, the huge range of choice can be confusing.

Related: Key Phases Of The Franchising Relationship

To prevent analysis paralysis and ensure you can get set to make the most of franchising, I can offer four top tips for selecting the best franchise opportunity for you:

1. Choose a credible brand

As you shortlist franchisors that appeal to you, go beyond what they tell you about themselves and find out about what people are saying about them. Do social media searches to find out how consumers are reacting to the product or service offered, pricing and customer service. Your franchise fee should buy you a halo effect thanks to your franchisor’s good reputation. Too much negativity around the brand will affect the potential success of your franchise, from your ability to attract customers and the turnover and profit you can hope to generate.

2. Look for a proven business model

A worthwhile franchise shares with franchisees the intellectual property it has developed over the years. It has created and grown this business model over time, knocking off rough edges and fine-tuning systems for mistakes as they become apparent. Check the brand’s news history online as well as its own sales material. Be wary of any franchise that claims to be perfect or invincible.

Nobody is – so either it has something to hide or it is fooling itself. Either way, such a brand is not keeping its eyes open to navigate the brand and its franchisees through the changing fortunes of business.

Related: Thinking Of Going Into Franchising?

3. Check the support systems

Getting relationships and systems right is vital in business success. They have become even more important since we founded Cash Converters nearly 25 years ago because the volume of legal compliance has mushroomed. Make sure that the franchises you shortlist offer you support in coping with this and that those running the brand are in touch with what happens on the ground in the franchisees’ stores. At Cash Converters, for example, our front-end support staff are in stores every day and the directors devote three days each month to visiting stores. This ensures that our expertise is available to guide the franchisees through any business issues they face.

4. Follow the recipe

When you sign up with a franchisor, you receive access to its business model, including the “recipe” for running your franchise. This forms a kind of safety net so you do not need to reinvent a wheel when setting up your business. But you cannot complain that the business model does not work if you do not implement it. This is one of those times when you must follow the recipe to bake the cake successfully. If you are not the kind of person who wants to do that, then think again about whether franchising is for you.

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