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Researching a Franchise

Protecting Interests

Are you considering investing in a franchise? If so, we have good news for you.

Mark Rose

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Since the introduction of the CPA, every franchisor is legally obliged to issue serious prospects with a disclosure document and grant a cooling-off period. This should go a long way towards protecting those who are over-eager to get started from making a life-changing decision they may come to regret.

It is no exaggeration to say that the disclosure document is the prospective franchisee’s new best friend. It provides all the information needed to assess the franchise opportunity, warts and all. It follows that the decision to join a franchise brand will be based on facts rather than marketing hype.

FASA recognised the need for a disclosure document early on. Unfortunately, this organisation’s appeal to members to provide a disclosure document met with mixed success. Those who had nothing to hide complied willingly, others were less diligent. To tighten up on this vital requirement, FASA made it a condition of membership in 1994. The only problem was that FASA could not enforce the requirement. In any event, not every franchisor was a member of FASA, leaving a large portion of prospective franchisees open to misrepresentation and even fraud.

The introduction of the CPA put a stop to this. Whilst originally, having a disclosure document was a requirement imposed on franchisors who wanted FASA membership, non-members were unaffected and FASA’s ability to impose sanctions for non-compliance by members was limited to termination of membership. Now, making a disclosure document available to qualified franchise prospects and their professional advisors has become a legal obligation.

Prescribed Content

The Regulations to the CPA are fairly specific regarding the minimum information the disclosure document must contain. For example, the franchisor is obliged to:

  • Disclose the total number of franchised outlets in operation, the number of outlets franchised during the preceding year, turnover growth and net profit.
  • Provide a statement to the effect that the franchisor company’s financial status has not changed significantly since the date the most recent financial reports were drawn up by the franchisor’s accounting officer.
  • State that there are reasonable grounds to believe that it will be able to meet its financial obligations arising over the foreseeable future as they fall due.
  • Provide written projections stating the level of potential sales, income, gross or net profits for the franchised business. Alternatively, figures achieved by similar existing franchises of the network may be given but this must be disclosed, with full particulars of assumptions made.
  • Attach a certificate written on the official letterhead of the franchisor company’s accounting officer whereby the accounting officer certifies that:
  • The business is a going concern.
  • To the best of his/her knowledge the franchisor is able to meet its current and contingent liabilities.
  • The franchisor’s audited financial statements have been drawn up in accordance with accounting standards that are generally accepted in South Africa and reflect fairly the financial position of the franchisor for the period covered.

Prescribed Appendices

  • A complete list of current franchisees with full contact details and a statement to the effect that the prospect is entitled to contact any existing franchisee to assess the accuracy of the information contained in the disclosure document.
  • An organogram showing the franchisee support system that is in place within the franchisor’s operation.

Other Important Considerations

Cooling-off period
The CPA states that a qualified prospect must receive a disclosure document at least 14 days prior to the signing of a franchise agreement. This requirement should effectively put paid to the ‘sign now, regret later’ approach to entering into a franchise agreement.

Confidentiality requirements
Given the confidential nature of the information the disclosure document contains, franchisors are concerned that this information could fall into the wrong hands. This is understandable but not addressed by the CPA or the Regulations. However, legal practitioners believe that franchisors are entitled to demand the signing of a Secrecy Undertaking or similar document prior to handing over the disclosure document. Signing such a document must not obligate the prospect to anything beyond treating the information they are about to receive in the strictest confidence, and not using it for any purpose beyond assessing the viability of the specific opportunity. L

The Act and you
The CPA imposes an obligation on franchisors to make full disclosure of salient facts and grant prospects sufficient time to assess the viability of their offer. These are two very important steps towards ensuring ethical dealings in franchising. In this context, it is noteworthy that FASA’s disclosure requirements are stronger than the CPA’s minimum requirements. This means that prospects about to join a brand that is a FASA member enjoy double protection. The CPA ensures that the disclosure document provides specified minimum information and FASA’s Code of Ethics adds additional protection.

Mark Rose is the Head of New Business Development at Nedbank Business Banking. He holds a Masters in Business Administration (MBA) from the Oxford Brooks University, as well as various business qualifications from the Gordon Institute of Business Science (GIBS), the University of Stellenbosch Graduate School of Business, and the University of South Africa Graduate School of Business.

Mark Rose is the Head of New Business Development at Nedbank Business Banking. He holds a Masters in Business Administration (MBA) from the Oxford Brooks University, as well as various business qualifications from the Gordon Institute of Business Science (GIBS), the University of Stellenbosch Graduate School of Business, and the University of South Africa Graduate School of Business. Nedbank’s New Business Development unit develops customised industry specialised offerings to the medium sized business market, including Franchising, Agriculture, Professional – including Financial and Legal Practices, and the Medical Fraternity. This unit has also developed a unique Enterprise Development proposition. For specialist advice and more information on the Nedbank Franchising proposition visit the website or send an email to franchising@nedbank.co.za

Company Posts

With Hundreds Of Franchise Options Out There, Choose The One You Can Trust

If you’re looking to invest in a business venture that offers you years of experience in the industry, the trust and loyalty of its customers, and franchise support from an expert team – then Hi-Q is the one for you.

HI-Q

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What you’ll become a part of

Since opening their doors in 1999, Hi-Q has gone from strength to strength, growing a humble three store enterprise into an extensive 130-store franchise network with a unique multi-product and multi-services automotive offering.

Hi-Q’s approach to business is centred around being ‘the one you can trust’ to their customers, their suppliers and their franchisees.

“That has always been the key driver in everything we do,” says Sean Harrison, Hi-Q’s Managing Director. “For example, when it comes to our customers, they need to know they can rely on us to put their safety first.

Related: Don’t Tread On Toes – Why Investing In A HIQ Franchise Will Offer You More Opportunities

That we’ll always strive to offer them expert, friendly service and top of the range products, while also keeping up-to-date with the latest technologies and advancements in our field.”

An acclaimed and awarded brand

Hi-Q has again and again proven themselves to be a leader in the industry.

They’ve been voted South Africa’s No.1 tyre retailer for eight consecutive years (2010 – 2017) by consumers in the Ask Africa Icon Brands Survey, the biggest of its kind in Africa – a clear indication that they are respected and trusted by their customers.

Business support

Hi-Q Franchisees all have the support of an expert and knowledgeable team with years of experience in the industry, who are available to guide them on their business venture. This includes areas of business such as marketing/promotional, commercial, organisational structure, tools and equipment, sales and more.

Franchisees also have access to various skills training opportunities for members of their team.
Hi-Q is invested in providing their network with the tools needed to thrive and grow in an ever-challenging market.

Relationship with Goodyear

Hi-Q has the support and backing of international tyre of multinational premium tyre manufacturer, Goodyear, and its full value proposition. This means access to incredible promotional and marketing opportunities in partnership with the brand.

Franchising opportunities

Hi-Q has embarked on an extensive expansion plan and have identified areas of opportunity to extend their Franchise footprint growth countrywide.

You’ll find more information on our website www.hiq.co.za We’d like to invite those who are interested to become part of our team to contact 011 663 2431 or bernie_andrews@goodyear.co.za

Related: We Want To Invite You To Join Us On The Hi-Q Journey And Become A Franchisee

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Researching a Franchise

The Digital Headaches Of A Franchise Marketing Team

Here are my top 5 tools that can help control and regulate franchisees marketing with minimum friction.

JG Bezuidenhout

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Franchise marketing teams already know that managing campaigns for a business with multiple locations and/or stores is a time-consuming job.

When it comes to online marketing, many franchisees are frustrated with the mother brands’ national campaign strategy, as it may not suit their immediate needs. This often means they embark down the dangerous route of “rogue” or unapproved campaigns.

This is a huge risk for any brand as there is limited to no control over the message and quality of creative, often resulting in brand CI and best practices not being followed.

Rogue advertising can be totally avoided by a franchises’ marketing team by employing tools that allow them to set up a managed process where franchisees can advertise through. With a managed approval process (preferably automated) it is easier to manage “rouge” content.

Here are my top 5 tools that can help control and regulate franchisees marketing with minimum friction.

1. Create a consistent Facebook content experience whilst still allowing your franchisees to post to their own page

Facebook location pages makes it possible to, as an alternative, allow every store to open a Facebook page, each with different versions of your logo as their profile picture, as well as incomplete profile data or even old or past promotions as their cover image. You as a brand manager can set up each store as a location page on the brand’s main FB page.

The pages can all be linked to the main page and if you change the profile image or cover art, it will automatically update all the other pages. There are also a number of other marketing advantages to this, but most importantly for me was the ability to manage them all from a single interface and clean up all the old and abandoned pages that just confused customers.

2. Manage social media content

Gain is extremely simple to use and connected to all the popular social media platforms such as Facebook, Twitter, LinkedIn etc. As a user, you can create posts or ads and schedule them all from the same window. Once said posts are scheduled, the marketing team can preview the content and approve it for publication or request changes all within a matter of seconds.  Best of all, nothing will get posted without your approval.

3. Free professional looking content in a template

Pablo is an old favourite of mine! It supplies predefined size templates where a user can use free professional stock photos and quickly overlay text. The feature I love most on this tool is the “insert logo” feature, which with the click of a button can overlay a banner or brand element that creates consistent content experiences. Once done, you can export the image and post it to gain for approval. Simple right!

4. Create email alerts for when your brand is found online

Talk Walker alerts is a nifty tool and acts like your personal internet detective who constantly crawls the internet for keywords that you define. I like to use my clients’ brand names and sometimes even my competitors just to keep tabs on their activity. Once set up, you receive daily emails with links to the content in question.

5. Pre-approved marketing creatives and targeting with machine learning optimisation

Lead Gener8or tool can define a bespoke target audience per store and lock advertising geographical areas to prevent any cannibalisation. Once completed, franchisees can execute pre-approved marketing campaigns as and when they wish on any of the integrated channels (SMS, Email, Facebook, Google and Youtube), without any further involvement required from the marketing team.

Powered by big-data machine learning, campaigns are automatically optimised while in flight. Marketing teams can monitor all campaigns in real time. This tool really is a game changer for franchise marketing teams and brand managers.

With these tools correctly implemented into your business, the digital headache of your franchise’s marketing team can subside and focus on what you do best, delivering results!

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Company Posts

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.

Col'Cacchio

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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

colcacchio-pizza-franchise-dessert

  • 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

#FoodwithaStory

“Our journey started with a single restaurant on the foreshore with the aim to serve the very best pizza around” – Greg Mommsen, Business Development 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 Development 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 www.colcacchio.co.za or call Tarryn Godley on 084 800 7264 and let’s get this adventure going.

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