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Researching a Franchise

The Legal Requirements For Your Business’ LifeStage

Matching business legal requirements with business lifecycle is a key component of success.

Monisha Prem




Just as the human lifecycle starts at birth and then progresses through infancy, childhood, puberty, adulthood and ageing, ending in death, so does the business lifecycle: Start-up, growth, maturity, decline, and rebirth or death. The same strategies and plans simply do not apply at the different stages of both life and business cycles.

And this includes legal strategy. What are the legal requirements at the different stages of a business cycle?


Type of industry, nature of offering and delivery model are key inputs in determining legal structure at the outset. At birth it is also critical to determine exit strategies, including risk management and preparing for challenges and failure.

Private companies are the most common choice as they are suitable for both small and large companies and can be managed efficiently with no requirement for filing annual financial statements.

Related: 5 Different Types Of Businesses

Different types of entities include:

1Sole Proprietor and partnership:

Unincorporated (no registration formalities and compliance) and no distinction between the business and the owner. No, or very limited, growth opportunity.

The Sole Proprietor and Partnership do not exist as a separate entity, therefore legal rights and obligations (including business debts) of the business vest in the owner respectively or the partners collectively.

Sourcing funds for a sole proprietorship or partnership depends on the security that the individual owner or partners are able to provide.


A trustee or multiple trustees (no more than 20) set up the trust to hold assets and / or conduct business for the benefit of the trust beneficiaries. The trust must be registered with the Master of the High Court.

The advantages include that the assets of the trust belong to the trust alone (providing protection to trustees from creditors), the administration costs are less than those of a company or close corporation, and taxes are less complicated.

3Close Corporation (CC):

In terms of the Companies Act 71 of 2008 (the Companies Act), it is no longer possible to register a new CC. However, existing CCs will remain in place and can be converted to a company.

From a growth perspective, a CC is limited to ten members, each owning an agreed percentage of the business and collectively responsible for operations.


Incorporated and regulated by the Companies Act, which encourages small business owners to register companies. A company can make shares available to the public (public company) or restrict transferability of shares to private owners only (private company).

CCs and Companies enjoy separate legal personalities and are separate to the members and shareholders. The business is conducted in the name of the CC or Company, and the assets and liabilities belong to the business, not the individual members.

Related: Business Plan Format Guide

Growth and Maturity


Growth and maturity means more clients and cash flow, which in turn means more risk. To assess legal risk and prepare a legal blue-print to prevent or reduce potential losses, conduct a legal audit.

This assessment may consider the degree of exposures of risk in terms of:

  • Legal form and capital structure
  • Regulatory compliance
  • Contracts and policies
  • Corporate governance
  • Labour and HR
  • Social media
  • Intellectual property.

Decline and Death

For any given reason, many businesses fail and must shut down, whether by choice or compulsion. Different business types will have different requirements for shutting down, and if you planned correctly this process will be smoother.

Sole Proprietor and Partnership: As a sole proprietorship and partnership are not separate legal entities and unincorporated, they cease to exist when the owner or partners stop carrying on the business.

Related: Have You (Really) Put Your Business To The Test?

Trust: A trust will terminate by written agreement on the date set out by the founder, or either upon the achievement of the trust objective, or the realisation of the impossibility of achievement of the trust objective. On dissolution, the trust deed will dictate final distributions.

Company and CC: A company or CC can cease to operate either due to de-registration or liquidation.

A company or close corporation may be deregistered by the Companies and Intellectual Property Commission (CIPC) if it has not complied with certain requirements. The business can also voluntarily deregister when trading has ceased and it can show that it has no assets or liabilities.

Monisha is a corporate advisor, admitted attorney at M. Prem Inc, and author with over 14 years deal-making experience. Monisha litigated for several years before joining an investment banking firm specialising in mergers and acquisitions. Monisha has owned and operated several businesses, is passionate about business development, commercial and corporate law.


Researching a Franchise

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.

Diana Albertyn




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.”

Related: As Consumers’ Tastes Change Can Your Franchise Keep Up?

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.

Related: Key Franchising Trends To Consider For 2018

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.

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Researching a Franchise

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.

Diana Albertyn




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.

Related: Driving Your Business Growth Towards More Customers

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.

Related: 5 Techniques To Leave Customers Grinning And Vowing To Return

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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Researching a Franchise

Maximise Your Social Media Reach This Holiday Season

Quick and cost-effective, social media is your best tool to reach target markets when it matters most – during the holidays.

Diana Albertyn




It’s not just the end of the year that can be lucrative for businesses. School holidays and other major breaks during the year present consumers with more time to spend shopping. Why not ensure money is spent at your franchise by capitalising on the minimal cost and maximum exposure of social media?

You don’t have to create entirely new deals or promotions from what you may already have running on your store, but find a way to make it special for your social media followers, suggests Kelly Mason, marketer at Customer Paradigm.

Holiday campaigns on Twitter, benefitting from popular hashtags, streaming live content, and receiving information instead of just distributing it via social media are just some of the ways to stay ahead of the competition.

Related: Why Your Business’ Social Media Marketing Strategy Is Probably Wrong

Know your customers well

The first step to attracting customers and getting them to complete a sale is understanding their customer journey.

“Being able to document where they spend their time online, which social channels they use most, and what they’re reading or watching on those channels is a huge plus. Finding that crucial information is fairly easy to do, thanks to modern-day marketing tools and resources,” advises Paul Herman, ‎VP: Product and Solutions Enablement Group, at Sprinklr, a unified customer experience management platform for enterprises.

The better you understand your customers, the easier it is to reach them through a campaign optimised for their interests.

Master social listening

You could be using social media all wrong in the run up to all your holiday campaigns. Perhaps it’s time you used this platform to listen to your customers?

“Through social listening, marketers can identify major trends and product keywords in their industries,” says Herman. “For instance, knowing those keywords can help marketers identify which social platforms are more popular for a target audience. With that information, they can make smarter decisions about where to spend their money and which products or services to promote on each platform.”

Related: 10 Laws Of Social Media Marketing

Use the information gathered to determine what customers like about your product, what they dislike about it, and how you can improve upon it so they can buy more of it. The more of this data you collect, the better and more effective your interactions with customers will be.

Try something new

50% of consumers look for a video of the product they want to buy before going to an ecommerce store to buy it, according to a 2016 Google survey. “Video can be an extremely effective way to get your customers to take action – in this case, to make a purchase with your store,” adds Mason.

Video adverts are often used as an experimental tool in social marketing and switching it up on platforms such as Facebook Live, Instagram Live, Instagram Stories, or Snapchat – depending on your brand’s activity and your audiences’ interests – can help attract customers during seasonal periods.

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