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Researching a Franchise

To Buy, Or Not To Buy

Here are five questions you need to answer before choosing a franchise.

Kyle Zagrodzky

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If you’re in the market for a franchise, there are loads to choose from. Those looking to become part of a franchise have to sort through everything from childcare to pizza, salons, gyms and medical facilities. That’s a lot to narrow down.

As potential franchisees make sense of all the information and start finalising their top picks, they often neglect to notice a key factor in the decision process: How many questions do franchisors actually ask them?

People making a choice as big as becoming a franchisee have so much on their minds and so many questions to answer that they may not focus enough on the way franchisors interview them.

Not all franchises are created equal, and the way a franchise gets to know you will tell you a lot about its culture. Ideally, you want to work with a franchise that is as interested in you as you are in it. The questions they ask (or fail to ask) can tell you a lot.

Above all, franchisors shouldn’t just want to take your money. They should be as deeply invested in building a successful business as you are, and the questions they ask say a lot about the kind of experience you can expect.

Here are five questions a franchise should ask potential partners:

1. What is your professional background?

Franchising is such an interesting business model because it attracts people from all kinds of backgrounds. There isn’t just one type of person who becomes a franchisee, so a good franchise will want to understand your previous experience to make sure you have what it takes to be a successful part of their business.

Some franchises look for a particular segment of past experience, but most will look at each franchise candidate individually.

If a franchise doesn’t care about your past experience, it’s a sign that they’re not choosy about who becomes a franchisee — which also means they aren’t as likely to be invested in your success.

2. How much time do you have to spend on the business?

Every franchise will have different guidelines for how much time a franchisee should expect to spend on the business. Some franchises are higher maintenance than others. It all depends on the type of product and service, the franchise’s culture of how involved each franchisee will be personally, and how easy or complex the business is to set up and run.

A basic mall kiosk will be easier to manage from a distance, but a retail unit that will be built from the ground up as a standalone store will require more time and legwork. Make sure the franchise cares and asks how much time you’re willing to commit.

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3. What do you hope to accomplish?

If you expect a franchise to be profitable in a month, and the franchise generally isn’t profitable for a year, it’s better to get that out in the open before you sign on the dotted line. Great franchises know how to manage expectations so that franchisees can stay positive and know what they’re signing up for.

Franchising isn’t a magic bullet of profitability. It’s a business like any other, and most businesses take time to earn profits.

The franchisor should also want to know if you have plans for expansion, since that should lead to in-depth conversations about territories and development. If a franchise makes promises that don’t seem reasonable, take a step back, and do some more research. It’s better to work with a company that is up-front about what you can expect than one that makes assurances and might not be there with support after you’ve joined
the team.

4. Why are you interested in franchising?

People get into franchising for all sorts of reasons. Sometimes they have always dreamed of entrepreneurship. Sometimes they want to take more control of their careers. And sometimes they are looking to segue out of another career.

The thing is, most people aren’t actually well-suited to running a franchise. Franchisees need to have a unique personality that can walk the line between visionary and team player. If you want to call all the shots, do things your way and build a brand from scratch, you might be happier with start-up entrepreneurship. If you are looking for the support of operations systems, sales practices and complete marketing and training tools, franchising is a better way to go.

Franchising doesn’t offer a guarantee of success, but merely a template for running a successful business.

A good franchisor recognises that and will only work with people who are a great fit for the franchising life.

5. Why are you interested in this particular franchise?

A lot of people get into franchising because they think it’s a sure bet for running a profitable business. However, the allure of profitability shouldn’t be the only reason you’re interested in a franchise. If you’re lactose intolerant, you aren’t the ideal person to open an ice cream shop. However, if you’re lactose intolerant and the ice cream shop sells products made exclusively from coconut, almond and soy milks, you might be perfect.

Running a business is about making money, but to do that well, you have to be passionate about what you’re pitching. The best franchises know every franchisee is passionate about the brand, not just the profits.

Kyle Zagrodzky is president of OsteoStrong, the health and wellness system that boosts bone and muscle strength in less than 10 minutes a week using scientifically proven osteogenic loading concepts. OsteoStrong introduced a new era in modern fitness and aging prevention two years ago and has since helped thousands of clients between ages 8 and 92 improve strength, balance, endurance and bone density. In 2014, the brand signed commitments with nine regional developers to launch 500 new locations across America.

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

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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

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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

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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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