A franchisor sells the right to open stores and sell products or services using its brand, expertise, and intellectual property.
What Is the Role of a Franchisor?
A franchisor is a person or company that grants a license to a third party (known as the franchisee) to open a business under the franchisor’s brand name and trademarks.
The franchisor retains all of the rights to the usually well-known brand name. But they lease the ability to use those rights and trademarks to the franchisee for a fee.
Franchising as a system is designed to expand a business and meet higher levels of demand in more diverse areas. In return, supported by their franchisor, franchisees can often grow their companies far more rapidly than other business types.
The strength of any individual franchise system is completely dependent on the strength of the relationship between franchisor and franchisee. If the relationship is strong, the company will expand, grow, and everyone will prosper.
What Makes a Good Franchisor?
On top of selecting the right kind of franchisees to join their system, a good franchisor will have a whole range of roles to play in ensuring the network as a whole succeeds:
A good franchisor should set the standard for the company culture your franchise will have. Is the brand friendly and helpful? Supportive?
Being a good leader means your franchisor should encourage you to set up a working environment which is in line with the company’s values.
One of the many advantages of the franchise system is that a franchisee – who will frequently be a new business owner with little experience of running their own company – can instantly get support and advice when an issue arises.
If you were in business on your own, you would have to guess what to do. As a franchisee, you can call your franchisor and see what they say. After all, they’ve been there and done it all before.
3 Branding and Marketing
The strength of the brand you choose to join is important. But so is your franchisor’s ability to market that brand effectively.
Ideally, you want your franchisor to be a marketing expert. You also want them to be willing to do at least some of the marketing on your behalf.
As a franchisee, the need to handle your own marketing distracts you from actually running your business. You also risk doing damage to the brand as a whole if you don’t know how other franchisees in the network are advertising their own businesses.
How Do You Become a Franchisor?
Becoming a franchisor calls for a business which has perfected its own way of operating. Your processes should be leading the industry. Your brand needs to be known far and wide. You need to have the resources to support the franchisees you will bring under your wing.
Because for all the advantages of being a franchisor, the franchisee-franchisor relationship is not a one-way street. Nor is becoming a franchisor an easy way to grow your business.
It calls for a huge amount of time, dedication and investment to begin with. If you do it successfully, that investment may pay off in the long-term.
In the short-term though, a franchisor needs to be a resource which their franchisees can call on. Not only to trade under a successful brand and use proven process, but also as a source of expertise and support to rely on while each franchisee sets up their business.
Below are steps to Become A Franchisor In South Africa
Determine if your business is one that can be franchised
Conduct a feasibility study to evaluate scalability, national demand, and profit for franchisees.
Make sure you have the time and money
Be prepared to take a step back from your current business, and anticipate an investment of between $100K-$400k.
Surround yourself with professionals
At the start-up phase, at a minimum you will need an expert franchise sales person, Operations Manager, Training Manager, and a franchise attorney.
Keep in mind that the, if you have a well-rounded franchise expert on board, they may be able to wear many hats (such Training, Support, and Operations). Another option is enlisting a franchise consulting company; often you will get a full team for less than a single executive salary.
From the time the lights go on until they go off, every step of your business including marketing, employee management, product merchandising; everything you can think of should be put into a process guide. This will later become your Operations Manual. Again, a good franchise consultant or Operations Consultant can help you with this.
How much does it cost to franchise your business in South Africa?
According to Debonair’s latest franchising documentation, new franchise owners can expect to pay between R800,000 – R1,400,000. In addition, franchisees can expect to pay an additional R100,500 as an initial franchise fee.
How much does a franchisor make a year in South Africa ?
The average franchise owner in the United States makes around R 1133482.36 to R 1889137.26 a year. That’s definitely much more than the average salary of a college undergraduate with less than five years of experience, or around R 755654.91.
What is the cheapest franchise in South Africa?
Top 10 Cheapest Franchises In South Africa
3@1 Business Centre.
Odyssey Franchise Information.
Are franchises worth it?
For those who want to become part of a franchise, there is one common question: Is entering a franchise worth it? The short answer: yes, if you and the franchisor do your parts. You will have a lot of business advantages when you decide to franchise. However, there is heavy financial risk, as with any new business.
How much is a McDonald’s franchise in South Africa?
With the application process agreed to, franchisees will need to pay R4 to R6 million to open a new McDonald’s franchise, depending on the type and size of the restaurant. According to franchise documents, at least 35% of this must be available as unencumbered cash.
How much does a franchisor make in South Africa ?
According to a survey done by Franchise Business Review involving 28,500 franchise owners, the average pre-tax annual income of franchise owners is about R 1209047.85
How can a franchisor be successful?
Below, we’ve listed 10 keys for franchise success.
Make sure you have enough money.
Follow the system.
Don’t neglect your family and friends.
Be an enthusiastic franchisee.
Recruit the best and treat them with respect.
Teach your employees.
Give customers great service.
Get involved with the community.
What are the rights of a franchisor?
The right to reasonable restraints upon the franchisors ability to require changes within the franchise system. The right to marketing assistance. The right to associate with other franchisees. The right to representation and access to the franchisor.
What is the role of franchisor?
The franchisor owns the brand and the operating system that they license to their franchisees. The franchisor grants the franchisee the right to operate the business under the franchise system’s trademarks and service marks and enforces the brand standards of the system.