If you want to grow your existing franchise business then that’s a smart option. Before you take the next step, take a look at some of the pros and cons of growing your franchise.

  • Advantages

    • You need less capital: once your business infrastructure is in place, new franchisees fund the roll-out of your franchise network.
    • Faster expansion: growth can happen more quickly because franchisees fund new units.
    • Better terms and service: suppliers often give franchisors better terms and service because of the quick expansion that usually goes with franchising.
    • More efficiency and less pressure on head office: a business owner is usually more diligent than a hired manager, and as such franchises are often run very efficiently.
    • Better planning: franchisees must set and achieve their budgets and this makes network-wide planning more accurate.
  • Disadvantages

    • Less profit per unit and high initial costs: but weigh this up against the benefits and know that your start-up costs could be recovered within three to five years.
    • Costs of supporting franchisees: while franchisees pay a management fee, it is usually relative to their sales, which may be low at first.
    • You need a large market: franchising may not make commercial sense if you can’t rapidly establish 15-20 units.
    • Limitations on your freedom to act: while you should welcome and value franchisee input, this could also limit your ability to react quickly to opportunities.
    • Poor franchisee selection: underperforming franchisees could damage the brand.
  • Call us

    Name Position Email
    Abigail Makhubele Business Development Manager - Consumer Services, Quick Service
    Restaurants & Restaurants
    James Noble Business Development Manager: Fuel jamesjn@absa.co.za
    Thamsanqa Letsoalo  Business Development Manager: Automotive Sector   Thamsanqa.Letsoalo@absa.africa
    Lesego Mpakanyane Business Development Manager: Wholesale & Retail  Lesego.Mpakanyane@absa.africa

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