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 3 to 5 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.
  • Talk to us

      Position Email
    Abigail Makhubele Business Development Manager - All Sectors Abigail.Makhubele@absa.co.za
    Henk Botha Business Development Manager: Restaurants and Quick Service Restaurants henkbot@absa.co.za
    HS van der Linde Business Development Manager - Retail Hendrik.vanderlinde@absa.co.za
    James Noble Business Development Manager: Fuel jamesjn@absa.co.za
    Sybrand Bezuidenhout Business Development Manager - Services     Sybrand.bezuidenhout@absa.co.za

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