Franchising (from the French for honesty or freedom) is a method of doing business wherein a “franchisor” authorizes proven methods of doing business to a “franchisee” for a fee and a percentage of sales or profits. Various tangibles and intangibles such as national or international advertising, training, and other support services are commonly made available by the franchisor, and may indeed be required by the franchisor, which generally requires audited books, and may subject the franchisee or the outlet to periodic and surprise spot checks. Failure of such tests typically involve non-renewal or cancellation of franchise rights.” http://en.wikipedia.org/wiki/FranchisingWhat are the benefits to owning a Franchise rather than starting a business from scratch or owning a “no name brand”?Without doubt the most important benefit to going the franchise route lies in the success rate of franchises as opposed to independent start up business. Where most businesses have a failure rate as high as 90%, franchised businesses have a failure rate of around 15%. The second most important thing to remember is that when you buy a franchise you are buying into a proven system with proper back up and support. Other benefits include:

  • A proven operating system
  • Brand recognition
  • Consumer confidence
  • More effective marketing
  • Value, consistency and comfort
  • Buying power
  • Sharing ideas
  • Training/Skills transfer
  • Support from other franchisees and franchisor
  • Increased potential for success

Are there any disadvantages to owning a franchise?

A person who is too entrepreneurial may find a franchised environment with strict business principles, systems and procedures too restrictive. Buying into an established franchise system also means paying management service fees and being locked into a contractual agreement for a set period of time. But, in the end, that is what makes the franchise and you successful.

What is a Franchise Fee?

The franchise fee is made up of two components namely the Initial Franchise Fee also commonly known as a joining fee (Non Refundable – Initial Payment) The Initial Franchise Fee goes toward design, plans, and drawing up of legal documentation, project management, training, menus and various other items.

What are Royalties?

The ongoing franchise fee (Royalties) is a monthly percentage of turnover contribution, which enables the franchisor to give ongoing service in respect of Franchisee Support.

What are the Criteria required to become a franchisee?

  1. Previous food service experience is beneficial.
  2. Owners are expected to operate the business themselves.
  3. An understanding of how franchising works.
  4. Available capital to setup the business.
  5. A positive attitude and good people skills.
  6. Not afraid of long hours and hard work.
  7. Understands the importance of customers.
  8. Works well under pressure.
  9. Systems and procedures orientated.
  10. An understanding of local markets and people.

How much money do I need before borrowing?

You must have unencumbered capital of at least 40% of the total setup cost in cash, which is to be applied toward the purchase and development of the franchise package.

The balance of the franchise package cost can be financed through various lending programs of any bank or financial institution, subject to the fulfilment of their usual credit requirements.

Does the franchisor offer finance?

The Franchisor does not offer finance nor does it have in-house finance available, however reputable financial institutions can be recommended.

Do I need a lawyer?

Yes, we strongly recommend that you have the terms of our franchise agreement and other related agreements explained to you by your lawyer.

What will my sales be?

The franchisor does not make a sales claim for new restaurants. Prospective franchisees are encouraged to conduct their own independent investigation to determine potential sales levels prior to signing any Franchise Agreement.

How much profit can I make?

The franchisor does not make any earnings claim for new restaurants. Prospective franchisees are encouraged to conduct their own independent investigation to determine whether they believe a restaurant may be profitable and consult with their own advisors prior to signing any Franchise Agreement.

What suppliers should I use?

A list of approved suppliers will be provided to you and you are required to purchase your supplies from those companies.

Can I use my own recipes and menu ideas?

Franchisees must sell only approved products in their restaurants. Franchise advisory boards may provide input on potential new items.

What kind of training do you offer?

Before you open your restaurant you are required to attend and complete the brand’s training program. Training ranges from 4 – 6 weeks (depending on the brand) and is conducted in a company certified training store/Head office. The Franchisee is responsible for all costs incurred including travel and lodging of the management, staff and training team.

Do you have a quality assurance program?

Each of the Brands has a two tier quality assurance program. The first is a customer based mystery shopper program where restaurants receive customer feedback on their store experience. Performance standards are set by each of the brands. Secondly, the Brands conduct periodic standards reviews in store and give feedback to the operators regarding execution excellence. Franchisees are required to meet certain operating standards as part of their franchise agreement.

Will I be required to use specific point of sale system at my restaurant?

All restaurants are required to use Micros (Hyperlink to micros sa) point of sale control systems. You must prepare and keep detailed records regarding all sales and other financial aspects of your restaurant operations. You may also be required to submit reports of product mix, hourly and day-part sales and other reports as may be determined by the Franchisor.

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