INSIDE YOUR BUSINESS: Top 5 Industries Where You Can Consider Buying A Franchise
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Freddy Makgato, CEO of Franchise Association of South Africa (FASA) talks about Fast food franchises are among the most popular businesses to buy in South Africa. Many South Africans have affinities to brands like Steers, Nando's, McDonald's, and KFC – and these have proven models that systematise operations and generate profits.
But they come at a steep cost to franchisees – often requiring millions in setup costs and ongoing management fees of around 12% of monthly turnover. And that's if they're even available in the first place.
There are, however, several fast-food franchises that operate nimbly. They deal in limited menus specialising in a single food type sold at low prices and away from expensive retail space.
Items that don't require complex cooking procedures, like sausages, pies, chips, and crumbed fish, are ideally suited to these operations, with some allowing the majority of preparation to take place off-site.
The franchises are also cheap because they operate out of food trucks, gazebos, kiosks, or small retail stores rather than taking over pricey floor space in malls.
As a result, many offer attractive deals to franchisees with flat or low monthly management and marketing fees.
Given the average price point and limited range of menu items, the profits from these stores may be lower than more prominent quick service restaurants – the average order cost will be far lower for a hot dog than a premium burger with chips.
But a well-positioned store, outside a busy hardware store or in a high-traffic walkway, for example, may sell a lot of units and generate reasonable profits, especially given the lower initial and ongoing fees.
But they come at a steep cost to franchisees – often requiring millions in setup costs and ongoing management fees of around 12% of monthly turnover. And that's if they're even available in the first place.
There are, however, several fast-food franchises that operate nimbly. They deal in limited menus specialising in a single food type sold at low prices and away from expensive retail space.
Items that don't require complex cooking procedures, like sausages, pies, chips, and crumbed fish, are ideally suited to these operations, with some allowing the majority of preparation to take place off-site.
The franchises are also cheap because they operate out of food trucks, gazebos, kiosks, or small retail stores rather than taking over pricey floor space in malls.
As a result, many offer attractive deals to franchisees with flat or low monthly management and marketing fees.
Given the average price point and limited range of menu items, the profits from these stores may be lower than more prominent quick service restaurants – the average order cost will be far lower for a hot dog than a premium burger with chips.
But a well-positioned store, outside a busy hardware store or in a high-traffic walkway, for example, may sell a lot of units and generate reasonable profits, especially given the lower initial and ongoing fees.
