Franchising a business is making a practical use of another firm’s successful business module. For the franchisor, the franchisee is an alternative to building a “chain store” for distributing goods and avoid the need for liability and investments for a chain. The franchisor’s success depends on the success of the franchisee’s. The franchisee has a greater incentive than the direct employees because she or he has a direct stake in the business.
Businesses for which franchisees work best have the following characteristics:
- A good track of profitability
- Ease of duplication
- Processes, procedures and detailed systems
- Unusual or unique concept
- Ease of operation
- Inexpensive operation
In retailing, franchising offers the advantage of starting up a business quickly on basis of a proven trademark, and access to tools and infrastructure, as opposed to having to develop them.
Two important payments are made to a franchiser. A royalty for the trademark and refunding for the training and advice given to the franchisee. These fees may be combined in a single “management” fee.
Hundreds of franchisees fail to come up to the mark every year. The most common causes are: unwillingness to follow the formula, poor skills, lack of funds, mismatch between franchisee and the franchisor, and poor management.
A critical decision is picking a product you care. Consider hiring a consultant to analyse and look into all the details. One of the most common mistakes that new franchisees make is dive headlong before proper research of the business is made. Study what it will take to run the business successfully. And, be realistic. Owning a franchise is not nearly a get-rich-quick scheme.
In Kenya franchises have been there, with the most known being in the fast food market. There are a number of food franchises in Kenya that include well known brands from South Africa, which include Debonaires, Pizza inn, and Steers. America is the most franchised country in the world, but their many franchises have not diversified to the African market. But recently, the first American franchise landed in Kenya. KFC (Kentucky fried chicken) is a super-brand in the world, which finally got to Kenya, and opened a much hyped branch at the Junction Shopping Mall. Since then, they have opened 3 new outlets bringing the total to four. The Chairman of KFC America has stated that they plan to open 15 new outlets in Kenya in the next 24 months. Sub-Saharan Africa is seen as one of the untapped and still-potentially-lucrative markets in the world. McDonald’s is another great fast food franchise from America that has been rumoured to be considering an entry into East Africa and other chains like it will well be on their way to capture this virgin market.
Never pre-judge a prospect of franchise model. It does not matter how famous the brand is. It all depends on how passionate you are to learn about the brand. Success doesn’t always follow you in the case of franchise models. Instead make an effort to improve your marketing strategy. Kick-start your business and learn to face the challenges and get over it.