Franchising can be a risky game. It's relatively easy to find potential franchisees with the money to invest, but true success lies in ensuring that person also fits the profile of a successful franchisee for your specific brand.

At a recent franchising mentorship event hosted by Nedbank and Franchise Coaches, Ayabulela Njingolo, Chairperson of the Franchise Association of South Africa (FASA) and Business Developer for the OBC Group, and Richard Mukheibir, CEO of Cash Converters, shared valuable insights into how franchisers can attract and secure high-quality franchise partners.

Hire for attitude over skill

Use your franchise model to define your ideal franchisee profile. Value alignment and brand fit are essential. 'Seek individuals who share your brand's core values, customer service ethos, and long-term vision,' Njingolo advises. 'A franchisee who believes in your mission will uphold brand integrity and build strong customer relationships. Hire the values – then teach the skills.'

Balance entrepreneurial drive and operational discipline

Look for candidates who combine entrepreneurial spirit with a commitment to operational discipline. 'You want someone who has entrepreneurial characteristics but who also thrives on the consistency of implementing your systems on a day-to-day basis,' says Mukheibir. 'Consistency is absolutely critical in franchising, so this operational discipline is essential for ensuring that your brand standards and customer experience are maintained across all locations.'

Owner-operators work best

'In our experience, actively managing the business increases success rates,' Mukheibir explains. 'So, owner-operators who are fully involved in the direct operation of the business for at least 2 to 3 years are preferable,' says Mukheibir. ‘In fact, at Cash Converters, we won't take franchisees who're just investors because we have found that this approach often fails.'

Focus on sound financial management and resilience

'It's critical that franchisees understand cash flow and reporting and are able to adapt to economic fluctuations,' he adds. 'It's also important to be transparent about the total costs upfront, including startup costs, working capital, and training expenses. You don't want to be 4 months down the line and the franchisee runs out of working capital. That's harmful for the franchisee and for your brand.'

Prioritise access to finance

Njingolo recommends offering tiered investment options – from entry-level to full-scale operations – to accommodate different capital levels and risk appetite.

Karen Keylock, National Manager for Retail Services at Nedbank Commercial Banking, notes that even without tiered investment options, banks view franchises as lower-risk ventures. 'Because of our long-standing relationships with the leading franchise operations in South Africa and our deep understanding of their franchising models, we can structure flexible, customisable and cost-effective financing for new franchisees and existing franchisees looking to expand within the franchise operation.'

Mukheibir agrees: 'The banks understand that franchising is an empowering model. It takes people who are passionate and driven but are not familiar with the inner workings of a successful brand, and provides them with a recipe for success, support and financial resources. You may have the best model and the best brand in your industry; you may have a site and an excellent franchisee. But without any money, there's no honey.'

Attracting the right franchisees

Once you have defined your ideal franchisee, it's time to find them. 'There are several ways to achieve this. One of the most effective is to network widely,' says Njingolo. 'Attend and exhibit at franchise expos, summits, and conferences. Engage with institutions and build long-term relationships with them. Use targeted media and franchise-specific platforms like FASA to find and reach ideal prospects and showcase success stories. Maintain a strong online presence and leverage brand ambassadors. And invest in a strong franchise sales team to identify and qualify leads.'

'Also tap into your existing operator base,' adds Mukheibir. 'It's a smart strategy. Existing operators have proven they can run a profitable business within your brand, and they're likely open to building on that success. You also save time and energy on finding suitable franchisees, and existing franchisees require less franchiser support. Plus, multi-unit operators can reduce their operation costs by shifting staff between locations.

However, make sure your franchisees don’t overextend themselves by ensuring they have the capital and human resources to manage multiple locations, and guard against the concentration of influence in too few hands.'

Mutual due diligence

When you have identified a strong candidate, have them work in the business before signing. They need to experience the operation firsthand, understanding the challenges and opportunities.

'This way, franchisers can establish if the franchisee is a solid fit in terms of values and character, while franchisees can experience the brand – warts and all – and decide whether it resonates with them,' says Njingolo. 'And 1 final tip: ensure all paperwork and legal formalities are completed before operations begin.'

Let partnering with Nedbank be your next big move. For more information, please call 0860 555 333 or visit https://business.nedbank.co.za/.

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