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Business Tips – Buying a Francise

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Please note that this pertains to the South African Consumer Protection Bill, the Franchise Association of SA, and Best Practice requirements.

Well let me say this – there are franchises and then there are franchises!

As with most things in life, you need to be careful about what you purchase – do the research, check the numbers – better yet get an Accountant (not a bookkeeper mind you) to check that the numbers are correct, insist on a Tax Certificate, if need be, get a Business Broker involved to ensure that the business is all that it is made out to be.

That said, there is a newly promulgated Bill that has just gone through called “The Consumer Protection Bill” (CPB). This Bill was put into place in order to “promote and advance the social and economic welfare of consumers in South Africa.”

So what does this actually mean?

Well, years ago when the whole Franchise thing started, many people got their fingers seriously burnt. The support that was promised never materialized. The Franchise business was never what it was made out to be, and many people went out of business and lost everything. Make no mistake, there are still those Franchises that are still exactly like that! With the new Bill, however, because all Franchise agreements will have to comply with the Bill, which will clearly give the Franchisee a lot more protection, and they will also have some sort of recourse to the Franchisor.

An added protection is if the Franchisor is registered with the Franchise Association of South Africa (FASA). As a member of FASA, the Franchisor would be obliged to meet the Franchising standards as set out by the Association. FASA makes sure that everyone follows and is compliant in terms of the internationally accepted Franchise principals.

Quite frankly if for no other reason, I would ensure that the Franchise business that I was intending to purchase, is registered with FASA – that in itself would give me a lot more peace of mind.