This support system, Doshi says, is one of the advantages about being a Naked Pizza franchisee because one can run the business without being “completely on their own”.
“The best thing about being a Subway franchisee is having hundreds of other business owners facing similar challenges, and are willing to share their knowledge and answers,” Bak adds.
Compared to operating your own brand, Doshi says being a franchisee involves running the business in a slightly different way, since the entrepreneur has to operate within tight guidelines with regard to recipes, standards, branding, and marketing needed to ensure maintaining high standards across the bar.
“Franchisors are not interested in franchisees who are trying to reinvent the wheel. There are a number of restrictions that are placed on you so that your offering replicates of the global experience of a brand. While this may be uncomfortable to some franchisees, you must understand that your royalties are paying for the knowledge and best practices of a global company.
“The best franchisors, however, recognise that not all markets are the same as their home market, and work with franchisees to adapt to local requirements,” says Bak.
Long, costly process
Despite the benefits, the road to becoming a franchisee can be long, taking even up to two years, and costly. According to Naked Pizza’s Doshi, some of the things a franchisor will expect from a potential franchisee include the entrepreneur’s commitment, their access to capital and either a track record of proven success in business or a high level of aptitude which shows that they can meet the challenges.
“Most reputable franchisors have a very intense screening process. This may involve background, financial and credit checks, academic testing, required training, assessments of business plans and so forth,” says Bak. “At the end of the day, they want to ensure that you have the capacity and willingness to operate their valuable brands at international standards in market environments that may be very challenging.
“In the case of Subway in Kenya, we spent almost five years working with the brand to test the supply chain and develop the strategy for the market.”
Bak also explains one of the downsides of being a franchisee is the slow decision-making common among large corporations adding that “the franchise system is necessarily bureaucratic”.
“The obstacles you have to go through to get something approved can be frustrating,” adds Bell of KFC. “There is the challenge of answering to a franchisor who doesn’t necessarily understand your market place. The essence of franchising is to localise a global brand, but some of the challenges are that you have to report to a regional office that may not fully understand the local environment.
“The regional office may think it understands how to apply the principles of the brand, but actually the best operator is the guy on the ground.”
Doshi concurs, noting that there are constraints in terms of menu development and how far a franchise can extend the brand. He adds that building someone else’s brand as opposed to your own, and having “to pay franchise fees”, are also downsides.
Picking the right franchise
When considering taking up a particular brand Subway’s Bak advises entrepreneurs to look for franchisors who appreciate the importance of franchisee profitability. “There are a lot of natural conflicts in the franchisor-franchisee relationship. At the end of the day, the franchisor is taking a percentage of overall sales, while the franchisee is getting paid through profits.
“You want to find a franchisor who minimises these conflicts and is transparent about how they are making money from you,” says Bak.
Hoggers Limited boss Samanani notes it is critical for both parties to get to know each other, build a relationship and iron things out before signing any deals.
“In our part of the world, where our legal system is not that efficient and contracts aren’t easily enforceable, the most important thing is the relationship. So the first few months should be a ‘dating period’ where you are getting to know the partners.”