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FRANCHISING: OVERVIEW

The Sherpa Kids franchise focuses on providing young children? rate of franchisees is around 90%.
with before school, after school and holiday care With independent businesses, the
PHOTOS: SUPPLIEDassociation claims, the success rate of
Among the brand’s franchisees says. “But I do not have experience start-ups can be as low as 10%.
is Zanele Shazi, who is currently in operating such an organisation.
finalising plans for a centre scheduled So when I read about Sherpa Kids, I For his part, Illetschko, does not
to open in the Highway area outside realised that it was a good opportunity believe that franchising can fail: “I know
Durban in October. While working as for a new business owner like me to that this is a controversial statement,
an accountant/auditor and raising two get involved in something close to my but I stand by it 100%,” he says.
daughters, Shazi recognised the need heart, but which also provides me with “Franchising is a tool. Used correctly,
for a facility that would provide safe support and guidance along the way.” it will produce excellent results. I have
and engaging programmes for young been involved with franchising since
children in the area. LOW FAILURE RATES 1975 and have never come across
For many aspiring entrepreneurs like a true franchise failure. Yes, I have
She and her husband had already Shazi, it seems to make sense to invest met far too many people who have
begun discussing the potential of in a franchise rather than going it lost heavily by investing in so-called
creating such a business when she alone. According to FASA, access to an franchises, but this is exactly my point.
read about Sherpa Kids. “I have a established brand, a proven operating The word ‘franchise’ doesn’t make it a
great passion for education and the system, valuable trade contacts and franchise; a thorough investigation of
well-being of children, as well as an ongoing guidance mean the success the offer is necessary.
understanding of business,” she
?
DISADVANTAGES OF BEING A FRANCHISEE Franchisee success
rate is around 90%
Franchising is seen by many as a ¦ There are restrictions on where you
simple way to go into business for the operate, the products you sell and “Far too many prospective franchisees
first time. But, warns the Business the suppliers you use; walk into franchise arrangements blindly,
and Industry Portal of the Queensland ¦ Bad performances by other hearing only what they want to hear. This
state government in Australia, there is franchisees may affect your turns them into easy pickings for silver-
no guarantee of success. franchise’s reputation; tongued promoters.”
¦ Bad decisions by the franchisor can
The portal lists the following as significantly impact your business; While Illetschko does not suggest
important disadvantages: ¦ Buying a franchise means an that every non-member of FASA is
¦ You must commit to a formal ongoing sharing of profit with a bad proposition, he recommends
and usually lengthy agreement the franchisor; extra caution when dealing with
with the franchisor; ¦ Franchisors do not necessarily non-members, “simply because FASA
¦ Franchise agreements dictate how have to renew an agreement at members have been scrutinised before
you run the business, so there may the end of the franchise term. being accepted as members”.
be little room for personal creativity;
Penny Haw published
and edited her own
sports trade magazine
for almost a decade
before selling the
business to focus on
freelance writing. A
long-time contributor
to Business Day and the Financial Mail,
she writes primarily about business and
entrepreneurial issues.

18 strategicmarketing August–September 2016