“The franchise model works well for someone starting out on his or her own, because it gives one opportunities to hone one's skills and build one's capital, while being supported by one's franchisor’s resources,” says MD, Richard Mukheibir.
“The company offers everything from a turnkey, fully stocked and branded store, backed by its robust procedures and IT systems, to ongoing training through its Training Academy. We have a collaborative culture, which includes franchisees networking, through our quarterly franchisee meetings in the regions and our support is guaranteed for 10 years.”
Starting prices for franchises vary across the industry and any prospective franchisee should interrogate this carefully.
“Compare not just the bottom line of the initial working capital you need to invest but also what the franchisor offers you. Also find out how much of the total cost of the franchise investment you must provide upfront and what this gives you in return.”
For example, the total setup costs for a Cash Converters business starts at R2.3 million for a store of up to 250 square metres. New franchisees must be able to invest half this total cost in unencumbered cash. When you are shopping for a franchise, you must also think carefully about which one fits you best.
Mukheibir chose to bring the Cash Converters brand to Southern Africa in 1994 because this well-established Australian business model was a world leader in trading and marketing second-hand goods.
“We have seen dynamic growth to more than 750 franchise stores worldwide. On average, it takes two years of working seven days a week to build momentum and realise return on investment but franchisees continue to amaze us. Within just one month of opening its doors, one operation in Polokwane achieved the trading level we normally envisage after a store has been operating for a year.”
“Successful franchisees need particular qualities. Any franchisee needs to be happy working within the processes and procedures of the franchise they decide on and should make sure that they understand these parameters before signing up.
“We want to partner with people who understand cash flow, have previous business experience and, very importantly, a trader mentality. Our franchise model is very hands on – not the kind of franchise where you can let staff run the business for you and just drop in once or twice a week to check for problems.
“We are passionate about our business and we want our franchisees to share that passion. They should be excited by the prospect of owning and operating their own business from day to day. To sustain this, they need a high degree of energy, initiative and motivation.
“Our franchisees also need to be empathetic and people-oriented, whether they are dealing with customers or staff. And in business, it always helps to have a sense of humour.
“Before investing in a franchise always research what kind of returns you can expect, how economic circumstances might affect the business and how the franchise is affected by existing legislation or anything that might be in the pipeline for its industry.
“Once our franchisees become established, we believe the company’s multiple revenue streams, which has included micro-lending since 2007, guarantee them double-digit returns. Our business model is recession resilient – there are always customers needing our services and cash never goes out of fashion.
“We insist that franchisees comply with all current legislation, such as the Consumer Protection Act, the National Credit Act and the Second-Hand Goods Act and our training programmes help familiarise franchisees and their staff with these. We believe that this approach offers honesty and integrity to our customers, enhancing the brand’s credibility for our franchisees – and contributing to their journey with us being a life-changing adventure,” concludes Mukheibir.
