I know absolutely nothing about franchising and how it works.
Seems to me like each person can make his own rules.
I need some advice from those with experience.
This is why I want to do it and I also list my concerns and the picture I have how it should work in my case.
I would value all input, advice and criticism, I love critic that is the only way we learn so if you think I am dof please tell me.
My business is growing and are becoming a household name in the 4x4 Industry.
I have an online shop and also two walk in shops, one in Cape Town and one in Langebaan.
I get extremely many request from people in Gauteng to open a branch in Gauteng.
Most of my web orders comes from Gauteng.
So opening a branch in Gauteng became a must for me.
My problem is that I am not a people's person. I have people working for me but that is not my idea of fun.
I already have problems managing the staff I have although they are actually wonderful, mostly self efficient staff. They are doing very well, but managing people is not my thing.
So if I look at how I feel about my two existing branches I cannot imagine having my own branch in Gauteng, managed by somebody I have to check up on all the time and sitting down here worrying if they are doing things the way I want it to be done. It will cost me a fortune flying up and down managing the shop.
My idea is to have a shop there which is run by somebody who owns it, thus have a big interest in it. That is why a franchise came to mind.
My problem with franchise:
I have friends who sold their franchises (one in Ocean basket Harties and one in Cattle Baron Langebaan) for the sole reason that the franchise fees were killing them. They felt they have to do all the hard work, take the risk, battle with staff and the franchisor just collected the money.
So I do not want to do that to other people. I feel something like that will discourage my shop owner and make him negative which will reflect negatively on my own brand.
Personally I stay away from any form of leaches. There are for example software companies who will offer you a good software deal but they want to charge you per item you use their system for. So if you work hard and grow your business they want to piggy back on your success and suck you dry. I see a franchise business as the same scenario.
This is where I do not know what is the difference between a franchise and a shop I sell to somebody and allow him to use my brand.
I want to have the shop opened by somebody who owns it.
Will prefer that the shop owner does his own shop fitting and buy his own equipment (please advice if this is a good way or will I have more control doing it myself)
Part of his purchase will be initial stock to stock his shop.
Sign a contract that he must purchase certain stock only from us and I will sell it to him at maybe cost plus 5%. Reason for such low profit is because we supply both wholesale and retail, if my markup is too high the shop owner will loose out on the wholesale side of the business which currently is my biggest turnover.
Charge him a small monthly license fee, like R5k per month, for the privilege to use our known brand and he will immediately get exposure from the web site.
I also consider letting the Gauteng branch send out parcels from online orders for Gauteng from Gauteng which will mean he will immediately start to get orders based on 4 years of business building from our side.
The R5k/month I will push 100% into advertising.
As I see it, if I make cost plus 5% on the product I supply, it is the same as charging a franchise fee but because we import most of our products directly the shop owner will not get the products for cheaper anywhere in the country so there is at least a great advantage of paying the 5% markup.
How do I structure this? Franchise, sell a shop? how do one go about doing this?
Am I too modest in my figures, does it makes business sense? For me it is more about having a shop in Gauteng without having the expenses, staff problems, rent, etc to worry about.
Is my cost plus 5% good?, what does franchisors do? Do they charge their franchise fee plus sell stock/consumables to the franchisee at a profit?