A guide to beating the odds and starting your own franchise business
According to financial services giant, First National Bank, franchising in South Africa has grown steadily at a rate of between 5% and 7% annually, especially in the fast-food industry. It is also estimated that the industry contributes more than 10% of retail sales. However, first time franchisors still face challenges when starting a franchise with capital restrictions. Founder and head of the Sandwich Baron franchise, Sally J’Arlette-Joy, explains how she grew her franchise from a capital investment of only R5,000.
The idea of selling sandwiches was inspired by my time spent working in London; where sandwich shops are common place. After I made South Africa my home, I realised the gap in the food retail market and decided to pursue my lifelong dream.
In 1996, I established and ran a small sandwich shop from home, which quickly caught the attention of the Alberton community, just east of Johannesburg. After being inundated with interest in the area, I realised that I had to formalise what is today known as Sandwich Baron, and opened up a store.
The business had taken off so well that I had not been open long when I had my first franchise enquiry. Although I had ran a restaurant with my husband before, I was, however, inexperienced in the intricacies’ of franchising and decided to get reading material to gain some insights. I did not have the funds to get the assistance I needed and there is no school that trains you to become a franchisor. But I was committed to make the business work and I applied what I was learning and have adapted it as I go along.
Sandwich Baron is currently a member of the Franchising Association of Southern Africa (FASA) and I have acquired great input from them as well. They are a great resource to engage with when you want to become involved in franchising.
Even though there was great demand from potential franchisees to attain a licence to operate a Sandwich Baron business, I wasn’t sufficiently prepared and faced financial obstacles. I had used my capital outlay of R5,000 to invest in essentials and had to focus on reinvesting the business’s income to expanding the business bit by bit. With the love and support of sandwich lovers across South Africa, Sandwich Baron has reached some amazing heights, making the humble beginnings worth it. Today, the franchise group has been in business for almost 20 years – with 48 outlets and four company owned stores countrywide.
When starting your own franchise business I would recommend that you carry on working on a part time basis until you are sure you can make it work. In South Africa, to get start up funding from venture capitalists and banks, you need to invest at least 50% of the capital amount from your own pocket. You should also research potential funders, because when you know their requirements you can save and plan accordingly.
We are all good at something and your new business would need to be something you have an interest in. Start networking today so you can engage potential clients. I also find positive mentoring is imperative. In my early years I had my father to bounce off ideas, so having some support within your close circles will help a great deal.