Most franchising advice is written for the franchisee. Far less gets said about what it actually takes to become a franchisor. Derek Smith, former chairman of the Franchise Association of South Africa, sets out what founders need to weigh up before selling their concept to others.
Ask why you actually want to franchise
Franchising is usually chosen because a business needs capital to expand faster than it could alone, and gains committed operators who have skin in the game. But it means trading some short-term profit for faster long-term growth, and that trade-off is not right for every business.
Understand what you are actually selling
There is a real difference between selling a loosely supported “business opportunity” and a properly documented, monitored “business format franchise”. Being unclear about which one you are offering can mislead franchisees about the level of support they will actually get.
Budget for the real cost of becoming a franchisor
Building the manuals, training programmes, legal agreements and support systems a franchise needs takes real time and money before a single franchise fee comes in. Underfunding this stage is one of the most common reasons franchise systems fail.
Don’t grow faster than your systems can support
A cash-flow crisis in the early years often pushes franchisors to sign unsuitable franchisees or approve weak sites just to generate fee income, which damages the brand far more than growing slowly would.
Frequently asked questions
What is the difference between a business opportunity and a franchise?
A business opportunity offers minimal ongoing support and monitoring, while a business format franchise involves a strictly documented system, training and continuous oversight.
How much does it cost to become a franchisor?
There is no fixed figure, but expect significant upfront investment in manuals, training, legal agreements and support infrastructure before franchise income covers costs.
Why do new franchise systems fail?
Commonly because they were underfunded at the start, or grew too quickly and accepted unsuitable franchisees to solve a cash-flow problem.
Should I franchise my business if it’s already successful?
Only if you are prepared to fund the infrastructure, accept the social responsibility of other people’s investments, and grow at a sustainable pace.
Where can I learn more about South African franchising standards?
The Franchise Association of South Africa publishes guidance for both franchisors and franchisees.
Further reading: How two entrepreneurs franchised their burger restaurant concept
Originally published in 2016. Updated September 2026.
