Buying a franchise is an attractive way to get into business for many entrepreneurs. The great thing about buying a franchise South Africa is that you’re investing in an established brand and business model that has been proven to work. This makes opening a franchise slightly less risky than starting a new business from scratch.
Many franchise opportunities exist in South Africa. These vary greatly in cost and can be highly profitable if done right.
In this guide, we’ll cover all the basics you need to know about starting a franchise in South Africa.
How Much Does it Cost to Buy a Franchise in South Africa?
The cost of purchasing a franchise purely depends on what franchise you’re buying. Other factors, like the size or style of the restaurant, will also affect the franchise price.
When you buy a franchise, there are various costs involved. However, these generally include the franchise fee and application fee, the establishment costs, and applicants need sufficient working capital. On top of this, many franchises require monthly royalty payments, advertising costs, or a percentage of monthly profits.
So, how much does this all add up to? According to an article on SA Franchise Brands, here are the costs of some different franchises in South Africa:
- McDonald’s: Between R 4 million to R 6 million depending on the type of restaurant
- Nando’s: Approximately R 6 million (Excluding VAT)
- Burger King: Approximately R 5 million
- Wimpy: Between R 1,75 million and R 2,4 million
- Debonaires: Approximately R 1,7 million (plus 12% of monthly turnover)
- Barcelo’s: Approximately R 1,25 million (Excluding VAT)
- Steers: Approximately R 1,97 million to R 3,75 (plus 11% of monthly turnover)
- Kauai: Approximately R 2,3 million depending on the type of restaurant (plus 4% of net sales)
These are just a few of the most popular fast-food franchises in South Africa. If you are considering investing in a franchise, then take a look at these 100 South African franchise opportunities.
Which is the Cheapest Franchise to Buy?
In terms of restaurant and fast food franchises, some of the cheapest options are:
- Fish & Chip Co.: Roughly R 599 000 starting cost
- King Pie: Approximately R 625 071 (Excluding VAT) starting cost
- Zebro’s Chicken: Roughly R 900 000
However, franchise opportunities don’t end at fast food restaurants. Many other areas of business offer affordable franchising opportunities. Some franchising opportunities under R1 million include:
- Battery Centre: R 150 000 set up plus R 511 200 working capital
- Tutor Doctor: Roughly R 625 000 to R 725 000
- Just Property: Between R475 000 and R1 000 000, including the joining fee and starting cost
- PostNet: Around R 860 000
What is the Most Profitable Franchise to Own in SA?
According to a report published by Business Tech, some of the biggest franchises that have the most market share (in descending order):
- KFC
- McDonald’s
- Nando’s
- Debonairs
- Wimpy
Of course, the profitability of a franchise will change for each case. The biggest brands will naturally attract the most revenue. However, factors like location and management can play a major role in profitability.
How Do I Invest in a Franchise in South Africa?
The first step is to perform thorough research. You need to understand exactly how your chosen franchise operates and establish whether you are suitable for the role. Different franchises operate in different ways, so it’s important to understand that the system will be a good fit for you.
Then the franchisee needs to get in touch with the franchisor. This is to understand franchising opportunities and establish the steps involved in opening a new franchise. The franchisor will likely be very involved in the process.
Opening a franchise is not always an affordable way to start a business. You will likely require a franchise business loan, as well as having sufficient non-borrowed capital available.
Once an agreement has been made, the franchisee must follow the strict requirements of opening and operating the business according to the franchisor.
Starting a franchise has many benefits. The main ones are that you can open a business with a brand that is already well-established, a business model that works, and gain support from experienced franchisors. The downside is that running a franchise can be very rigid, with lots of strict rules in place.
South Africa has many franchise opportunities available. These cover all kinds of industries and range greatly in cost. If you find a franchise that suits you, it could be an excellent way to start a business.
