8 South African franchises you can open for less than R1 million

·15 Feb 2018

Franchising is likely to see continued growth in 2018, as the sector remains a core part of the country’s business sector, which is likely to be boosted by the appointment of Cyril Ramaphosa as president of the nation.

This is according to Tony Da Fonseca, chairman of the Franchising Association of South Africa (FASA), who is confident that franchising business format will continue to outperform the overall economy.

Da Fonseca’s confidence is backed up by FASA’s latest franchising survey (published in November 2017) which shows the sector’s performance remains on an upward trend, with 845 franchisors and their over 40,000 franchisees generating sales of R587 billion – contributing 13.3% to the country’s GDP.

South Africans are also showing increasing appetite in becoming a franchise owner according to a BusinessTech poll conducted earlier in February 2018.

The poll – which attracted 5,644 votes – found that 61% of readers were interested in buying a franchise, while 3% (145 voters) indicated that they already owned at least one.

Based on this data, BusinessTech looked at eight franchises, across a variety of sectors, which are currently available to purchase for less than R1 million.

The Fish & Chip Co – from R840,000

Taste holdings provides assistance to prospective franchisees by preparing finance applications, identifying suitable sites, as well as initial and ongoing training and support.

All franchisees are required to complete a five-day training program that covers day-to-day operations, staffing, stock control, marketing, and management skills.

Franchisees are supported by an experienced team including a dedicated franchise manager who facilitates communication and operational requirements between the franchisee and Taste.

In addition to an average set up cost of R699,000, you can expect to pay an initial joining and set up fee of R140,000.

Debonairs – from R900,500

According to Debonair’s latest franchising documentation, new franchise owners can expect to pay between R800,000 – R1,400,000.

In addition, franchisees can expect to pay an additional R100,500 as an initial franchise fee.

Similar to other Famous Brand-owned restaurants, franchisees are also expected to pay 7% of their turnover in management fees and 5% of their turnover in royalties.

Wilcote – from R520,000

Wilcote is a manufacturer, supplier and applicator of professional solutions to all waterproofing, interior and exterior redecoration projects.

According to its franchising documentation, Wilcote offers:

Access to a respected Brand name.
Proven know-how and experience.
Extensive initial training and ongoing assistance and support.
A business that is virtually recession-proof.
Territories with outstanding business potential.
A realistic opportunity to earn above-average returns.

3@1 Business Centre – from R695,000 (ex VAT)

The 3@1 Business Services franchise concept offers a retail opportunity in the business services and communications industry.

Boasting cemented partnerships with DHL International and Kodak International Express photographic provider, its franchisees can offer an ever-broadening selection of services.

3@1 promotes owner-operated stores starting out with two staff members, while offering a consultative, personalised service.

Applicants have a choice of two business formats — a standalone full store setup measuring 50-80 sqm, an Express Store option occupying 30-45 sqm or a kiosk option occupying 15-25 sqm either in a regional mall, strip mall or stand-alone site.

Zebro’s – from R949,000

According to its latest franchising data, the total estimated initial cost for a standard Zebro’s outlet of 80-100 sqm is R949,900.

This amount includes a franchise joining fee/deposit of R190,000.

The total cost makes provision for store design, staff training, and launch promotion materials during opening and support from head office from day of opening.

A thorough setup cost projection schedule of your specific location will become available further into the application process.

Zebros chicken will provide these figures to assist in analysing a typical outlet construction. These estimates are based upon our construction experience associated with previous Zebros outlets as well as the industry standard costs of construction.

H20 International – from R325,000 (excluding VAT)

H2O International SA has over 20 years experience in providing South Africans with water and air purification systems.

H2O said that a typical day involves motivating and managing your sales team and internal staff, manning your state-of-the-art water bar or water station, servicing existing customers, and ordering stock for more sales and rentals.

Set up costs range from R325,000–R625,000 (excluding VAT) depending on the type of franchise, location and the quality of the source of the water to be bottled. The total set up cost provides you with a complete turnkey operation.

The Bed Shop – from R500,000

The franchisor’s operational planning department assists franchisees by researching new store locations, designing the store formats and preparing budget and financial projections for each site.

Once an outlet is open for business, franchisees can call on their dedicated area representative for operational support, should the need arise.

The franchisor engages in a variety of marketing activities, including digital marketing, national promotions and individual store campaigns.

National promotions running over two month-ends typically incorporate national newspaper adverts, digital campaigns, in-store promotions and promotional pamphlets.

Sorbet – from R1 million

Sorbet says that the exact amount of your investment will depend entirely on the size and condition of your selected store and varies from site to site. 50% of this amount should be available in unencumbered cash as a deposit (funding can be obtained for the balance).

According to the beauty store’s latest franchising costs, you can buy a 60 sqm nailbar for around R1 million, while a Sorbet salon and Candi franchise will cost you slightly more with a total cash requirement of between R1.6 million – R1.7 million.