Correction: A previous version of this article stated that Krispy Kreme Doughnuts would available as a franchise option in South Africa, which is not correct. While the international brand is entering into the South African market with 31 planned outlets, these will be solely owned by KK Doughnuts SA.
Looking at the biggest food chains in the country, franchising costs range from R500,000 for a brand like Chesa Nyama, to as much as R6 million for a global giant like McDonald’s (all excluding VAT).
Franchise set-up fees often incorporate location, renovation and facility costs, with franchisees then paying an additional “joining” fee and the monthly payments to the brand owner.
Franchise fees can hit as high as R185,000 for a Nando’s franchise or even R540,000 ($45,000) for McDonald’s, while monthly royalty and marketing payments range between a combined 4% and 12% of net income.
Understandably, some of the most popular food brands in the country carry the highest costs, with McDonald’s ranging between R4 million and R6 million.
South Africa’s biggest food chain, KFC, with 771 stores across the country, carries the second-highest start-up costs at R5.5 million; but the group notes that it is not currently open to new franchise opportunities.
Potential franchisees are often expected to have between 35% and 65% of the purchase price of a restaurant in unencumbered, non-borrowed cash.
The table below lists the costs of opening a new franchise of South Africa’s fast food chains, with franchise fees and monthly payments noted where information was available.
|Franchise||Set-up cost||Franchise fee||Monthly payment (% of gross)|
|McDonald’s||R6 000 000||R540 000||4%|
|KFC||R5 500 000|
|Burger King||R5 000 000|
|Nando’s||R4 500 000||R185 000||12%|
|Chicken Licken||R3 000 000||R150 000||12%|
|Pizza Hut||R2 500 000*|
|Wimpy||R1 930 000||R114 300||12%|
|Roman’s Pizza||R1 800 000||R 70 000||8%|
|Debonaires||R1 720 000||R130 000||12%|
|Barcelo’s||R1 600 000|
|Domino’s Pizza||R1 500 000|
|Kauai||R1 300 000||R110 000||10%|
|Steers||R1 200 000||R130 000||11%|
|Subway||R1 100 000|
|Cinnabon||R1 000 000||7.5%|
|Burger Perfect||R 970 750||R 65 000||8%|
|Anat||R 950 000||R100 000||8%|
|Scooter’s Pizza||R 950 000||12%|
|Pizza Perfect||R 830 000||R 65 000||9%|
|1+1 Pizza||R 800 000||7%|
|Zebro’s Chicken||R 756 000||R 75 000||4%|
|London Pie||R 675 750|
|King Pie||R 550 000||R 54 000|
|Fish & Chip Co.||R 525 439||R120 000||R4 400|
|Chesa Nyama||R 499 000|
* Potential Pizza Hut franchisees must be able to put up R25 million to potentially open up 10 franchises over time