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The key to making an educated decision when becoming a franchisee is to make sure that the franchise you are investigating has a Disclosure Document as required by the provisions of the Consumer Protection Act as they relate to franchising. Becoming a franchisee can be somewhat daunting, especially when you don’t know how to make sense of the various franchise opportunities or to evaluate a particular franchisor’s operation. Thankfully, the Consumer Protection Act, 68 of 2008 (“the CPA”) has stepped in, assisting prospective franchisees by compelling franchisors to provide prospective franchisees with a disclosure document. If you are thinking of becoming a franchisee, the disclosure document is your new best friend. It is packed with valuable information and is designed specifically to educate you about a particular franchisor, its network and its operations so that by the time you have to make the decision whether or not to join a franchise network, it will be a well-informed and educated decision. The CPA’s disclosure requirements aim to protect the eager prospective franchisee from basing their decision to join a franchise brand on propaganda and marketing hype rather than the facts. The relevant issues found in the disclosure document include: Background on the concept This includes details on the franchisor, the company background and brand history, key players within the organisation, their personal details, and the growth and performance of the company. How it was started? Who started it? Was there a change of ownership? How long has it been in business? How has it performed under its current owners? Who are the directors, the key management persons and something about their backgrounds, the growth and performance over the years? The history of a brand is a good place to start when you are trying to establish if the brand will be a good investment going forward. The Franchisor’s network This will give you a very good idea about how big the network is and whether or not the network is a healthy growing network or perhaps it is shrinking or stagnating. To this end, the disclosure documents provide a list of all the current franchisees that are part of the network with their contact details. It also shows which outlets are company-owned i.e. owned by the franchisor. You would be wise to try to establish how many franchisees are joining every year and how many are terminating and not renewing their franchise agreements. Moreover, go and visit the individual outlets to find out from them what you can expect in terms of your relationship with the franchisor and what they think of the brand. The disclosure document also provides an organogram depicting the support system in place for franchisees. The franchisor’s financial position Naturally, prior to investing in a franchise brand, you will want to look closely into the financial health and the growth of the franchisor’s turnover, net profit and the number of individual outlets, if any, franchised by the franchisor for the financial year prior to the date. The disclosure document must be accompanied by a certificate on an official letterhead from an accounting officer or the auditor of a company certifying that the business of the franchisor is a going concern; To the best of his or her knowledge the franchisor is able to meet its current and contingent liabilities; The franchisor is capable of meeting all of its financial commitments in the ordinary course of business as they fall due; The franchisor’s audited annual financial statements for the most recently expired financial year have been drawn up in accordance with South African generally accepted accounting standards and fairly reflect the financial position, affairs, operations and results of the franchisor as at that date and for the period to which they relate. Initial investment, investment capital before borrowings, set up costs, working capital The disclosure document details the various costs you will have to come up with to become a franchisee, including not just the initial franchise fee, but also the set-up costs, working capital which you may need to get the business off the ground and rental of the premises etc. To make sense of the numbers you need to know that all costs normally vary from outlet to outlet. You must make sure you understand what you are getting yourself into. Always allocate about 10% additional to the cost estimate in order not to find yourself overextended. Royalty fees and expenses Ongoing fees and costs are an important consideration. The management services fee is usually paid monthly by the franchisee but may vary from brand to brand. It may be a percentage of the franchisee’s gross turnover or sales or it may be a fixed levy fee. It is a fee paid for the management services rendered by the franchisor for ongoing support and help, for brand building, purchasing power and research and development and for the ongoing use of the intellectual property. Fasa’s recent survey showed the average management services fee was calculated at 6,6% of turnover. Most franchisors require their franchisees to contribute to national or regional marketing or advertising fund. These funds are pooled to finance the advertising and promotion of the franchise system and to help build brand recognition for the benefit of all the franchisees. In the 2017/2018 FASA survey, the marketing and advertising levies would cost a franchisee, on average, 2,1% of turnover.

GLOBAL EDUCATION UNIVERSE FRANCHISE

GEU EDUCATION FRANCHISE IN SA WITH A FRANCHISOR MONEY BACK GUARANTEE

  • 1 hour
  • 1 437 500 South African rand
  • 154 Bluebell Way, Brackenfell North, Western Cape

Service Description

The Global Education Universe (GEU) is a newly established educational franchise opportunity, by its founder, Kay Naidu, who has 30 years professional experience in private education in South Africa. The GEU was created purely to exploit the new opportunities created by COVID-19. Several 1000's of colleges have closed down globally and various new entrants have entered the market with a stronger focus on E-Learning and online learning, but with a traditional business strategy. Prior to COVID-19, college owners faced 2 major challenges viz. to obtain student enrolment & secondly to collect fees from students. At this point, the national bad debt ratio for student fee collection was 40%. Put COVID-19 into the mix, and that ratio climbs to 75-85%. Thus investing in a college in this time is financial suicide. BUT - what if there was an educational franchise model that offered incoming investors and franchisees: a 100% financial guarantee on sales in 2021 that is equal to their investment (or their money back) a guaranteed student base Then the financial suicide mentioned above is eradicated. Our model allows profitability within COVID-19. Yes, if you invest an amount of R 1,438 m (incl. VAT) in a GEU franchise or R 1m as an investor in the GEU main company, you are given a written guarantee on signature of a minimum sales value equal to that of your investment from the franchisor or your money back. THERE is no such opportunity in South Africa and probably globally. This is why this offer is limited to the first 10 franchises - first-come first served basis. Strategic Components of GEU Model Registration - Department of Higher Education and Training Registrations - SABS ISO 9001:2015 QMS Accreditations - Quality Council for Trades and Occupations Accreditations - Umalusi Council Registration - Franchise Association of South Africa Guaranteed funding for students Financial Model Franchise Cost = R 1,438m incl. VAT Monthly Royalties = 10% (incl. VAT) Investors sought from R 1m to R 20 m (max shareholding = 50%) Investors get shareholding in 2 companies - Education Company and Franchise Company Franchise Locations Johannesburg Pretoria Durban Pietermaritzburg Bloemfontein Cape Town Port Elizabeth East London Richards Bay Polokwane Other locations not listed may be considered on application but the total number of franchises on this model is limited to 10 and for the 2021 academic year.

Contact Details

  • 154 Bluebell Way, Brackenfell North, Cape Town, South Africa

    0834565270

    kay@iwasiam.org

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