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How To Start A Franchise Business In Nigeria

Starting a Franchise business in Nigeria may be the best decision you’ll make for yourself.

You know why?

A Franchise business unlike other business does not involve the effort or stress involved in breaking into a new market. You are not going to be making a new product, and every chance is, your product is well known and has a solid reputation already in the market.

Most companies also offer free training to every franchisee before taking them on. So even if you don’t know how or what to do to make your business succeed, you don’t have to worry, you’ll be given all the training you need to succeed.
But that doesn’t mean you shouldn’t work on yourself. Just as you’re reading this how to start a franchise business in Nigeria, read other articles too.
Learn the basics of a franchise business, what is involved, how you can interact with customers and so on.
Doing that will improve your chances of surviving the harsh competition already in the market. I hope you heed that advice though.

How To Start A Franchise Business In Nigeria

What Is A Franchise Business?

In a franchise business, you make use of the already strong brand of a business to sell your products. You brand your business with basically the same logo, brand and product name as that of an already established company. For instance, you may set up a fast food joint in an area, using the already known Mr. Biggs brand and logo – of course, with permission. This way you can easily break into the fast food industry with ease since Mr. Biggs is already a well-known food brand.

Franchise business is not as easy as most people paint it. Yes, it is very lucrative, but requires enormous capital (which is dependent on the area you want to venture into by the way), dedication and advertising. It is not impossible though; there are lots of Nigerians who are doing it and raking in millions every month. But to tell you the truth, you’ll face a lot of challenges when starting out, and you must be prepared to handle it, or your business will fold up quicker than you can imagine – strong brand or not.

What Do You Need To Start A Franchise Business In Nigeria?

Capital

I believe this requirement is quite apparent. You’ll need to set aside some cash to start your franchise business. I’ll avoid giving you an estimate right here since the cost of franchise business varies from one industry to the other and from brands to brands. For instance, starting a McDonald’s food franchise costs around N23,000,000 while a KFC franchise costs around N45,00,000.

You’ll have to conduct research about this or even visit other entrepreneurs in the industry – most will be ready to help out. You can also visit or write the company’s retail department, and they will quote you an estimate.

A Good Location

I wanted to omit this, but I thought it might be necessary for someone out there especially those who are completely new to the business world.

Your business location is as important as the very air you breathe, I mean it’s the very thing that can make or fold up your business. McDonald’s food joint survived even in faces of severe competition because they are set on excellent locations.

As a franchisee, you’ll be using a company brand to sell your products. It wouldn’t make much sense to start a business where such a brand has already built a strong reputation; the competition will snuff out the life out of your business.

Often the best location is a place where such brand is not yet available but is necessary, either because such a service is being offered poorly or because it is not entirely present.

For instance, you can set up a Tantalizer fast food in a place where there’s no Tantalizer. If there’s a Mr. Biggs fast food joint around the corner, you may want to refrain or go ahead if you feel you can offer something they don’t offer or are offering poorly. The aim is to use your competitors weaknesses against them. But please don’t start a Tantalizer fast food where it already has a strong reputation.

Permit

Branding your products with other business brands especially registered ones is a great crime and could land you in jail. Because that’s not franchising but identity theft.

To brand your business with an already established brand, you must obtain permission from such companies. This way your business is legally recognized and privileged to make use of the company brand.

You can obtain a permit by writing to the retail department of any business you wish to impersonate. Though, I’ll advise you to visit the company in person as your letter or email can easily get lost amongst the seas of mail going in every day. Dress nicely and go prepared to answer a few questions and I assure you, if you do your homework properly, you’ll be given a permit.

NAFDAC Certification

Once you obtain the go-ahead permit from the business, you’ll need to obtain certification from NAFDAC. Nope, your brands NAFDAC certification does not cover your business. Your business is an entirely different business from your franchisors and is only using their brand for marketing. As such you must obtain a NAFDAC certification before you start operations.

What The Franchisor Gains

You’ll be promoting the franchisor brand as well so that should be gain enough in itself. But you’ll be required to pay a commission to the franchisor for using its already established brand. The commission rate will be communicated to you with your permit. Usually, it’s 12% of what your profits.

Please, you don’t have to accept the first commission rate offered to you. Continue negotiating until you reach a rate that’s suitable for you. Research on this properly before setting our so you don’t work hard and at the end only get to pay the franchisor all your profits.

Franchising is a lucrative business, easy to startup and establish, but like all other business requires dedication and hard work from you as the owner.

If you have any question or opinions about this article feel free to leave your comments here and I’ll be happy to help.

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