Buying a Franchise in South Africa: Site Viability Checks

A franchise brand may be familiar across South Africa, but your outlet must win customers in a particular place. Before committing, test whether the proposed location can support the business you are buying. This is a site viability exercise, not simply a check that premises are available or that the franchisor approves them. Within the franchise community, brand experience is valuable, but it should support rather than replace local evidence.

1. Establish what the franchisor has actually assessed

Ask for the reasoning behind the proposed location. A site described as ‘approved’ may have passed a brand presentation check without undergoing a detailed assessment of customer demand.

Request a written explanation covering:

• The intended customer group and why it is likely to use this location.
• The area from which customers are expected to travel.
• Footfall, vehicle traffic or delivery demand used in the assessment.
• Nearby competitors and businesses that could attract complementary visits.
• Comparable outlets used to estimate likely sales.
• Who prepared the assessment and when its information was collected.

Distinguish measured evidence from assumptions. Traffic passing a property is not the same as customers entering an outlet. Shopping centre visitor numbers do not necessarily reveal how many people pass your particular unit.

Also ask what site-selection assistance the franchise package includes. Does the franchisor inspect locations, commission studies or merely approve premises you identify? Record who pays for any additional assessment. Approval should not be treated as a promise of profitability.

2. Test local customer demand yourself

Visit the proposed site more than once, covering the trading periods that matter to the business. A lunchtime observation tells you little about evening demand, while a busy Saturday may disguise quiet weekdays.

Keep a simple observation sheet with the date, time, weather, pedestrian activity, nearby queues and ease of access. Count consistently so that visits can be compared. Treat your observations as a useful check, not a statistically reliable sales forecast.

Look beyond the number of people present:

• Customer fit: Do the people using the area match the brand’s likely customers and price positioning?
• Convenience: Can customers enter, park, collect orders or reach public transport without unnecessary difficulty?
• Visibility: Is the outlet noticeable from the routes customers actually use?
• Trading pattern: Does demand depend heavily on offices, schools, tourists or a single nearby employer?
• Alternatives: What would make customers choose this outlet instead of an established competitor?

For a delivery-led concept, investigate collection access and realistic delivery coverage rather than relying on pedestrian activity alone. For an existing outlet, ask for its trading history and investigate changes in the surrounding area. Past sales are less useful if a major customer draw has disappeared.

3. Connect the location evidence to the sales forecast

Ask your accountant to translate the proposed sales figure into operational assumptions. How many transactions must occur each day, at what average spend, and during which trading periods?

Then compare those assumptions with your observations and the franchisor’s evidence. If the forecast requires a substantial share of passing customers to buy, ask what supports that expectation. If comparable outlets underpin the forecast, check whether they share similar access, customer demographics, competition and trading hours.

Build a cautious alternative forecast. Consider weaker weekday demand, a slower opening period or lower average spending. Include location-dependent costs such as security, delivery arrangements and measures needed to manage electricity or water interruptions.

The point is not to predict sales perfectly. It is to identify whether the purchase only makes sense under optimistic assumptions. Ask for explanations where the forecast appears inconsistent with what the site can physically serve, particularly during short peak periods.

4. Put the evidence into the pre-signing review

South Africa specifically regulates franchise agreements through the Consumer Protection Act 68 of 2008 and its regulations. The regulations require the franchisor to provide the prescribed disclosure document at least 14 days before the franchise agreement is signed. The agreement must also satisfy statutory requirements, including being in writing and meeting plain-language requirements.

Use that review period to compare the disclosure information with the proposed site assessment and financial model. Disclosure compliance is not independent confirmation that a particular location will succeed.

Give your franchise lawyer the site report, relevant correspondence and any location-specific sales projections. Ask which site-selection commitments form part of the agreement and how responsibility is allocated if a proposed site proves unsuitable before opening. Resolve important gaps in writing rather than relying on verbal reassurance.

Practical takeaway: Before buying, assemble a site decision file containing the franchisor’s assessment, your observations and a cautious sales model. Proceed only when the location’s evidence—not just the brand’s reputation—supports the investment.