17 August 2012
Mr Axel Le Rait
Association of Motor Dealers and Repair Workshops in South Africa Cape Town
Dear Mr Le Rait
Report on whether small repair businesses should become Franchisee or not Enclosed, is the report on the MR Franchising system highlighting the benefits and costs to small repair businesses and of being a part of such a system. The main purpose of this report is to investigate the franchise system and to describe the support provided by MR to its franchisees. The report will highlight findings from the investigation, on the financial implications of joining and belonging to a franchise group, the benefits of the system and the characteristics of successful members. Recommendations are given to members of the association on how the franchise system should be run in order for it to be beneficial to members after they join the system. If you have any questions or comments regarding the interpretation of this report, please feel free to contact us on 021 650 4757. We look forward to working with you again soon.
Miss S. Stronach and Miss R. Shitholani
Terms of Reference
This report was requested by Mr. Axel Le Rait, the President of the Association of Motor Dealers and Repair Workshops in South Africa, on the 21 August 2012. Mr. Axel Le Rait ordered this report to investigate if small enterprises across South Africa could be interested in becoming franchisees of Mzansi Radiators (MR). The instructions given were to:
1. Investigate the franchise system and describe the support provided by MR to its franchisees.
2. Evaluate the financial implications of joining and belonging to a franchise group.
3. Investigate the benefits of the system and the kind of person best suited to this form of trading.
4. Consider all other factors relevant to members of the Association that may help them with a successful application.
5. Draw conclusions and make recommendations relevant to members of the Association.
This report describes the viability of small enterprises becoming franchisees of Mzansi Radiators (MR), a South African radiator repair business. In particular, it highlights the operations and characteristics of Mzansi Radiators. This information was found in the article titled “Earnings Boil Over” and in various interviews. These interviews were with Mr. Le Rait and Mr. H. I. Speed, the franchise manager of MR and supplemented with comments from existing franchisees. Major Findings
The major findings in the report suggest that various requirements are essential if a small business is deciding whether or not it would want to become a franchise. Before that information will be provided, it was found that there is definite potential for the growth of black-owned small businesses due to the fact that car manufacturers have increased the sizes of their engines and decreased the size of radiators. This means that there will an abundance of customers as this will increase the amount of radiator problems and thus the need for repairs. Apart from the earning potential in the industry, Mzanzi Radiators has a major share in the industry and its operations span across 40% of the market. Thus, if these small businesses buy into the franchise, they can benefit in their wealth. It was found that there are several requirements that are essential to buy into the franchise and thus before members of the Association of Motor Dealers and Repair Workshops in South Africa can become a franchisee, they need to ensure these are meet. The most important is that these small enterprises need to have between R...