Things you must Know Before Investing in a Franchise in Nigeria

All over the world, most people desire to own or operate their own businesses, and Nigeria is no exception.

As Nigerians, we all hope to someday control our own businesses. This ambition is not a crime and is fully accommodated in the constitution of the Federal Republic of Nigeria.

There are a number of ways through which you can achieve the goal of owning your own business. One of the ways you can achieve this goal is through a franchise.

Investing in and owning a franchise is a great way to start your own business in Nigeria with a certain guarantee of success. You can leverage on the success of successful franchises in the country by buying into their brands.

If you are afraid of starting a business from scratch due to the heavy competition in the market, then you should consider investing in a franchise that is already experiencing success with their brand.

Things you must Know Before Investing in a Franchise in Nigeria

What is a Franchise?

A franchise simply refers to a situation whereby you or any other individual or group pays money to a company to enable them to use the company’s name, brand, and trademark to do business.

Examples of successful franchise in Nigeria include Chicken Republic, Domino Pizza, Kentucky Fried Chicken (KFC), NNPC, Best Western Hotels etc.

To be granted this right by the company (franchisor), the group or individuals are required to pay a certain amount of money to the company in exchange for this right.

The money which this group or individual pays to the company is called a franchise fee.

When this business arrangement between the group or individual and the company is consummated, the group or individual becomes known as the franchisee while the company is then known as the franchisor.

Quite a number of companies operate the franchise business model. The franchise business model is mostly used in the hotel, food and restaurant industry.

Can I Make Money Investing in a Franchise?

Yes, you can. You can make money investing in a franchise. You can make money investing in a franchise in Nigeria especially if you do it right.

Across the world, people who have invested in franchises have made money with it, improved their life and have also grown their wealth from their investments in franchisees.

However, to maximize your potential for success investing in a franchise, there are certain things that you must know. With this information, you can greatly increase your success with your franchise investment.

The things you must know before investing in a franchise in Nigeria are:

  1. Understand the Franchise Industry

As at now, the franchise industry in Nigeria is not very popular and is not like most other industries.

Before investing in a franchise in Nigeria, you should first understand the franchise industry in Nigeria and the unique forces influencing the industry in Nigeria such as state regulations, taxes, and the level of infrastructure in Nigeria.

  1. Understand the Cost

This is another thing you must look out for before investing in a franchise in Nigeria. Investing in a franchise comes with its own unique costs. So, you should know the cost of investing in the company (franchisor) in which you are interested. The costs would include a franchise fee which you must pay to the franchisor.

Other fees include a royalty fee, advertising fee, and other ongoing fees which the franchisor demands from its franchisee. Investing in a franchise usually requires an initial huge capital outlay. Ensure to understand the costs before signing that cheque.

  1. What is your Source of Capital

You know Nigeria is still a developing economy and our financial system is not as developed as what you would find in more developed climes.

So, you should be sure of your source of capital for your franchise investment. If your source of capital is through a bank loan, ensure to get your capital at the lowest interest rate you can find.

  1. Study the Company

Before investing in a franchise in Nigeria, you need to study the company in which you are to make your investment.

Find out what product or solution the company is offering and ensure it is a product you can sell comfortably. Remember that you will be operating within the system of the franchisor, therefore, make sure to study the company as much as you can.

  1. What Support Does the Company Provide

Before investing in a franchise in Nigeria, you need to find out if the franchisor you are about to invest your money in provides any form of support for its franchisees and the depth of the company’s support.

Before you invest in a franchise, ensure that the support which the company provides for its franchisees is well suited to meet your need for success as a franchisee.

Some of the support you should get from a good franchisor in Nigeria is telephone support and online support. A good company should also be able to support its franchisees with site selection.

A good franchisor should also be able to provide you with marketing support. So, before you commit that money to a franchise, confirm their support.

  1. Know your Location

Location is everything. It is one factor that can either make your business successful or the opposite. Before you put your money into a franchise make sure that your location is right. The right location is a location where there is a high concentration of potential customers, that is, people who need the company’s product.

  1. Franchisee Training

Does the franchisor provide training for its franchisees? You should ensure that the company provides some sort of training for its franchisees to enhance their success.

  1. How Long is the Term of Agreement/Renewal?

This is very important. You don’t want a situation where you will be renewing your franchising contract every year. Some franchising companies give as long as 10 years before renewal. The shortest should be around 3 or 5 years.

Just make sure you do your findings. The longer, the better.


It is not in doubt that investing in a franchise is a great business opportunity, but, before you make that investment make sure that the franchisor’s system and product support the success of your franchise investment.

Read more about Franchise business and the different Franchise opportunities in Nigeria.

Francis Nwokike

Francis Nwokike is a Social Entrepreneur and an experienced Disaster Manager. I love discussing new business trends and marketing tips. I share ideas and tips that will help you grow your business.

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