In a weak and uncertain economic climate such as ours, companies that struggle to stay afloat tend to opt for retrenchments in order to survive.

This results in people who have been laid off rushing to cash in their pension funds, with the aim of investing in business ventures in a desperate bid to generate income to take care of their financial needs.

However, despite there being many business models to exploit, many aspiring entrepreneurs become tempted to opt for enterprises which, from a distance, appear easy to run and to generate cash.

These include businesses such as shisa nyamas, taverns, catering and cleaning services.

For the purposes of this column, I will focus on franchises, as some aspiring entrepreneurs consider them as money-printing and hassle-free outlets.

South Africa has about 750 brands claiming to be franchises.

In my chat with Franchising Association of South Africa chairman Tony de Fonseca, he said people who buy franchises must be prepared to work hard to ensure that their businesses become successful.

This logic, as well as the need to have an entrepreneurial flair, should be applied to any type of start-up business.

People should also know that investing into a franchise is not a guarantee of success.

"It is important to know that you cannot operate a franchise and start printing out the money from the beginning," he said.

De Fonseca also highlighted that it was important for anyone wanting to buy a franchise to be familiar with the law, especially the National Consumer Act.

This will help the potential purchaser to know the type of information a franchise brand should disclose.

"In terms of disclosure, the brand has to disclose how many stores they have had in the last three years and how many stores they have closed down in the last three years," said De Fonseca, stressing that this requirement formed part of the National Consumer Act.

"And people should not only think franchising only relates to fast-food outlets.

"There are franchising models in painting, home care services and pest control, [as well as] others," he said.

However, emerging entrepreneur Boni Sikhu was not so lucky. She has vowed to never invest in a franchise after getting her fingers burnt following an almost R2-million investment of her life savings into fast-food franchises.

In 2010 she spent R513000 on her first franchise. She then bought another outlet in 2011 for R614000 and franchise rights of a third store for the same amount the following year.

"My first store was based in Tembisa Plaza and the second one in Berea.

"I paid for the third store but the franchise owner never gave me the outlet.

"The challenge is that we were required to buy stock at a distribution centre linked to the owner of the franchise, and the centre would send me an invoice which had items I did not purchase, while also increasing the prices of goods without notifying me," said Sikhu, who used to employ 11 people.

This resulted in Sikhu starting to purchase goods from distribution centres which were not linked to the franchise owner, which led to the quality of food deteriorating.

"At first my stores enjoyed a lot of foot traffic but over a period of time the number of customers started declining," she said.

The store in Berea closed down in 2012, while she sold the Tembisa outlet in 2015. Though she filed a successful legal action against the franchise owner, she never recovered the money for her third store.

"We opened a case against a franchisor and the matter went through a court and the franchisor was liquidated, but we never recovered the money," she said.

Sikho is currently trying out other business ideas.