Cash Crusaders
Franchise Opportunities

Franchising can be an excellent method of getting into business “for yourself but not by yourself”, but of course this assumes variables such as site selection and the quality of the franchise business system are optimal.

Anyone considering investing in a second-hand and pawnbroking business may want to ask the following questions of the seller and/or the franchisor (if applicable):

• How has the franchisor’s business system adapted to recent court rulings affecting the pawnbroking industry?
• Is the franchisor willing to state unequivocally that the business system they are selling is legal and fully complies with all the laws and regulations that apply to it?
• Can the franchisor confirm that, at the time of the prospective franchisee’s enquiry, there are no ongoing National Credit Regulator (NCR) investigations or complaints that could affect the franchisee and the success and profitability of the franchise business
• Where variations on a pawn loan are a key part of the business system, for example a “buy back”, can the franchisor demonstrate the lawfulness of the product by reference to a written legal opinion or published NCR guidance confirming that such products are legal?
• Where the franchisor’s business system offers a variation on a pawn loan, for example a “buy back”, can the franchisor explain why decisions of the National Consumer Tribunal, which found that so-called “sale” agreements were in fact pawn loans in disguise and subject to the National Credit Act (NCA), do not apply to it?
• The generally held legal view, which the NCR, has also held historically is that an initiation fee may be charged only once on a pawn loan – when the loan is first taken out – and not again each time the loan is extended. The NCA regulations were changed in 2015 to make this clear. Does the franchisor’s business system allow a pawn loan to be extended by charging a second, third or further initiation fee when the customer has not repaid the amount borrowed?

• Under the NCA regulations, a pawn loan must be repaid within six months. Where the franchisor’s business system allows 30-day pawn loans to be extended indefinitely, can the franchisor demonstrate that this practice does not fall foul of the Regulations?
• The potential consequences for a second-hand and pawnbroking franchise business found to have offered a loan product that does not comply with the law can be severe. Can the franchisor demonstrate that its pawn, loan and any “sale and buy back” products comply with the law? Will the franchisor cover the franchisee for any future fines and penalties if this proves not to be the case?
• If the purchaser is considering acquiring a franchise rather than an independent pawnbroking business, how many of the chain’s stores are owned by the franchisor and were these stores opened by the franchisor, or purchased from franchisees? Where an existing store was purchased from a franchisee, are the contact details of these franchisees available so that a prospective franchisee can contact them and discuss their experience of owning and running the franchise?
• The second-hand market has become increasingly competitive, with second-hand and pawnbroking franchises (and independent stores) competing with Facebook Marketplace, Gumtree and other online platforms. Do the franchisor’s projections and budgets rely on a store making an unrealistically high gross profit on second-hand goods just to break even?
• Does the franchisor give its franchisees access to centrally acquired new and/or second-hand goods to ensure that the franchisee’s store always has sufficient stock to offer its customers?

If you are potentially interested in purchasing an existing Cash Crusaders Franchise (were one to become available), please email your details to Aleese Coopan (franchise@cashcrusaders.co.za) with an indication of the geographical areas you would consider.