BUSINESS NEWS - Having R1.35 million in available cash may meet the financial requirement to apply for a Tasty Gallos franchise, but it does not guarantee approval.
The chicken franchise’s founder and CEO, Muhammed Gutta, interviews every applicant to assess whether they have the experience, commitment and business mindset needed to run a sustainable restaurant.
Applicants who meet the financial criteria can still be turned away.
Gutta, who founded the business in 2020, says the selection process is based on the difference between being able to afford a restaurant and being able to keep it running successfully.
The assessment considers general business experience, income streams outside the proposed restaurant and whether applicants intend to take an active role in managing the business.
“Anyone can sell you a restaurant, especially an established franchised business. I want to know whether you'll still be running it in five years, because that’s what makes the franchise sustainable, and that’s the only version of this model that will work for both of us,” he says.
Focus on long-term business survival
The approach comes amid a reported gap between early-stage entrepreneurship and established business ownership in South Africa.
According to the Global Entrepreneurship Monitor (GEM), early-stage entrepreneurial activity in South Africa increased from 11% of adults in 2023 to 15% in 2025. Over the same period, established business ownership declined from 6% to 4%.
For franchise operators, business failures can affect more than individual owners. Failed outlets can put pressure on support teams, undermine confidence in the brand and complicate further expansion.
With Tasty Gallos operating across multiple locations and expanding its footprint, Gutta says the focus is on building a sustainable network rather than simply increasing the number of outlets.
“Selling another restaurant may grow the network on paper but placing it with the wrong operator can create problems for years. That puts more responsibility on us to make the right call at the beginning. We learnt that the hard way,” he says.
Gutta says the franchise’s selection process has evolved after the company found that having sufficient capital did not necessarily translate into long-term success.
Some franchisees expected the business to provide an income too quickly, while others withdrew too much money before their restaurants were established. In other cases, owners were not sufficiently involved in day-to-day operations to deal with problems promptly.
“That changed the way we looked at franchise applications. Having the money tells me you can open the restaurant. But what matters is whether you can make the most of the opportunity once the doors are open,” he says.
Income expectations under scrutiny
One of the key considerations is whether an applicant needs the restaurant to generate an immediate personal income.
Gutta says pressure to withdraw money before the business is financially established can place strain on working capital and threaten its viability.
For selected applicants who want to own a restaurant without managing it daily, Tasty Gallos may offer a separate management arrangement at its discretion. Under this model, head office manages the restaurant for a fixed monthly fee, while the franchisee retains ownership.
The arrangement allows for a more hands-off ownership model in selected cases while keeping the restaurant’s management under closer oversight.
Gutta says the commercial reasoning behind the screening process is straightforward: while selling a franchise generates an upfront return, a failed outlet can have longer-term consequences for the wider business.
“Our business interests have to be aligned. I don't want someone to open a Tasty Gallos for six months or a year. I want them to build a business that is still successful years from now, because if they succeed, we succeed,” he says.
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