Going into franchising

Thinking of making a career change? Fed up with your boss taking all the credit for the hours you work and the results you achieve? Feeling unhappy and worried about how your job always seems to take priority ahead of your spouse and children?

If so, becoming a franchisee might just prove to be your salvation. After months of looking around, you zero in on a franchise that looks like it will suit you. The research you’ve done tells you that everyone who buys a franchise makes a fortune, is their own boss, and can work when they want. This is the perfect answer to all your problems – a fortune is waiting, your wife/husband will fall for you again and, most importantly, you just know it’s going to be a success.

Professional advice is a must

As the weeks unfold, you undergo all the training the franchisor provides, you pass all the rigorous tests, you visit many of your soon-to-be fellow franchisees, and then you are given the go-ahead. Your next meeting is at head office with the managing director and financial controller. They ask for your business plan and your statement of financial position. This flusters you a little, but you go through your papers and produce everything you have. This consists largely of notes you’ve scribbled on pamphlets, brochures and other material the franchisor’s given you, but what more did they expect?

Everything they’ve given you is fact, right? Mental note – go and visit a business advisor who specialises in franchising. Your tax advisor, who you’ve had since getting your first job, has served you well, but he/she isn’t the best person to advise on your new venture.

Do things right from day one

Your next meeting is with a legal firm whose people are going to review your franchise agreement. Why? Your mates at head office are doing everything with your best interests at heart, but after your meeting with the financial gurus, you’re a bit more sceptical. The lawyers tell you that your agreement with the franchisor is for 15 years, which is great. But although you can sell at any time, you have to sell to another registered applicant and at a price that may not be to your liking. Furthermore, your ‘patch’ may be encroached upon by another new franchisee, and you may not even be offered first rights on this new business.

Then you’re told that the company constitution you must use is not standard and contains special provisions that you don’t understand and need advice on. By this time, the budget you set for professional fees has been used up. But you’ve got a much greater understanding of what lies ahead, and your greater knowledge, wisdom and awareness can’t be measured in dollars and cents. You’ve achieved peace of mind and you know that your prospects for the future are good because you’ve been doing things right from the moment you decided to get into franchising.

Being a franchise owner-operator is a wonderful way to be in business. It can be a vehicle to both financial freedom and the lifestyle that you only dreamed of. But, like everything, there are many hidden issues involved in operating a franchise. Don’t be scared off, but once you’ve got the basics right, there are still staff and compliance issues that you will have to address and overcome if your business is going to reach its potential. These issues often appear more daunting than they really are, but you need to go into any business with your eyes open. If you expect the unexpected and have an effective plan from the start, the road ahead should be easy travelling.

More often than not, many people who buy a franchise have been employees who have had no exposure to many of the issues that running a business throws up. Everyone is different, but these issues typically take up between five and ten hours of your time each week, and you need to plan this time into your weekly business routine. You entered your franchise for many reasons, but mainly to improve your quality of life, so doing this stuff at midnight is not the answer either.

One last thing – don’t forget to prepare or have your advisor prepare the monthly financial reports that many franchisors require under the franchise agreement.

Good luck. If you pursue your goals with a solid plan and a good team of specialists, you can’t go wrong.

For those considering going into franchising, it may be a good idea to check out the Franchise Council of Australia is a not for profit membership organisation that is the peak body representing the franchising sector in Australia.