Mortgage Choice advise on how to pick a franchise winner

Per-capita, Australia is the most heavily franchised country globally with the franchising industry now worth more than $130 billion and experiencing outstanding growth.

At the moment there are over 1,000 franchise systems nationally, spanning industries ranging from fast food to financial services.

Many people are turning to franchising for greater job security and earning potential, as well as renewed stability and to determine their own work/life balance. How can these people determine which franchise is the best place to invest their hard earned dollars?

Kristy Sheppard, Senior Corporate Affairs Manager of Mortgage Choice , said “Findings from the 2009 Mortgage Choice Potential Franchisee Survey showed that among those considering purchasing franchises, the top reasons for doing so were: income potential (54%), job satisfaction – people seeking stimulation, a challenge and personal achievement (46%) and flexibility, with the ability to control their own time and movements (50%). For the 41% who said the economic downturn had influenced their decision to buy a franchise, 48% said the primary reason was ‘it seems safer to run my own business than have my job in someone else’s hands’.

Mortgage Choice is a large independently-owned mortgage broker franchise group and has successfully been franchising for 15 years. The home loan franchise network has maintained a top 10 ranking on topfranchise website since the industry award launched in 2008. The award ranks franchisors as to the satisfaction of their franchisees. The mortgage broker franchise group suggests the following seven steps to choosing the most suitable franchise.

Step 1: Do you have what it takes
Running a successful franchise requires motivation and passion and a strong desire to provide superior customer service is essential. Attention to detail and a commitment to continually expanding your skill set is also vital.

Step 2: Research via a wide range of sources
Research can often be daunting and time consuming but it will help you find the small business ownership career path that’s best suited to your individual needs and goals. Mortgage Choice’s 2009 Potential Franchisee Survey determined the majority of those looking to buy spend up to 12 months researching before purchasing. The main resources identified were

1. Professional advisors
2. Current franchisees
3. Franchisors
4. Franchise expos

Step 4: Speak at length with the franchisor
Ask your franchise recruitment contacts the questions in Step 3 before discussing the support provided such as training, mentoring, lead generation, marketing, public relations and business development. Reputable franchisors observe the legal requirements for disclosure and the franchise agreement will contain all the terms and conditions under which the franchise will operate.

Step 5: Speak with other franchise owners
Observing franchisees at work is a great way to experience what your routine will be once you have become a part of that franchise system and talking with people at the ‘coalface’ of the franchise group you are seeking to buy into will offer further insight.

Step 6: Ensure you have enough working capital
Some franchisors suggest you need six to 12 months’ working capital behind you before buying a new or existing franchise, in addition to franchise purchase costs. Discuss the financial and legal implications of your purchase with your accountant, financial planner and solicitor.

Step 7: Consult experts and make your decision
Carefully review the paperwork and enlist your advisors to do the same. Then step back and consider whether buying your chosen franchise will provide everything you are looking for.