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5 things to consider before you buy a franchise

Sarah Stowe

Want to know what you should consider before you buy a franchise? Who better to ask than another franchisee? At the Franchising & Business Opportunities Expo in Melbourne, franchise buyers had that opportunity when franchisees from a wide variety of brands and business sectors participated in daily panel sessions.

1.       Do your research

Every franchisee on the panel sessions was adamant that proper research is essential before you buy a franchise. And the research includes looking deeply into the chosen brands, getting legal and accounting advice and speaking to franchisees in the network.

Kelly Marshall, a franchisee with First Class Accounts, says “I spoke to the three franchisees the franchisor recommended, but then I contacted another franchisee at random, to ensure I wasn’t just getting the views the franchisor wanted me to hear.”

Ju Li knew he wanted to get into the courier business; he spent 10 years in hospitality before becoming a franchisee just a few months ago, and was keen to find an option that gave him more time with his young family.

Li tracked the progress of Fastway Couriers for three years before committing to a franchise.

2.       Be careful you buy for the right reasons

Common reasons for wanting to buy a franchise include achieving a better lifestyle, meeting the challenge of business ownership, and building wealth.  Understanding your real drivers is an important step in finding the right business model to invest in.

But, suggests Gutter-Vac franchisee Paul Reinsch, “be very careful if you just buy for money, there is lifestyle to consider too”.

Reinsch moved from a long term IT role in the corporate world to take up a better lifestyle, working part time with his wife in the hands-on Gutter-Vac business.

3.       Try before you buy

Ju Li took up the opportunity to ride with a Fastway Courier franchisee for a day to get a better feel for the daily demands of the role – the volume of work and the speed required to deliver top quality customer service. “You have to be familiar with the franchise,” he suggests.

4.       Check your numbers

Paul Reinsch recommends franchisees who are buying either a brand new territory or a greenfield site look carefully at any suggested turnover figures proposed by the franchisor. There is no trading history to review, so it’s important to consider how achievable these numbers might be. Get your accountant on board to check what will really work and speak to other franchisees in similar sites.

5.       Look for a business with potential

Silvio Del Vecchio swapped his corporate banking career for a Laser Clinics Australia franchise. Now the former banker has expanded to a second clinic. He picked the sector because of its growth potential.

“I investigated the market and we haven’t even scratched the surface here,” he explains.