Brands that support franchisees with a certain level of income can be an attractive proposition for first-time business owners.
Launching a business is always stressful, and one of the big worries is trying to ensure a steady cashflow and coping on a fluctuating income. Some franchises are conscious of this, so offer an easy way in by supporting franchisees with a certain level of income.
As well as easing the stress load, it gives new franchisees the freedom to focus their energies on building up their business.
Here are seven brands that provide a financial safeguard:
1. Aussie Pooch Mobile
Aussie Pooch Mobile offers a guaranteed income for the first eight weeks in its premium franchise package, helping give new franchisees peace of mind while growing their business in the initial launch period.
“Obviously as company we are confident in our systems and know how our business grows, but a new franchisee does not necessarily share the same belief and confidence,” says founder Christine Taylor. “The guaranteed income helps give the franchisee the confidence that we will be doing everything we can to help them grow their business.”
Running for 20 years, it is an established part of the franchise offer. The guaranteed income is $600 excluding GST each week for eight weeks. If a franchisee earns $400 in a week, the franchisor pays $200; if they earn $599, they’ll receive the extra $1.
The money is placed on the franchisee’s Aussie Pooch Mobile account for them to use to pay for stock and royalties.
“We do as much advertising and marketing as possible leading up to and including the first few weeks of the franchisee’s launch to help them reach a point where they are earning more than the guaranteed income as quickly as possible,” says Taylor.
“The guaranteed income demonstrates to people coming into our business that we back our systems and know how to grow the business. It also shows them there is a real incentive for us to help them.
“Our goal is to have the franchisee earning the guaranteed income themselves from week one.”
A standard franchise package is available for those who do not want or need to rely on a guaranteed income.
2. Cafe2U
“We are so confident our Cafe2U business model will help franchise partners build the business to a minimum of $500 a day revenue in the first two weeks, that we will cover the difference if they don’t,” says George Angelis, general manager mobile at parent company Retail Food Group.
“This Acceleration Package is our point of difference. Not only are franchise partners offered support every step of the way during their business launch, they are guaranteed their income will build to a minimum of $500 a day, and they will be left with a strong customer base as a platform for their business to grow.”
This offer has applied for Cafe2U franchisees since 2009.
Return on investment is important for new franchisees, says Angelis. They want to know they will make a fair income for their investment and for the amount of effort they put into the business.
For 90 per cent of franchisees, it is their first business. Many have never made an espresso coffee previously. More than 98 per cent of franchisees achieve or exceed the level of success they aimed for before starting their business.
3. Hire A Hubby
CEO Brendan Green wants every Hire A Hubby franchisee to be as successful as possible. “Being able to offer an income guarantee is just one of the many tools we provide to newcomers so they can set up their business and make it flourish,” he says.
“Having an income guarantee policy gives the franchisee peace of mind, especially in the early days when there are a lot of unknowns.”
A few select franchise packages offer a $125,000 income guarantee. This is designed to be a guide and help in the initial stages of the franchise business. Hire A Hubby provides a support structure in terms of leads, guidance and training to give new franchisees the best opportunity to reach this income level in their first year.
If the level is not reached in the specified time frame with all conditions having been met, the franchisor will make a payment and offer further help to achieve these levels.
Since the income guarantee was introduced last year, the interest in joining Hire A Hubby has increased. There are now more than 300 franchises across Australia.
“The offering is a key selling point because for so many people the biggest leap of faith in taking on a new business is the fear of the unknown and the fear of something not working out,” says Green.
4. InXpress
InXpress franchisees enjoy the benefits of a recurring, compounding income business. The income guarantee offers new franchisees the chance to focus on the long-term success of their business knowing their day-to-day finance commitments are covered.
Introduced two years ago, the concept offers new franchisees a guaranteed income of $1000 +GST weekly for the first six months. If a franchisee earns $300 in their first week, InXpress will “top up” an extra $700.
While the option does not suit all franchisees, there are other business-building options at InXpress. For approved candidates there is the Young Gun package, a full graduate training opportunity and mentor program. The exclusive program offers a six-month training internship with up to 50 per cent discount on the normal purchase price of a franchise.
5. Ladies Running Errands
Just months after launching its franchise model, the Ladies Running Errands service introduced an income guarantee.
“We found we were attracting people to our franchise system who were leaving stable, long-term employment in favour of the flexibility, earning potential and sense of ownership derived from self-employment. We believe the income guarantee provides predictable income and cashflow during this huge transition,” says franchise operations manager Zoe Voyanas.
The income guarantee provides a set weekly amount to the franchisee. The franchisee needs to fulfil their local marketing obligations and comply with the operations manual. If their weekly revenue falls short of the guarantee level, they receive a top-up from the franchisor.
The franchise investment is from $19,990 + GST, with the income guarantee starting at $400 a week for 12 months.
Ladies Running Errands has found the income guarantee effective in allowing potential franchisees to work out what their minimum revenue will be and how long it will take for them to see a return on their investment.
6. Oven Valets
“We feel it is important to hit the road running. A happy franchisee makes good business, so an income guarantee has always been part of our offer,” says Oven Valets sales and marketing manager Wayne Hunt.
Oven Valets franchisees work with homeowners, schools and business clients, providing a specialised cleaning and detailing service. The franchisor will provide five jobs each week for an initial eight-week period for most areas. The average job value for the past six months has been $285.
7. Yarra Valley Farms
Yarra Valley Farms guarantees a minimum $2000 weekly gross income for six months, with a top-up if a franchisee does not make target.
How effective has it been in attracting new franchisees? “It’s a big advantage as it relieves the stress normally associated with starting a business. Franchisees can make money from day one,” says national sales and franchise recruitment manager, Darren Young.