Are you franchise ready?
Buying a franchise has been a gateway to success for thousands of Australians.
If you plan to join their number and invest in a branded business opportunity you're going to have to take a good look at many aspects of the franchise.
That's no different from the process for any major investment: thorough planning and preparation will give you confidence that buying a franchise is the right path for you to follow.
It is also important to consider the future: what do you want your life to look like in five, 10 years time? What is the vision of the franchisor and what are the expectations for the franchise brand? What about macro issues: you will need to consider general trends and what's happening in the economy.
What you need to ask yourself before you buy a franchise
1. Why do you want to buy a franchise?
- You've had enough of your job and want to be your own boss
- You're ambitious, have always wanted to run your own business and don't want to wait
- It will provide job security
- You have a redundancy package or lump sum to invest
- You want to try your hand at business with all the backing of a franchise system
- You want to work with family and give your children a business to work in
- You want more flexibility in your working life
Of course personal reasons are a strong driver to any decision, but need to be backed up by a sensible business approach. Because there may be other ways to achieve your ultimate goals that are more suited to your circumstances:
- Look for a new career
- Opt for part-time work to get the flexibility you want
- Start an independent business
- Check out government grants
- Invest your money in a different way
Buying a franchise is a serious commitment tied to an agreement. Whatever business you invest in, ask yourself if you will be able to stay the course and be in the business for the three, five or seven years.
2. Is your family supportive?
Many franchise outlets are run as family businesses. So consider whether your family is truly supportive of your decision buy a franchise and understands exactly what is involved.
Does your family back you up in:
- the franchise you have chosen?
- your spouse, partner, sibling as a business partner?
- providing an employee base for family members?
A crucial consideration is whether this investment will introduce an imbalance in family politics that may set everyone at loggerheads if things don't work out.
3. Are you getting the best advice?
A general survey of what the franchising sector offers is worthwhile before picking particular brands you are interested in.
There are plenty of places to start researching key issues in the sector, the franchise relationship, and to get an overview of brands:
- Websites dedicated to the franchising sector such as www.franchisebusiness com.au
- The Franchise Council of Australia, the sector's peak body
- Franchise publications, books and magazines such as Franchising
- Franchising expos are great places to see a multitude of brands in one place
- Online franchise education through Griffith University's Asia-Pacific Centre for Franchising Excellence
- Business brokers
- Your State Small Business Commissioner
- Government information at www.business.gov.au
4. What is your experience of running a business?
Consider how much experience you have gained, if any, in running a business. There's no right or wrong response, what matters is an honest appraisal of your experience and skills - that allows you to match your talents to the appropriate brand and ensure the right training is in place.
- Limited knowledge
- TAFE or other course
- University degree
- Previous experience
Each franchise system will have its own perfect franchisee profile and more often than not, with some technical exceptions, franchisors are looking to recruit for a go-getting attitude rather than existing aptitude.
Franchise training should teach you what you need to know to start your business.
5. Are you getting professional advice?
It is absolutely essential to get both legal and accounting advice. You might also seek guidance from other sources such as specialist consultants. Investing in professional advice can pay dividends: franchise-experienced lawyers and accountants bring invaluable sector-specific insights that can help you avoid big mistakes.
- Has your lawyer approved the franchise contract?
- Is your accountant or adviser satisfied with the figures?
Thorough research or due diligence really is essential before investing in any business opportunity, whether or not that's a franchise. The advantage of buying a franchise is the knowledge and experience on hand to help you choose the right business in the first place and then to keep you on track to run a successful operation.