Buying a franchise has been a very rewarding experience for tens of thousands of Australians.
Like any major investment, you should be totally thorough in your planning and preparation before satisfying yourself that this is the right path for you to follow. Too many failed franchises are blamed on “franchising” and the franchisor, when better planning would have avoided potential failure.
If you plan to purchase a franchise, you’re going to have to take a good look at many things.
You need to assess yourself, your family, your resources, your advisers, the franchisor, the product or service, the franchise agreement and territory/location.
You also need to assess the future – your own, your franchisor’s, the economy and trends in society generally to see where you might be in five years.
Assess your personal situation
Why are you considering purchasing a franchise?
* You want to quit your job.
* You want your own business with a support system.
* It’s a way of beating unemployment.
* You’ve been given a lump sum payment.
* You believe in franchising.
Those who ultimately succeed acted on sensible business reasons, not primarily on personal or lifestyle reasons.
Is this really how you’d like to spend at least the next five years?
You could alternatively:
* Be an employee – maybe a retiree.
* Look for a new career.
* Start an independent business.
* Check out government grants.
Buying a franchise is a serious commitment. Although less risky (statistically) than small business, it is still a major investment decision.
Does your family support your decision to buy a franchise – this franchise?
* Your spouse as business partner.
* Providing an employee base for family members.
* No imbalance in family politics that you can’t withstand or reconcile if things don’t work out.
The majority of franchise outlets are run – to some extent – as family businesses.
Are you getting the best advice?
What is your starting place in seeking a franchise?
* Franchise publications, books and magazines.
* Franchise expos.
* Brokers.
* The banks’ publications.
* Office of small business.
Start with broad information sources – expos are a good place to start because each exhibitor is under the scrutinising eyes of peers.
What is your general understanding of running a business?
* No knowledge.
* Little knowledge.
* TAFE or other course.
* University degree.
* Previous experience.
Experience is the most worthwhile source of knowledge, though it is not always advantageous when starting a franchise. Ideally the franchisor teaches you all you need to know.
What professional advice are you seeking?
* Legal advice
* Accounting
* Franchise specific
* Other
1. Has your lawyer approved the franchise contract?
2. Is your accountant or adviser satisfied with the figures?
3. Have you sought advice from specialist franchise consultants, who can generally advise on all these issues?