/

Five things a first-time franchise needs to know

SEEK content team – updated on 19 December, 2019

Share

There’s a point in many people’s lives when they consider running their own business. But not everyone has a killer idea or knows the nitty gritty of how to launch and run a business.

That’s why many would-be business owners turn to franchising. A franchise is in effect a branch of a big national or international company. The branch is yours as franchisee, but the overall business is run by a franchisor who owns the name. For example, most Bakers Delight stores and Hungry Jack's restaurants are franchises where you can own the local business and pay the franchisor to use their name, systems, products, and so on.

If you think franchising could be for you, then read on for five key points to know for potential franchisees:

Do your due diligence. Do your homework and research extensively before committing. The best way to get your information is from the source, says Damian Paull, chief executive of the Franchise Council of Australia (FCA). “Speak to current and former franchisees and ask them what is working and what isn’t. Has it met their requirements?” Make sure before making any financial commitment that you seek out and evaluate all disclosure material during the application process and take legal and accounting advice from specialists with franchise experience. It’s a good idea that they belong to appropriate professional organisations such as the FCA.
Understand that you’ll need to work. Franchise businesses are usually hands on. Think about what skills you bring to the table. With so many different sectors of franchising it’s good to know what suits your lifestyle, expectations, investment capital and your own set of individual skills or personality. Make sure you assess the lifestyle and income implications of owning and operating a business and the risks versus rewards, says Paull.
Ask yourself the right questions. Do you know who you are? Can you afford to invest? Will you be 100% committed to the work and don’t mind following the rules? Are you looking to invest with a partner or spouse? If so, do you have their support?
Consult the experts. Use their experience, knowledge and expertise to provide you the best advice so you can get ahead. Tax experts, lawyers, franchise brokers and financial or banking partners will provide a great foundation for a successful team.
Take advantage of the training: Going from wages to business owning is a huge leap. The advantage of a franchise is there’s someone there to show you the ropes. If you buy a café, but have no experience running one you will be trained in absolutely everything you need to know to run that specific business. Someone will walk you through all the details such as opening up the front door in the morning to employing people, complying with health and safety and so on.

Whatever you decide, do your homework on franchising before taking the leap. You can even do online pre-entry training through Griffith University’s Asia Pacific Centre for Franchising Excellence. Information about that course can be found at franchise.edu.au. Or visit franchise.org.au where you’ll find lots of thought provoking articles. Network with as many contacts as possible who have been involved in franchising. Their advice could be worth its weight in gold.