A 2023 report from the Franchise Council of Australia estimates the franchise sector in the country to be worth over A$174 billion, with 1,267 franchise systems and over 94,000 individual franchise units in place. The vast majority of these businesses are small businesses with fewer than 20 employees, suggesting that franchising can be a good choice for those with a big enough budget to launch a small business. Perhaps you are already an entrepreneur and you are seeking to broaden your portfolio, or you are new to entrepreneurship and you are considering franchising as a safe way to ease your way into becoming a business owner. Below are a few handy tips that will help you decide if franchising is right for you.
Starting Small
When launching a franchising business, many owners begin with a small but trusty staff, which often comprises the owners themselves and members of their families. Initially, franchises require owners to invest long hours in getting the business up and running, so it is important for families to be onboard. There are many steps new franchise owners can take to keep their families safe and secure. These include creating a thorough business plan that jots expected revenue and hiring expectations. Family is much more likely to work for long hours initially if they know it won’t be forever. Secondly, because a franchise may involve a significant percentage of a family’s savings, owners can take steps to protect their families financially. In Australia and NZ life and living coverage is typically taken out to protect families in the case of injury and illness. Doing so is a way of covering all contingencies, even though (fingers crossed) this policy does not need to be relied upon.
Ensuring the Franchise Has a Track Record of Success
Purchasing a franchise is not the only cost in setting up a business. You may also need to make a few improvements and cover any potential last-minute costs. It is therefore vital for you to ensure that the franchise you are purchasing will definitely bring in the bacon. Conduct research on the business background of the franchise founders and take time to analyse how profitable their franchise has been. Look into how long the franchise has been in business. A newer franchise may cost less to buy, but the franchise creator may not have had enough time to create a well-defined and refined system.
Ensure Relationships Are Smooth
Your franchise is something you will be placing your time and energy into. It is therefore important to get on with the franchise owners or managers you will have to deal with and to ensure you meet them prior to launching your own franchise. You will be interacting with them for many years so consider prior networking as a vital time investment. When visiting other franchises belonging to the same company, also make it a point to talk to staff. Find out if they are happy and ask how long they have been working in their current job. Think about how happy you will be too; does the franchise represent an area you have always been passionate about, or are you simply taking the business on because of its financial track record?
There are numerous questions to ask yourself before opting for a franchise model of business. The most important ones are whether you can afford the financial cost and time investment. These can be answered by taking time to research, getting to know the owners, and ensuring that your chosen franchise represents a sector you are truly passionate about.