There are many reasons why people choose to buy a franchise. It could be a desire to break away from a dull or dead-end job. Or to move away from being told what to do to making your own decisions as a business owner and manager. Another reason might be to build something substantial and meaningful for yourself and your family. Or to express yourself in creative ways or find enjoyment in an outdoors or customer service setting.
A franchise business can be all these things, and more.
Whatever your motivation, it is important to balance your desires, impulsive or otherwise, with a careful and practical approach in selecting the franchise business that is right for you.
You already know your own strengths and skills, but take the time to also check out the strengths and support systems of the franchises on offer and narrow your selection down to franchise companies that tick all the boxes for genuine franchisee support.
After all, a franchise is a two-way relationship. As a franchisee, you are bringing your ambition, drive, commitment and money to a new small business. The franchise company is bringing a successful business model, a proven and simple-to-operate system and support to you and all its other franchisees.
In assessing which franchise to buy, do your careful due diligence and in particular, look for the following, as a minimum.
Full Disclosure. The Franchise Code requires that franchisors provide an up-to-date Disclosure Document about the franchise. The disclosure document lists current and past franchisees. You are entitled to, and encouraged, to contact other franchisees and check whether their experiences of the franchisor and the business generally is the same as the promises made.
Buying Prices. If the franchise you are considering requires you to purchase stock, equipment or other supplies from the franchisor, or a nominated supplier, check that your purchase prices are competitive with what else is available in the market. Ideally, as a franchisee, you should be buying at better prices than you would be if you were an independent business. That is, the franchisor should be using its purchasing power to buy better and to then pass on these better prices to its franchisees.
Initial and Ongoing Training. Whatever the type of business, you will need to be inducted into it by the franchisor. This typically means the franchisor will provide you with a comprehensive training program at the commencement of your franchise. In other words, part of what you are buying is access and induction into their experience and the specific know-how of their franchise group. Ask about what this entails and satisfy yourself that you will be able to ‘hit the ground running’. Almost every business involves ongoing updates and refinements. Check that your franchisor has an effective program of ongoing training so that you are able to maximise your place in a competitive world.
Marketing Support. The best franchise systems are those where the franchisor manages the ongoing marketing and advertising for the group. Yes, sometimes, local area advertising by individual franchisees is desirable and effective, but generally centralised marketing, initiated by the franchisor, benefits the franchisees the best. This is particularly so where marketing involves online sales and e-commerce promotions from a single brand website. In your investigations into your franchise of choice ask about what marketing support is provided, how it works and what your financial contributions, if any, will be.
Regular Support. An important reason for buying a franchise is that you are not going it alone. You are part of a group of other franchisees and each of you will benefit from the experiences of each other and most importantly, the regular communication and support you all receive from the franchisor. This may be in the form of regular updates, new ideas, competitive information and just general on-call support with the inevitable day-to-day operating snags and problems. A franchisor who can demonstrate a genuine and practical system of franchisee support is an essential box to tick when selecting your new franchise.
In summary, take the time to learn about and fully understand exactly what your franchisor provides all of its franchisees and do this as part of your investigative due diligence. Ask questions, talk to other franchisees, do your own sums and even prepare your own business plan. You will then be in the best position to make a choice that supports that initial drive and motivation that started you on this path to owning your own business as a franchisee.
Written by Roger Dickeson
WFD Consulting Group Pty Ltd