Do You Really Want to Do It?

By Richard Evans, author, The Australian Franchising Handbook, and partner, Conroy, Llewellyn & Evans

So you have the cash and you want to be your own boss but have little idea as to what to do next. The pitfalls are many and the success rate can be challenging but the rewards in running your own business can add value to your family and even more so to you as a person. 

Business is damn hard. There are competitors everywhere and the fickle consumer can drive you nuts as you go about earning a dollar. But if being your own boss is your absolute desire and you are convinced this is the life for you, then there are some very basic rules to follow before your money is lost and your dignity destroyed. Don’t get me wrong! A small business can grow to be a large business and provide you the lifestyle rewards and inner glow of accomplishment that many before you have enjoyed. You can enjoy the rich rewards of being your own boss but follow the prescribed and indeed covert rules of success before you start and save yourself the heartache so many other dreamers like you may have endured.

Why do it?

The very first question you must ask yourself is – why? Why do you want to give up your current job, where everything is provided for you by your employer, and become the employer where you have to provide everything? Sure a franchisor will help with many operational aspects of your business but it will be you who needs to cover staff when they call in sick; you who needs to provide the coffee and cake and deal with staff and customer tantrums and tears; you who is responsible for locking up the site; you who needs to do the books; you who will be required to do the marketing, accounting, pay and penalty rates, occupational and heath laws, the costs of doing business, the lack of cash flow; and you who will need to be across just about everything associated with your business plus still provide the fees to your franchisor. 

This is not an employer/employee relationship you are about to enter. You are about to buy a license via a franchise agreement to run your own business. If it fails or succeeds it will be your fault. So understanding why you want to go into business is very important and you must clearly understand why, and your family must be fully supportive of your decision – otherwise, forget it!. Don’t waste your time or money if you think you can invest in a franchise and not work the operation. The failure rate is extreme from cash-rich, lazy people who thought they could buy a brand and have others work it for them.

What type of franchise?

Once you work out why, try and decide what type of franchise is best for you and your lifestyle. Do you want: a home-based business?, a retail location with its 7 day a week demands?, a take away food place or a restaurant?; a service provider?, or, indeed a home services operation like a dog washer or a lawn mower? Australian franchising has an enormous range of quality brands whatever you consider to be the right fit for you there will be a franchise available.

Which franchisor?

Once you have selected the category you wish to invest into, the next decision to make is about the franchisor. What level of establishment are they in? The more mature the system the more investment capital is needed but there is less operational risk and greater support. The younger the brand, the less support structure, the greater risk of failure and loss, but the potential rewards from an emerging brand can be very big if you are keen to invest with an eye to re-sell.

Franchisees who call foul!

Franchising is a highly regulated business environment, yet most franchisees do not fully know their rights or indeed their responsibilities. The media is full of stories of failed franchisees who call foul when they have failed to follow their responsibilities. So an essential rule is to understand the franchise business model and how it works for you and the franchisor. This information is readily available through the industry body the Franchise Council of Australia and various articles and resources via the sector’s media. Learning about your relationship is essential prior to engaging with a franchise and there are quality books on the subject – so do the research.

Finding the right brand.

Once you understand the demands of the franchise business model and you have identified the category you wish to invest, in the route becomes even more challenging in identifying which brand is right for you. There are a number of methods to use, and I advise you to use all of them! 

Every city in Australia has at least one franchise expo where (mostly emerging) brands display their wares. These expos are good to see the variety that may be available and often provide cost free seminars to help folks starting their search. Another terrific source of information to find out what is available is the many internet directories, which many franchise systems advertise ... but not all. These directories are ideal to help your search to compare systems against each other and should be an indicative tool helping you with your search. There are also various magazines about that have systems advertising for new franchisees and magazines, such as this one, often have extremely relevant articles to help in your research. Use them all in researching and looking for the brand that will suit you and your expectations.

Another good source of education is the Franchise Council of Australia’s event program which mixes conferences with education seminars, perfect to help you get an idea of what to look for when determining which brand is for you. Their national convention is held in October every year and in 2010 is scheduled for the Gold Coast. Each state also holds a one day conference during the year, so a visit to the FCAs web site would be very helpful.

Warning, warning!

Do not be seduced by the romantic language of seduction by the folks that may paint the perfect picture for you when you speak to them about a brand you are interested in. In other words do not sign an enforceable agreement, transfer cash or commit yourself before you are fully researched and clear what you are getting involved in. If the process gets pushy then walk away.

Clearly understand your responsibility is to know what you are entering and to claim later that you didn’t know is no defence. The regulations protect you but only if you use your rights prior to entering the franchise. The clear majority of franchisors will help you come to a clear and informed decision. They will support you through the process. They will provide you any information you need but if you want information beyond what the Code allows you have to ask. So, ask. Delve into the franchise operations; speak to franchisees, even the ones who have left are important to talk to. It is in your best interests to ensure you know before going in. Remember, it is your business, and your success will be determined by the effort you apply but – and this is important – it is the franchisor’s brand and they will direct you so that their brand, and thus the network, is protected.

Sound advice

Julia Camm, the principal of Corven, a recognised thought leader in what franchisees should be looking for when making a decision on which brand is best for them suggests:

“Potential franchisees must understand primarily what and how working for yourself will impact their lives. Too many potential franchisees love the idea rather than understand the demands of working for yourself.”

The Corven research Into the Fold: What are the key issues impacting new Franchisee preparation? indicates self assessment is critical which deeply considers such issues as the impact upon family; how rejection affects self esteem; the shock of leaving employment; the alignment with the franchisor’s culture and values; and, whether becoming a franchisee will meet lifestyle goals. 

There are many methods of recruitment but the most successful is the research you do prior to entering a dialogue with the franchisor. Know what you want, and be prepared to work to get the information you need. Do not allow a laissez-faire attitude to drive your decision as it may be the difference between your success and absolute failure leading to losing everything.

Franchising is possibly the most successful business system in the world. It allows franchisees to invest as small investors into a brand and help it grow thus drawing success to the franchisee. The critical element for success for a franchisee is that whilst they risk everything, by entering the system, the franchisor has greater investment risk. You are in business for yourself but not by yourself so do the homework before you commit.

Richard Evans is a senior partner with Conroy Llewellyn & Evans and helps brands maximise their communication potential. He can be contacted on 1300 303 183

The Corven study suggests, in preparation for the transition to franchisee you consider the following.

Have I...

  • Consulted with relevant membership associations and regulatory bodies?
  • Completed all the requirements of the franchisor’s franchise recruitment process?
  • Conducted a risk assessment on franchise concept sustainability, model viability and business location?
  • Assessed the currency and relevance of the franchise business system to consumers, including reviewing the franchisor’s strategy for maintaining market share and continual improvement?
  • Met with professional advisors to ascertain the extent of legal, financial and operational implications of the business opportunity?
  • Sought banking advice and secured adequate funds?
  • Completed a business plan, including risk assessment, cash flow forecasts, contingencies, local area marketing plans and exit strategies?
  • Conducted discussions with previous and current franchisees on their experience and challenges?
  • Completed the required registrations, applications and certifications relating to the franchise business?
  • Committed to attending all required training programs and learning opportunities?

For more information on the study, visit