Just about everyone loves pets, be they dogs, cats, rabbits or guinea pigs. I would not deem goldfish in the same category but many people also like them.
Life is better with a pet but they can’t care for themselves and that why humans exist. In New Zealand we have a number pet franchises including, Jim’s Dog Wash and Bark Busters. We also have franchised pet shops including Animates and Pet Essentials.
I really like Animates which are franchised pet shops. Animates say that their purpose “to make our world a happier place through the love of pets”. They go on to say:
“At Animates, our belief is that life is better with pets. We understand the joy when your dog greets you at the door or the comfort of your cat curled up on your lap. We understand the unconditional love that pets bring to our lives, each and every day.
We’ve dedicated ourselves to creating an awesome experience for people and their pets – to provide our customers with everything they need to become great pet parents, alongside supporting the pet community with fundraising, donations and local events.”
As with any prospective franchise purchase, you need to do your due diligence. This includes finding out information from the franchisor such as the following:
- Franchisor’s financial health and history
- How long has the system been franchising
- Details of pilot operation results – how many different animals
- Type and level of head office support and full details of the training
- Territorial practices and exclusivity terms
- Do you need to buy products from the franchisor?
- Operating restrictions and launch assistance
Once you like the franchisor and the franchisor likes you and you have found out necessary information, you should be given a copy of the franchise agreement. This is the key legal document and it will cover the following:
- Geographical area and types of customers to whom you may sell
- Your rights to sell or transfer ownership of the business
- Nature and extent of your obligations to the franchisor, including buying supplies and services
- Right of renewal
- Terms and conditions under which you may terminate the contract, if any
- Fees which you would have to pay like royalties and marketing
- Precise boundaries of the territory
- Compliance with the Animal Welfare Act 1999
- Compliance with local Council regulations
You should engage an accountant to examine the books and records and undertake some financial projections. Also if you have to borrow any funds you must know that the business will be able to service your proposed borrowings and still leave an adequate return.
If you decide to go ahead with purchasing a pet franchise you will need to think about the business structure – usually a new franchisee will set up a company and the directors will be the guarantors. Owning the franchise as a company will make it easier should you decide to sell the business further down the track. In New Zealand a company’s profits are taxed at 28%.
You also need to think about how many employees you will need and employees should be chosen carefully as the franchise may operate outside regular business hours and prospective employees will likely need to have experience with dealing with animals. All employees will need to have a written employment contract setting out the terms and conditions of their employment, eg wages, responsibilities.
If you need to lease premises then you will need legal advice as you must understand the lease document. As part of your due diligence you should obtain legal advice from a franchising lawyer with experience in the area.
If you love animals then a pet franchise might suit you. Do your homework, choose the brand carefully, talk to other franchisees about the franchisor, and enjoy the emotional experience.
Stewart Germann founded Stewart Germann Law Office (SGL) in 1993 as a boutique law firm at Auckland, New Zealand, specialising in franchising, licensing and business law. Stewart has over 40 years’ experience in franchising law and acts for franchisors in New Zealand, Australia, USA and the UK. SGL also act for franchisees and provides legal advice. Stewart has spoken at franchising conferences in New Zealand, Australia, Italy, South Korea and USA and he was on the Board of the Supplier Forum of the International Franchise Association (“IFA”) for 6 years until March 2007.
E-mail: stewart@germann.co.nz | Website: www.germann.co.nz