So, you want to buy a Franchise?

Michael Paul, Chairman, Franchise Council of Australia

This article appears in the March/April 2014 issue of Business Franchise Australia & New Zealand


Congratulations. If you’re considering going into business for yourself, and you have picked up this magazine, you’ve taken your first steps towards success.

There are many reasons to go into business for yourself. Key among them, the opportunity to be your own boss, the challenge of building something, and work/life balance.

If the idea of starting a business from scratch doesn’t appeal to you, there are other ways. You can invest in a proven concept, brand and product, one that your future customers will already know.

If the idea of being your own boss with the added benefit of a support network, training and a recognisable brand sounds appealing, then franchising might be for you.

As written about in previous columns, the most important thing you can do before investing in any business is research. On franchising as a business model, on the type of business you’d like to invest in, on your brand of choice, and most importantly, on yourself.

But how do you go about it and what resources are available to you?

Franchising in Australia is worth an estimated $131 billion in annual revenue to the Australian economy, which is a sizeable portion of GDP, and something the Government takes seriously.

As such, it is a regulated way of doing business. The Franchising Code of Conduct (the Code), monitored by the Australian Competition and Consumer Commission (ACCC), ensures that while Australia is the most regulated place to franchise on the planet, it also boasts best practice and therefore the most fertile breeding ground for franchisee success in the world.

What should you know before signing up?

The previously mentioned Franchising Code of Conduct, while heavy source material, is essential reading before committing to a franchise business. By gaining an understanding of the Code, you will be well placed to ask the right questions during the recruitment process. It is essential you understand the mechanics of a franchise agreement and exactly what you’re signing up for. Research from the Asia Pacific Centre for Franchising Excellence at Griffith University last year cited a lack of contractual understanding as one of the key reasons franchisees fail.

If the Code is too much to digest at the beginning, Griffith have developed a free online franchise pre-entry education course. Consisting of five modules and sponsored by the ACCC, this course is a key part of any prospective franchisee’s due diligence. You can find the course at

What else do you need to consider?

Once you’ve decided on the kind of business you’d like to own and the level of investment you’re prepared to make, having the support of loved ones is very important. Owning and running your own franchise business can be very rewarding, but it can also have tough times. It is very important to have supportive loved ones to help you do your best; and to provide support if things do get tough, so you can have the tenacity to work through the rough times.

What should you ask for from a potential franchisor?

Apart from the obvious, like investment amount and inclusions, length of term and training, you will also need to know renewal arrangements, end of term obligations, territory restrictions and marketing plans. This is by no means an exhaustive list.

The pre entry course mentioned features a module on questions to ask franchisors. A good franchisor will also put you in touch with multiple current franchisees so you can discuss their experience with the brand and get a feel for what day-to-day life would be like.

Attending events like this month’s (March 28-30) Franchising and Business Opportunities Expo in Sydney provides an excellent opportunity to ask those questions face to face. Should you be in a position to attend, the FCA strongly recommends visiting as part of your initial research and due diligence.

Start your research today!


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