Taking the First Steps to Becoming a Franchisee in Australia

Warren Wilmot, Chairman, Franchise Council of Australia

There’s a good chance you’ve picked this magazine up at the Franchising & Business Opportunities Expo 2015, and are seriously  considering purchasing a franchise.

If that’s the case, congratulations on taking the first steps towards becoming a small business owner, and joining the flourishing $144 billion Australian franchising industry.

Where do I start?

Becoming a franchisee can be a rewarding journey, but it is not a decision to be taken lightly. The importance of doing your research and undertaking due diligence cannot be emphasised enough.

Talking to existing franchisors and franchisees is a great way to begin building your knowledge of the sector. Events like the Franchising & Business Opportunities Expo provide an invaluable opportunity to speak face to face with franchisors and get answers to the tough questions (don’t be afraid to ask them!) and find out more about franchising directly from those who are already part of the industry.

The Franchise Council of Australia website is another great place to develop your understanding of the franchise business model and whether franchising is a good fit for you.

How do I know if franchising is right for me?

The opportunity to be your own boss, build your own business and tip the scales of work/life balance in your favour is an enticing one. Investing in a franchise can be one way to do this, while also gaining the brand recognition and drawing on the training and support that comes with being part of an established franchise system.

It’s important to understand however, that franchising is not risk free and buying a franchise business does not guarantee success. Nor is franchising a suitable model for every would-be small business owner. All businesses, including franchises, take time to become established. Are you prepared to work long hours to grow your business? Do you have adequate working capital to see you through the early stages of your business?

As a franchisee, you will be buying into the existing systems and processes of the franchise brand. Are you prepared to work as part of a team and stick to the established formulas? Do you have the support of your family and loved ones? Do they understand and accept the sacrifices that you, and they, may need to make in order to make the business a success? Don’t underestimate how important the support of loved ones will be in the tough times that may come.

This is by no means an exhaustive list of questions, but answering them will provide you with a good starting point to assess your suitability to become a franchisee.

How do I choose a franchise system?

Some of you may have already completed your preliminary research and your visit to the Franchising & Business Opportunities Expo might be about selecting the franchise that’s right to you. And with 1160 business format franchisors in Australia in 2014, there’s a franchising system to choose from in just about every industry.

While non-food and food retail accounts for the majority of franchise networks in Australia, representing 45 per cent of franchise systems in 2014, franchising also encompasses administration and support services, education and training, rental, hire and real estate services to name a few. Take some time to consider your interests and skillsets. Whether you are looking to turn your passion for food or fitness into a business, or to take your experience in a trade or service sector and become your own boss, chances are there’s a franchise system operating in the space.

Regardless of the industry that a franchise operates in, if you reach the point of choosing a franchise system to join, you need to find out whether the franchise you are considering has a track record of success.

As a prospective franchisee in Australia you are entitled under the Franchising Code of Conduct to receive from the franchisor documents including a disclosure document, franchise agreement and a copy of the Code so that you can make an informed decision about whether or not to proceed with purchasing a franchise business.

Be sure to read these documents thoroughly and seek professional legal, financial and business advice to help you understand and verify the information contained in them, and also take the time to contact existing franchisees to find out about their experiences with the franchise.

Remember too, the process of becoming a franchisee is a two-way street and just as you will be making an assessment of the franchisor, they will be deciding whether you are a good fit for their business.

Additional resources

The Franchise Council of Australia website at www.franchise.org.au contains information for prospective franchisees, including a range of publications which are available for purchase.

The Australian Competition and Consumer Commission’s franchisee manual, which contains information to help franchisees and prospective franchisees to understand their rights and responsibilities under the Franchising Code of Conduct, is available to download at www.accc.gov.au/publications/thefranchisee-manual

W: www.franchise.org.au