Franchising may seem like an easier way to start you own business and many times it is. However, buying a franchise offers no guarantee that you will be successful.
Your success in franchising in Australia will depend on three key factors; your ability to make the investment to secure the franchise and open it for business, the care with which you select the franchise, and most importantly your drive and ambition to make it successful.
There are hundreds of franchise opportunities in Australia, but when buying a franchise in Australia, how do you know which one is right for you. You need to ask yourself a number of questions:
How much can you afford to invest? The cost of a franchise varies depending on the type of franchise so you need to know how much you can invest before looking at opportunities. You need to look at your finances and identify, what assets you have (home, investments etc), and equally what liabilities you have (mortgage, loans etc). If your main source of income you need to know how much money you need to have coming in each month to survive as you are. You should also identify any other sources of finance or security available to you.
When looking to buy a franchise you should ultimately find one that you would enjoy working in. There is no point buying a business that would make you miserable. The key to success is being happy in your work and having a passion for what you do. List the things that you enjoy and what could influence your business.
Look at you strengths as well as your weaknesses. How can your strengths help you succeed?
What sort of environment do you wish to work in? Are you happy working alone or do you want to work in a team? Do you want an office environment or maybe retail? Or maybe you are happy being mobile or working from home?
You also need to look at the industry you would want to work in, whether it be food, automotive, b2b, children, fitness etc.
Do you want to buy a new franchise or an existing franchise that is for sale i.e. a franchise resale? Many established franchises will have resales available from time to time. You also need to identify if you want to buy into an established franchise, or be a pioneer and buy into a new franchise system.
Do you want to work in a business that you have experience in, or do you want to try something new? An advantage of franchising is that the system allows you to try something new. You don’t need experience as the franchisor will train and support you in all aspects of the business.
Geographically, where do you want to work? You need to look at your family situation and which areas you could “afford” to geographically work in. Remember, especially at the start, you will be required to work long hours to get the business up and running, and so if working in an area that is a few hours from home, you need to be aware that you would be spending less time at home.
Once you have identified a few franchises of interest, you need to ask the following question. These will help you to identify if it the right franchise for you.
- What’s involved in the day-to-day running of the business?
- How long has the franchise been established?
- How many franchises do you have? What are you plans for the next 5 years? Have any franchisees failed? And if so, why?
- What are the current and future market trends for the product/service?
- What is the cost of buying the franchise? What are the initial and ongoing fees?
- What is the recruitment process? When would I be able to get a copy of the disclosure document?
- What training and support would I receive initially and ongoing?
- How do you market the business? How is the marketing funded?
- How is my territory assigned?
- How long is the franchise term and can it be renewed?
- What happens if i wish to sell the business? What are the terms?
Getting answers to these questions will help you to gain a better understanding of which franchise is right for you.