Frequently asked franchise questions
Question: I am a franchise owner of a small business, and have the franchise for sale. I am considering the option of a vendor agreement between myself and a prospective buyer as he does not have the funds for a full purchase. I've been told I he would purchase the franchise off me, but in payment instalments over a set period. The assets (eg vehicles) would still be in my business name and all ongoing costs would be up to him. Can you please provide advice on what I need to know to ensure all the correct steps are taken and what the legal requirements are. Is this is a common action to take to sell a business?
Answer: I know it’s not easy selling businesses and particularly franchise business. I can tell you of a number of sales of business transactions on Vendor terms where they went wrong, the buyer failed to pay or defaulted. It is a high risk to you as a vendor even if you keep security over the business and its assets.
The first issue is to get the Franchisors approval to the transaction as they may not agree. They can refuse their consent. It is messy as the buyer would still have to enter into a new Franchise agreement with the Franchisor. They buy the business and therefore become the owner upfront but pay it off on Vendor terms. Most Franchisors would not agree.
If the Franchisor does agree then you need to make sure you have a “tight “ contract of sale with PPSR security rights , penalties for late payment for example a default interest rate and then termination rights.
If it all goes wrong you may have to step back into the business.
It is far better to sell the business up front if you can. There are now sources of finance that will lend on asset security so better if the buyer can fund it via a 3rd party. If the business is profitable then it may be better to hold out and find a buyer who has the funds rather than sell on vendor terms.
I think the first step is to discuss it with the Franchisor.
Robert Toth | Wisewould Mahony
Question: I have a Master franchise in Australia. The Franchisor operates the same franchise brand in NZ as well. Can I Compete with the Franchisor in NZ, whilst owning and operating in Aussie under my master franchise?
Answer: The short answer is no; you can’t compete with the franchisor in New Zealand as a master franchisee in Australia. Usually a master franchise agreement will grant you rights to operate for a term in a specific territory. Many MF agreements we see grant rights for Australia and New Zealand.
Assuming your agreement is for Australia only I suggest you should not enter the New Zealand market without the Franchisors written approval otherwise you will be in breach of your agreement.
It would also be unwise to do so as you would be investing time and resources without having secured those rights to operate in NZ.
Robert Toth | Wisewould Mahony
Question: I have been trying to open a franchise since April 2004. I have paid the franchisor $770 legals, $3300 design and have paid $4400 to a 3rd party to set up a liquor licence (at the suggestion of the franchisor). Due to not receiving a franchise agreement, detailed costing, date of operation commencement or lease details I pulled out and notified the franchisor of my intention not to proceed. I believe the franchisor has signed the lease. He has informed me that the lessor is holding me liable as I have signed a personal guarantee. I have signed a document called "formal offer" which identifies me as a prospective franchisee and gives basic information.
My question is as follows: Can I be held liable or do I have to proceed with this franchise even though I have not signed a FA? If I was not permitted to withdraw, surely the franchisor could draft up a FA and budget to suit him? That does not seem reasonable.
Answer: The Franchise Code requires the franchisor to provide you with a 14 day disclosure period before they take any non-refundable money.
The Franchisor must give you a Disclosure document, copy Franchise agreement, copy Code and advice certificates and give you 14 days to seek advice.
If you did not get these documents the Franchisor is in breach of the Code and you are entitled to request all your money back.
If you did receive the documents and then 14 days elapsed but you didn’t go ahead and sign the documents , then the Franchisor can retain a reasonable sum to cover their costs i.e. the legal costs , training , design fees.
There is also a 7 day cooling off period after you sign the franchise agreement where you can pull out but you then lose money you have paid.
If you signed a personal guarantee to the landlord then they can hold you personally liable . That would be unusual if the Franchisor has signed the lease.
I would need to see what documents you have actually signed to see whether they have any rights as they say against you. If you did not receive the disclosure documents and didn’t sign a franchise agreement you can’t be held to enter into the franchise arrangement.
I trust that assists. I would need to see all documents you have signed to give you a definitive view.
Robert Toth | Wisewould Mahony
Question: I was wondering whether the fees that I would pay to a Franchise Consultant to franchise my existing business are immediately tax deductible? The fee includes fees for a feasibility review, an assigned mentor, a software program, face to face meetings, monthly coaching calls, meetings interstate and an individual franchise agreement and individual disclosure document.
Answer:As I do not know all the facts and circumstances around your business, please do not take the comment below as formal tax advice and please seek formal tax advice before making any decisions or lodging any tax returns.
Generally, expenses associated with the establishment of a business are considered to be incurred too early to be regarded as being incurred in carrying on a business and therefore are not tax deductible.
This would certainly apply to the feasibility study and may apply to some of the other costs. It will be a matter of fact based on your circumstances as to when you are carrying on the business (in which case expenses are deductible) and when you are establishing a business (in which case expenses are not deductible). One important factor in determining which is the case, is the element of commitment to establish and carry on a franchisor business.
The answer is a little vague, but it is as precise a response as I can give you without knowing all the facts.
Tim Kilham | Lanyon Partners Chartered Accountants
Question: How often can a franchisor change or amend the manual. Ours seems to be changing all the time lately. Also with incentives given to the top archiving franchise, can they just be withdrawn, when it has been the norm until now? All of a sudden our franchisor has removed incentives.
Answer: Firstly I cannot give legal advice on your specific situation without seeing your franchise agreement and other documents so I can only speak in general terms.
Therefore while I have not seen your particular franchise agreement, usually a franchise agreement states that the Operations Manual will provide the operational rules and systems of the franchise and that these can be changed from time to time by the franchisor. Usually the franchise agreement also says that the agreement prevails over the Manual so that there should not be something in the Manual which conflicts with the Franchise Agreement. Generally the franchise agreement can only be changed if both parties agree in writing. You will need to refer to your own franchise agreement to see what it says.
So with the case of the incentives, again speaking in general terms, it will probably depend on whether these were set out in the franchise agreement or were something which were set out in the Manual and can therefore be changed by the franchisor without franchisee consent.
Also relevant to your situation may be whether the incentive scheme was something told to you by the franchisor before you bought the franchise and was something you relied upon in making your decision. However you should seek specific legal advice in those circumstances to establish if you have a legal cause of action.
Corinne Attard | Holman Webb
Question: I am planning to buy a KFC franchise or subway franchise. I've got $60,000 saving and I don't have property as a security for business loan. The franchises are located in a very busy area with high income. What would you suggest? ?
Answer: Banks will usually lend between 50% and 70% of the value of the business on a pure cash flow basis with you having to come up with the rest in cash (and in some instances landed security).
You have mentioned that these stores you are looking at are located in very busy areas and have high incomes. You would need to have a good look at the profit & loss statements of each of the stores to confirm their trading numbers. From the sale prices you have mentioned they seem very cheap if they are in strong areas. There could be many reasons for this and as such you would need to do your full due diligence prior to committing.
A value of a restaurant is usually based around 3 times the EBITDA (earnings before Interest, Tax, Depreciation and Amortisation).
Make sure you do your homework on the performance as compared to other sites in the same brand and get a good accountant to check through the numbers before making any commitments.
Question: Can I stop a former franchisee from setting up a business that is similar to mine?
Answer: Yes, you can when the restraints are reasonable and necessary. Read more on franchise restraint clauses
Question: What happens if I buy a franchise and the franchisor decides to sell the business, or even worse, goes bust?
Answer: If you have done your due diligence and have carefully selected a reputable franchise, then it will be very unusual for the franchisor to go bust, though it can happen. Equally a franchisor may decide to sell up which could mean changes to the system. Read more on your rights if a franchisor goes bust or sells up
Question: I want to get into business for myself but unsure as where best to start?
Answer: You need to make sure that you have the support of your partner and family as being in business is going to consume a lot of your time so it is important that they are behind you in this undertaking. You also need to look at your finance. Read more on how to get into business for yourself
Question: I want to buy a franchise business but I am not sure about a couple of things, namely the level of control and responsibility I would have as a franchisee. Do I have control and a say in the business?
Answer: Something very important that you should understand about franchising is that it is not about control. Read more on control in a franchise
Question: I've got a great idea for a new business - how do I go about protecting that idea from others copying it?
Answer: The first thing to do is to make sure that you only discuss this idea with people that you trust. Read more on protecting a business idea
Question: How do I decide what sort of franchise business I would like?
Answer: Getting into business is a serious undertaking that is going to consume a lot of your waking hours. So it is a good idea that the business is something that you enjoy doing. Read more on finding a francise you would like
Question: How How much of the purchase price should I borrow to buy a franchise??
Answer: My recommendation is to have at least 50% in cash, and not to borrow more than 50%. And the reason for this is simple. Let me give you an example. Read more on franchise purchase price
Question: When is a good time to apply for a loan to buy a franchise?
Answer: You should start looking at finance options the minute you decide you want to buy a franchise business. Read more on applying for a franchise loan
Question: I’m in the process of buying a franchise and I’ve been told that I should use a franchise lawyer to look over my agreements. I’ve got my own lawyer who isn’t necessarily a franchise lawyer but very good at what he does. I did request some costs from a few franchise lawyers I found online but they were extortionate! I’ve been told that the franchise agreement cannot be changed, so is there any point using a lawyer?
Answer: Not using a franchise lawyer could be the biggest mistake you make! Yes, it is costly but in the long run it will save you money. I don’t know how many times we hear from people who have failed that they didn’t think they needed to use a franchise lawyer, BIG mistake!! And like you said, your lawyer is good at what he does, he doesn’t do franchising though! A franchise lawyer knows what they are looking at out for and they can tell you what the agreements entail and if there is anything you should be avoiding. Read more on why use a franchise lawyer
Question: I am interested in franchising but I do not want to buy a business which could fail. How do I find out what the best franchise in Australia is? And which makes me money.
Answer: There is no such a thing as the best franchise in Australia, despite what franchisors may tell you! The question you need to ask yourself is "what is the best franchise for me?". Read more on best franchise to buy
Question: I am currently looking at a franchise here in Toowoomba. It is an existing business with a regular client base with a claimed weekly gross. I need some advice please about the franchisee supplying profit loss statements for my own information and for my bank to be able to borrow the money or does it work differently to this.
Answer: The vendor of the franchise should be able to supply you with the profit and loss statements for the last couple of years so you can verify the top line sales but more importantly the profitability of the business. Read more on profit and loss in existing franchises
Question: I was interested in buying a lawnmowing franchise and was particularly interested in Jim’s Mowing. When i looked at the Jim’s franchise website, they have a lot of franchises! Would i be just buying the lawnmowing franchise? Can they still offer dedicated support if managing so many brands?
Answer: There are over 40 franchises in Jim’s Group. All of them cover different areas – Jim’s Mowing, Jim’s Cleaning, Jim’s Fencing etc. Read more on Jim's Franchise
Question: Is there such a thing as a tax franchise? I’m an accountant specialising in tax preparation and wondered if there were tax franchises available in Australia? Would my experience help me get the franchise?
Answer: There is no question that your experience would serve you well when looking to buy a tax franchise. There are many accountancy and bookkeeping franchises that include tax preparation. Read more on tax franchises
Question: I’m interest in buying a franchise but there is so much information out there! I was wondering if there was somewhere where I could find which franchise will make me the most money?
Answer: If only there was such a place! There is no such thing as one franchise that will make everyone a lot of money, and more than any other franchise. It all depends on finding the right franchise for you. Read more on which franchise will make me the most money?
Question: What is the definition of franchise? I’m writing a collage essay and trying to get my head around all of the different terms.
Answer: Understanding all the different franchise terms can be complicated so i will try to simplify it as much as possible for you and will guide you to where to look for more information. Read more on franchise definition
Question: How much does a franchise cost? I’m interested in franchising and after recently being made redundant i have some money to invest and so need to know the average cost of a franchise?
Answer: How long is a piece of string! There is not one answer to this question as many factors are involved in calculating the cost. Read more on the cost of a franchise
Question: Im running a successful printing business and i am thinking about expanding it. I was going to open another one and run it myself but someone told me to consider franchising. My question is therefore, how do i franchise a business?
Answer: Having a successful business is the first step towards franchising it. Many people make the mistake of wanting to franchise their business before it is successful, they see it as a quick route to expansion. Read more on how to franchise a business
Question: I’m very interested in IT. As well as being an avid and competent internet user, i regularly help friends with their IT problems. I don’t think i have the business acumen to start up a business from scratch though i am very hard worker and a quick learner. I was recommended to look at franchising. Is there IT franchises available?
Answer: Starting any business from scratch can be daunting but franchising would give you the training, support and systems you need to run a successful business; the blueprint to success. Going to down the route of doing something you like is also beneficial. There are many IT franchises available covering a spectrum of industries. Read more on IT franchises
Question: What is the Franchising Code of Conduct? Do all franchises have one?
Answer: The Franchising Code of Conduct regulates the franchising industry in Australia. The code aims to regulate the conduct of franchisors and franchisees towards each other. Read more about the Franchising Code of Conduct
Question: Question: There are so many franchise opportunities in Australia, all telling me that their franchise is the best. How do i know which ones are reputable and which aren’t? I really want to know how to spot a good franchise from a bad franchise?
Answer: You are right; there are literally hundreds of franchise opportunities in Australia. And equally many businesses that call themselves a franchise but may not meet the requirements of an actual franchise business. Read more on franchise opportunities Australia
Question: Question: I want to buy a franchise but i’m unsure which one is right for me? What questions should i be asking myself to help identify franchise that i would like and what i would be good at?
Answer: You are on the right track but identifying that it is not about looking for the best franchise, but the right franchise for you. Read more about buying a franchise in Australia
Question: What franchise fees should i be paying when i buy a franchise? Does every franchise require me to pay fees? And what exactly should i expect to get in return?
Answer: Once the franchise has been granted, all franchisees are required you to pay franchise fees. There are two types of franchise fees, initial and ongoing. Read more about Franchise Fees
Question: We are thinking of buying a franchise in Canberra and there is a franchise exhibition taking place soon in Sydney, is it worth me attending?
Answer: Franchise exhibitions are a great place to start if you are looking to buy a franchise. In Australia annual franchise expos are held in Melbourne, Brisbane, Sydney and Perth. These franchise exhibitions feature 100s of Australian franchise opportunities. Read more about Franchise Expos
Question: I’ve got a business idea that i think would make a good franchise, how do i go about setting it up? Do i start it is a franchise or set up it up as a business initially?
Answer: First of all, businesses need to be up and running successfully before they can look at franchising. You should not try and run before you can walk! Read more about franchising your business.
Question: Is there such a thing as a “working from home franchise”? I’m interested in buying a franchise but do not think that i can afford to buy one that requires me to purchase/rent external premises.
Answer: There are many home-based franchises that allow you to operate the business from home. As you suggested, buying a franchise that allows you to work from home can be a cheaper alternative to a premises based franchise. Read more about buying a working from home franchise
Question: When buying a franchise, should I be looking for a franchise that is a member of the Franchise Council of Australia? I’m not quite sure of the benefit of doing so.
Question: I would like to buy a Gloria Jean’s coffee franchise but not sure if i should buy a new one or a franchise resale. What are the benefits of this? And how do i find out where there are existing stores for sale?
Answer: There are many benefits of buying a franchise resale. I would start by identifying these so that you can weigh up the pros and cons of both. Read more about Gloria Jeans franchise
Question: I would love to become a McDonald’s franchisee but I’m not sure If i’m setting my sights to high as know how powerful a brand McDonald’s is. What is involved in becoming a McDonalds franchise owner?
Answer: If you speak to any McDonalds franchisees you will learn that there is a lot to be gained from joining their network. However like any franchise business you must be right for McDonald’s, and McDonald’s right for you. McDonalds will put all franchisees through a rigorous selection, recruitment and training process before finally accepting them. Read more about McDonald's franchise
Question: I’ve been made from my job as an account and I’m looking for an accountancy or bookkeeping franchise. How do I know which is the best one to choose?
Answer: There are many good bookkeeping franchises in Australia. Looking at members on the Franchise Council of Australia’s website is a good starting point. Read more about Bookkeeping franchise
Question: If i buy a courier franchise, do i need to do the courier work myself?
Answer: Not all courier franchises require you to physically do the couriering. Read more about courier franchise
Question: Can I purchase a Boost Juice franchise and get someone in to manage it for me? Do I need to work in the store?
Answer: Boost Juice franchise believes that their most successful franchise owners are those who actually work in the store. Read more about a Boost Juice franchise
Question: We were forced to close down our franchise and had sent all the franchisor our stock to use while we sorted out all the mess our partner left us in. The franchisor used all our stock, profited from it and refuses to pay us for it. He said he will only give us store credit, but we don't want store credit, we want to be paid in cash the same way we had to pay for the supplies from his supplier. There is nowhere in the contract stating anything about store credit. It is what he wants, its suits him. Can he legally do this? The business ceased trading in nov 2008 and he still won't pay us.
Answer: In the absence of a contractual term that allows the franchisor to provide store credit you are entitled to be paid for stock sold or taken by the Franchisor at your cost price. They may, however, be trying to offset that amount against money they allege is owing by you to them which would be difficult to dispute. Robert Toth, Wisewould Mahony
Question: I have always been interested in owning my own business and I think it is time to start reseaching different options. My biggest problem at this stage and I'm sure many other people have the same issue is finance! I have recently obtained a loan to build my first home and have used all my savings for that. I now sit with no savings and a home that has no equity! What would be my options for financing a new business? If the Bank can't help is there a small business loaning scheme from the Government and what do you need to apply?
Answer: Always a tough question. With a standard small business the Banks will usually look to have some form of landed security to support the application.
With franchise finance it can be a little different. A Bank will accredit a franchise system and then lend a certain amount “unsecured” against the strength of that brand and the business entity you set up. However no Bank will lend 100% to assist in purchasing a small business whether or not a franchise. (“unsecured” usually means a mortgage taken over the business supported by personal guarantees but not supported by property).
Whilst it is a little too late now, sometimes it is better to use whatever deposit you may have to assist with the purchase of that business and look to build/ buy your home at a later stage. The rationale behind that is that your deposit is then income producing and if the business runs as you would plan it to, a little later down the track you may have been able to complete a house purchase supported by the income of the now set up business.
In relation to Government Grants/ support, there is nothing that would allow you to fund a 100% business purchase available
Greg Lawton, Commonwealth Bank
Question: When calculating an ongoing Franchise fee of 9%. We understand that this is after GST is taken out of the total sales. When paying the 9% franchise fee which we understand is a royalty, should I be charged GST on top? My Franchise agreement just states "9% of Adjusted Gross Weekly Revenue" with the definition of this being "the Gross Weekly Revenue in respect of the Franchised Business excluding GST and redeemed Gift Vouchers and other items specified in the Manuals.
Answer: In answer to your question:
1. GST is payable on Franchise fees as a general rule unless the franchise services are exempt as a financial supply. That does not appear to be the case with your franchise.
2. The liability to pay GST is determined by the agreement. In your extract and definition it appears that from the definition that you pay the 9% on the Gross weekly revenue amount which excludes the GST; however that’s not to say that you are not to pay the 9% plus GST. There will likely be a GST provision in the agreement towards the back which says words to the effect that if any supply under this agreement is subject to GST ( and as I have said the payment of Franchise fees as a rule is ) then you as the Franchisee are liable to pay that GST. If that clause is not in the agreement then the Franchisor has no contractual right to pass that liability on to you.
This issue is often raised and often misunderstood by Franchisees.
I suspect therefore that your Franchisor is charging you the 9% plus GST .This would make sense as otherwise they would only be entitled to the 9% less one eleventh which they would have to remit to the ATO and would receive net 8% roughly.
You should take some comfort that your position is revenue neutral in that you can claim back that GST in your BAS statement as an input tax credit.
Robert Toth, Wisewould Mahony
Question: Can I purchase a Boost Juice franchise and get someone in to manage it for me? Do I need to work in the store?
Answer: Boost Juice franchise believes that their most successful franchise owners are those who actually work in the store. Read more about Boost Juice franchise
Question: I have a franchise in Sydney, am i allowed to buy another food franchise? I’m interested in KFC.
Answer: KFC are happy to let you run their franchise whilst operating another if you are not in direct competition with them. Read more about kfc franchise
Question: There is a pet franchise for sale where I live in Melbourne, but after some research I found out that it is more expensive than opening a new one in a neighbouring town. I understand a lot of this will be to do with them having potentially a database of customers, but what are the other benefits? How do I know if should buy this or buy a new one?
Answer: There are many benefits to buying an established franchise. As you pointed out, they should have an existing client base who they should have a good relationship with, and a profitable business. Their accounts will let you see how profitable it is, or isn’t. If profitable you could be making money from day one. Read more about pet franchise
Question: I live in Queensland and I’m interested in buying a franchise. Which franchise would make me the most money?
Answer: If I knew the answer to this I would buy that franchise! It is not as simple as finding the franchise that makes the most money. A lot of the bigger franchises may make you more money but they also require a bigger initial and ongoing investment. You need to weigh up the pros and cons and outline what exactly you would be getting for you money and what the business would require from you. Read more about buying a franchise
Question: Would a Nando’s franchise in Australia make me money? Is it a good franchise to buy into?
Answer: It is not as simple as finding a good franchise to buy into then sitting back and letting the money roll in! Only the franchise owner can determine the level of success they achieve. Even the best franchise in the world cannot make a bad franchisee money! Nando’s is reputable franchise that originated in South Africa. It came to Australia in 1990, initially opening in Western Australia, with presence now throughout Australia as well as the rest of the world. Read more about Nando's franchise
Question: What investment do I need to buy a McDonalds franchise opportunity for sale in Australia? What other requirements do they have?
Answer: The cost of buying a McDonald’s franchise will vary according to size of premises and location of the business. You will need to contact McDonald’s directly to find out the cost.
Buying a McDonalds franchise is not as simple as handing over the required cash. Even if you have the money for the franchise, they may not consider you right for their business. And equally McDonald’s franchise may not be the right franchise for you! Read more about McDonald's franchise
Question: I live in Sydney and was interested in buying a coffee franchise. Does Starbucks Coffee franchise in Australia? What other coffee franchises are available?
Answer: We get asked this question a lot so best to address it with what Starbucks officially say on their website. Read more about Starbucks Coffee franchise
Question: I’m considering buying a coffee franchise but I don’t really want to work in it. Is this a good idea?
Answer: Generally most coffee franchisors will be very reluctant to grant a franchise to someone who is not going to be actively involved in the business. Read more about coffee franchise
Question: I’m thinking of buying a franchise – How do I find out what I need to know?
Answer: Let us presume you have narrowed down your choice and have selected the franchise that most appeals to you based upon your personal strengths and qualities. There is no substitute for hard work when investigating your franchise. If you were buying a house it would make sense to have a building inspection completed prior to handing over thousands of (dollars/pounds). So the answer here is to invest in professional advice. Do not treat this as a cost, but an investment. Read more about how to buy a franchise business
Question: I am considering buying an existing home-care franchise business. What are the key things I should be looking at?
Answer: Apart from the necessary due diligence of the financial, operational performance and growth potential of the business, an often overlooked element is ensuring you have adequate protection from the vendor starting a similar business [franchise or independent] in direct competition. Given these types of businesses rely heavily on close personal client relationships, and that a large part of your purchase will be the “good will” of the established network of clients, it is imperative that you have your solicitor include as a condition of the purchase some form of Deed which strictly prohibits the vendor from operating a similar business within your defined geographical region for a set period [say 3 years].
Graeme McCormack, FACTION
Question: Which franchise should I buy?
Answer: This is a very common question and sadly, one that can never be answered with a degree of certainty. Why is this so? The answer is simply because we are all individuals, and what appeals to one person and works well for them can be a living nightmare for someone else in the same circumstances. Read more about which franchise to buy
Question: I really want to buy a franchise but my husband doesn’t. Any suggestions?
Answer: Get a divorce! No, sorry, only kidding! Buying a new or existing franchise business involves making significant business decisions and taking risk, all of which could have profound effect on a person’s personal life and financial situation for better or worse, along with that of their wife, partner, children and/or family as a whole. Further, the operation and management of these businesses can be tiring, relentless and stressful. It should not be underestimated the strain and unexpected challenges owning a franchise business can have on personal and family relationships. If you are truly passionate about pursuing “your” dream of owning a franchise, my strong recommendation would be to engage the services of an independent franchise expert to discuss with you and your wife the process, challenges and potential pit-falls and rewards. This will enable both of you to make the most informed and united decision possible from the start.
Graeme McCormack, FACTION
Question: My partner and I want to start a new business as buyers advocates. We have the necessary experience and expertise but have not ventured into this particular area before. As we were doing our research we were approached by a company that we think is reputable and were offered a franchise arrangement. The details have not been discussed as yet. I would like to know how much money would be reasonable for them to ask of us and what are the main considerations we should be alert to? We are interested because it would save us from 'reinventing the wheel' and also give us much needed support and training.
Answer: Your question is not easy to answer. There is no scientific answer as to how much you should pay them. Rather, you have to make a judgment about the value of what they provide and whether the asking price is fair (and if you think it is not, don’t be afraid to offer to pay a fee less than what they are asking). Read more about franchise considerations
Question: I am a Greek Cypriot and I live in Nicosia of Southern Cyprus which is a full member of European Union. What is your opinion about my interest in order to becoming the Master franchise of a carbon company which has its base in Australia? Do you believe that I will be successful in one of these businesses?
Answer: The area of Carbon Credits is one of mystery to most people and businesses across the World. To that end, if this area is to boom as many predict, then the time to "get on Board" is now.
For example, I would have loved to have been the first Macdonalds Franchisee!! Read more about Carbon franchises
Question: I am looking at purchasing a souvlakihut franchise in Sydney. At present we only have one Sydney location which is Gladesville. I had an initial meeting with them and although they don’t disclose too much information, they indicated that the profit margin which they aim for is 20%. This amount appeared a little low to me, however I have no experience in franchising. What is your opinion of a 20% profit margin?
Answer: I will assume that the 20% margin you refer to is the net profit margin – that is, the margin after expenses. Even assuming that, it is important to know what expenses are taken in to account before arriving at the margin of 20% - do expenses include a wage for the franchisee, or income tax? Read more about Souvlakihut franchise
Question: I’m buying a franchise – am I set for life?
Answer: Unfortunately this is too often the expectation of a Franchisee, particularly those who have not done sufficient homework before deciding to enter their system of choice. Read more about franchise expectations
Question: I found a franchise biz on the net which sounds very attractive. It's basically they supplying software to create homepage and as a franchisee, get sales and develop & manage clients' web site. But this head office is in UK, and it makes a bit hesitation that it might be a scam. What can you suggest me to prepare a research for this instance? I really hope this franchise is genuine!
Answer: I suggest you contact the franchisor and ask them to send you information about the franchise. You can then assess the information they send you and try to determine if it is a scam. Read more about franchise research
Question: I was in holiday recently in London and saw a food franchise that was a different concept and not one that I know of as being in Australia. If I wanted to bring a franchise from the UK to Australia, how does this work?
Answer: If the franchise is not as yet in Australia, there is the opportunity for you to become the master franchise owner for that franchise i.e. you have to sub-franchise to others in Australia. Or if they are looking for master for a defined territory e.g. per state, you would sub-franchise to those in your state. You ultimately would be the franchisor for that franchise in Australia/your state. As well as sub-franchising you may be required to run your own outlet. Read more about master franchises
Question: I’ve just recently been made redundant from a job in the telecommuncations industry and have been looking at various franchising options. I want to try something different e.g. retail, but is this possible to do with a lack of experience in this type of business?
Answer: Unable to find a job that matches their previous income as well as aspirations, more and more people are using their redundancy money to invest in a franchise. One of the great things about franchising is that for the large majority of franchises available, you do not need any specific experience in that industry. As the franchisor wants you to become a successful and integral part of their network, they will train you in all aspects of running their franchise, THEIR way. Read more about franchise redundancy
Question: How much should you pay for a franchise? Why do some cost more than others?
Answer: When trying to identify how much should you, you need to look at what can you afford and what do you get for your money. To work out how much you can afford you need to look carefully at your family situation and how much money you will need to live on. Work out how long you can live with no salary coming in, as this may be the case with the franchise you are buying (unless it is a franchise resale, you are very unlikely to be making money from day one) and then compare against how long you need to be running your business to make a profit. Read more about cost of a franchise
Question: Why is Hungry Jack’s franchise in Australia not called Burger King if part of the Burger King franchise?
Answer: Hungry Jacks is so called because the name Burger King was already taken by a takeaway shop in Adelaide so they had to come up with another name. Read more about Hungry Jacks franchise