Franchising can provide a satisfactory entry into business for many people. You should be copying an already successful and proven formula with training, advice and marketing provided by the franchisor.
However, keep in mind that you are making a substantial investment. Always investigate before signing a contract and take heed of the messages of experienced professional advisers.
The following is a list of the do’s and don’ts of becoming a franchisee:
Do read and understand all the documents yourself, including the fine print, and insist on seeing actual figures of actual outlets, not just projections.
Do consult your bank manager, lawyer and an independent qualified accountant. If it is a decent franchise they should have heard of it. The professional fees involved are a small ‘insurance premium’ to help avoid problems.
Do deal with the principals of the business – they are the people you are signing up with.
Do talk to existing franchisees of your own choosing – are they happy / profitable? What is the ongoing service like? Would they join again?
Do join only a franchise that is a member of the Franchise Council of Australia and conforms fully to its Franchise Code of Practice.
Do educate yourself on franchising. Go to exhibitions, read magazines and newspapers and obtain a copy of the Franchise Council’s Franchisees’ Guide.
Don’t get pressured into signing anything or parting with any money. A good franchise agreement has a seven day ‘cooling off’ period.
Don’t join a franchise unless you really like the business and the people. For several years, you will be working harder than you have ever done before, so you had better enjoy what you are doing.
Don’t over-stretch yourself financially. Ensure you can meet the repayments, your mortgage and your living expenses.
Don’t join a franchise without company outlets and other franchisees. You are taking a much bigger risk if you are the first franchisee or the business is unproven in Australia, despite its possible success overseas.
Don’t rely on advice from people who are not independent. Make sure you have your own professional advisers – accountant, lawyer and banker.