Franchising - does it hold the answers for you?
Most people who inquire about franchise business opportunities are in a state of flux about their working life, career direction or business investment options. There are many that people consider, such as:
In evaluating issues such as those above, many come to see the franchise sector as offering opportunities with proven business systems, defined investment, coupled with training, support and marketing. There are, however, over 1200 franchise systems operating in Australia, with varied levels of success and development. The quality of training, support from the franchisor, brand marketing, their unique selling proposition or intellectual property that provides any competitive advantage, and, critically, the satisfaction of the franchisees within the system – are all factors to be evaluated.
The Australian Franchise industry is one of the best regulated in the World. The Franchise Code of Conduct is designed to afford franchisees protection and redress. The prescribed disclosure obligations on franchisors are aimed at maximum transparency and informed decision-making for prospective franchisees.
A recent Pricewaterhouse Cooper Survey, completed in collaboration with the Franchise Council of Australia, has shown that for the third year running Australia’s leading franchise businesses have shown good sales and profit results for 2011. The most recent figures from the Australian Bureau of Statistics revealed that among non-franchise business about 45% cease trading within their first two years – rising to 70% over five years. In contrast, 95% of franchisees succeed in completing the average five-year term
If you are considering purchasing a franchise business then there are many things to consider and actions to take to ensure that you go into the business fully aware and informed.
Here a few tips to consider before taking the step:
The process starts with YOU
What are you looking for?
Basic questions to ask yourself
Basic questions to ask the Franchisor
Check out the fine print
Contents of Franchise Agreement
Termination & post termination conditions
Advice and consultation
Prospective franchisees should obtain
Interview existing franchisees
Cost of the Franchise
Consider the total cost of your investment
What’s in it for me?
Undertake critical review of operating costs (and profitability scenarios if provided)
Understand the restrictions on Franchisees
The franchisor has ultimate control
Franchising is not a guarantee of success but finding the right company and style of business that suits you, can be a better choice than going it alone.
Joining a franchise concept can provide you with the support, training, marketing and systems to help you run a successful franchised business, however, it will still be your own business and the ultimate success will depend upon you to make it happen.
Author: Phil Ciniglio, Managing Directory, Market Minds
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