10 Steps For Choosing The Right Franchise

Written on the 15th of September 2011 by Tracey Voyce - Bloomtools

Buying franchises is a daunting task. You have to consider the Industry, the brand, competitors, location, finance and numerous other things. You also have to make sure it fits in with your experience, your skills and your lifestyle. Choosing a franchise is especially challenging job.

To make the process of choosing a franchise easier for you, I’ve compiled this list of the ten steps you should follow.

Step 1 – Start your general research

Use whatever tools you have at your disposal to find out about the franchise industry. A good place to start is the Internet - read articles and reports from the Franchise Council of Australia, search for advice from franchising experts and browse franchise directories to see what’s available. You should also subscribe to some franchising and small business magazines to get their perspective on the industry. Empower yourself with as much knowledge as possible before you start on your franchise search.

Step 2 – Know yourself

So, now that you have an understanding of the franchise industry, you need to have a long, hard look at yourself and why you want to go into franchising. Firstly, brainstorm what you want from a franchise. Flexibility? The option to work from home? A challenge? To work with a strong brand? You also need to honest with yourself about your strengths and weaknesses, your skills and your experience. For examples, if finance isn’t your strong point then you need to make sure you can get adequate financial support from the franchise you choose. It’s important for you to identify these things so you can base your future decision on them.

Step 3 - Assess your financial situation

It’s essential that you are realistic about what you can and can’t afford right from the beginning. Sit down with your accountant and crunch the numbers so you know right from the start what your budget is and also the timeframe you need for accessing finance. Figure out how much you can afford then choose your shortlist based on that, rather than choosing the franchises you like, then struggling to scrape together the money – starting off on the back foot will make it really difficult for you to succeed in the long-term. Once you’ve set your budget, stick to it! Looking above what you can realistically afford will only cause you more stress and confusion.

Step 4 - Shortlist your favourites

You’ve equipped yourself with knowledge of the industry and have established your own position, so now it’s time to find some franchise opportunities that you like. The best way to start is to search online directories, because you can conduct searches based on the industry you want to get into and on how much you want to invest. You should also view the websites of the franchises you like to find out more information about them and the opportunity they are offering. Ideally, the website should have a section dedicated to franchising with lots of information, like on the Australian Franchises website.

Next you should create a simple spreadsheet to help you evaluate these franchises. Put the names of each franchise down the left side of the page and several headings across the top that are important to you, such as ‘professional image’, ‘brand strength’, ‘training offered’ and ‘marketing support’. Then for each franchise, make notes about each area and rate them out of ten. This summary only needs to be very basic to help you get your list down to 3, so you can contact each of these for more information.

Step 5 - Contact your shortlisted franchises

You will now need more information from the 3 franchises on your shortlist. Make contact with each one and arrange to meet or speak with their Franchising Manager. Prepare a list of questions to ask them to get more details on what you have already ranked them on and to work out whether you will be compatible with them. Many potential franchisees that contact a potential franchisor for more information ask questions such as:

  • Who runs the company?
  • What is the target market?
  • How does the franchise system work?
  • What will it cost me to set up a franchise?
  • What kind of training, marketing and support is offered?

Asking questions like this will help you get as much information as possible so you can make an informed decision.

Step 6 – Choose your favourite

Now that you’ve had a chance to speak to someone from each of your shortlisted franchises and been given more information, you should evaluate everything you have learnt and choose a favourite to pursue. Once you choose to contact this franchise again to get more information, you are moving along the franchisee process, but you are not yet locked into anything.

Usually this stage will involve signing a confidentiality agreement, because the franchisor will be giving you information that they don’t want you to pass onto anyone else. These agreements are standard in the industry, but make sure you read it thoroughly before you sign it. At this stage, the franchisor will also want to make sure you are the right type of person for them, so they may ask for permission to do a credit check on you and ask you some qualifying questions. If both parties are keen, you can continue to move onto the next stage which involves you signing an agreement and gaining access to their financial data.

Step 7 – Do your due diligence

Once you’ve gotten this far in the franchisee process, you are obviously pretty serious about investing in the franchise. After you’ve signed an agreement with the franchisor and been given their financial data and other information, you get a period of time to conduct what is called ‘due diligence’. This basically just means doing even more thorough research and seeking professional advice.

Get more detailed information about the company by speaking to their other franchisees and researching more about their products and services, history and directors. Then meet with your lawyer and accountant to go through everything with them and get their expert opinion. Make sure you take advantage of this time to learn as much as you can, then compare it with your experience, skills and financial situation. If you aren’t 100% convinced that it’s the opportunity for you, then now is the time to pull out.

Step 8 - Formal interview

As mentioned, it is just as important to the franchisor that you are the right person for the job. So once you’ve received all the information from them and passed all their checks, it’s time to have a formal interview with their franchising team. This is designed to find out if you are compatible with their business and to discuss all the finer details of the opportunity. Obviously you will still have more questions, so use this opportunity to ask them – don’t leave this meeting without finding out what you want to know. Also, evaluate the key people in the franchise face-to-face – if you don’t like the people, the franchise may not be for you. If the franchisor wants to formally offer you the franchise and you accept the offer, you will have to sign a legally binding agreement and organise to pay an initial deposit (the deposit will vary greatly depending on the company).

Step 9 - Use the ‘cooling off’ period

A ‘cooling off’ period is a certain amount of time that franchisors are legally required to give you to think about your decision to sign with them. This time is required by law because many people change their mind after signing because they got caught up in the excitement of the process or were pressured into it. In this time, you can withdraw from your agreement with them without losing your deposit. However you will be charged for any costs that the franchisor incurred in that time (such as lawyer’s fees), so the best idea is not to sign in the first place if you have doubts. If you do sign, but are then unsure, take advantage of this time to evaluate your decision and seek more advice if necessary.

Step 10 - Become a franchisee

Congratulations! You have now joined the thousands of Australians that own a franchise business and get to be their own boss. This stage of the process involves making payment for the franchise you have purchased and getting your business underway. Firstly you will need to arrange a time to begin the training offered by the franchisor and also organize the location of your business. The process and timelines at this stage really depend on the company you are involved with, so make sure you work this all out with them.

The final piece of advice I can give you is to maximize the opportunity you have been given – take advantage of extra training, engage in lots of local area marketing, build strong relationships with the franchisor and other franchisees and do everything you possibly can to achieve success in your business. If you do this, the results will speak for themselves. Good luck!

Resources

Australia's No.1 business franchise company providing opportunities to start own business with expert franchise advice and latest franchise news. Contact us for business for sale and many other franchise business opportunities in Australia.


Author:Tracey Voyce - Bloomtools
Australian Franchises

10 Steps For Choosing The Right Franchise

Written on the 15th of September 2011 by Tracey Voyce - Bloomtools

Buying franchises is a daunting task. You have to consider the Industry, the brand, competitors, location, finance and numerous other things. You also have to make sure it fits in with your experience, your skills and your lifestyle. Choosing a franchise is especially challenging job.

To make the process of choosing a franchise easier for you, I’ve compiled this list of the ten steps you should follow.

Step 1 – Start your general research

Use whatever tools you have at your disposal to find out about the franchise industry. A good place to start is the Internet - read articles and reports from the Franchise Council of Australia, search for advice from franchising experts and browse franchise directories to see what’s available. You should also subscribe to some franchising and small business magazines to get their perspective on the industry. Empower yourself with as much knowledge as possible before you start on your franchise search.

Step 2 – Know yourself

So, now that you have an understanding of the franchise industry, you need to have a long, hard look at yourself and why you want to go into franchising. Firstly, brainstorm what you want from a franchise. Flexibility? The option to work from home? A challenge? To work with a strong brand? You also need to honest with yourself about your strengths and weaknesses, your skills and your experience. For examples, if finance isn’t your strong point then you need to make sure you can get adequate financial support from the franchise you choose. It’s important for you to identify these things so you can base your future decision on them.

Step 3 - Assess your financial situation

It’s essential that you are realistic about what you can and can’t afford right from the beginning. Sit down with your accountant and crunch the numbers so you know right from the start what your budget is and also the timeframe you need for accessing finance. Figure out how much you can afford then choose your shortlist based on that, rather than choosing the franchises you like, then struggling to scrape together the money – starting off on the back foot will make it really difficult for you to succeed in the long-term. Once you’ve set your budget, stick to it! Looking above what you can realistically afford will only cause you more stress and confusion.

Step 4 - Shortlist your favourites

You’ve equipped yourself with knowledge of the industry and have established your own position, so now it’s time to find some franchise opportunities that you like. The best way to start is to search online directories, because you can conduct searches based on the industry you want to get into and on how much you want to invest. You should also view the websites of the franchises you like to find out more information about them and the opportunity they are offering. Ideally, the website should have a section dedicated to franchising with lots of information, like on the Australian Franchises website.

Next you should create a simple spreadsheet to help you evaluate these franchises. Put the names of each franchise down the left side of the page and several headings across the top that are important to you, such as ‘professional image’, ‘brand strength’, ‘training offered’ and ‘marketing support’. Then for each franchise, make notes about each area and rate them out of ten. This summary only needs to be very basic to help you get your list down to 3, so you can contact each of these for more information.

Step 5 - Contact your shortlisted franchises

You will now need more information from the 3 franchises on your shortlist. Make contact with each one and arrange to meet or speak with their Franchising Manager. Prepare a list of questions to ask them to get more details on what you have already ranked them on and to work out whether you will be compatible with them. Many potential franchisees that contact a potential franchisor for more information ask questions such as:

  • Who runs the company?
  • What is the target market?
  • How does the franchise system work?
  • What will it cost me to set up a franchise?
  • What kind of training, marketing and support is offered?

Asking questions like this will help you get as much information as possible so you can make an informed decision.

Step 6 – Choose your favourite

Now that you’ve had a chance to speak to someone from each of your shortlisted franchises and been given more information, you should evaluate everything you have learnt and choose a favourite to pursue. Once you choose to contact this franchise again to get more information, you are moving along the franchisee process, but you are not yet locked into anything.

Usually this stage will involve signing a confidentiality agreement, because the franchisor will be giving you information that they don’t want you to pass onto anyone else. These agreements are standard in the industry, but make sure you read it thoroughly before you sign it. At this stage, the franchisor will also want to make sure you are the right type of person for them, so they may ask for permission to do a credit check on you and ask you some qualifying questions. If both parties are keen, you can continue to move onto the next stage which involves you signing an agreement and gaining access to their financial data.

Step 7 – Do your due diligence

Once you’ve gotten this far in the franchisee process, you are obviously pretty serious about investing in the franchise. After you’ve signed an agreement with the franchisor and been given their financial data and other information, you get a period of time to conduct what is called ‘due diligence’. This basically just means doing even more thorough research and seeking professional advice.

Get more detailed information about the company by speaking to their other franchisees and researching more about their products and services, history and directors. Then meet with your lawyer and accountant to go through everything with them and get their expert opinion. Make sure you take advantage of this time to learn as much as you can, then compare it with your experience, skills and financial situation. If you aren’t 100% convinced that it’s the opportunity for you, then now is the time to pull out.

Step 8 - Formal interview

As mentioned, it is just as important to the franchisor that you are the right person for the job. So once you’ve received all the information from them and passed all their checks, it’s time to have a formal interview with their franchising team. This is designed to find out if you are compatible with their business and to discuss all the finer details of the opportunity. Obviously you will still have more questions, so use this opportunity to ask them – don’t leave this meeting without finding out what you want to know. Also, evaluate the key people in the franchise face-to-face – if you don’t like the people, the franchise may not be for you. If the franchisor wants to formally offer you the franchise and you accept the offer, you will have to sign a legally binding agreement and organise to pay an initial deposit (the deposit will vary greatly depending on the company).

Step 9 - Use the ‘cooling off’ period

A ‘cooling off’ period is a certain amount of time that franchisors are legally required to give you to think about your decision to sign with them. This time is required by law because many people change their mind after signing because they got caught up in the excitement of the process or were pressured into it. In this time, you can withdraw from your agreement with them without losing your deposit. However you will be charged for any costs that the franchisor incurred in that time (such as lawyer’s fees), so the best idea is not to sign in the first place if you have doubts. If you do sign, but are then unsure, take advantage of this time to evaluate your decision and seek more advice if necessary.

Step 10 - Become a franchisee

Congratulations! You have now joined the thousands of Australians that own a franchise business and get to be their own boss. This stage of the process involves making payment for the franchise you have purchased and getting your business underway. Firstly you will need to arrange a time to begin the training offered by the franchisor and also organize the location of your business. The process and timelines at this stage really depend on the company you are involved with, so make sure you work this all out with them.

The final piece of advice I can give you is to maximize the opportunity you have been given – take advantage of extra training, engage in lots of local area marketing, build strong relationships with the franchisor and other franchisees and do everything you possibly can to achieve success in your business. If you do this, the results will speak for themselves. Good luck!

Resources

Australia's No.1 business franchise company providing opportunities to start own business with expert franchise advice and latest franchise news. Contact us for business for sale and many other franchise business opportunities in Australia.


Author:Tracey Voyce - Bloomtools

The Tricks To A Great Franchise Business Plan

Written on the 11 June 2010 by Theo Afkoudias

The Tricks To A Great Franchise Business Plan

We love doing business plans for franchises mainly for the same reason people consider buying one - most of the hard work has already been done by the franchisor or the prior franchisee.

We have done hundreds of business plans from all industries and at all stages of business life – start up, growth, expansion, etc. When a prospective franchisee contacts us and tells us they are proposing to buy a franchise and the franchisor and the bank has asked for a business plan, we’re delighted.

Here’s why.

Below we've listed some of the typical components of a business plan - consider the ticks (√) we’ve given the franchise when compared to a stand-alone business (X):

Past financials available

√ Typically available from prior franchisees
X Non-existent or not always trustworthy in a stand-alone business

Marketing

√ Typically guidance and mentorship is available from franchisor
X Owner required to research best marketing methods for industry and estimate cost

Operations, processes and procedures

√ Typically franchisor has processes and procedures in place
X Owner required to research possible processes and procedures, hardware, software, quality control, invoicing, CRM systems and estimate cost

Human resources

√ Typically franchisor will assist with suggesting staffing requirements based on other sites and peak demand times for staff is usually known
X Owner required to estimate service demand throughout week and also required to understand ever changing HR laws

Management

√ Franchisor typically available to mentor and add layer of management
X Owner may need to hire services manager(s) or consider business coach

Financial projections

√ There are always past financials of target site or others available to base projections on
X Usually pure estimates

Business expansion

√ Easier expansion with franchisees buying multiple franchise sites
X Can open multiple sites but risk typically equal to that of opening original site 

Across all areas of a business plan, the ‘work’ has been done or the information required is much easier to acquire.

Information is expensive

You see, with a business plan the source of the information contributes greatly to the cost of the business plan. If, as a provider, we have to go out and research marketing strategies or an operations strategy, the cost of the business plan starts heading into the thousands.

Rather, with franchises all the information is typically much more easily available from the franchisor for a new site or the prior franchisee for an existing site.

No free ride

All this doesn’t mean the franchisor will typically hand out franchises to just anyone – they have a brand to protect and a vested interest in the franchise succeeding.

Many prospective franchisees are given the task by the franchisor to produce a business plan as part of the selection criteria (especially if the franchisor is a large business with lots of people applying for a franchise). This makes sense as the franchisor has spent years or even decades building a well regarded reputable brand and the last thing they want to see is one of their sites stumble or even fail.

The franchisor is looking for the franchisee to ‘showcase’ themselves in a business plan - what are you bringing to the table?

Here, we work with prospective franchisee to extract all relevant information across the various components of the business plan. The franchisee is handed a brand, a site and full operations manuals and the availability of the franchisor to call upon. However we work with franchisees to help them consider: 

  • What are your marketing ideas?
  •  What are your personnel ideas?
  • What research are you prepared to do?
  • Why do you think you’ll succeed?
  • What will you do different from the prior franchisee to improve the site?

Overall, what are you bringing to the table?

All potential franchisees are welcome to consider our services in submitting a business plan to the franchisor or their bank/finance company.

Theo Afkoudias

Principal

www.businessplans.com.au

 


Author:Theo Afkoudias

10 Steps For Choosing The Right Franchise

Written on the 15th of September 2011 by Tracey Voyce - Bloomtools

Buying franchises is a daunting task. You have to consider the Industry, the brand, competitors, location, finance and numerous other things. You also have to make sure it fits in with your experience, your skills and your lifestyle. Choosing a franchise is especially challenging job.

To make the process of choosing a franchise easier for you, I’ve compiled this list of the ten steps you should follow.

Step 1 – Start your general research

Use whatever tools you have at your disposal to find out about the franchise industry. A good place to start is the Internet - read articles and reports from the Franchise Council of Australia, search for advice from franchising experts and browse franchise directories to see what’s available. You should also subscribe to some franchising and small business magazines to get their perspective on the industry. Empower yourself with as much knowledge as possible before you start on your franchise search.

Step 2 – Know yourself

So, now that you have an understanding of the franchise industry, you need to have a long, hard look at yourself and why you want to go into franchising. Firstly, brainstorm what you want from a franchise. Flexibility? The option to work from home? A challenge? To work with a strong brand? You also need to honest with yourself about your strengths and weaknesses, your skills and your experience. For examples, if finance isn’t your strong point then you need to make sure you can get adequate financial support from the franchise you choose. It’s important for you to identify these things so you can base your future decision on them.

Step 3 - Assess your financial situation

It’s essential that you are realistic about what you can and can’t afford right from the beginning. Sit down with your accountant and crunch the numbers so you know right from the start what your budget is and also the timeframe you need for accessing finance. Figure out how much you can afford then choose your shortlist based on that, rather than choosing the franchises you like, then struggling to scrape together the money – starting off on the back foot will make it really difficult for you to succeed in the long-term. Once you’ve set your budget, stick to it! Looking above what you can realistically afford will only cause you more stress and confusion.

Step 4 - Shortlist your favourites

You’ve equipped yourself with knowledge of the industry and have established your own position, so now it’s time to find some franchise opportunities that you like. The best way to start is to search online directories, because you can conduct searches based on the industry you want to get into and on how much you want to invest. You should also view the websites of the franchises you like to find out more information about them and the opportunity they are offering. Ideally, the website should have a section dedicated to franchising with lots of information, like on the Australian Franchises website.

Next you should create a simple spreadsheet to help you evaluate these franchises. Put the names of each franchise down the left side of the page and several headings across the top that are important to you, such as ‘professional image’, ‘brand strength’, ‘training offered’ and ‘marketing support’. Then for each franchise, make notes about each area and rate them out of ten. This summary only needs to be very basic to help you get your list down to 3, so you can contact each of these for more information.

Step 5 - Contact your shortlisted franchises

You will now need more information from the 3 franchises on your shortlist. Make contact with each one and arrange to meet or speak with their Franchising Manager. Prepare a list of questions to ask them to get more details on what you have already ranked them on and to work out whether you will be compatible with them. Many potential franchisees that contact a potential franchisor for more information ask questions such as:

  • Who runs the company?
  • What is the target market?
  • How does the franchise system work?
  • What will it cost me to set up a franchise?
  • What kind of training, marketing and support is offered?

Asking questions like this will help you get as much information as possible so you can make an informed decision.

Step 6 – Choose your favourite

Now that you’ve had a chance to speak to someone from each of your shortlisted franchises and been given more information, you should evaluate everything you have learnt and choose a favourite to pursue. Once you choose to contact this franchise again to get more information, you are moving along the franchisee process, but you are not yet locked into anything.

Usually this stage will involve signing a confidentiality agreement, because the franchisor will be giving you information that they don’t want you to pass onto anyone else. These agreements are standard in the industry, but make sure you read it thoroughly before you sign it. At this stage, the franchisor will also want to make sure you are the right type of person for them, so they may ask for permission to do a credit check on you and ask you some qualifying questions. If both parties are keen, you can continue to move onto the next stage which involves you signing an agreement and gaining access to their financial data.

Step 7 – Do your due diligence

Once you’ve gotten this far in the franchisee process, you are obviously pretty serious about investing in the franchise. After you’ve signed an agreement with the franchisor and been given their financial data and other information, you get a period of time to conduct what is called ‘due diligence’. This basically just means doing even more thorough research and seeking professional advice.

Get more detailed information about the company by speaking to their other franchisees and researching more about their products and services, history and directors. Then meet with your lawyer and accountant to go through everything with them and get their expert opinion. Make sure you take advantage of this time to learn as much as you can, then compare it with your experience, skills and financial situation. If you aren’t 100% convinced that it’s the opportunity for you, then now is the time to pull out.

Step 8 - Formal interview

As mentioned, it is just as important to the franchisor that you are the right person for the job. So once you’ve received all the information from them and passed all their checks, it’s time to have a formal interview with their franchising team. This is designed to find out if you are compatible with their business and to discuss all the finer details of the opportunity. Obviously you will still have more questions, so use this opportunity to ask them – don’t leave this meeting without finding out what you want to know. Also, evaluate the key people in the franchise face-to-face – if you don’t like the people, the franchise may not be for you. If the franchisor wants to formally offer you the franchise and you accept the offer, you will have to sign a legally binding agreement and organise to pay an initial deposit (the deposit will vary greatly depending on the company).

Step 9 - Use the ‘cooling off’ period

A ‘cooling off’ period is a certain amount of time that franchisors are legally required to give you to think about your decision to sign with them. This time is required by law because many people change their mind after signing because they got caught up in the excitement of the process or were pressured into it. In this time, you can withdraw from your agreement with them without losing your deposit. However you will be charged for any costs that the franchisor incurred in that time (such as lawyer’s fees), so the best idea is not to sign in the first place if you have doubts. If you do sign, but are then unsure, take advantage of this time to evaluate your decision and seek more advice if necessary.

Step 10 - Become a franchisee

Congratulations! You have now joined the thousands of Australians that own a franchise business and get to be their own boss. This stage of the process involves making payment for the franchise you have purchased and getting your business underway. Firstly you will need to arrange a time to begin the training offered by the franchisor and also organize the location of your business. The process and timelines at this stage really depend on the company you are involved with, so make sure you work this all out with them.

The final piece of advice I can give you is to maximize the opportunity you have been given – take advantage of extra training, engage in lots of local area marketing, build strong relationships with the franchisor and other franchisees and do everything you possibly can to achieve success in your business. If you do this, the results will speak for themselves. Good luck!

Resources

Australia's No.1 business franchise company providing opportunities to start own business with expert franchise advice and latest franchise news. Contact us for business for sale and many other franchise business opportunities in Australia.


Author:Tracey Voyce - Bloomtools

Latest Franchise News


10 Steps For Choosing The Right Franchise

Written on the 15th of September 2011 by Tracey Voyce - Bloomtools

Buying franchises is a daunting task. You have to consider the Industry, the brand, competitors, location, finance and numerous other things. You also have to make sure it fits in with your experience, your skills and your lifestyle. Choosing a franchise is especially challenging job.

To make the process of choosing a franchise easier for you, I’ve compiled this list of the ten steps you should follow.

Step 1 – Start your general research

Use whatever tools you have at your disposal to find out about the franchise industry. A good place to start is the Internet - read articles and reports from the Franchise Council of Australia, search for advice from franchising experts and browse franchise directories to see what’s available. You should also subscribe to some franchising and small business magazines to get their perspective on the industry. Empower yourself with as much knowledge as possible before you start on your franchise search.

Step 2 – Know yourself

So, now that you have an understanding of the franchise industry, you need to have a long, hard look at yourself and why you want to go into franchising. Firstly, brainstorm what you want from a franchise. Flexibility? The option to work from home? A challenge? To work with a strong brand? You also need to honest with yourself about your strengths and weaknesses, your skills and your experience. For examples, if finance isn’t your strong point then you need to make sure you can get adequate financial support from the franchise you choose. It’s important for you to identify these things so you can base your future decision on them.

Step 3 - Assess your financial situation

It’s essential that you are realistic about what you can and can’t afford right from the beginning. Sit down with your accountant and crunch the numbers so you know right from the start what your budget is and also the timeframe you need for accessing finance. Figure out how much you can afford then choose your shortlist based on that, rather than choosing the franchises you like, then struggling to scrape together the money – starting off on the back foot will make it really difficult for you to succeed in the long-term. Once you’ve set your budget, stick to it! Looking above what you can realistically afford will only cause you more stress and confusion.

Step 4 - Shortlist your favourites

You’ve equipped yourself with knowledge of the industry and have established your own position, so now it’s time to find some franchise opportunities that you like. The best way to start is to search online directories, because you can conduct searches based on the industry you want to get into and on how much you want to invest. You should also view the websites of the franchises you like to find out more information about them and the opportunity they are offering. Ideally, the website should have a section dedicated to franchising with lots of information, like on the Australian Franchises website.

Next you should create a simple spreadsheet to help you evaluate these franchises. Put the names of each franchise down the left side of the page and several headings across the top that are important to you, such as ‘professional image’, ‘brand strength’, ‘training offered’ and ‘marketing support’. Then for each franchise, make notes about each area and rate them out of ten. This summary only needs to be very basic to help you get your list down to 3, so you can contact each of these for more information.

Step 5 - Contact your shortlisted franchises

You will now need more information from the 3 franchises on your shortlist. Make contact with each one and arrange to meet or speak with their Franchising Manager. Prepare a list of questions to ask them to get more details on what you have already ranked them on and to work out whether you will be compatible with them. Many potential franchisees that contact a potential franchisor for more information ask questions such as:

  • Who runs the company?
  • What is the target market?
  • How does the franchise system work?
  • What will it cost me to set up a franchise?
  • What kind of training, marketing and support is offered?

Asking questions like this will help you get as much information as possible so you can make an informed decision.

Step 6 – Choose your favourite

Now that you’ve had a chance to speak to someone from each of your shortlisted franchises and been given more information, you should evaluate everything you have learnt and choose a favourite to pursue. Once you choose to contact this franchise again to get more information, you are moving along the franchisee process, but you are not yet locked into anything.

Usually this stage will involve signing a confidentiality agreement, because the franchisor will be giving you information that they don’t want you to pass onto anyone else. These agreements are standard in the industry, but make sure you read it thoroughly before you sign it. At this stage, the franchisor will also want to make sure you are the right type of person for them, so they may ask for permission to do a credit check on you and ask you some qualifying questions. If both parties are keen, you can continue to move onto the next stage which involves you signing an agreement and gaining access to their financial data.

Step 7 – Do your due diligence

Once you’ve gotten this far in the franchisee process, you are obviously pretty serious about investing in the franchise. After you’ve signed an agreement with the franchisor and been given their financial data and other information, you get a period of time to conduct what is called ‘due diligence’. This basically just means doing even more thorough research and seeking professional advice.

Get more detailed information about the company by speaking to their other franchisees and researching more about their products and services, history and directors. Then meet with your lawyer and accountant to go through everything with them and get their expert opinion. Make sure you take advantage of this time to learn as much as you can, then compare it with your experience, skills and financial situation. If you aren’t 100% convinced that it’s the opportunity for you, then now is the time to pull out.

Step 8 - Formal interview

As mentioned, it is just as important to the franchisor that you are the right person for the job. So once you’ve received all the information from them and passed all their checks, it’s time to have a formal interview with their franchising team. This is designed to find out if you are compatible with their business and to discuss all the finer details of the opportunity. Obviously you will still have more questions, so use this opportunity to ask them – don’t leave this meeting without finding out what you want to know. Also, evaluate the key people in the franchise face-to-face – if you don’t like the people, the franchise may not be for you. If the franchisor wants to formally offer you the franchise and you accept the offer, you will have to sign a legally binding agreement and organise to pay an initial deposit (the deposit will vary greatly depending on the company).

Step 9 - Use the ‘cooling off’ period

A ‘cooling off’ period is a certain amount of time that franchisors are legally required to give you to think about your decision to sign with them. This time is required by law because many people change their mind after signing because they got caught up in the excitement of the process or were pressured into it. In this time, you can withdraw from your agreement with them without losing your deposit. However you will be charged for any costs that the franchisor incurred in that time (such as lawyer’s fees), so the best idea is not to sign in the first place if you have doubts. If you do sign, but are then unsure, take advantage of this time to evaluate your decision and seek more advice if necessary.

Step 10 - Become a franchisee

Congratulations! You have now joined the thousands of Australians that own a franchise business and get to be their own boss. This stage of the process involves making payment for the franchise you have purchased and getting your business underway. Firstly you will need to arrange a time to begin the training offered by the franchisor and also organize the location of your business. The process and timelines at this stage really depend on the company you are involved with, so make sure you work this all out with them.

The final piece of advice I can give you is to maximize the opportunity you have been given – take advantage of extra training, engage in lots of local area marketing, build strong relationships with the franchisor and other franchisees and do everything you possibly can to achieve success in your business. If you do this, the results will speak for themselves. Good luck!

Resources

Australia's No.1 business franchise company providing opportunities to start own business with expert franchise advice and latest franchise news. Contact us for business for sale and many other franchise business opportunities in Australia.


Author:Tracey Voyce - Bloomtools
View more Franchise News

Expert Advice


10 Steps For Choosing The Right Franchise

Written on the 15th of September 2011 by Tracey Voyce - Bloomtools

Buying franchises is a daunting task. You have to consider the Industry, the brand, competitors, location, finance and numerous other things. You also have to make sure it fits in with your experience, your skills and your lifestyle. Choosing a franchise is especially challenging job.

To make the process of choosing a franchise easier for you, I’ve compiled this list of the ten steps you should follow.

Step 1 – Start your general research

Use whatever tools you have at your disposal to find out about the franchise industry. A good place to start is the Internet - read articles and reports from the Franchise Council of Australia, search for advice from franchising experts and browse franchise directories to see what’s available. You should also subscribe to some franchising and small business magazines to get their perspective on the industry. Empower yourself with as much knowledge as possible before you start on your franchise search.

Step 2 – Know yourself

So, now that you have an understanding of the franchise industry, you need to have a long, hard look at yourself and why you want to go into franchising. Firstly, brainstorm what you want from a franchise. Flexibility? The option to work from home? A challenge? To work with a strong brand? You also need to honest with yourself about your strengths and weaknesses, your skills and your experience. For examples, if finance isn’t your strong point then you need to make sure you can get adequate financial support from the franchise you choose. It’s important for you to identify these things so you can base your future decision on them.

Step 3 - Assess your financial situation

It’s essential that you are realistic about what you can and can’t afford right from the beginning. Sit down with your accountant and crunch the numbers so you know right from the start what your budget is and also the timeframe you need for accessing finance. Figure out how much you can afford then choose your shortlist based on that, rather than choosing the franchises you like, then struggling to scrape together the money – starting off on the back foot will make it really difficult for you to succeed in the long-term. Once you’ve set your budget, stick to it! Looking above what you can realistically afford will only cause you more stress and confusion.

Step 4 - Shortlist your favourites

You’ve equipped yourself with knowledge of the industry and have established your own position, so now it’s time to find some franchise opportunities that you like. The best way to start is to search online directories, because you can conduct searches based on the industry you want to get into and on how much you want to invest. You should also view the websites of the franchises you like to find out more information about them and the opportunity they are offering. Ideally, the website should have a section dedicated to franchising with lots of information, like on the Australian Franchises website.

Next you should create a simple spreadsheet to help you evaluate these franchises. Put the names of each franchise down the left side of the page and several headings across the top that are important to you, such as ‘professional image’, ‘brand strength’, ‘training offered’ and ‘marketing support’. Then for each franchise, make notes about each area and rate them out of ten. This summary only needs to be very basic to help you get your list down to 3, so you can contact each of these for more information.

Step 5 - Contact your shortlisted franchises

You will now need more information from the 3 franchises on your shortlist. Make contact with each one and arrange to meet or speak with their Franchising Manager. Prepare a list of questions to ask them to get more details on what you have already ranked them on and to work out whether you will be compatible with them. Many potential franchisees that contact a potential franchisor for more information ask questions such as:

  • Who runs the company?
  • What is the target market?
  • How does the franchise system work?
  • What will it cost me to set up a franchise?
  • What kind of training, marketing and support is offered?

Asking questions like this will help you get as much information as possible so you can make an informed decision.

Step 6 – Choose your favourite

Now that you’ve had a chance to speak to someone from each of your shortlisted franchises and been given more information, you should evaluate everything you have learnt and choose a favourite to pursue. Once you choose to contact this franchise again to get more information, you are moving along the franchisee process, but you are not yet locked into anything.

Usually this stage will involve signing a confidentiality agreement, because the franchisor will be giving you information that they don’t want you to pass onto anyone else. These agreements are standard in the industry, but make sure you read it thoroughly before you sign it. At this stage, the franchisor will also want to make sure you are the right type of person for them, so they may ask for permission to do a credit check on you and ask you some qualifying questions. If both parties are keen, you can continue to move onto the next stage which involves you signing an agreement and gaining access to their financial data.

Step 7 – Do your due diligence

Once you’ve gotten this far in the franchisee process, you are obviously pretty serious about investing in the franchise. After you’ve signed an agreement with the franchisor and been given their financial data and other information, you get a period of time to conduct what is called ‘due diligence’. This basically just means doing even more thorough research and seeking professional advice.

Get more detailed information about the company by speaking to their other franchisees and researching more about their products and services, history and directors. Then meet with your lawyer and accountant to go through everything with them and get their expert opinion. Make sure you take advantage of this time to learn as much as you can, then compare it with your experience, skills and financial situation. If you aren’t 100% convinced that it’s the opportunity for you, then now is the time to pull out.

Step 8 - Formal interview

As mentioned, it is just as important to the franchisor that you are the right person for the job. So once you’ve received all the information from them and passed all their checks, it’s time to have a formal interview with their franchising team. This is designed to find out if you are compatible with their business and to discuss all the finer details of the opportunity. Obviously you will still have more questions, so use this opportunity to ask them – don’t leave this meeting without finding out what you want to know. Also, evaluate the key people in the franchise face-to-face – if you don’t like the people, the franchise may not be for you. If the franchisor wants to formally offer you the franchise and you accept the offer, you will have to sign a legally binding agreement and organise to pay an initial deposit (the deposit will vary greatly depending on the company).

Step 9 - Use the ‘cooling off’ period

A ‘cooling off’ period is a certain amount of time that franchisors are legally required to give you to think about your decision to sign with them. This time is required by law because many people change their mind after signing because they got caught up in the excitement of the process or were pressured into it. In this time, you can withdraw from your agreement with them without losing your deposit. However you will be charged for any costs that the franchisor incurred in that time (such as lawyer’s fees), so the best idea is not to sign in the first place if you have doubts. If you do sign, but are then unsure, take advantage of this time to evaluate your decision and seek more advice if necessary.

Step 10 - Become a franchisee

Congratulations! You have now joined the thousands of Australians that own a franchise business and get to be their own boss. This stage of the process involves making payment for the franchise you have purchased and getting your business underway. Firstly you will need to arrange a time to begin the training offered by the franchisor and also organize the location of your business. The process and timelines at this stage really depend on the company you are involved with, so make sure you work this all out with them.

The final piece of advice I can give you is to maximize the opportunity you have been given – take advantage of extra training, engage in lots of local area marketing, build strong relationships with the franchisor and other franchisees and do everything you possibly can to achieve success in your business. If you do this, the results will speak for themselves. Good luck!

Resources

Australia's No.1 business franchise company providing opportunities to start own business with expert franchise advice and latest franchise news. Contact us for business for sale and many other franchise business opportunities in Australia.


Author:Tracey Voyce - Bloomtools
View more Expert Advice
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