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

Research reveals franchise performance in global first

Written on the 12 June 2011 by Fiona Taylor

Research reveals franchise performance in global first

Franchisor performance can now be measured, for the first time globally, with the launch of new research findings from Griffith University’s Asia-Pacific Centre for Franchising Excellence.

The Franchise Performance Metrics research enables franchisors to compare their franchise model across a range of key performance indicators (KPIs) with other Australian franchises.

Lead researcher and Asia-Pacific Centre for Franchising Excellence Director Professor Lorelle Frazer said now franchisors could gain new insights into how they really perform, to enhance business planning and resource allocation.

“Previously franchisors could benchmark across a specific industry, however not across ‘franchisor-ing’ allowing little guidance on franchise support or recruitment costs, as well as a wide range of metrics,” Professor Frazer said.

The top findings from the Franchise Performance Metrics research are being launched at special events co-hosted by Westpac, in Sydney, Melbourne and Brisbane this week, before becoming publicly available.

The Centre is also hosting a public webinar reporting the key findings of the research on Wednesday, July 6 at 3pm at no cost. To register visit: www.franchise.edu.au

Professor Frazer said the research was based on financial data from 2009 and 2010 and although showed the sector fared quite well throughout the Global Financial Crisis (GFC), there were some interesting findings.

“Franchisors generally reported their model achieving sound return on investment for franchisees, however the data reveals on average franchisees are slower making payments, which could indicate cash flow pressure,” Professor Frazer said.

“Also while franchisee numbers grew by 16 per cent on average, most groups actually recorded a loss in existing franchisee numbers, with new sales not increasing overall existing numbers.

“This means there’s evidence from the GFC of consolidation with site losses greatest in systems with lower return on investment ranges.”

The research also revealed while 100 per cent of franchisors track franchisee sales, only half track franchise margins and even less (33 per cent) track franchisee expenses and profit on a regular basis.

“These are key drivers of business profitability and vital measures to provide an accurate view of trends and emerging issues within a franchise model,” Professor Frazer said.

“These are also areas where franchisees are now seeking greater support from the franchise head office, and are skills franchisors rate franchise support staff less strongly on, particularly compared to sales skills.

“This highlights there may be a gap in franchise field support and franchisee needs.”

The research also looked at net income received by franchisors from each franchisee, average franchisee recruitment costs, franchisee recruitment conversation rates as well as franchisee return on investment and more.

Professor Frazer said the Centre planned to continue to conduct the Franchise Performance Metrics research at least annually to provide franchisors with this valuable business planning tool and further best practice across the sector.

Franchisors are invited to participate in the research (and access the findings at a reduced cost). To purchase the Franchise Performance Metrics Report (released August 1, 2011) or to participate in the research visit: www.franchise.edu.au/franchise-performance-metrics.html.

A pre-purchase discount is available for all purchases before July 30. 


Author: Fiona Taylor

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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