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

What To Take Into Account When Buying A Franchise

Written on the 24 March 2008 by Elisabeth Ritchie - HWL Lawyers

What To Take Into Account When Buying A Franchise

The purchase of a franchise business is different from the purchase of an independent business. As a franchisee you will be party to a long-term relationship with your franchisor and you will agree to run the business in accordance with the franchisor’s system.

Buying a franchise has the advantages of offering many benefits, such as:

  • A uniform, consistent business that often relies on a successful formula
  • Support from the franchisor in respect of knowledge relating to management, industry, marketing, advertising and buying power
  • Use of an already established business name and format and a reduction of business risk

It also involves the payment of fees and/or percentages of turnover to the franchisor, a reduction of independence through franchisor control of management, and there may be factors that adversely affect a franchisee that are outside its control, e.g. reputation risk.

Before buying into a franchise you will need to evaluate the franchise opportunity. You will need to assess the business itself, the franchisor, other franchisees within the system, financial matters, what your obligations and entitlements will be, and decide whether you want to be a franchisee. You will need to consider the advantages and disadvantages of a franchise business, and have read and understood the franchise agreement and disclosure document provided by the franchisor.

Make sure you obtain relevant information

The following are important factors you must give consideration to.

  • The information provided in the disclosure document. This will give a useful insight into the current status of the franchise system.
  • The business model – How successful is it? Does it have a solid business plan and marketing strategy? Is there a demand in the marketplace for the goods or services on offer? Are there other competitors?
  • The track record and/or reputation of the franchisor – How long has it been in the business?  What are its motives for franchising?  Has it complied with the laws in relation to the business?
  • The support the franchisor will provide to you – Product supply, service support, advertising, marketing, reputation, site location, operations manual, policies, guidelines.
  • How other franchisees are faring in the same network? The franchisor is obliged to provide you with details of other franchisees in the network in the disclosure document. You should be able to contact franchisees directly and ask frank questions about their experiences.
  • How much will it cost? This includes start-up costs, working capital, operating expenses (including administration, marketing, staff, signage, customer service expenses), royalties, and other associated expenses.
  • If goods are supplied by the franchisor – What are the terms of trade? Can you purchase goods from outside the franchise network?
  • The franchise agreement – What is the term of the franchise? Can it be renewed? What happens when the franchise ends? What are your obligations?
  • The location of the franchise - Where will your franchise be located? Is there a lease on the property? If so, can it be assigned? What territorial rights will you have? Are they exclusive? Is the territory clearly defined? Will you have a choice of territories?

The warning signs of a 'dodgy' franchise

If the franchise business you are interested in displays any of these signs, it would be wise to end your negotiations with them - chances are they aren't reputable and are just trying to rip you off:

  • Franchise businesses advertised with only a post office box number as identification.
  • Franchisors that are reluctant to provide any information in writing.
  • Franchisors that require you to part with large sums of money without providing you with sufficient information.
  • Franchisors that are reluctant to give details of other franchisees within their system.
  • Franchisors that claim that you can make large amounts of money quickly with little effort.

When evaluating your franchise business opportunity you should carefully assess all aspects and obtain advice from experienced professionals such as solicitors, accountants, financial and business advisers and franchising consultants. You will need to consider whether you will enter into the business as an individual or through some form of business structure. You will need to consider the tax implications of entering into a franchise business.

Franchise agreements and disclosure documents are essential documents requiring careful examination. You will need to obtain legal advice on these documents. You will need to be aware of your rights as a franchisee set out in the Franchising Code of Conduct.

 

Prepared by Elisabeth Ritchie, Partner, Home Wilkinson Lowry

www.hwl.com.au

Elisabeth Ritchie is the head of the firm's Franchising and Licensing Cell. The firm provides specialist advice to both franchisors and franchisees. Elisabeth regularly advises in relation to the set up and purchase of franchises, as well as presenting franchise workshops and seminars.
For further details please contact Elisabeth by email here or (02) 9334 8649.



 


Author: Elisabeth Ritchie - HWL Lawyers

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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