Choosing the right franchise

Once you have decided that Franchising is how you want to go into business you need to assess the various systems that are on the market to determine which one is the right one for you? This will be one of your most important decisions as you are picking your future business partner.

At this stage we recommend that you assess yourself, your visions, your dreams, your values and your strengths and weaknesses. Once you have narrowed your choices down to a few industries / systems you can then check areas and determine if there is a market for the business that you are thinking of or if there are any franchises available in the areas that you want. It is critical that when you are talking to potential franchisors that you interview them and thoroughly check all the data that they supply you with.

Talk to the franchisor, go over their disclosure documents and check that they are a member of the Franchise Council of Australia - FCA . If they are a member of the FCA they have to abide by the franchise Code of Conduct, if they are not a member you need to ask why. At this stage you need to check what the franchisor will do to assist you in starting your business. Some of the question that you need to be asking are:

1. What training they offer both initial and ongoing
   
2. What assistance do they offer if your site does not work
   
3. What is your territory? How is it defined and can that be changed
   
4. How are the franchise fees or royalty charged, what are the other fees eg marketing, technology
   
5. What is the franchisor doing to grow their brand – what is their competitive advantage
   
6. What are their plans to kept the customer offer current
   
7. Names of some existing franchisees that you can talk to.
   
8. Are their any restrictions
   
9. Check the financial health of the parent company.

Spend time talking to current franchisees and talk to them about their experiences with the franchisor during the start up period and after it. Talking to franchisees you will gain valuable insights into the values and culture of the system and if it will suit you and what you want do.

You need to investigate claims about potential earnings. Franchisors will probably quote high medium and low figures. Find out what it is that drives the difference and apply this to your potential site, this will help you to determine your own cash flow projections.

You need to enlist the help of professional advisors –accountants and lawyers. If you do not have an existing relationships we recommend that you use those firms who have staff that specialise in working with Franchises

Click here for Advantages and disadvantages of Buying a franchise