Franchising is undoubtedly a quick pill to establish you in business, but the things are not as simple as they sound, and this route may not be the right one for all business people. No doubt that franchising is indeed one of the fastest growing areas in Australia. That is why we thought of investigating it further in this article for the benefit of readers.
The precondition to be successful in any business venture is to be passionate about it. It is true for all cases, be it franchising or your own business.
Before jumping on the bandwagon, try to visualize yourself at first doing the business like running a restaurant, a cafe or a recreation shop. If you feel comfortable doing these then you can think of entering into a franchise. But be sure that no business is easy and is often a 24.7 affair, sometimes for the rest of your life, or at least several years.
If you are mentally ready for such a challenge, the second stage must be about collecting as much information as possible about the franchise. Find out if the business is new or has been there for a long time. Find out about the competition and your expected territory. Check for the investment needed and return expectations. Compare the expected returns with other avenues that are available in the market. Find out the business philosophy, and the training that the franchisee owner provides to the staff. The last but not the least, find out the experience of other existing franchise holders about what they feel. Like with any new business venture, franchising is no different; do your ‘due diligence’.
To enter into a franchise needs a good amount of paperwork and one of the most important documents is the Franchise Agreement. Read it very carefully first yourself, then list your questions (however silly you think they are) and then absolutely have a franchise solicitor (yes, solicitors specialise in this field) check it over thoroughly and answer your questions. Do not rely on what you are told, rely on what is in the document, because if there is an issue later “s/he told me” holds no weight with a judge. What’s in the document is what will be law and I personally have heard some agreements that are completely unfair. Remember, who drew the document up; it’s always going to be in their favour. Remember, once you have signed the papers and committed your money and resources, rarely is there an ‘opt out’ choice.
Even if you are engaging with an established franchisee, research the potential of the product or service in your area. Try to get a survey done, and find out the required market if such a franchise comes in the area. If you see good possibilities then commit your time, money and resources into the business.
Engage a consultancy to do a proper market research to find out if the idea is just run of the mill type or different. If you are going to be just another bakery shop in the area then there may not be any challenge in the whole game. If you are coming with a uniquely established concept in popular demand, you can expect to get success fast and will break even sooner than expected. Even if the Master Franchise has said this has been all done; satisfy yourself and remember that their first interest is usually themselves and their interests. In other words, assume nothing!
The next most important thing is to prepare your detailed business plan, clearly detailing investment and revenue expectations. Find out about your finances and other terms to fund the business. Also see the owner’s equity capital required and check if you are in a position to invest that much or not. You should clearly know the source of each penny for investment as well as the revenue. Find out the place that is best suited to reach your customers and then let the feelers go into the market and judge the interest by the queries that come to you about when the outlet is opening.
Remember that all new businesses, even a franchise (although often less so) do take time to establish; expend little or no income anywhere from 3 to 6 months (and maybe more) so ensure you have the resources to keep going. After you apply good business acumen, then it finally comes down to your zeal and enthusiasm to make things happen. Business (including a franchise) require hard word, dedication and passion.
If you are a business owner or someone who wants to go into business, the Stepping Stones® Series is good for you. Get your copies now!
About Donna Stone
Donna Stone is a published author of the very popular “Stepping Stones Series” – a trilogy of books containing over 750 business tips, available via https://donna-stone.com.au. Also a speaker and consultant in the bookkeeping industry. She won “Networker of the Year” for 2010, 2011 and 2012. Check out Money GemStones.Connect with her thru Facebook, Linkedin, Google+ and Twitter. Watch videos here.