Buying a franchise
With business failure rates for start-up businesses up to 60% within the first 5 years of operations compared with existing franchise systems only in the vicinity of 5%, many new business operators are turning to the support and assistance along with a tried and true product delivered by franchise operations. But buying a franchise can be a very expensive business if you don’t do your due diligence.
In Australia today there is a franchise operating in almost every type of business category, with varying levels of complexity and cost.
Prior to buying a franchise, potential franchisees should do the following;
- Assess your own reasons for wanting to own a business;
- Assess the lifestyle and income implications of owning and operating a business;
- Assess the franchise opportunities consistent with 1 and 2 above.
- Build your understanding of the franchise relationship by reading the Franchise Guide.
- Narrow your franchise search to a few systems, then request further information.
- If appropriate, and you are comfortable with the decision, select a system and commence the application process.
- Ensure you have adequate borrowing capacity, including working capital, to successfully establish this type of business.
- Be sure you receive and evaluate all disclosure material during the application process.
- Be sure you receive legal and accounting advice from lawyers and accountants with franchise experience before making any final commitment.
- Use the cooling-off period to check your facts and figures and determine if you still want to proceed.*
This is by no means an exhaustive list of things you should consider prior to buying a franchise, but if you work through these 10 steps you will be at less risk of rushing headlong into a hasty and ill-informed decision.
SRJ Walker Wayland is a member of the Franchise Council of Australia (FCA) and supports potential and existing franchisees and franchisors. Not only can we assist with assessing the viability of your investment into a franchise, advice relating to financial aspects of franchise operations, but also support with project managing the various steps required for franchisees or franchisors to achieve their objectives.