News and Events

View our large collection of articles, events, media and interviews within.

Request a Callback

Latest Media

Read Articles
    • Type
    • Title
    • Action
    • MP3
    • Planet Chocolate
    • View
    • MP3
    • REA Group
    • View
    • MP3
    • Pack & Send
    • View
    • MP3
    • Corporate Fiduciary Structures
    • View
    • MP3
    • 25 Ways to Find the Best Franchise
    • View

Hopefuls Must Proceed Warily

Hopefuls must proceed warily.pdf

The rapid growth and in­creasing popularity of fran­chises means that up to 15,000 franchise opportunities are available in Australia each year, according to business expert Rod Young.

This wealth of opportunities doesn’t mean potential franchis­ees should rush in and grab the first one that comes along.

 Young, managing director of DC Strategy and a 30-year veteran of franchising, says before potential franchisees go shopping, it’s important they have a set of criteria of what they are looking for in a business and that they stick to these when making this important decision.

More than 850 franchises oper­ate in Australia, providing a wide range of business choices. This diversity can make it difficult to choose the right franchise for you, so Young advises those seeking a franchise to think carefully about what they want to achieve and how they are going to do it.

He advises potential franchis­ees to do their homework and devise a strict set of criteria before taking the plunge.

Most importantly, the first step, Young says, is you must ask yourself if you are sincere in wanting to work for yourself.

Next is working out your finan­cial commitment. You must set a limit on how much money you are prepared to risk. This leads to the next point of what sort of return you expect from the business.

The next question you must ask is are you looking for a business you can operate solo or do you want to hire and supervise staff. If so, how many do you think you could handle?

Lifestyle and family are next on the list. Do you expect your partner and/or family members to be involved? How many hours a week can you dedicate to working in your business, and how many hours can the rest of the family contribute?

Young warns that potential franchisees must seriously con­sider the effect that running your own business will have on your family. Some retail businesses mean a 90-hour working week. Could you and your family successfully handle this?

Where would you like to oper­ate your business? Certain choices could mean moving your home and family. Given the amount of time running your own business takes, Young suggests you live no more than a 30-minute drive away.

Another key part of your plan should be professional advice. Young urges all prospective fran­chisees to engage a lawyer and an accountant who understand fran­chising business models.

WHY FRANCHISING BEATS SMALL BUSINESS

  1. The franchisor provides detailed training.
  2. The franchisee has the incentive of owning their own business with the additional benefit of continuing assistance from the franchisor.
  3. The franchisee benefits from operating under the name and reputation (brand image) of the franchisor, which is already well established in the mind and eye of the public.
  4. The franchisee will usually need less capital than they would if they were setting up a business independently because the franchisor, through their pilot operations and buying power, will have eliminated unnecessary expense.
  5. The franchisor provides the advice and/or help in identifying suitable trading locations or operating territories for the franchisee.
  6. The franchisor helps the franchisee obtain occupation rights to the trading location, comply with planning (zoning) laws, prepare plans for layouts, shopfitting and refurbishment, and provide general assistance in calculating the correct level and mix of stock and in the opening launch of the business.
  7. The franchisor trains the franchisee (and very often, the franchisee’s staff as well) in areas as diverse as manufacture, preparation, accounting, business controls, marketing, promotion and merchandising.
  8. The franchisor may negotiate better rates of finance, or more favourable conditions for franchisees, with financial institutions.
  9. The franchisee receives the benefit on a national scale (if appropriate) of the franchisor’s advertising and promotional activities at a lower cost than if they were to attempt such marketing themselves.
  10. The franchisee taps into the bulk-purchasing power and negotiating capacity made available by the franchisor by reason of the size of the franchised network.
  11. The franchisee can call on the specialised and highly skilled knowledge and experience of the franchisor’s head-office organisation while remaining self-employed within their business.
  12. The support and benefits provided by a franchise system greatly reduce a franchisee’s business risks.
  13. The franchisee has the services of the field operational staff of the franchisor, who are there to help with any problems that may arise from time to time in the course of business.
  14. The franchisee has access to use of the franchisor’s patents, trademarks, copyrights, trade secrets and any secret processes of formulas.
  15. The franchisee has the benefit of the franchisor’s continuous research and ­development programs, which are designed to improve the business and keep it up to date and competitive.
  16. The franchisor provides a knowledge base developed from their own experience, as well as that of all franchisees in the system, which would otherwise be impossible for a non-franchised business to access.
  17. Defined territories of operation within the franchise can help protect the franchisee from competition.
  18. A franchisee can always speak to their franchisor or a fellow franchisee to discuss their business challenges or problems – something a non-franchised business can almost never do.

Source: Franchise Council of Australia. 

The Herald Sun
8 March 2006