Considering purchasing a franchise?
With so many things to consider when buying any business – we look at debunking a few common myths around franchising, and what to look for, to make sure a particular franchise is right for you.
Myth 1 – Buying Yourself A Job
A common misconception with potential franchise buyers; is that they believe they are basically buying themselves a job. This is far from the truth. Buying a franchise is like buying any other business; franchisees need to be prepared, willing and able to take on the responsibilities of running their own business.
Myth 2 – Franchises Run Themselves
Yes – franchisors offer start-up training and ongoing support; though – like any business it takes hard work and exceptional business management skills of the franchisee to build a successful franchise. It may reach a point where staff can manage the day-to-day operations, though you will still need to be actively involved in the business. * http://www.evancarmichael.com/library/david-banfield/5-Common-Franchising-Myths-Busted.html
Myth 3 – A Franchise Is Profitable From Day One
If you’re thinking of buying a franchise as a “get rich quick” scheme, think again. Many people assume that not only do franchises always succeed, but they’re money machines right from the start. * http://www.acefranchising.com.au/images/menu/PDF/6_1.pdf
There are lower risks involved in buying a franchise compared to starting your own business, but like any business there are still risks. And franchised businesses and indeed whole franchise networks can fail, just like other businesses. Sometimes businesses fail because the franchise system is not successful, but more often they fail for the same reasons other businesses fail – lack of capital, economic downturn, lack of management skills of the operator, borrowings too high, increased competition, changed customer preferences or poor customer service skills. * https://www.franchise.org.au/process/knowledgebase/knowledgeBaseAnswers.html?categoryId=223&answerId=1637
The Franchise Council of Australia, advises that – prior to buying a franchise, potential franchisees should do the following: * https://www.franchise.org.au/buying-a-franchise.html
- 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. * https://www.franchise.org.au/buying-a-franchise.html
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