Australia is the most heavily franchised nation per capita in the world. There are more than 1,000 franchise systems nationally, spanning industries ranging from fast food to financial services. With myriad options to choose from, how do you determine where to invest your money?
Australia’s largest independently-owned mortgage broker and successful franchiser, Mortgage Choice, provides the following tips on how to choose the most suitable franchise:
- Do you have what it takes? Running a successful franchise requires motivation and passion. A strong desire to provide superior customer service is essential, as is attention to detail and a commitment to continually expanding your skill set.
- Research a wide range of sources. Although often daunting and time consuming, research will help you find the small business ownership career path that’s best suited to your individual needs and goals. Mortgage Choice’s 2009 Potential Franchisee Survey determined the majority of those looking to buy spend up to 12 months researching before purchasing. The main resources identified were: professional advisors, current franchisees, franchisers and franchise expos.
- Ask your top franchisers the key questions. Questions you could ask to help you create a franchise shortlist may relate to: projected market growth; initial investment required; projected return on investment; scope for income growth; additional franchise purchase opportunities; and the franchiser’s solid reputation and brand strength.
- Speak at length with the franchiser. Ask your franchise recruitment contacts the questions in Step 3 before discussing the support provided such as training, mentoring, lead generation, marketing, public relations and business development. Reputable franchisers observe the legal requirements for disclosure and the franchise agreement will contain all the terms and conditions under which the franchise will operate.
- Speak with other franchise owners. Talk with people at the ‘coalface’ of the franchise group you are seeking to buy into. Observing a franchisee at work is a great way to experience what your routine will be once you have become a part of that franchise system.
- Ensure you have enough working capital. Some franchisers suggest you need six to 12 months of working capital behind you before buying a new or existing franchise. Discuss the financial and legal implications of your purchase with your accountant, financial planner and solicitor.
- Consult experts and make your decision. Carefully review the paperwork and enlist your advisors to do the same. Then, step back and consider whether buying your chosen franchise will provide everything you are looking for.