Franchised businesses are an increasingly popular option when people consider buying a business. The Franchising Council of Australia state that there are approximately 1160 franchise types in Australia, and about 79,000 franchise units in operation. Franchises employ more than 460,000 people across Australia, and they cover almost every type of industry sector.
Franchising is a popular business model.
- Franchising is a great combination of being able to run your own small business, while having the support of a big business network.
- Franchisors usually train their new franchisees, so it’s a great way of entering and gaining experience in an area. Experience is not always required.
- Franchises have a high rate of success, as they are often household names, with built-up goodwill. They have an established reputation and image. This gives them a head-start against other businesses.
- Finance is usually easier to obtain for a franchise than other business models.
- Franchise systems have tried-and-tested management systems and work practices, and access to nation-wide marketing and ongoing support.
We’ve been helping people buy and sell franchises for over a decade. Over this time we’ve helped scores of people to buy a franchise, so we’ve learnt all the tricks of the trade. This process can be stressful if you do it alone, so we recommend using an experienced business broker to help you.
Good advice for buying a franchise includes:
- Be sure that this is what you want. Does this follow your passion, and work in with your lifestyle and aspirations?
- Know your budget.
- Engage the support from your family and friends.
- Obtain finance before you begin. It is important to do this at the start, because there’s no point investing time and effort into this process if you don’t have the funds to go ahead. Work out all the likely costs and visit a few finance brokers or bankers.
- Get together a team of advisors (perhaps a lawyer, accountant or business coach).
- Use an established business broker to give yourself a wide range of franchises to choose from. If you approach a single franchise on your own, you might only focus on that opportunity, to the exclusion of others. This closes you off from a process of learning and education, and closes you off from other good opportunities that are out there. A broker will help you to narrow down location, opening hours, takings and so much more.
- When you’ve located a franchise you’re keen on, request all the right documents. This might include items such as the lease, profit and loss statements, Vendor’s statement, franchise agreements, equipment lists and supply agreements. Get the right advice from an expert.
- Get help when negotiating on price. Assess the positives and the negatives of the business opportunity. Do a SWAT analysis. Be prepared to compromise on some things (or at least know what you’re not willing to compromise on!). Use a broker to do the negotiating for you. Remove yourself from the emotion of the process!
- Research the price of other such franchises for sale in the area. Consider getting a bank or independent valuation. Understand how profit and loss has been presented to you. Remember that good cafes won’t hang around. Be prepared to pay for a good opportunity.
- Get help when drafting the contract of sale, so that the clauses are drafted in your favour. For example, consider having a trial period, in which you can watch how much money the franchise is making. Ask for provisions in the contract that suit you.
Buying a franchise is a bit of work. But a good business broker will make the whole thing so much faster and smoother for you, and make it seem easy.
If you’re looking at buying a franchise, we’d love to help you on your journey. Telephone First Choice Business Brokers on 9899-1888 for a confidential discussion.