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Why Become a Franchisor?

Imagine having your business franchised. In two to three months you have a franchise system that is COMPLETE, PROVEN and of INTERNATIONAL STANDARDS. The aim of a franchisor is to build their empire and brand effectively, to the point where they can step back and let the franchisees continue to achieve financial and business growth. Enjoy the lifestyle and income you have always wanted.
Some advantages you can benefit from as Franchisor of your own system:

  • The franchisor is not concerned with the day to day operation of the business
  • The franchisor’s organization is compact and can earn profits without the involvement of high capital risk
  • The network has the ability to grow rapidly
  • The franchisor has fewer staff and fewer staff problems
  • Provides motivated owner/operator. It is generally recognized that franchisees have greater motivation to succeed than company employees do
  • It provides a wide and secure outlet for the products and services
  • It enables the franchisor to service national customers using his network of franchisees
  • Continuous income from royalties which are based on the franchisees gross sales and/or fixed fees
  • Additional income from upfront fees
  • Cost effective advertising and promotional activities
  • The benefit of stronger purchasing and volume discounts
  • New marketing concepts. Many franchisors claim that 90% of their marketing innovations originate from motivated franchisees that all have the best interest of the Franchise Sysem at heart

Why Become a Franchisee?

Franchising enjoys a success rate more than two and a half times greater than stand-alone businesses.

It’s time to make the move, BE YOUR OWN BOSS! Have the freedom and lifestyle of owning your own franchise, whilst also having the backing and support of an already established and proven business system!

Some advantages you can benefit from as a Franchisee of your own business:

  • The franchisee’s lack of basic or specialist knowledge is overcome by the training program and assistance of the franchisor
  • The franchisee has the incentive of owning their own business with the additional benefit of continuous assistance from the franchisor and other franchisees
  • In most cases the franchisee’s business will benefit from operating under a readily identifiable name usually on a national basis, the brand.
  • The franchisee will usually need less capital than would if setting up their own business
  • The franchisee will have a business all set up and ready to go with systems in place and operating with a proven track record
  • Interaction with fellow franchisees enabling the swapping of ideas and improving operational systems in all your businesses
  • Putting it all together. The Franchise System will give the franchisee a greater chance of success then if the franchisee was to operate independently
  • An industry that continues to grow solidly even through difficult economic climates.
  • Becoming a franchisee gives the franchisee the confidence that the System works
  • Field support by the franchisor’s operations people in ongoing operational issues and guideless
  • Initial and ongoing TRAINING to assist the franchisee with the operation and development of their business
  • The franchisee should, where appropriate, receive the following assistance:
    1. Site selection
    2. Preparation of plans for modelling of premises
    3. Obtaining finance for part of the acquisition cost of the franchise business
    4. Training of staff
    5. Purchase of equipment
    6. Selection and purchase of stock
    7. Getting the business open and running smoothly
    8. The franchisee receives the benefit of a greater scale of the franchisor’s advertising and promotional activities, therefore a greater public awareness of the business
    9. The franchisee receives the benefit of bulk purchasing and discounts

4 Steps to Franchising Your Business

Once you have decided that franchising is the way to expand your operation and you are satisfied that you would make a suitable franchisor, then the following steps need to be followed to ensure that the move is a success for both the franchisor and franchisee.

Step 1 – Franchise Feasibility

The first ‘step’ in creating a franchise system is to assess whether or not it is viable to franchise a particular business. The feasibility study should:

  • Identify major strengths and weaknesses of the business;
  • Determine if the essential features of the business can be duplicated
  • Analyze past trading in order to assess whether or not the business can support both Franchisor and Franchisee as profitable entities

Step 2 – Franchise Program and System Development

The second ‘step’ in forming a franchise system is the establishment of an appropriate franchise program. This involves determining the most appropriate strategy for the development of the franchise network. The franchise program includes determining the precise terms of the franchise arrangement, including, territory, premises, product supply, training and support, the rights and obligations of the Franchisor and the Franchisee, franchise fees and advertising levies, just to name a few.

Step 3 – Franchise Documentation Development

The third ‘step’ involves the development of the necessary documentation for the system. Typical franchising documentation that needs to be developed include:

  • The Operations Manuals
  • Franchise Induction Sequence
  • Franchise Profile Documents
  • Franchise Disclosure Documents
  • Franchise Agreements

Step 4 – Implementation and Recruitment

This fourth ‘step’ requires the development of the most appropriate strategy for implementing the franchise program. The strategy will include advice on the marketing of the franchise and the recruitment of suitable Franchisees.

However, implementation of the system is not the end of the process. As franchisor your area of responsibility will encompasses the welfare of, not only your original business, but the continued viability of the franchise system and your franchisees.

The major reasons that franchise systems fail include:

  • Greed on the part of the Franchisor.
  • Poor Franchisee selection.
  • Poor Franchisee training.
  • Lack of continuing product development.
  • Too rapid expansion.
  • Poor monitoring of Franchisee performance.
  • Lack of proper conflict resolution procedures.

Ongoing Success

A Successful Franchisor will need to be committed to…

  •   Putting in the right sort of effort to ensure the success of your operation.
  •   Maintaining high operating standards for your business.
  •   Always sticking very closely to the business concept and being a team player.
  •   Being sure you have chosen your franchisees carefully and making sure that they definitely have the right aptitude and temperament for your type of business.
  •   Reading all material sent to you by your franchisees and responding to requests for information.
  •   Being loyal to your franchise system and your franchisees.
  •   Explore new avenues and implore new developments to expand your business.
  •   Going out of your way to develop a close working relationship with franchisees and personnel.
  •   Being highly suited to self-employment and taking full responsibility for your business.

A Successful Franchisee will need to be committed to…

  •   Putting in the right sort of effort to ensure the success of your operation.
  •   Making royalty payments and submitting reports on time.
  •   Maintaining high operating standards for your business.
  •   Always sticking very closely to the franchisor’s concept and being a team player.
  •   Being sure you have chosen your franchise carefully and definitely having the right aptitude and temperament for the type of business.
  •   Reading all material sent to you by your franchisor and responding to requests for information.
  •   Being loyal to your franchise system and not competing outside the system against fellow franchisees.
  •   Rather than resisting change for the sake of it, going along with new developments introduced by your franchisor.
  •   Going out of your way toward developing a close working relationship with franchisor personnel.
  •   Being highly suited to self-employment and taking full responsibility for your business

Franchise Consultants

When you’re buying or setting up a franchise, it’s important to get accurate and useful advice. Franchise Central offers some hints on choosing the right consultant.

How Do You Choose?

In choosing any consultant is essential that you can build a good rapport with them and trust them implicitly. You will be paying them, and you must have confidence in the person/firm.

Having said that, there is no point in using, say, your family lawyer to examine a franchise agreement just because you trust them. Franchising is a specialist area, so you should shop around to choose specific professional franchise consultants experienced in it. Many excellent lawyers have never seen a franchise agreement before so their advice will be superficial and off the mark.

Many excellent accountants do not understand the real value of a franchise brand and system. If you choose inexperienced people, not only will you be paying for uncertain advice – you’ll be paying for them to gain their experience.

Value For Money

Experience and expertise cost money, so be prepared to pay a reasonable fee to each of your professional consultants. The additional cost of using an experienced consulting firm will be offset by the quality of the advice given; the cost of a mistake makes the cost of experience look cheap.

Most advisors are loathe to work on a fixed fee basis because so many contingencies can pop up without warning. They therefore charge on an hourly basis, which you should find out. If you can’t obtain a fixed price, get a written ‘guesstimate’ of the likely hours involved with fairly rigid parameters to avoid misunderstandings.

A Reasonable Fee

There is a tendency for people to feel that professional fees are excessive. Where this happens, it is usually because the franchise consultant has not communicated the basis of charging or has not given accurate estimates, which means that the result is bad for everyone.

If you are not happy with the final bill you receive, you should communicate with the sender right away. Ignoring bills and monthly statements does not make them go away; it merely makes people more determined to get the full amount.

Your franchise consultant should put everything in writing as to likely costs, and you should be able to rely upon that. If there are unforeseen expenses, ensure your franchise consultant keeps you informed as you go along – not when the final bill arrives. As in franchising itself, communication is all-important.

Should You Follow Their Advice

The advice you receive from your franchise consultant will be based upon their professional expertise, their knowledge of the facts in your particular instance and their researches on your behalf.

However, whether you choose to accept the advice or not is up to you. If you disagree or don’t accept the advice, then discuss it. Ensure there are no misunderstandings or misconceptions, which might lead to the wrong advice being given. Sometimes a gut feeling might tempt you to reject the advice given. If you do this, be prepared to accept responsibility for your actions.

Do not expect an advisor to tell you what to do. Their role is to comment on a situation objectively and without emotion, using all their relevant skills, judgement and knowledge of the factors involved. Bear this in mind when deciding to accept the advice, but remember that the final decision is always yours.

Built On Trust

The client and the professional advisor must always trust each other to tell them the whole truth. If you want good advice, you should give them every piece of information you can and always be entirely honest about your circumstances, because their advice will be based partly upon what you tell them.

When appointing an advisor, you should have the objective of a long-term relationship with them. The longer they have acted for you, the better they will know you and your business, and the better their ongoing advice will be. People who change advisers regularly miss out on this valuable relationship.

A Necessary Good

Whatever your business, in this day and age you cannot do it alone – no matter how good you are there will always be concerns outside your own area of expertise. The ideal is to have experienced and trusted advisors who will help to make you more successful.

Professional advisers are not a necessary evil, but a necessary good. They can bring additional breadth and wisdom to the purchase or operation of your business. Select them well, use them wisely and treat them as your friends, for they are there to help.

Franchise Central and its team have been leading and developing the franchise sector in Australia for over 27 years.

Our team has been involved in the development and expansions of more franchise systems in Australia than any other firm or consultant. A strong and proven track record of long term success stories and relationships with franchisors and franchisees, even long after they have moved on.

Thinking of Buying?

It is important to note that before taking the time to evaluate a franchise, it is essential to first ensure that you are prepared to work with a Franchisor. To help you assess your readiness to do this, ask yourself the following questions:

  • Do you know your skills, strengths and weaknesses?
  • In light of this knowledge, do you believe that operating a franchise is the right form of ‘self employment’ for you?
  • What are the types of franchises that interest you? Make a list -Franchise Central can assist you with this.
  • Have you investigated these enough to determine that they have a future, particularly in view of current economic and social trends?
  • Have you decided to work the franchise in partnership with someone? Do you know their skills, strengths and weaknesses and are these compatible with yours?
  • What about the members of your family? Are they willing and able to help/support you in this venture?
  • If you plan to operate the franchise on your own, do you have confidence in your ability to manage all aspects of the business?
  • If you will require assistance in the setting-up stage, does the franchisor include the cost of staff in the financial calculations for the franchise?
  • Are you confident that the level of training and support provided by the franchisor will be sufficient for your needs as a franchise business operator?
  • What exactly is your reason for acquiring a business? New challenge? Job replacement? Asset building? Boredom? Family involvement?
  • Do you have the stamina and perseverance to run a business?
  • What exactly do you want to achieve over the next ten years? Security for family? Cash flow for other investments? Empire-building? Capital gains? Property investment portfolio?
  • What sort of working conditions can I tolerate? Noise, food odors, cold, hours, pressure, physical demand, outdoors, customers, etc.?
  • What is your asset position? Equity in house? Cash reserves? Shares, bonds, etc.?
  • What type of business suits your personal style? Would I wear a tie? Am I comfortable telling friends I own a fast food outlet, a car detailing business or food shop?

Owning a franchise or business is a great way to become self-employed with a proven business system and with the support of experienced operators. With vast experience and dedication, Franchise Central can provide you with assistance in choosing the right franchise or business for your specific and personal requirements.

Can specifically help you:

  • Find the most suitable franchise/business amongst the great variety available;
  • Evaluate a franchise/business before you buy to ensure it is viable and that it is realistic to expect it  can achieve what you want it to;
  • Negotiate with the franchisor/owner to ensure you receive the best deal possible;
  • Assist in the application to a franchise/business to improve your chances for success.
  • Assist in business planning and cash flow projections of the proposed franchise/business.
  • Arrange your financing in the most appropriate way.

Are you ready to MAKE THE MOVE?

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