Starting any kind of business can be daunting. After all, it’s a significant commitment both in terms of time and money. However, starting your own business can also be one of the most rewarding experiences in the world. The sense of achievement that comes with building a business from scratch is truly second to none.
One of the best ways to dip your toes in the entrepreneurial pond is by purchasing a franchise. A franchise provides you with all the benefits of being your own boss and having control over your working hours, whilst also providing you with a tried and tested blueprint for small business success. So, if you’ve been thinking of buying a franchise, here’s what you need to know.
What are the steps I should take before purchasing a franchise?
Before you make any kind of contractual or financial commitment to purchasing a franchise, you should always take the necessary steps to understand the full scope of what you’re signing up for. Although franchising is a wonderful and accessible way to start your own business, it’s still a significant undertaking that requires some thought. We always recommend taking the time to do some research prior to signing any agreement or paying any money.
Here are some of the first steps you should take before purchasing a franchise:
Find out if franchising is really right for you
Franchising is a popular entrypoint to starting a small business because it’s accessible and convenient. Rather than having to start completely from scratch, buying a franchise allows a small business owner to build their own business based on a franchising system that’s been proven to work. The result is that franchise owners are much more likely to find long-term success than their independent counterparts.
Although most franchising systems afford franchise owners plenty of freedom, the reality is that operating a business under a franchise means that you are limited in some ways. For example, you will, in most cases, have to pay regular franchising fees and you will also likely be asked to abide by certain operational principles. If you’re someone who thrives working under structured systems and someone who values convenience, then having these rules and requirements can actually be something of an advantage. On the other hand, if you’re someone who doesn’t work well with rules, then starting an independent business may be the better way to go.
We recommend talking to other franchise owners across a wide range of industries to get a better idea of the realities of owning and operating a franchise business. At the end of the day, everyone is different so the decision you make should be one that complements your skills and your personality.
Understand laws about franchising
The importance of franchise agreements can’t be understated. Franchise agreements are legally binding documents that set the parameters of a franchising relationship. Simply put, a franchise agreement is a master document that outlines in detail the terms of the franchising relationship that both the franchisor and franchisee have agreed upon. Under the Franchising Code of Conduct, every franchisor in Australia is legally required to present a franchise agreement to a potential franchisee.
Every franchise agreement is different, but the type of information you’ll typically find in this document include:
- Fee structure;
- Key terms of the business;
- Licence grants;
- Grounds for termination;
- Franchisee obligations;
- Franchisor obligations;
- Business procedures and rules;
- Dispute resolution procedures.
Ultimately, franchise agreements serve to protect both the franchisor and the franchisee. By clearly setting out the obligations of both parties, franchise agreements exist to prevent disputes from occurring later down the track.
We always recommend doing your due diligence prior to signing any legally binding document. And since no two franchise agreements are exactly the same, it’s always wise to get a lawyer to review a franchise agreement prior to signing it.
Not all franchises are made equal. Although franchising is generally a wonderful and low-risk way to start a business, there are unfortunately some bad actors out there, which is why it’s important to do your research prior to making any kind of commitment.
When researching franchises, you should be guided, at least initially, by your skills and interests. There’s no point in researching gardening franchises, for example, if you don’t enjoy gardening. Our advice is to first find out what you enjoy doing and search for franchise opportunities accordingly. You might be surprised to see how many opportunities are out there in your chosen industry.
The second consideration to keep in mind when you’re in the research stage is whether there are any training requirements. Some industries require qualifications and certificates, so be sure to enquire about any specific training obligations when you’re sending out your expressions of interest. At Jim’s Group, we provide comprehensive business training to all our new franchisees and can also support our franchisees in obtaining external qualifications.
Related Jim’s Group News
– 14 Best Franchise Opportunities in Australia.
– Three Most Profitable Small Business Opportunities in 2022.
– What are the 4 Types of Franchising?
– What are the Best Franchise Opportunities in Australia?
– What are the Most Successful Small Businesses?
– What Franchise Should I Buy?
– Which Franchise Makes the Most Money in Australia in 2021?
We have regional franchisor opportunities and some pre-loved franchises available Australia-wide.
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