How to buy and run a franchise in Australia
There are a number of things that prevent people from running their own businesses, but the two biggies tend to be money and the idea itself. Setting up a new business from scratch means you’ve got to shell out for everything from stationery to utilities and premises. On top of that, you’ve got to be passionate about what you’re trying to get off the ground.
However, even if you haven’t come up with that Big Idea, it’s still possible to be your own boss. Franchises offer the perfect solution for those with limited funds and who don’t want to risk it all on the back of an untested idea.
Why buy into a franchise?
Buying into a franchise is a smart move. It gives you a business template, a tried and tested product or service and the brand already has some reputation and profile. In short, what can take an entrepreneur years to build up is already yours for the taking. A good franchise will come with a business model, the product or service and even training and support, if it’s required. As far as your end of the bargain goes, you’ll pay an up-front fee and then there will be ongoing fees for the right to operate as part of the franchise – usually a percentage of the sales. An accounting software such as Intuit QuickBooks can quickly help you to comprehend type of costs related to running a franchise. However, after that, as long as you uphold the franchise’s code of conduct, you’re pretty much your own boss.
However, while buying into a franchise definitely gives you a head start in the business game, it doesn’t mean that you can rest on your laurels. This isn’t an ‘easy option’. There will still be as much work involved in ensuring that you attract and maintain clients. However, the first thing you need to decide is the type of franchise that you want to buy into.
In essence, there are two types of franchise on the market: the business format franchise and the product and trade name franchise. The business format franchise is more co-ordinated that its counterpart; the name, the product and the way you conduct business are laid out for you – all you need to do is put the work in to find new clients.
The product and trade name franchise is less structured; effectively, you buy the right to sell a particular product or service under a brand name. After that, the way you operate the business is more or less up to you.
However, deciding the type of franchise you want to buy into isn’t the end of your decisions. There are other things to take into account to make sure that you get the best return on your investment. The first – and possibly most important of these – is to ensure that the franchise you’re buying into is a member of The Franchising Code of Conduct, as recognized by the Australian Competition and Consumer Commission.
These bodies have laid out guidelines and legislations that will protect both you and the company you want to become part of; in the event of a dispute from either party, you can call on the FCC or the ACCC to help mediate. Operating as part of a franchise can help you get a flavour of what’s involved in running your own business, but without many of the risks associated with getting a start-up off the ground.