Franchising is a particular relationship in which the franchisor (the owner of the business providing the product or service) allows others (franchisees) the right to use the franchisor’s names, systems and processes to sell goods or services.
Some key points in buying into a franchise include:
- Business advice, guidance and support is provided by the franchisor and fellow franchisees;
- The training provided may not meet expectations and is often for a fee;
- There are identified set-up costs and regular franchise costs, although these could be more than establishing a small business;
- There is pre-existing public awareness of the brand, although there is often an additional marketing fee (usually a percentage of revenue);
- If you require premises, you will also need to pay rent;
- There are existing operating systems and protocols which save you from having to build these from the ground up;
- However, there is a lack of independence and freedom to innovate or choose suppliers.
It is crucial that you seek professional advice from a lawyer, accountant and business adviser to thoroughly inform you of your obligations before you enter into this agreement.
If you have further questions, please contact us at frank@franklaw.com.au
This is not legal advice.
Written by Tim Cargill & Zdenka Marinov and edited by Andrew Graham.