Should I Franchise?

You have been a business owner for several years. You have started to employ several employees and you are finding yourself in a position where it is easier to let go of certain tasks and leave it up to your trusted employees to serve the clients. Your business is doing very well, your brand is established, you have a unique product or service – people know your business. Your business enables you to sufficiently provide for your family and in retirement you should be OK.

But you know there is more value to be extracted from your business. You sense that the business can do better and for it to get better, it needs a re-shape in its structure and approach. Perhaps some investment is needed in a branch or perhaps external capital is required to take it up to the next level. Then, one of your network colleagues asks you: “Why don’t you franchise your business?”

Franchising is a smart and efficient way of doing business. In a franchise, the franchisor owns the name, brand and system, and a franchisee is given the right for a limited period to use it. The franchisor may also organise products, equipment, a lease of premises and other things, depending on the nature of the franchise. The franchisee will typically pay for these rights.

Owning and operating a franchise can be extremely rewarding - both financially and lifestyle wise. Here is a list of a few matters to consider when asking yourself the question - should I franchise?

Make sure you love your job / industry

Only true lovers of coffee should run and operate a coffee shop franchise. The same goes for gyms and physiotherapists. It is the passion of a franchise owner that has the biggest impact on franchisees and ultimately, consumers. 

Denis McFadden had one simple idea – that people want quality haircuts, at an affordable price, from a qualified stylist. This one simple idea became clear to him when he was operating his own hairdressing shop, where people were required to make an appointment and ‘walk-ins’ were not allowed. As part of a marketing campaign, he decided that for one week, people could simply ‘walk-in’ and get their hair cut. The public response was overwhelming, and it started this notion of having access to a professional hair stylist without an appointment – and Just Cuts™ was born! Being a qualified stylist himself and being passionate about it changed the hairdressing industry forever and remains the purpose of Just Cuts™ 27 years on.

Make sure that before starting a franchise, you are passionate about what you do!

Accept the reality and plan ahead

Starting a franchise is like starting a new business, even if you have an established business. It is therefore imperative for you to recognise that you will be required to do the very things you did when you started out. This includes all the hard yards in terms of marketing, networking, convincing, following up ‘dead leads’, planning, preparing and designing. Being rejected and discouraged will be part of the journey. In addition, if you are planning to franchise your business, you will need to prove that it can survive different trading conditions over time. The Franchise Council of Australia recommends business owners who are considering franchising, to have at least 5 years’ experience in successfully operating a business, before launching a franchise of their own. Mapping out your plans for establishing a franchise is essential.

Access to money

Setting up a franchise and the associated products and systems are very expensive. Franchising is also subject to various regulatory requirements. Estimates therefore run into tens of thousands of dollars. The development of operating manuals, branding, marketing and other strategies may require the services of experts in those fields. Preparing and developing a suitable franchise agreement, with the required licencing and constraints, is a critical step and will require expert legal advice. Make sure you can handle the financial investment of franchising.

Do research

Do your research in terms of the different type of franchise structures and your franchise competitors in the market. Make sure you identify and clarify your niche or point of difference. For a franchisor it is the potential franchisee that is your customer. Make sure your systems place your franchisees in front of their competitors. A successful franchise is one where franchisees can thrive and excel above their competitors. Make sure your business model empowers your franchisees to succeed, who may not be that experienced in the field. Provide access to the required resources that you have gained over the years in the industry.  Remember, the reasons franchisees will sign up is to have a strong brand, on-going training, technical assistance and group purchasing and marketing strategies. Admittedly, not all franchises are the same – some provide a lot of support and other less so – but knowing your product, market and competition are essential before launching your franchise.  

Get advice

At Frank Law we have the experts and experience to advise and assist you in making the decision and then ultimately establishing a franchise. Our expert team can also advise you on various options to grow or expand your business, if the franchise model is not suitable to your situation. Our team has access to other subject matter experts such as business advisors, accountants, IP lawyers, marketing and branding experts and tax advisors. 

We encourage all business owners who are asking themselves the question if they should franchise to call Frank Law on (02) 9688 6023 or contact us online. 

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