Think before you make this big business decision
Many people think that purchasing a franchise is a quick road to wealth and success. If you are an entrepreneur at heart without the time and impetus to start something from scratch, then owning a franchise seems to be the logical, easier option, especially if it is a successful business. With so many positive aspects, you’re probably ready to sign on the dotted line without doing your homework properly. Take a step back and read through this list of what you should consider before making the decision to purchase a franchise.
Research the franchise
Make sure the franchise you intend to purchase is well established with a solid foundation. There are no hard and fast rules when it comes to franchise contracts so be sure to read any printed material thoroughly. You will need to ensure that the franchise head office assists with training new staff, construction of the branch and marketing the services.
Check for hidden costs
There is usually an upfront cost when purchasing a franchise and it’s not just a few dollars. Determine what you are paying for as the franchisee, and what the franchisor is covering. It is possible to come to an agreement with regard to the monetary value before any contract is signed. This is essential as it determines whether you can afford to purchase the franchise or not. Remember, it is not wise to depend on future income of the franchise to cover the initial cost of purchase.
Contact info of other franchise owners
It is not legally expected for the business owner to provide you with contact details of other franchisees but it is useful to request, especially if you have doubts. Get a first-hand account of a scenario and the best way to do that is to speak with someone who has dealt with the business owner and setup a branch.
Analyse potential earnings
A franchise is not a way to make a quick buck. Request previous financial reports and estimated running costs. Consider the inflation rate and work out how much the business costs to run, and what the future potential earnings could be. If there is a great difference then it is probably not worth your while. Ask a professional financial analyst to assist you with this component.
Examine territorial restrictions
What is the point of owning a business if there is another branch around the corner? This minimises your potential earnings and could be the determining factor of whether your branch is successful or not. It is crucial that you discuss location with the business owner. Each franchisee should be restricted to a certain area to ensure fair trading practises.
Study the market and trends
Do some intensive research about the industry you want to purchase in, even if you think you know it well. Whether it is the restaurant, photography or construction industry, various market indicators and trends need to be taken into account to increase the likelihood of successful operations. Once again, consult an expert who can assist you with this task.
Become au fait with business operations
Unlike owning your own business, purchasing a franchise comes with certain restrictions. For example when it comes to the services, the appearance or the manner in which staff handle certain scenarios, it has to be in line with what the original business has decided on. You cannot change systems, operation process and colour schemes as you see fit, unless agreed upon by the franchisor.
If you are looking for a unique franchise opportunity in Australia, visit the Viva Photography franchise page.