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Commonly Asked Questions

 

Can I rely on the information provided by the Franchisor when deciding whether or not to buy a Franchise?

No, you should have your solicitor; your accountant and an independent specialist franchise adviser review the disclosure document and the terms and conditions of the franchise agreement, and ensure they explain them to you before making a decision.

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Are there important advantages to buying a Franchise over starting a business from scratch?

Yes, the advantages include reduced risk of failure, overcoming limited experience, a proven market position, access to training and assistance, potential buying power, help with finding a location and designing premises, and in some cases help with financial assistance.

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Are there potential pitfalls that might make me think twice about buying a Franchise?

Yes, it could be more costly than setting up your own business and opposing to the “be your own boss” advertising, the franchisor will tightly control how you can conduct your franchise business.

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Once I have paid the initial cost of a Franchise, do I have to pay any more fees?

Yes, royalties are usually paid as a percentage of sales. Part of the Royalty represents profit to the franchisor, but part should also represent the cost of providing management support. An advertising or marketing levy may also be paid as a percentage of sales. It should only be used by the franchisor for advertising and promotion, and no part of it should contribute to franchisor profits.

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What sort of personality traits should I have to run a successful franchise?

  • Capable of absorbing new concepts quickly. 

  • Willing to follow the franchisor’s blueprint to the letter. 

  • Positive people- someone imbued with the necessary enthusiasm to market the business and motivate staff. 

  • Adequately resourced to meet the initial (capital investment) and ongoing (working capital) financial requirements of the business. 

  • Able to manage and control the business, and willing to drive the brand at local level. 

  • Prepared to co-operate with the franchisor’s team as well as with fellow franchisees, and play an active part in programs offered by the network. 

  • Determined to build the business into the best and most successful in the territory. 

  • Convinced of the merits of the franchise and the brand, and prepared to defend both against possible attack by competitors or others. 

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Are there any laws regulating franchising?

Franchising is regulated via the ACCC and is subject to the Trade Practices Act. The Franchising code of conduct is the most significant regulations and it is imperative to be read the regulations before purchasing or setting up a franchise system.

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How long does a franchise last?

Read your disclosure document which will be provided by your franchisor. Length of a franchise will vary from one system to another. It should be noted that generally a franchise will last for a fixed period of time however there will be an option to renew.

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Should I talk to other franchisors?

Other franchisees will often provide the inside story as to the strengths and weaknesses of a franchise model. It is important to remember that often a franchisor has more interest in selling franchises than building up a strong network.

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What do I do if I have a disagreement with my franchisor?

The first thing you should do is contact your franchisor to discuss the problem, If you can not resolve the problem in a face to face meeting, then write down succinctly the source of the problem indentifying the issues and mail a copy to the franchisor. The next step is to read the operations manual which will outline procedures for alternative dispute resolution. When the above options have been exhausted then it may be necessary to contact your legal advisor.

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 If you’d like more information or if you would like to discuss a particular Franchising matter, please complete and submit the Express Enquiry form on the top right hand side of this page and we will contact you to discuss your enquiry or call us on 1300 QUINNS (1300 784 667) or on +61 2 9223 9166 to arrange an appointment