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What Research Should I Do?

 

A Guide to What You Should Know

The greatest risk you take when buying a franchise is to rush in without doing enough research. Thorough research is critical when choosing a franchise. The following 10 steps will help you avoid taking the wrong path:

Step 1

Get a copy of the Franchising Code of Conduct. Read and re-read it.

Step 2

Look at what franchises are available.

Step 3

Talk to your accountant, solicitor, bank and financial adviser. You can never do too much research or get too much independent legal and financial advice. Access how much money you have available and your borrowing capacity. Do the figures on the start up costs: the initial purchase price, the ongoing fees, the legal costs, a shop fit-out and purchasing stock.

Step 4

You will want to see a Disclosure Document. Franchisors are required to provide you with this at least 14 days before you enter into an agreement with them.

Step 5

Discuss the Disclosure Document details with your lawyer.

Step 6

Talk to your accountant. In your financial analysis, calculate how much value you can extract from the business in wages, profit, car use and superannuation after paying for running costs, royalties, taxes, marketing and technology. Will it be enough?

Step 7

Talk to some of their franchisees about profitability, their relationship with the franchisor, any problems they have encountered and how this has been resolved and whether the franchisor’s side of the agreement is being kept. As the franchisor will be offering management, advertising and research skills, assess what present franchisees think of these resources.

Step 8

Expect the franchisor to do a thorough investigation of you and your credentials.

Step 9

Contact the ACCC (Australian Competition and Consumer Commission) to find out if they have had any dealing with the franchise business.

Step 10

You want to be confident that the franchise business is reputable, financially strong and good at what they do.

While you may be tempted to skimp on professional advice, independent legal and accounting advice will save you money in the long run.

If you’d like more information or if you would like to discuss whether buying a franchising suits you. 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.