Australia has a vibrant franchising industry. According to the Franchise Council of Australia (FCA), there are around 73,000 franchise businesses in Australia and these employ about 400,000 people.
The FCA’s statistics also indicate that franchise businesses are making a significant contribution to the Aussie economy, turning over about $131 billion in revenue annually.
Furthermore, franchises have been found to grow faster than other small business. This is because franchises have better support and marketing systems to carry them through the tough times unlike other small businesses.
No wonder many considering getting into business for themselves take franchising into serious consideration. However, before you sign the dotted line, here are three key things to know.
1. You have to do your research
Research, research, research! We’ve all heard it before, but I can’t stress this enough.
Make it your business to know the franchise in and out as much as you can.
Does the franchise have a good track record of success? Is it making profit? What has its financial performance been over the past few years?
Do they have proven systems in place? What challenges do they have and what they are doing to overcome them? What sets them apart from their competitors? What is their reputation?
What about their franchisee support systems? How helpful are they? Most franchise systems have staff dedicated to providing support, but make sure it’s the right kind of assistance you need.
At stratton, we offer our franchisees a continuous comprehensive professional development training program, strong marketing assistance and even deliver leads straight to their desks.
And because our business is online, we have I.T experts who constantly work on building competitive technology and business systems for our franchisees.
Talk to other franchisees to get a feel for what the system is truly like, no one will have a better view of how things really are than the people already using the system.
If you can, speak to existing customers too. They will give good feedback on the products and services, and can make recommendations on improvements you may not have considered.
Make sure you question everything you don’t understand, so that you are 100 per cent confident and comfortable before you proceed. To make franchising work, you not only need to believe and trust in the brand, you also need to believe and trust in yourself.
2. You will have to work really hard
The good thing about purchasing an existing franchise system is that the owners will already have systems and processes in place that you can build upon. This is great, but be prepared to work hard if you want to see results.
Most franchise owners, particularly first time franchisees, go from a 9 to 5 job, where they’re used to wearing just one or two hats, to running their own business with little business management skills and experience.
While most franchise companies provide solid support, be prepared to juggle everything from sales and marketing to hiring and managing your own staff, and doing a lot of paperwork.
3. You will make mistakes
Whether it’s your first or third time owning a business, the franchise journey is not an easy one, so be prepared to make some mistakes.
One of the biggest challenges you may face with buying an existing franchise is fitting in with the culture of the business. When you’re investigating and doing your research, use it as an opportunity to build rapport within the business.
Don’t be afraid to take a few risks. I took a few and nearly fell flat on my face, but I survived. If you don’t take risks then you’re not going to have a go. Take a risk, make a mistake, quickly re-group, learn from it and start again.
Finally, stick with it and don’t let mistakes dishearten or de-motivate you. Surround yourself with great people and take advantage of the help from the franchisor. If you don’t understand something, always ask until you do!
Rob Chaloner is the founder and Managing Director of stratton, one of Australia’s leading vehicle finance providers.