| Franchising - What You Need to Know! |
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DO'S & DON'TS TO FRANCHISING EXCELLENCEIf you're considering becoming a franchiser – or perhaps becoming a franchisee is what you’re really after – then don't look past these tips! TIPS FOR FRANCHISEETips for Success 1. Check to see the franchiser is a member of the Franchising Association of Australia and that they comply with the franchise code of conduct. 2. Read up on the franchiser and ensure they have a solid track record of performance 3. Ensure the franchiser has a unique product range, which is growing in demand. Have a look at industry trends and the long-term need for the products sold by the franchise. 4. Determine whether the franchiser has a strong brand name and a reputation for excellent service and quality. 5. Ask to see the franchiser's operations manuals and make sure they are comprehensive. 6. Check the franchiser has a thorough training program and dedicated and competent franchiser support system. 7. Find out what specific sites are available or which regions the franchiser is keen to open new stores in. 8. Talk to existing franchisees and get their perspectives and feedback. 9. Do some work experience within one of the franchises to gain valuable information first-hand on what the business entails. 10. Make sure you are compatible with the franchiser's values and business structure. 11. Take advice – see your accountant and financial adviser and seek out an appropriate lawyer to review the franchise agreement. Tips on what not to do 1. Do not hurry. A shortcut in your research can increase your likelihood of making a poor decision. 2. Do not over-extend or be optimistic with your personal finances. Be realistic and, if anything, conservative. 3. Do not rush in and get the first one that comes along. Rather, wait and get the business that you want. 4. Do not take anyone's word. Find out for yourself. It's your money, your risk and your opportunity. You know best what you need, so investigate first hand. 5. Do not listen to comments from people who may have the best of intentions, but are unqualified to comment. BECOMING A FRANCHISERTips for Success 1. Franchiser must establish a profitable business and have a sound understanding of the critical elements of differentiation for its concept. 2. Build a successful business model for the franchisee. The concept must be profitable for the franchisee and the franchiser. The concept must have the capacity to be replicated consistently and in a streamlined manner. 3. Identify the type of franchisee who would best suit in the business and establish a target mix of franchisees to ensure the calibre and integrity of the proposition is enhanced. 4. Develop strong systems that create the foundations of the success equation. Franchise system + franchisee adherence + franchisee effort = success. 5. Develop and maintain Key Performance Indicators (KPIs). The KPIs should be targeted at monitoring the franchisee’s performance against the identifiable critical elements that differentiates the franchise business from its competition. Good KPIs must equate to growth of the franchisee’s business. 6. The franchise proposition should be a turn-key operation with no hidden costs. The franchisee should have a defined establishment cost incorporating all expenses in order that proper financial planning can be implemented and maintained. Nothing will stifle a growing franchise organisation more than new franchisees struggling to meet their financial commitments. 7. Provide a structured platform for dialogue between the franchiser and franchisee representatives. This is a health check on the system which maintains the following critical elements:
9. The franchiser should consider strongly the advantages of multi-unit franchising due to the inherent benefits contained in the proposition, as follows:
11. Obtain and develop good relationships with your accountant, financial planner and banker and seek out wise counsel. Director Tony Martin |
+ 61 8 8333 1944
