Franchises

Franchising is quickly becoming a popular option for people to enter the market with a strong and tested business model. It’s important that both franchisors and franchisees understand the franchising process. Buying into a franchise can be an incredible opportunity for the right kind of entrepreneur but if you are not careful, you could easily be falling into a deep pit of lawsuits, debt and sleepless nights.

5 facts you need to know before you buy a Franchise

  1. The Franchising Code of Conduct governs franchising in Australia. If you are entering into a franchise, it must be compliant with this code.
  2. The franchise agreement is the key document setting out the relationship between the franchisor (big boss) and franchisee (individual owner).This includes upfront and ongoing costs by the franchisee, and what the franchisor provides for those payments.
  3. The franchise disclosure document is a document designed to give a franchisee a neat and easy to understand overview of the franchise agreement terms.
  4. Entering into a franchise as a franchisee is a considerable commitment.  Specialist lawyers know what to look for and advise you on what is standard and normal in a franchise agreement and disclosure document.
  5. Franchising may seem like a good option at first however, there are many pitfalls to buying a franchise.

 

If you want your franchise agreement and disclosure documents reviewed, please contact us for a free quote.

4 pitfalls to watch out for when buying a franchise

  1. Hidden Fees – These could include fees for entry, training, and marketing. It also may be a percentage of the revenue you make. You should carefully review the franchise disclosure documents to make sure you understand all of the fees you will be expected to pay as a franchisee.
  2. A Strict Boss – You may think that owning a franchise equals independence. Some franchises have strict rules on how you run your franchise, such as the prices you charge and how you can decorate your location. You are definitely accountable to someone else and they may be able to come in at any time and ask to show your books or inspect the location.
  3. Territory – People who buy into franchises think they’re buying a “territory”. Check your franchise agreement if this is included, or else another franchisee may open up down the road from you.
  4. Plan for the worst – If things turn out pear-shaped and you may want to leave your franchise. This may be hard to do as most franchise agreements will have a non-compete clause preventing you operating for a certain period of time and within a distance from your franchise location. Before signing an agreement, you should confirm your exit strategy.


I don’t trust words. I trust action.

Just try us. We guarantee you’ll know straight away.

 
 


I don’t trust words. I trust action.

Just try us. We guarantee you’ll know straight away.