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If you’re thinking about taking on a franchise, then there are a few things you need to know. While the low entry cost may seem appealing in securing a decent wage and job security, there are certainly a number of risks to be aware of.
“A mobile coffee van business costs as little as $50,000 to purchase with the potential of making as much as $150,000 in revenue a year,” said Franchise Expert Tracy Eaton.
“Mobile dog washing, accounting, beauty, car servicing and cleaning, computer services as well as food delivery are available more than ever from $6,000 and there’s even a franchise that has drones providing aerial photography and video surveillance services,” said Eaton.
Franchising is one of the most dynamic and progressive business sectors in the Australian economy. The industry is growing and it is seen as recognised and reputable way of doing business in Australia.
The latest survey by Franchise Australia, the peak body in Australian franchising, shows that there are 79,000 franchises in Australia, with 460,000 people employed in the sector and the national sales turnover estimated to be $144 billion. In the period between 2013 and 2014, only 1.5 percent of franchisees were involved in a substantial dispute with a franchisor over the past twelve months.
If you fear redundancy in your industry or wish to find greater flexibility as your own boss, a franchise may be a beneficial option.
“On the flipside of the franchising, there is usually less autonomy and more operational restrictions on franchisees, there are fees to be paid, and some of the expected benefits may not be as great as anticipated, or indeed the franchisor may fail to deliver to the franchisee’s expectations,” said the Franchise Council of Australia.
Eaton believes franchises are a viable employment option as long as you do your research:
#1. Due diligence
Don’t be sold on the story alone about the business providing flexibility and a good income, get advice, check the financials and hire a franchise lawyer to be safe.
Speak to other franchisees to gain an insight into the business culture within that franchise to ensure it’s a good fit for you.
#3. Your needs
Know what you want out of a franchise first and foremost so when you look to buy one you are searching based on your criteria.
#4. Skills and personality fit
Running a business is different to working for someone, consider your personality, identify your strengths and consider the gaps and be prepared and open to grow and learn
“The franchise industry is regulated which means there are safeguards in place for franchisees. Franchise businesses include systems, training and support making it a less risky option than purchasing other businesses, or starting your own,” concluded Eaton.
While the 7-Eleven scandal has shaken the industry, the Franchise Council of Business (FCA) has been working to manage the impact on the franchise community and prevent similar situations from arising.
Kate Longman, who was the 2016 Western Australian winner of the Franchise Woman of the Year award, has spoken to Franchise Australia of the potential abundance within the franchising industry, and says that there is a steady increase of women in the industry.
“We are seeing more women, which is really encouraging. The future of franchising is strong; there is a lot of enthusiasm out there for franchising and we see that with people coming through our office- it’s really positive that people really have a good opinion on franchising, and that is just getting stronger.”