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Tips on Franchising

Franchising is a business model where you to buy a licence for an existing business, which allows you to establish your own practice under this licence agreement.

Franchises are a great opportunity if you don’t want to start a business from scratch – you get the benefit of a market established product or service and the reputation that comes with it, corporate marketing and advertising and established business systems.

But…like all business ventures, you need to do your homework first, to make sure you choose a Franchise that’s right for you. And to make sure you’re not ripped off by scams or under-performing businesses.

So, here are some franchising tips if you’re interested in giving this business model a go:

  • What are your goals and business ambitions? Is this just going to be a retirement hobby, or are you looking for a serious investment.

  • Choose a Franchise you like! Potentially you are going to be working in this business 7 days a week until it gets established – so it really helps to be doing something you enjoy. Natural passion also makes a huge difference in your ability to promote your new business – customers will feed off your passion!

  • Do you like the Franchisor? the Franchisor will be an integral part of your business life. Can you get on with them in business?

  • What do other Franchisees say? Talk to other franchisees and find out what THEY think about the business – they are likely to be much more open and honest about realistic performance than the Franchisor! Ask them about the good and the bad.

  • Do your own market assessment. Just because you purchase a franchise, it doesn’t mean it will automatically be a success. You still need to do your market research – will this franchise grow? Who are your target customers? Who are your competitors - are there 27 other coffee shops in the same mall?

  • How much cash do you need to get started. Like all new businesses, cashflow in the early days can be a struggle. Do a financial analysis of start-up costs, estimated returns (and be conservative!) and how much money you need in the bank to maintain a healthy cashflow. At this stage, it’s wise to get your accountant to look at the figures too.

  • Get professional advice from your accountant and your lawyer, to make sure you fully understand the implications and requirements of the disclosure document from the Franchisor, BEFORE you sign up.


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We are not certified financial planners or advisors. The information in this website is general information only. Always consult a licensed financial planner before making any finance or investment decision.


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