Five things to consider when buying a franchise
So you’ve decided you want to buy a franchise? You’ve made initial inquiries to check that your finances are in order? Do you have business experience and know you would make a great manager? Now it’s decision time. But how do you know what franchise to buy into?
There are as many different franchises in Australia as there are loaves in a bakery. From the cost of investment to the products or services offered, it’s vital to choose a franchise that suits you and that you are passionate about.
Here are five things to consider when choosing which franchise to buy.
Business values
Businesses are becoming increasingly mindful of the need to be environmentally and socially sustainable. Business values also include treatment of managers and the community and transparency of processes.
Research the values of the business and be sure they align with your personal ones. This might be giving to charity, sponsoring community initiatives, refusing to test products on animals, or supporting fair trade. As with any relationship, similar values will set you up for a happy and long-lasting commitment.
Franchisee retention
The length of time that franchisees last in the business can tell you a lot about whether you should invest your time and money. If franchisees last a long time (five years or more) this indicates they enjoy the work and make money from it. This franchise could be the way to go. However, if you notice a trend of franchisees only lasting a few years, this may indicate the business is not profitable or not enjoyable to run.
Consumer demand
Research the likelihood of ongoing demand for the product or service. Don’t buy into fads or trends that won’t be around in five years. Also, think about geographical factors in terms of where you want to base your business.
If you are from a regional or rural area and are not willing to move to a city, ensure that there is consumer demand in the area. Research existing competition and only consider opening the franchise if there is a Unique Selling Proposition that will make it stand out from the competition.
Unique selling proposition
Investigate what it is that makes the product or service stand out from its competitors – and also whether this factor is sustainable. The Unique selling proposition (USP) might relate to the values of the business, the customer service, the price or it might be the product itself if no one else is selling it. A USP ensures that you will be able to attract customers, and by following through on it every time you will also retain them.
Personal interest
There’s no point in trying to sell tents if you hate camping. Choose a product or service that means something to you. You don’t necessarily have to have experience in selling or using the product or service, but at least have an interest. Passion for your work makes you naturally more likely to succeed because you will enjoy becoming an expert and selling the product or service.
There are several resources that will aid your research. FranchiseBusiness is an online directory that lists franchises for sale and has informative articles. The Franchise Council of Australia is a good destination for checking the history of the franchise including any potential risks for the particular business. Finally, the websites of each franchise you are considering will give you an idea of the values and unique selling proposition of the business.
Choosing a franchise is a huge decision, but with research and thought you will set yourself up for a happy, profitable, and long-lasting business relationship.
Kate Egan-Hirst is the sales manager for FranchiseBusiness.com.au, the official directory for The Franchise Council of Australia.
