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Making Franchising Work For You

Unsecured small business loan

$5k - $300k Term loan with a redraw option.

Facility term 12 – 18 months

Any business purpose

Top-up & early payout options

Unsecured business line of credit

$5k - $300k Term loan with a redraw option.

Facility term 12 – 18 months

Any business purpose

Top-up & early payout options

Businessman climbing upward on a green arrow representing growth and success

Making Business Franchising Work For You – Unsecured Finance Australia

When it comes to business opportunities, few topics are as divisive as franchising.

On one side of the fence there are people who have had highly negative experiences during their time in franchising who would warn you to sprint away faster than Usain Bolt from any opportunity, whilst there are groups of people who will happily speak at length about the riches they have gained in opening a franchised business and love franchising.

Many franchises come with a proven product or service, and franchisees sell these under a recognized brand. Top franchises are well-established and offer the use of a reputable brand and business systems. There is a power dynamic between franchisors and franchisees, and the franchising code addresses this to help balance the relationship.

Here are some of our tips to ensure that franchising works for you:

  • Ensure that there is a definite worklife balance in place as growing a franchise, just like any other business, can be all-consuming.
  • Do your relevant checks on any franchisor. There are countless blogs and forums out there who can discuss the merits of joining any business group, and in some cases, the franchisor themselves and their expectations on their franchises. This can be an invaluable source of any information.
  • If things aren’t working for you, don’t hold on for ‘too long’. Planning your ‘getting out’ is just as important as ‘getting in’. Franchise agreements often last for several years and may have penalties for early termination.
  • Have a dedicated support team around you, with clear role definition. By sharing responsibility around your team, you can focus on strategies to grow the business and achieve that worklife balance. Franchisors often give service and marketing support to help franchisees succeed.
  • Be kind to every customer, even if it as lead for another location, word of mouth is important and they may speak about your target audience about an unpleasant experience.
  • Spend some time in the business at another location beforehand to ensure that it is for you. Ask the franchise directly for their feedback on the pros and cons of the business.
  • Learn from existing franchisees and use their experience to inform your decision.
  • Don’t buy a franchise to ‘be your own boss’. Franchisees have limited control over business decisions due to franchise agreements. Franchising models are based on conformity. Franchisees are expected to follow established systems and procedures, and even when you have the best and freshest business development idea, head office is likely going to move slowly in implementing it, if they do at all!
  • Have your finances in check, with backups for any contingencies. An example is that your brand-wrapped truck will need to be upgraded to new graphics with minimal notice. It is important to understand the money required for initial investment, ongoing fees, and the risk of losing money if the franchise does not perform as expected.
  • Be very wise in reading the franchising document, and seek legal opinions if necessary. Make sure to review all agreements, including lease agreements for business premises, as these are often integral to franchise operations.
  • Imagine failing, and put plans in place to overcome any of these possible issues.

Franchising can be very lucrative, and if managed correctly can be an ideal way to enter the world of business. There are literally hundreds of franchise opportunities in Australia, for both new and established presences. Starting with a clear understanding of the systems and agreements involved in franchising is essential for long-term success.

If you’re looking for a quick and simple loan solution to get yourself set-up with some extra funds to tackle your franchise business development needs, chat to Unsecured Finance Australia about how we can support you with your business loan

Introduction to Franchising

Franchising is a proven business model that gives individuals the opportunity to start their own business by leveraging an established brand name and a tried-and-tested system. When buying a franchise in Australia, potential franchisees must take the time to understand the franchise agreement and the franchising code of conduct, which set out the rules and expectations for both franchisors and franchisees. The Australian Competition and Consumer Commission (ACCC) plays a key role in regulating the franchise industry, ensuring that franchisors comply with all relevant laws and that the relationship between franchisors and franchisees is fair and transparent.

The benefits of franchising include access to a recognised brand, established business processes, and ongoing support from the franchisor. However, there are also risks, such as strict operational requirements and ongoing fees, which must be carefully considered. The franchise industry in Australia is diverse, with opportunities ranging from food and retail to services and products, making it essential for potential franchisees to do their research and understand what’s involved before making a commitment. By learning about the franchise system, the legal framework, and the obligations of both parties, you can make an informed decision and set yourself up for success in the world of franchising.

Understanding the Franchise Agreement

A franchise agreement is the cornerstone of any franchise relationship, acting as a legally binding contract between the franchisor and the franchisee. This agreement spells out the details of the franchise system, including the rights and responsibilities of both parties, the fees and payments required, and the standards that must be maintained. For anyone considering buying a franchise, it is essential to thoroughly review the franchise agreement, as it will have a direct impact on how you operate your business and your long-term success.

Under the franchising code of conduct, franchisors are required to provide a comprehensive disclosure document to potential franchisees. This document includes key information about the franchise system, financial performance, fees, and any risks associated with the business. Taking the time to understand both the franchise agreement and the disclosure document is crucial, as these documents outline your obligations, the support you can expect, and the terms of your relationship with the franchisor. Seeking expert legal and financial advice before signing any contract can help you avoid costly mistakes and ensure you are making the right decision when buying a franchise.

Regulatory Framework

The regulatory framework for franchising in Australia is designed to protect both franchisors and franchisees and to promote fair business practices across the industry. The Competition and Consumer Act 2010, together with the Franchising Code of Conduct, sets out the legal obligations that must be followed by all parties involved in franchising. The ACCC is responsible for enforcing these laws, ensuring that franchisors provide accurate disclosure documents, act in good faith, and comply with all relevant regulations.

For potential franchisees, understanding the regulatory framework is essential when buying a franchise. The code outlines the information franchisors must provide, including details about the business, fees, and any legal or financial risks. It also sets standards for dispute resolution and ongoing communication between franchisors and franchisees. By familiarising yourself with these laws and your rights under the code, you can make more informed decisions and protect your interests as you enter the franchise industry in Australia.

Buying a Franchise

Buying a franchise is a significant investment and requires careful planning and research. Potential franchisees must take the time to investigate the franchise system, review the franchise agreement and disclosure document, and seek advice from industry experts before making a commitment. The ACCC offers a range of free resources, including an online course and a franchise registry, to help you understand your rights and responsibilities when buying a franchise.

It’s also wise to consult with lawyers, accountants, and business advisors who specialise in franchising. These professionals can help you interpret the franchise agreement, assess the financial health of the franchise, and ensure you are fully aware of any obligations or risks. By gathering the right information and support, you can make a confident decision, increase your chances of success, and build a thriving business within a proven franchise system.

Industry Oversight

The franchise industry in Australia benefits from strong oversight by the ACCC, which works to ensure that franchisors comply with all relevant laws and regulations. The ACCC also provides valuable information and advice to help potential franchisees make informed decisions when buying a franchise. In addition to government oversight, industry associations such as the Franchise Council of Australia offer support, resources, and advocacy for both franchisors and franchisees.

These organisations play a vital role in promoting best practices, providing education, and supporting the growth of successful businesses within the franchise sector. By taking advantage of the support and guidance available from the ACCC and industry associations, franchisees can navigate the complexities of the franchise industry, protect their interests, and contribute to a fair and transparent business environment in Australia.

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Unsecured business line of credit

$5k - $300k Term loan with a redraw option.

Facility term 12 – 18 months

Any business purpose

Top-up & early payout options

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