Many people dream of taking control of their lives and starting their own business. However, research from the University of Sydney’s United States Studies Centre shows that Australian entrepreneurs are far less likely to take advantage of business opportunities than their American counterparts. The major reason for this reluctance is fear of failure.
This fear has become particularly pronounced with the economic impact of COVID-19 upending many people’s lives and creating a great deal of uncertainty and anxiety about the future. While it is entirely reasonable to be cautious – starting a business is a serious life decision after all – fear of failure can be managed by arming yourself with the most powerful resource available to you: knowledge. Finding the information you need and receiving relevant and informed advice is critical, but can be difficult.
Whether you are buying an independent business or a franchised business, understanding exactly what you are buying is crucial and doing your research will help to alleviate anxieties.
Some ideas to help you do your research.
Connect With Your Franchisor
The Franchise model enables a prospective business owner to establish themselves under the guidance of a franchisor with an established business and model. Important information is provided through the franchise agreement and disclosure documents that set out each party’s rights and responsibilities as well as the costs associated with the franchise.
We highly recommend reading these documents with the assistance of professionals with relevant expertise. The franchising sector is highly specialised and many professional services exist to provide tailored advice in areas including legal and business matters related to your specific circumstances.
It is worth asking questions to clarify with the franchisor exactly what you can expect. For example, if you are operating out of a fixed location, will you have an exclusive territory or will you be competing with other franchisees nearby? What training is provided to get you up to speed with the franchisor’s systems? What ongoing support can you expect? Your franchisor is an important source of information, so asking the right questions can ensure you get off on the right foot.
Engage The Franchisee Network
The information you gain from the franchisor gives you a jumping off point to begin your own due diligence. One crucial advantage you have as a prospective franchisee is access to a ready made network. Speaking to other franchisees about their experience and the lessons they learned is extremely valuable and not easy to obtain as an independent start-up business owner.
Some information they may be able to provide includes what is the true cost of running their franchise, and how this impacts their profitability. Being able to anticipate any hidden costs is hugely beneficial.
It is also crucial to ask about their relationship with the franchisor. Was the training adequate? Did they receive the ongoing support they were promised? You must be able to trust that your franchisor has your best interests at heart, and existing franchisees in the network are best positioned to tell you.
The franchise model has been around since the 1960s and there is a wealth of information available to those interested in investing in a franchise. Having said that, to alleviate your fears, you must verify the information you are provided before you invest.
FranchiseED is one of the most respected sources of information and support for franchisees and franchisors alike. Also, check out the Australian Franchise Marketplace which has sessions on buying a franchise as well as franchise brands you can visit and research.