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Thinking of Choosing a Franchise Business

Thinking of Choosing a Franchise Business

Why buy a franchise over an established business? Off the top of your head, you could probably come up with a good number of reasons, but have you ever actually sat down and considered all the pros? There’s little doubt that the right franchise opportunity can be profitable and satisfying for the right entrepreneur, and the franchise industry appears eager to welcome and guide new owners.

Many companies turn to a  franchise business as a system for expansion because they recognize that they can grow rapidly with a minimum amount of capital and enlist top-notch partners if the company is willing to share the profits. The company that sells licenses to its system is called the franchisor, while those who open their own units are called franchisees.

Some areas to consider when thinking of choosing a Franchise Business are:-

  • association with a well established brand, reputation and product or service;
  • assistance with site selection, lease negotiation, site development, builders and shop fitters;
  • assistance with outlet design and equipment purchasing
  • initial management training and continuing management assistance;
  • access to group/national market research, along with advertising and merchandising assistance;
  • access to established standard procedures, operating manuals and stock control systems;
  • assistance in securing finance and sometimes financial assistance in establishing the business;
  • access to financing packages which may be more attractive and easier to access than for non franchised businesses; and
  • access to established financial systems and checks which can provide early warning signals to highlight trouble spots.
  • Disadvantages

  • less autonomy in some business decisions (franchisees generally have to operate the business according to the franchisor’s operations manual);
  • restricted territory in which you may operate and/or promote your business;
  • ongoing payment of fees to the franchisor;
  • less control if you decide to sell your franchise business as there will be a set of procedures for you to follow, including getting the franchisor’s approval of the buyer;
  • if you sell the business you will usually have to pay a fee to the franchisor as outlined in the franchise agreement;
  • restraint of trade provisions on the sale or termination of the franchise that may be more onerous than required if a non franchised business is sold;
  • at the end of the franchise term, the franchisor is not obliged to renew the franchise, in which case the business and its goodwill revert to the franchisor.

As you look at this list, it not only shows a number of reasons to think about getting a franchise–it also shows you just some of the major challenges you’ll face if you have to create all these things yourself in an independent business. Book a consultation with our team of dedicated business growth specialists today to discuss on 1300 788 491 or book online via www,bottrellaccounting.com.au

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Bottrell Group

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