Buying a Franchise? The key things to consider

Graham Billings, Executive Director of FANZ
Buying a Franchise? The key things to consider

Branching out into the world of franchising can be alluring and scary at the same time. Thankfully the answers to your questions can be found with the Franchise Association of New Zealand (FANZ).

Graham Billings, Executive Director of FANZ says, “The Franchise Association is the only body which sets standards for franchising in New Zealand. Our members represent those concerned with promoting high-quality franchising and are only accepted after undergoing independent scrutiny to ensure that their documentation and agreements comply with our rules.

“Members must also undertake to abide by the Association's Franchising Code of Practice and Code of Ethics which define standards of conduct in keeping with international best practice. That is why we recommend that you check to see if your prospective franchise is a member of FANZ”.

Here Graham takes us through some key things to consider before buying a franchise.

SEE ALSO: Do you have what it takes to be an entrepreneur?

 

What makes a franchise a good option?

Whilst not without risk, buying a franchise has a key inherent benefit that influences franchisee success. The franchisor relies on your success to reap its own rewards, which means that there are real incentives for the franchisor to assist you in achieving those rewards.

It’s important to remember that good franchising is a partnership between franchisee and franchisor, and well-structured franchise systems ensure that franchisors have the necessary incentives, as well as legal obligations (via the Franchise Agreement) to provide you with the level of support that an independent business owner could never achieve.

 

How do I choose which industry to enter?

Many people think that because they have never worked, for example, in the food industry they could never successfully run a pizza franchise. This is not the case, because the technical skills can be learned and so can the business skills.

The key requirements for most franchises are the attitude and determination that will ensure you achieve best results. A franchisee's ability to build relationships, important in any franchise, will help make sales and will enable the franchisee to work well with staff and the franchisor.

 

What questions do I need to ask myself?

Buying a franchise is a big commitment, you can’t just jump in head first. Take a moment to ask yourself these questions:

  • What time do you have available for the business?
  • Are you prepared to give up the security of a regular income?
  • Are you prepared to take on the responsibility of managing a business?
  • Do you have the total support of your partner?
  • What should you do if the business fails or does not perform up to expectations?

It is important to consider these issues and to do so in a thoughtful and informed manner. Talk to people who know you well, and know what your capabilities are. Talk to self-employed friends and gauge what they've learned from their experience. Talk to your professional advisers. Talk to your partner, children or parents. But only talk to those who have something positive to contribute and are impartial or will be involved in the consequence of your decision.

 

What else do I need to know?

The Franchise Association also recommends other key areas to investigate before making your decision:

  • Research Franchising as a business format
  • Decide what Industry and type of role you are interested in
  • Prepare for the interview
  • Complete a Site/Field Visit and talk to other Franchisees
  • Understand the contents of a Disclosure Document
  • Understand the contents of a Franchise Agreement

To really get informed, take the free pre-entry on line training course that FANZ has developed in conjunction with Massey University.  

After you have completed the 5 segments, you will receive a certificate of completion that you can show to a prospective franchisor to show that you are really serious and knowledgeable about becoming a franchisee.

SEE ALSO: Do you have what it takes to be an entrepreneur?

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