Unveiling the 9 Secrets of Franchising: Your Top Guide

Before you plunge into the franchise waters (yes, even with Wheel Change U), it’s imperative to seek guidance from experienced business advisers, accountants, or lawyers. Here are our 9 secrets of franchising well and your crucial tips to consider before committing to an entrepreneurial journey:

1. Mastery of the Franchise Wisdom

Embark on a quest of self-education, specifically tailored to franchising. Dive into the intricacies of franchising and seek professional advice.

‘Whether you’re doing early research or are about to sign a franchise agreement, this course will help you better understand franchising.’ – The Australian Competition and Consumer Commission (ACCC)

2. Decoding the Business Bible

Think of the franchise agreement as your business bible – a contract that determines where and how you’ll run the franchise for a set time, often five years. Make sure you know the franchise agreement inside and out before signing.

‘The franchise agreement is the most important document in a franchising relationship because it usually provides the answers to questions that arise…’

3. Reading Between the Lines: The Disclosure Statement

In the realm of Australian franchising, the disclosure statement, unveils the experiences of current and past franchisees. Reach out to them for insights, turning hidden treasures and traps into valuable knowledge.

‘A disclosure document must include information about the number of existing and former franchisees and contact details for them. It is important for potential franchisees to speak to current and former franchisees to help inform their decision about whether to buy a franchise.’ 

4. Money Matters: Identifying Your Financial Risks

Franchising introduces its own set of financial challenges. Be prepared for unexpected costs or shifts in consumer demand – just like any other business.

‘Conducting a thorough financial analysis upfront may save you from financial ruin down the road. So, take some time to evaluate your finances and make an informed decision about whether or not buying a franchise is the right move for you.’

5. Your Territory – Your Kingdom

Your franchise territory is your kingdom. Be wary of overlaps, unclear boundaries, and fellow franchisees encroaching on your turf. A well defined territory ensures a successful reign.

‘Your franchise territory, as governed by your Franchising Agreement, is the territory in which you are contractually able to carry on your franchise business. Such territories can be exclusive or non-exclusive, or a hybrid of both, and exactly where you can carry on your franchise business, market your franchise business and take referrals for new business will be detailed in the depths of your franchise agreement.’

6. Taming the Beast: Restraint of Trade

A clause in your franchise agreement might restrict you from competing. Understand this clause well – how it affects you during and after the agreement ends.

‘Restraint of trade clauses are included in franchise agreements to stop the franchisee from competing with the franchisor, during the term of the franchise agreement, and after the franchise agreement ends.’

7. Decoding the Fee Mystery

Understanding the fees – royalty fees, advertising fees – is essential within franchising. Know them. Is it a flat fee or a percentage?

‘Although franchisees anticipate upfront costs, such as the franchising fee and fit-out costs, you must also consider ongoing costs.’

8. Success and Woe in Franchising

Franchising in Australia is a saga of triumphs and tribulations. Storms are inevitable, and preparedness is key. 

‘Purchasing a franchise comes with a lower risk than starting a new business, as the trial and errors of new ventures have already been worked through. With a franchise, you’re working with proven strategies and implementing a process that works.’

9. The Selective Art of Choosing

Selectivity is your ally. Investigate, interrogate, and be vigilant. 

‘Look for a franchisor that will be a true partner in supporting your growing franchise. Ask the franchisor representatives specific questions, and talk to current franchisees to get a sense of how the franchisor supports its partners.’