New Zealand's Best Source of Franchising Information Since 1992

Linkedin Twitter Googleplus Facebook


by Brian Salmon and Lorraine Butler,
last updated 28/06/2011

In this article from March 2002, the late Brian Salmon, founder of The $2 Shop, and Lorraine Butler outline the essential Do’s and Don’ts for new franchisees

The first few months of franchise ownership are an exciting time when you can really start to make things happen for yourself. You’ll have the excitement of finding and serving your first customers. The fear when things don’t go according to plan. The thrill of making the business grow. And, if you’ve chosen well, the wisdom of a supportive franchisor to help you come through the initial highs and lows to create a business with a strong foundation.

However, no matter how good the franchisor, you still have to remember that you are responsible for your own business. Those first six months are a vital time to establish the habits of good management for yourself and those around you. Here are ten important do’s and don’ts.

Do expect to work hard. You are responsible for every aspect of your new business, from serving the customers to ordering product, managing staff, paying the wages and balancing the books. If you haven’t done this before, it can be scary – especially knowing that if you don’t get it right, there will be no salary cheque coming at the end of the month. That’s not a reason to panic, but you should allow for the fact that doing all of these different tasks will take you longer at first. Once you are experienced at the job, you’ll find most of the everyday tasks become second nature – but it does take time.

Do follow the systems. The quickest way to get into a good daily routine is to use the systems put in place by the franchisor. Most franchises have developed their systems over years of trial and error. The reason why something is done in a certain way might not be clear to you, but don’t assume that you can change the system or take short-cuts without creating potential problems. You have paid to get access to a proven system – use it!

Do remember you are part of a team. As a franchisee, you might own your own business but you are not a totally independent business person. You will need to follow the disciplines set by the franchisor and operate according to the franchise agreement and the manual. The purpose of these disciplines is to maintain the brand’s image and value, and to ensure a good experience for customers of every franchisee. To do this, everyone needs to uphold standards. Doing as you please is not an option.

Don’t forget what you are paying for. Once franchisees become comfortable in their new role, it is not uncommon for them to attribute their success totally to their own hard work and forget the value of the training, systems and marketing provided by the franchisor to help them get to where they are. They are most likely to feel disgruntled when writing out the regular royalty cheque. At this time, it is important to remember what that cheque is paying for. The franchisor needs the income stream to provide franchisee support. Yes, there will be a profit margin for the franchisor as well – he or she is running a business. Focus on what you are getting, not what you are paying.

If you need help, do ask for it. In the first few weeks, unless you have a franchise support person actually with you then you are likely to be on the phone to the franchisor several times a day. This is normal and your franchisor will expect it. No-one can remember absolutely everything they are told in training, and although you should consult the operations manual first, the occasional quick phone call may be necessary. As you grow in experience and confidence, though, your phone calls will drop off. However, if you want advice or want to talk about a problem, never be afraid to ask your franchisor – this is one of the services your royalty pays for. But you must ask — the franchisor cannot help you unless they know you need help.

Do take every opportunity to share with your fellow franchisees. A franchise is a network of information. Much of this is circulated through the franchisor, but you can also gain a lot of advice and wisdom from talking to fellow franchisees. Networking with those in the franchise is the key to improving yourself, helping others and benefitting the franchise as a whole. It’s also fun!

Don’t spend your earnings until the tax has been paid. A key lesson for all new businesses. In your first year, you will not be paying tax on the profits because they have not yet been assessed. In the second year, you will have to pay the first year’s taxes plus the second year’s taxes as well. This catches many people out. Work with your accountant to make sure your tax money is safely put aside (and earning interest!) before you start spending.

Don’t live beyond your means. Just because you have a good business doesn’t necessarily mean you can afford to live like a successful businessperson – yet. Wait until you have built the business up and have a full understanding of its cashflow and working capital requirements before you start to enjoy the trappings of success.

Don’t dip your fingers in the till. Cheating the taxman is a crime. Cheating your franchisor may lead to your losing your whole business and everything you have invested in it. At the very least, you will be robbing the whole franchise system of money that it needs to maintain the competitive advantage of your business. And if you understate your income to reduce your royalty payments, your business will be worth that much less when you come to sell it. Crime doesn’t pay.

Finally, do accept change. A key attribute of being a successful franchisee is accepting that change is inevitable if your business is to keep up with the market. Be open-minded and prepared to implement changes when necessary. Good franchisors consult their franchisees on major changes, but no change ever suits everyone. Some will work for you better than others, so accept that sometimes changes are needed for the benefit of the franchise as a whole.

Read more about Brian Salmon



Send for your free copy of our printed magazine, New Zealand's most respected,


Freelisting Franchisenz Burgerfuel_logo_tile_web Epiphany_logo_tile_web Dominoslogotile Goodwinturnerlogotile Westpac_tile_ad_2016
Westpac_tile_ad_2016 Freelisting Franchisenz Burgerfuel_logo_tile_web Epiphany_logo_tile_web Dominoslogotile Goodwinturnerlogotile
Goodwinturnerlogotile Westpac_tile_ad_2016 Freelisting Franchisenz Burgerfuel_logo_tile_web Epiphany_logo_tile_web Dominoslogotile
Dominoslogotile Goodwinturnerlogotile Westpac_tile_ad_2016 Freelisting Franchisenz Burgerfuel_logo_tile_web Epiphany_logo_tile_web