New Zealand's Best Source of Franchising Information Since 1992

Linkedin Twitter Googleplus Facebook


by Simon Lord,
last updated 01/03/2017

in this article:

Does money matter? The way some franchise buyers avoid taking advice, they don't seem to think so.

It might be hard to imagine, but some people invest thousands of dollars, their time and their careers in buying a franchise without taking sensible precautions. Why would you risk your whole future by not consulting a lawyer and an accountant?  Elsewhere on this site, we look at the excuses franchise buyers make for not consulting a lawyer; here, let's see why people going into business seem to think money doesn't matter.

I can read the figures myself. If you have business experience you might well be able to read profit & loss accounts and balance sheets - but how well do you know this specific industry? What costs and margins are normal? How does this particular franchise compare? What do other franchises in the same sector achieve? Find out - use a franchise-experienced accountant (see the Directory for suitable advisors)

The franchisor has provided all the information I need. Franchisors may provide example figures from existing franchisees or pilot operations but there is no guarantee that you will achieve similar results. You need to have all figures checked, know how they relate to the area where you are proposing to operate and what the effect would be of under-performing on sales achieved or management of costs. Use an accountant.

What can an accountant tell me about a business that doesn't exist yet? They can tell you what to expect, what to look for and how to measure your progress. The franchisor can advise on the profitability of the franchise itself; only your accountant can relate that to your borrowings, your tax, your cashflow and your personal expenditure. They can advise about working capital. They can help you prepare a presentation for your bank and structure your finances in the most effective way. Use an accountant.

If it weren't OK, the bank wouldn't lend me the money. A bank will certainly want to know that you have every chance of success and will give you all the help they can. At the end of the day, though, they will want some form of security to reduce their risk, such as your house. This means that most of the risk is yours - not theirs. Why wouldn't you want to keep the risk as small as possible? Use an accountant.

Other franchisees have said they're doing well. I'm sure they are. Does that guarantee that you will do well too, or might your situation or your area be a little different? Have the others had more time to get established? Has the market changed since then? Is the competition different? Are the costs comparable? Use an accountant.

I want the franchise no matter what anyone says. If you are prepared to ignore professional advice, you shouldn't be going into business. Yes, you need to balance the information you get from your accountant with the details you get from the franchisor and your own researches, but if you're going to make the right decision, it needs to be an informed one. All together now - use an accountant.



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


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