What Happens When You Enquire About A Franchise?

If you’ve ever thought about owning your own business, buying a franchise can be a great way to start. You’ll get training, help and advice; you’ll have systems to follow; you’ll have an established name to bring in customers, systems to help you work efficiently, and a group of fellow franchisees around you to talk to and support you as you grow. You’ll also benefit from the buying power, shared information and mentoring that comes from being part of a bigger group.

So how do you actually get into a franchise in the first place? Look through this magazine and website and you’re sure to find something that will appeal, with franchisors inviting you to contact them and find out more. What happens next and what questions will you be asked? It’s perfectly natural to be a bit nervous when you’re making an enquiry about something that could change your life, so here’s a guide to what to expect.

Every industry sector – and even franchise systems within each sector – will approach things differently, so the approach and comments outlined below are generalised and focus on the process for dealing directly with the franchisor.

New or existing?

If you are looking at buying an existing business which is already operating under a franchise brand, there will be some additional steps in the process. You will first have contact with a business broker or in some cases may deal directly with the current owner themselves (be aware that there are restrictions on who can legally facilitate the sale of a business in New Zealand – this is covered by the Real Estate Agents Act 2008).

In this case, it is common practice that a condition of settlement in the Sale and Purchase Agreement is that you are approved as a franchisee by the franchisor. Once you have agreed on a price and terms with the vendor, this is usually when you commence the interview process with the franchisor.

Whether you are interested in a new or existing business, your contact with the franchisor is a two-way process designed to help both you and the franchisor work out whether you are suited to the business, whether the business is suited to you, and whether you and the franchisor would like to work together. Until you are both satisfied and sign an agreement, you are not committed to anything.

Getting professional financial and legal advice before you sign should be high on your list of ‘must-do’s’. Speak with your bank, financial and legal advisors early and build a relationship with them. Make sure you use franchise specialists who will have considerable expertise and background knowledge. Again, there’s a list of specialists in the Westpac Directory of Franchising.

Get prepared

Applying to be a franchisee is similar to applying for a job, in some ways – something almost all of us have done. You want to know what you’ll be doing and what sort of people you’ll be working with; the other party will want to know what skills you have and how you’ll fit in. So before you start looking, think about what you really want from a business: what hours you are prepared to work; what lifestyle you want; what you can invest; what returns you want; what skills you have; what you need to learn; and where you need support.

Knowing what you want will help you choose some good options, and also give a base from which to start asking questions. Remember, unlike a job interview, you’ll be ...

This article appears in full in Franchise New Zealand magazine (Year 32 Issue 3). You can read it in the digital magazine here or request a free print copy here.