Financial Advice

by Simon Lord

last updated 02/12/2019

Simon Lord is editor of Franchise New Zealand magazine & website and has worked in franchising for over 35 years.

How To Choose The Right Advisor

by Simon Lord

last updated 02/12/2019

Simon Lord is editor of Franchise New Zealand magazine & website and has worked in franchising for over 35 years.

When buying a franchise, getting input from specialists will save you time and help you make better decisions

If you’re looking at buying any business, you need to take good professional advice. The three key people that you need to speak to are a lawyer, accountant and, if you are going to require finance, a banker. Here’s why it’s worth spending a little time and money on choosing franchise-experienced advisors:

1. You’ll save time (and maybe even money).

Choose experienced advisors and they’ll probably have come across the franchise system you’re investigating before. Even if it’s new to New Zealand, the chances are they will be able to find out more about it from contacts overseas than you will. And if it’s a brand new system, they will at least know the characteristics to look for in a successful franchise. They might cost more per hour than non-specialist advisors, but they will give you better advice and take less time about it. 

2. You’re less likely to make mistakes.

You might not know what rents or margins are normal in a certain industry, but your advisors should. You might not know whether a sub-lease arrangement leaves you exposed, but your lawyer will. You might be new to business borrowing, but your banker will know what is and isn’t possible – and the fact that you are buying a franchise may mean special terms are available if you talk to the right people.

3. You’ll know what to expect.

One of the most important tasks of your advisors is to ensure that you know exactly what the franchise entails and that you know what will be expected of you as a franchisee. That will not only help you to make the right choice of business but also enable you to settle into your new role faster.

4. You’ll be confident your chosen franchise will meet your needs.

Whether your reasons for buying a franchise are short-term growth, long-term security or lifestyle, involving advisors and briefing them honestly about your goals will help ascertain whether the business will really meet your needs.

5. You’ll get impartial advice.

If you find a business you love, it’s easy to focus on the positives and miss some of the warning signs. For all sorts of reasons, a good franchise may not actually be the right one for you. Advisors can help you see beyond the dream to the reality, and help you make the right decision.

How do you choose the right advisor?

So how do you ensure that your chosen advisors are the right ones for you? Here are some tips.

1. Don't assume that your normal family lawyer or accountant has the skills to analyse a franchise opportunity. Franchising is a specialist field and it pays to use specialists. They may charge more per hour but they will know what is and isn't acceptable, they will have contacts in the field and they may well take less time than someone inexperienced in franchising

2. Look for advisors who are demonstrably focusing on the world of franchising already. The Directory is a good place to start, as it lists both members of the Franchise Association and others with specialist knowledge in this area. It separates out:
Accountants

Banks

Lawyers

Franchise Consultants

Service Providers

3. Choose people who are able to demonstrate knowledge and experience of franchise systems in the field in which your chosen business is operating. Don't be afraid to ask for a summary of their relevant experience.

4. Check the reputation of each advisor with your other advisors - some may work particularly closely with other specialists and be able to recommend someone.

5. Make sure that you choose people with whom you can build a good rapport. You need to be honest with your advisors and trust that they will respect your confidences and give you good advice. In all likelihood, you will be working with them not just while you are buying your franchise but as your business grows, too.

6. Be prepared to pay reasonable fees for professional advice. It's not worth saving a few dollars at the outset and getting poor advice. Most advisors charge on an hourly basis, so find out what this is and get a written estimate of the likely number of hours involved. Ask to be kept informed in writing of any extra hours incurred.

7. Accept that the advisor's job is to advise. The decision whether to proceed or not is just the first of many decisions you will need to make in running your own business, so be prepared to take responsibility for your own future.

Finally

With the right team of advisors behind you, buying a franchise can be much less stressful – and less risky – than trying to do everything on your own. The trick is to choose the right advisors in the first place, be honest with them and listen carefully to what they have to say. At the end of the day, the decision whether to proceed or not will be yours and yours alone, but if you have listened to the voices of experience then you stand the best possible chance of making the right decision for your future success.

Simon Lord is editor of Franchise New Zealand magazine & website and has worked in franchising for over 35 years.

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