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While there are many franchise opportunities for sale there are
as many questions you might like to consider before making any important
decisions. First are questions you can ask yourself and second are
questions more specific to finding the right business. Early on
you may consider whether you are suited to franchising. While you
may possess the drive and enthusiasm required you also need to be
prepared to work within the framework of the franchise. Some find
following methods and procedures provided for running the business
irritating and too restrictive. It is also important to consider
your interests, goals and aspirations, as well as the level of personal
and financial commitment you are prepared to make. Are you prepared
to cope with the reality of operating your own business, including
the hours, stresses and the risks?
Deciding on the right business also requires a number of considerations.
The key to choosing well is research. Franchise New Zealand magazine
is a good resource for understanding franchising generally and it
lists numerous opportunities. Evaluating many before narrowing your
choice is a good strategy as any decision carries long term consequences.
Your personal tastes and financial circumstances may assist this
process as different franchises involve different products and services
and carry a range of price tags. Evaluating specific opportunities
is a difficult and complex process. This is because it is important
to consider the products, services and prospects of not just one
business, but two: the business (or franchise opportunity) and the
franchisor. There are too many questions to list here but these
points should help. Pertaining to a particular opportunity, consider
the business you are looking at and the wider industry it is operating
in. For example, what products and services does the opportunity
offer to customers, who are the competitors and what do they offer?
How is the brand perceived? Is the concept proven? Is there enough
demand in your location for the businesses as well as profit margins
to support you (and the franchisor) over the long-term? Is the franchisor
a member of the Franchise Association of New Zealand? If not, why
not?
Evaluating the franchise package is also paramount as franchisors
vary in the extent and level of supporting services and structures
they provide. Assistance may cover numerous areas and depending
on the type of franchise could include help with site selection,
design of physical layout, training programs, provision of standard
operating manuals, field operation evaluation, ongoing advice, information
bulletins, regional and national meetings, franchisor-franchisee
advisory councils, book-keeping, centralised purchasing and inventory
control, marketing research, and advertising and promotion. Comparing
more than one franchise gives you the opportunity to evaluate whether
you are getting value for money.
One factor that can not be stressed enough is the importance of
obtaining specialist professional advice. By this I mean accountants
and lawyers who specialise and/or are intimately familiar with franchising.
Franchising is a complex relationship so choosing well can result
in better advice at lower cost. Major banks also provide managers
who specialise in franchising. Franchisors will often provide performance
information based on existing franchises or company-owned operations.
Experienced accounting advisors can assess these and, in view of
your personal circumstances can assist you in determining the prospects
of the opportunity. Obtaining specialist legal advice is prudent
for understanding the terms and conditions of the franchise agreement
and assessing its fairness. There are a number of issues here such
as, the term of the agreement, exclusivity, territories, performance
criteria and so on, which need to be included in your evaluation
of the business.
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MAKING
THE RIGHT DECISION
