How does Franchising Work?

The thought of owning their own business is a long held dream of many Australians. Franchising may be the perfect opportunity for people to get into their own business.

What exactly is franchising? It’s a way of growing a business with the original business owner investing in all the new outlets and business units. Rather, the business owner (the franchisor) increases their brand presence and reach by selling the rights to their business to independent business owners. (franchisees). They then have the right to sell the product or service within a particular region during a particular time period.

In return for this, the franchisee pays a fee to the franchisor. This royalty often comes in a number of different forms. It may be an initial payment, it may be an ongoing cost, it may be some sort of mixture of the two. Sometimes it’s profit based, other times its sales based. Other times it can be based simply on the number of units sold.

Then, the franchisor provides the existing business model, the framework, the brand, all the marketing and the initial business strategy. After this, there is consistent support and assistance by the franchisor to the franchisee to ensure their continued success.

A major benefit of this model is combined success. If the franchisee succeeds, the franchisors succeeds too, so everybody wins!

As with any business though, investment is a risk and franchises are no different. Given the diverse nature of the industry though, the sector is heavily regulated by the ACCC. There are a raft of different protections for franchisees.

It’s important as part of the buying process, the franchisor must deliver particular information to the potential buyer. This information is called the statement of information as well as a disclosure document. It’s vital that this information is provided because it gives the buyer all the information they need to move forward confidently.

Franchisees also have a 7 day cooling off period as part of the law.

When the agreed period of a franchise agreement is finished, the franchisee may have the choice to then renew the agreement for a further term, for their benefit.

What does it take to be a successful franchisee?

  • Commitment
  • Passion
  • Resources
  • Hard work
  • Compliance

What makes a good franchise?

  • A proven system
  • Training
  • Business support
  • Marketing
  • Operations manuals
  • A positive, collaborative culture
  • A shared vision
  • Profitability

If you’re looking for the perfect franchise business for you and your family, look no further than JAN-PRO.