Buying a franchise like house hunting: FCA

Potential franchisees should give as much diligence to investing into a franchise as they would a house, rather than merely attend an event, according to the industry’s peak body.

Steve Wright, executive director of the Franchise Council of Australia, says it’s not enough for potential franchisees to attend a franchising event in the hope of securing a business opportunity.

According to Wright, purchasing a franchise is not dissimilar to purchasing a house in terms of the scale of the investment, and should therefore not be entered into lightly.

“Approach it in the same way you would buy a house. Some people say you should put in the same amount of due diligence – research and compare on the web and in other areas,” he says.

Wright’s comments come ahead of the Sydney Franchising and Business Opportunities Expo being held next week, where potential franchisees will have the opportunity to research more than 100 franchise systems and businesses for sale.

The lineup of franchise brands covers all categories including retail, mobile, business-to-business and homecare services.

Brands exhibiting at the event include food franchises Bakers Delight, Coffee Guru, Eagle Boys Pizza, Grill’d, Healthy Habits, Outback Jack’s Bar & Grill, Pizza Event, Sergio’s Cake Shop and The Cheesecake Shop.

Other franchises include Brian Tracy International, Cartridge World, Changing Places Real Estate Consultants, Fastway Couriers, the Jim’s Group, Minuteman Press, Poolwerx and United Petroleum.

Also in attendance will be franchise brokers to guide potential franchisees through the variety of systems in their portfolios.

Service providers such as the Australian Competition and Consumer Commission, business.gov.au, DC Strategy, the Commonwealth Bank, NAB and the Franchise Council of Australia will also be on hand.

Visitors can also attend knowledge-based seminars including a franchising bootcamp that will boost their understanding of the franchising world before signing up to a system.

Wright says the annual event is an ideal opportunity for potential franchisees to source ideas, estimating some 4,000 people to attend.

However, he says would-be franchisees must ensure they communicate with franchisors after the event, encouraging people to shop around.

Wright says as franchisors struggle to attract franchisees, people need to look beyond the marketing campaigns and incentives.

“You need to compare what the different businesses are offering; it’s the only way you’re going to reassure yourself that what you’re being offered appears to be what the market is offering,” he says.

“Be upfront [with a potential franchisor] – explain to them that you are in the early stages of your research but you want to see the basis of what they’re offering. Most franchisors will be happy to do that.”

Wright says he is seeing a continuing trend in service industry offerings, namely the aged care and retirement sector.

“I think you could say that given the slightly choppy nature of some retail industries, that’s likely to continue probably for the rest of this year,” he says.

“Meanwhile, the baby boomers are going to have more disposable income in their retirement than any generation before them and they’re going to be buying services.”