Training and support is a key feature of franchise groups both at the outset when a new franchisee comes on board and ongoing throughout the life of the relationship.
According to the Franchise Australia 2012 report, 99% of franchisors in Australia provide training and support to franchisees to develop their business management skills and expertise, and over 70% provide training and updates to support franchisee employees.
This ensures franchisees maintain any required licenses, current knowledge and processes and can efficiently train new staff they employ.
Franchises also provide an excellent ‘in-built’ support group for franchisees, with more than 70% having 10 or more franchisees in their group.
A support network of existing franchisees that have trod the path before you is hugely beneficial to new and prospective franchisees.
Prospective franchisees should speak to existing franchisees to gain insights into their journey and experience, learn from their mistakes and capitalise on the activities they find produce the best results.
Many franchisors also employ Franchise Support Managers whose role is to provide assistance to franchisees throughout their journey.
Franchise groups also provide information about ongoing performance that you can use to set yourself targets and benchmark yourself against, as motivation once you are established.
Unlike independently owned businesses, franchises are tightly controlled by the franchise agreement and the franchisor. The agreements are legally binding documents that spell out your obligations and right to operate the franchise for a specified period of time.
Given the average tenure of a franchisee is only six to seven years, if you intend to operate your business for longer than that, you may need to factor it into your initial discussions with the franchisor.
Franchise agreements also typically define:
While franchisees are bound by their agreement, they have the benefit of a clear path to sale and an expectation of the price they can expect to receive for their interest, as well as any costs they will have to meet.
Because of the nature of a franchise business with systems, support and recognition, a franchise is typically easier to find potential buyers for as well, and franchisors often buy back franchise sites or have buyers lined up for an outgoing franchisee.
Independent owners on the other hand typically have no real idea about the value of their business and what a realistic asking price is for the sale of it.
Or worse, think it’s worth more that the market is prepared to pay and only discover the shortfall when they make the decision to sell or are forced to exit for unforseen reasons. By then, it’s too late to work on a strategy to increase the business value that will give them full return on investment that their time, effort and sweat equity deserves.
When starting or buying your business, weigh up these and the other pros and cons of your options to make sure you invest in a business that provides you with the experience and return you want.
Marc Peskett is a partner of MPR Group a Melbourne based firm that provides business advisory and finance lending services, as well as tax, outsourced accounting and grants support to fast growing small to medium enterprises.
MPR Group provide advisory services to assist business owners buying, selling and starting a new business, including specialist services to assess franchising opportunities, obtain funding and manage franchises. For a free initial discussion contact MPR Group by clicking here.
You can follow Marc on Twitter @mpeskett
