Five Things To Remember Before Buying A Franchise.

Are you ready to invest in a franchise? 

If you answered ‘yes’, then you have reached the right place. 

Franchising in Australia 

The Australian population seem to love franchises; from Perth to Brisbane, there are excellent franchise opportunities to suit every need in this country. This is reflected by the fact that the Franchise Council of Australia state that this sector is worth $182 billion to the country. 

According to recent figures, there are around 472,000 people working in this industry. If that doesn’t demonstrate that Australia is a country that loves their franchises, then we are not sure what does!

Franchising Code of Conduct 

The first port of call for any potential franchisee should be to familiar themselves with the Franchising Code of Conduct. This is the industry code that all franchisors and franchisees in Australia are legally obliged to comply with. 

The initial Code, which was introduced in 1998 by the Australian Competition and Consumer Commission, was replaced by a new code in 2015 and it details the regulations that franchising industry participants must abide by.

As a franchisee, the Code will guide you on the following: 

• What you need to do as a franchisee.
• What information the franchisor needs to share with you.
• The information a franchise agreement must include.
• Help with dispute resolution and mediation.
• What is a minimum standard of conduct within the franchise industry.

Disclosure Documents

A Franchise Disclosure Document is a document that all franchisors are legally required to provide potential franchisees. It exists to provide potential franchisees with all the information they require of a franchise system, so they can make an educated decision whether they want to enter into a franchise agreement. 

All franchisors are required to maintain a disclosure document and it must be provided to a potential franchisee who is considering entering, or renewing a franchise agreement.

These are some of the details that franchisors are required to disclose;

• Details of certain types of legal proceedings involving either the franchisor or its directors
• Contact details of current and former franchisees (unless a franchisee has made a request that these details are not shared)
• Details of the expenditure involved in starting and operating the franchise business, as well as any other financial payments which are required.
• Details of the arrangements that will be in place when the franchise agreement comes to an end.

What is popular 

The average expectation for investment in the franchise sector in Australia is around $100,000 – $200,000, according to two separate industry sources. Meanwhile, the most popular categories in Australian franchising right now are food & beverage, coffee, fast food, restaurant and cafes and home-based franchises. 

That being said, there are examples of excellent franchises in almost every industry, so successfully investing in a different category is still an option for all potential franchisees.