JPAbusiness

When it comes to franchising, our message is consistent: get robust, independent advice before you buy a franchise (or any business, for that matter!)

The recent release of a damning federal parliamentary report into Australia’s franchise sector has reinforced the importance of this message.

The parliamentary inquiry into ‘Fairness in Franchising’ recommended an overhaul of the industry's regulatory framework, stating that it had “manifestly failed to deter systemic poor conduct and exploitative behaviour”. It said the existing rules had “entrenched the power imbalance” favouring franchisors.

However the report also acknowledged there are good franchise systems that “operate to the mutual benefit of the franchisor and their franchisees”.

We have written a number of blogs on franchising and also created a free Buying a Franchise Planning Sheet.

This week I've published a video highlighting 4 issues you should consider very carefully before buying a franchise.

Buying a franchise may, on the surface, seem like any other business purchase.

However, a franchise is a special type of business in which the brand and business operational model has been systematised.

A franchise may have additional, more complex requirements for a buyer to consider and meet, but they also tend to come with more ongoing support than regular businesses.

We have created the JPAbusiness Buying a Franchise Planning Sheet to help business buyers assess potential franchise opportunities.

I read with interest a recent Sydney Morning Herald article about franchising and the questionable activities of some of Australia’s largest franchising groups.

Some very disgruntled franchisees were represented in the article, which also contained views on the pros and cons of the franchise model.

The story reinforced some of my long-held beliefs about franchising, namely that the model sets up an environment perfect for conflict: a franchise is about doing it the franchisor’s way, not necessarily about doing what makes good, solid business sense.

Buying a franchise may, on the surface, seem exactly the same as buying a business.

Principally they are the same, except with a franchise the brand and business operational model has been systematised.

While the operational and other support mechanisms that come with a franchise are appealing when compared to an independent business, it’s important to consider the additional requirements and costs you may have to meet.