Did you know there are over 65,000 franchise units and 1,100 franchisors in Australia? Franchises have been flourishing in Australia since the 1970s with the growth of new systems and major competition. Before considering franchising or buying a franchise, you must understand what it is. Franchising involves a business operating under a parent business where the franchisee sells their good and services and uses their business practices for a set time and fee. This franchisee then gets paid the share of profits their outlet makes and gains a range of market and business experiences.
Even though, as a franchisee, you will not have to build a brand name, create a good or service or set up an internal system, there are many other requirements you will need to follow. For instance, you will need funding and market research to ensure you raise profits for the franchise. Here are some top requirements that you will need as a franchisee when starting a franchise:
Requirements For A Franchise
Once you have determined which franchise business is best for you, it is time to accumulate the right funds to invest in the franchise. You will need to have enough capital and funds to:
- Set up the outlet
- Ensure operations match the business standards
- Hiring experienced staff
- Looking after operational costs
Besides this, you will also have to keep extra funds to keep operations running until you start making a profit. Sharing these profits with your franchisor ensures you have enough to keep you stable.
2. Market Research
Another key requirement when starting a franchise is to have an in-depth knowledge of the market in which this franchise is competing.
- You will have to research the brand’s value in the market and how to improve it.
- You will also have to study the demand for that product or service and the demographic from where it is coming.
- This will help you understand how long this demand will last and thus create a business plan accordingly.
- For instance, if you are planning on buying a cleaning franchise in Australia, you must know how big the cleaning industry is in your location and what target audience needs them the most.
3. Learn The Industry Practice
To make sure you stand out from your competitors and create profits for your franchisor, you must understand and learn the industry you are joining. You will have to learn about laws, rules and regulations, industry dynamics, human relations, direct competitors, human resources quality and market cycles. Once you have learnt these dynamics, you can promote and highlight the brand in a positive light.
One of the important factors when creating a franchise in Australia is the area where you will set it up. It would help if you chose a highly prominent region where you can display the brand name and increase sales and profits for the goods and services. It is a good idea to research the area and see where your target audience is mostly located and try to find a good location in that region. This will help you bring the products and services right to your target consumers, ensure high returns and sales, and create goodwill and brand value.
5. Franchise Agreeme
Lastly, you as a franchisee must sign a mutually-agreed upon contract with the brand’s owner, the franchisor. This agreement will contain a list of mutually agreed upon decisions like:
- The time period of the agreement and its renewal date
- Division of the profits
- The extent to which a franchise can use the brand name and services
- Rules for promoting the brand name
- Points on which the agreement can be broken
If you need help drafting this agreement or want some good franchise advice, you can speak to franchise consultants in Australia to help you.
Thus, the above requirements will help you set up a franchise in Australia and run it profitably to promote the brand name and increase revenue. You and your franchisor must also make sure you both follow the Franchising Code of Conduct so that there is no power imbalance in the franchising relationship and everything can go off smoothly.