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Franchising And Business, The Start-Up Without Needing To Start From Scratch

From petrol stations to hotels, to hair salons and fast-food chains and more, franchises are a common sight across almost every industry sector. With varying levels of complexity and market share, creating employment and prosperity for the nation, franchises are a business structure that you may want to consider investigating.

As a sector, Australian franchises make a major contribution to the economy, worth $184 billion dollars per year. Franchises can range from small, family-run businesses to larger businesses, and can provide Australian businesses with the opportunity to branch out into international markets.

Franchising is a business model where one company (the franchisor) owns a brand and offers a license to others (franchisees) so that they can sell the products or services under that brand for a defined period of time. As a business structure, franchising offers would-be business owners the ability to be their own boss with the support and reputation of an established and proven brand.

There are four business models that are generally used in franchising.

Manufacturer-retailer

In this business model, a franchisee enters into an agreement to sell the franchisor’s product directly to the public. It’s most commonly seen in businesses such as new car dealerships.

Manufacturer-wholesaler

In this specific business model, a franchisee is given a license to manufacture and distribute the franchisor’s product. It’s commonly used by soft drink companies for bottling their products.

Wholesaler-Retailer

Through the wholesaler-retailer model, franchisee retailers buy the products from a wholesale franchiser and then sell them under license at retail.

Retailer-retailer

This is the most commonly known and used franchise business model (also known as a ‘business format franchising model’). In this type of franchising agreement, the franchisor markets its products through a network of franchisees. Each franchisee must use a common name and a standard set of systems and processes and are obligated to protect the brand integrity of the franchisor by following the agreement guidelines. This may involve placing constraints on specifics to ensure the quality of the product or service is maintained, such as:

  • Where the franchise can be located
  • The image of the business
  • The quality of the goods and services
  • How the business is operated

Before choosing to buy into a franchise, it is critical that you conduct your own research on the subject. With so many options available, and so many choices to make, it may seem overwhelming. It’s best to ensure that you are choosing the right fit for you and what you’re looking to bring into the business.

Talk To Existing Franchisees

As buying a franchise business is a significant financial investment on your part, you should learn as much as you can about it beforehand. Any professional franchisor will encourage you to speak with their existing franchisees to get a sense of how they are run, and whether or not they may be the right fit for you. It allows you to gain an insight into the inner workings of the business and what it’s really like to own a business with that particular brand.

Research The Location

Some franchise opportunities will work better in particular locations, be it a result of the demographic, the demand or the actual physical location. For example, a franchised petrol station might work better in an area with higher traffic than in a residential area with little traffic. Research the competition in the area to determine whether or not you have a chance of success in your chosen venture, with the current customer base.

Be Aware Of The Workload

A franchise is just as much a start-up as any other. You are going to have to work hard on and in the business to make sure that things are progressing as planned. By putting yourself into the business as an owner-operator, you’ll be able to see what’s happening with your team, apply solutions to problems as they arise and be actively responsive to situations that may come up.

As with any business venture, it’s important to ensure that you, ahead of time, are adequately prepared to begin with the information you need.

You can speak with us for assistance with business planning, development, questions about your financial situation prior to investing and more. Come see us today.

If you’re someone who often finds it difficult to make large lump sum payments for goods or services, you may want to consider looking into “Buy Now Pay Later” services.

Buy now pay later essentially means that, rather than paying in a full lump sum payment for a product or services rendered, there may be an option to pay through instalments of a certain amount over a set period to make the sum of the full amount in total. This method should allow you to pay in full for the product or service without overly straining your finances – you pay back what you can, as agreed upon when you begin the buy now pay later service.

Some popular buy now pay later services include Afterpay, Zip Pay, Brightepay, and some credit card networks such as  Mastercard and Visa, can offer buy now pay later arrangements.

Though it can be a convenient, immediate solution, it may be challenging to juggle the necessary repayments with other financial commitments. It’s not always the most appropriate method for people, and you should bear in mind your situation and ability in paying back the amounts. 

Before you sign up, keep in mind: 

  • It becomes easier to overspend with buy now pay later services, so know your limits on what you can and can’t afford.
  • You will be charged fees and costs to use the service, which can add up to a princely sum in and of itself.
  • Keeping track of your payments can be tricky if you’ve signed up for multiple services.
  • It could affect your loan applications for a car or mortgage as lenders consider buy now pay later spending just as much as your credit score.
  • Late repayments can appear on your credit report, which affects your ability to borrow money in the future.
  • Layby can be a cheaper alternative to buy now pay later, with no account-keeping or late fees to consider

If you are someone who could make use of BNPL services, you may wish to:

  • Ensure that when using the BNPL service, you stick to a set limit on what you spend so that you can comfortably pay it back later. 
  • Aim only to have one BNPL account at a time to manage payments through, rather than confuse yourself with multiple payments across different providers.
  • Always budget for bills, loan payments and BNPL payments, and 
  • Rather than use your credit card for payments to your BNPL account, consider linking to your debit account instead.

If you would like assistance in planning your financial future, help in managing your budget or some friendly advice, see us for a chat about what we can do for you.

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John Briggs

Jane Noller has been my accountant for the last 15 plus years. I can testify to Jane’s professionalism and expeditious manner in dealing with the day to day issues that surrounds our business accounting.

John Briggs

Registered Building Certifier

David and Alison Parker

I have been consulting J L Noller and Co. (more specifically Jane) for six years and during this time I have found her to be professional, efficient and easy to discuss all accounting and taxation matters with. Her office team are all polite and friendly also.

David and Alison Parker

Business Owner

Carl Gillmore

I have used Jane & the team for the last 6 years for all of my business & personal accounting needs. They have always been professional, easy to talk to & available when we have needed assistance.

Carl Gillmore

Carl Gillmore Landscape

John Briggs

Jane Noller has been my accountant for the last 15 plus years. I can testify to Jane’s professionalism and expeditious manner in dealing with the day to day issues that surrounds our business accounting.

John Briggs

Registered Building Certifier