A Detailed Guide to Buying a Franchise in Australia

On 17 Jul., 2021

Buying a franchise is different from owning an independent business. The former has more perks, the reason why many budding entrepreneurs show interest in franchise investments these days.

A Detailed Guide to Buying a Franchise in Australia

Buying a franchise is different from owning an independent business. The former has more perks, the reason why many budding entrepreneurs show interest in franchise investments these days. Nevertheless, just like any other business venture, buying a franchise in Australia is an intricate process with legal formalities. If you are in your initial phase of seeking franchise business for sale in Sydney, Melbourne, Adelaide, or elsewhere, this is the perfect time to get your facts straight on franchise purchase. Read below to know more!

What is franchising?

Franchising is a business model which allows a person to buy the rights of business operation for another brand and leverage the same under applied conditions and norms. As the franchisee, you can sell and promote the franchisor’s services and products for a given tenure as per the franchise agreement. In return, you would have to pay a certain amount in royalty or other franchise fees and abide by the parent company’s agreement.

What are the advantages of buying a franchise in Australia? 

Let’s say instead of starting your own cleaning business, you buy a cleaning franchise in Australia; here are the benefits you would be enjoying:

  • The initial investment is lesser than starting your own business and less hassle to arrange.
  • Ability to sell and market a product with an existing consumer base.
  • Established brand image and adequate reputation management. 
  • Readymade business plan with marketing and advertising support. 
  • Inventory and other related support.
  • Financial and operational support from the parent company. 

What are the essential aspects to know about before buying a franchise?

Before you go on investing in a franchise business for sale in Melbourne, Sydney, or elsewhere in Australia, here are a few things to know and understand first:

  • You need to thoroughly research the franchise processes and laws in the country and how the system works. 
  • Consult with an experienced legal professional, financial and business advisor to assess your options. 
  • The potential franchisor has to provide you with a document containing all the necessary details regarding operational, legal and other compliances. This is known as the Franchise Disclosure Document (FDD) that also includes the agreement and the Franchising Code. You need to read and review it properly before signing the deal.
  • Do adequate research on the market response regarding the franchisor’s company along with the services and products offered. 
  • In Australia, there are laws on franchising such as the Franchising Code of Conduct, Fair Work Act, Australian Consumer Law (ACL), and Contract Law. The governing body that enforces the franchising laws is the Australian Competition and Consumer Commission (ACCC). Sit down with a legal professional with prior experience in franchising to understand the aforementioned.   
  • Be aware of your rights and obligations along with all the processes in place to resolve disputes. 
  • Be aware of your franchising tax obligations and deductions. For instance, a franchisee might be allowed to deduct the fees during tax filing. Consult with a financial and tax advisor for the details. 

Lastly, a franchisee is also needed to hire the staff and make leasing arrangements for the location of the franchise business. In some cases, active help is provided by the franchisors. Try to get a clear picture regarding the same before signing on any dotted line.

For any more information regarding buying a franchise in Australia or to explore the top ten franchises in the country, you can subscribe to https://www.businessfranchiseaustralia.com.au/, the leading franchise directory and magazine for credible information.

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