Buying a Franchise in Australia: Beware the Blunders that can Ruin your Investment

On 17 Sept., 2021

Franchise businesses are easier to start, with lesser financial risks in comparison to stand-alone businesses.

Buying a Franchise in Australia: Beware the Blunders that can Ruin your Investment

Franchise businesses are easier to start, with lesser financial risks in comparison to stand-alone businesses. The franchisee gets all kinds of support and training from the franchisor, with access to an established consumer base with tried and tested business and marketing plans. I am sure by now you have heard of all such great benefits of buying a franchise in Australia. It has given you the confidence to invest in a franchise business yourself.

While there is no denying the perks of a franchise model, you have to remember that at the end of the day it is a substantial investment from your end. No business is devoid of risks, but you can surely avert them by perceiving common mistakes.

In this article, we will highlight the common mistakes committed by franchisees when investing in a franchise in Australia. Take note and beware of them!

1. You must not make haste

Business and investment decisions fail to bear fruits when taken in haste. When looking for franchises to buy, you must keep your options open and diversify your search across multiple industries. Oftentimes people come across one franchise they like and without any further exploring commit their investment to the brand. 

The wise thing to do would be to check out multiple franchise opportunities, have a talk with the sales team, understand the business model of each, conduct a legal review and due diligence and after you have weighed the pros and cons of each, commit to the brand that suits your preference.

2. All that glitters, might not be Gold

Just because the brand is big and established does not necessarily mean that it will generate ROI and consistent profits. Similarly, don’t presume that a new franchise or a smaller brand is unworthy of your investment. Be it a big or small brand, conduct thorough market research. Gather information about the profit generation of the franchise businesses and their yearly turnover. It will give you a fair idea about the best franchise opportunities in Australia.

3. Don’t Get Swayed by the Hype

A franchisor might present you with overall industry statistics to sway your mind in their favour. It’s a typical marketing tactic used by the sales team of both small and big franchises. However, you should know better than that. Just because the industry is running in profits does not mean that the individual franchise unit is doing the same. Follow what we discussed in the previous point to avoid falling for such gimmicks when looking for a franchise for sale in Sydney, Australia. 

4. Validate First, Buy Next

It is the usual protocol for the franchisor to present you with an FDD (Franchise Disclosure Document). It is a detailed agreement with all necessary information about the franchise, along with an account of terms and conditions that the franchisee has to follow post-investment. Just skimming through the FDD and not reading it thoroughly is another blunder to avoid. Get a legal and financial advisor, and go through the document with a magnifying glass. Take the expert opinion into account before signing the agreement.

You can access similar informational write-ups and opinion pieces on franchise business for sale https://www.businessfranchiseaustralia.com.au/, the leading franchise directory and magazine in Australia.

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