A Guide to Your First Year Owning a Franchise in Australia

franchise in australia

Buying a franchise offers many advantages that aren’t available to the average entrepreneur starting a business from scratch. The reduced risk of purchasing an already successful business model leaves you with the opportunity to start making your own stamp on the industry right from the get-go!

The first year of owning a franchise in Australia is an exciting time of growth, lessons, and opportunity for the business and owner. If you are in the early stages of your franchise journey or are thinking of taking the plunge, read on for a guide to the first year of owning a franchise in Australia.

Initial Costs

The cost of entry into a franchise agreement will vary greatly, depending on both the market segment you choose and the franchise brand you select. At the lower end of the spectrum, home-based or mobile concepts can initially set you back around $10,000 or less.

In contrast, established fast food restaurants can cost $1 million and beyond. Knowing how much you have to invest at the front end for the franchise fee and to set up your operation is, therefore, an important process that must be completed in the first year of franchise ownership.

The total costs of entering into a franchise agreement include:

  • Professional fees (lawyers, accountants, etc)
  • Fitting out the store or office
  • Inventory, equipment, and landscaping
  • Employee training
  • Franchise fee: entry price to use the franchisor’s brand
  • Ongoing royalties (usually calculated as a percentage of gross revenues)

Based on the experience of existing franchisees, franchisors can provide you with an estimate of what it will cost to start the business, your ongoing expenses, and an approximation of when you will start making a profit.

Location Scouting

The right location, at the right time, is key to success. Most franchisors will provide you with support in choosing a location for your business. However, it’s always important to do your own due diligence and seek outside counsel.

It’s important to identify the best environment to promote a successful franchise. For some businesses, this may be a store within a shopping centre; while for others, it will be a stand-alone shop on a strip. Additionally, it is equally important that you understand the area and your target demographic for your products and services, and how these considerations align.

Note that most franchise agreements provide you with an exclusivity agreement in your specific area. This means that an identical franchise will not be permitted to open within a certain distance from your business.

Training and Support

Franchise companies are dedicated to the success of each franchise location. Therefore, they must have staff dedicated to providing ongoing assistance. One key element of almost all franchise training programs involves training at the franchisor’s headquarters. Another is the operations manual, which is distributed to all franchisee’s, outlining very specific instructions on the operations of the business, and expected standards of performance.

Most companies will even send staff to assist you onsite at your new franchise location. Here you will receive guidance and support through every step as you prepare to open. This period of time offers you great hands-on training right in your own place of business, setting you up for success from the beginning.

Marketing your Grand Opening

Franchisors will often have defined marketing processes for an Opening Day. This will likely include signage, ads, and other initiatives to be performed. This is a great opportunity to ask your franchisor about what other successful franchisees have done for their opening ceremonies.

Before you open, you must conduct market research into your potential customer base. How will you attract them, inform them and entice them to venture into your new business? One of the most important ways for any business to succeed is to build connections within the local community. After all, it is the local community who is most likely to attend your opening festivities.

Involvement in the local community and trade associations helps your franchise gain exposure and visibility. It can also help you understand the local market segment and interact with your future clients.

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Opening your own franchise business is an exciting step for those who choose to take the plunge. With thorough research, planning, and hard work, your first year as a franchise owner can be a roaring success.