Buying a franchise

Aligning yourself with an established brand can offer many advantages. You get to run your own business, but with the added benefit of having the support of the franchisor to deal with any issues that could arise, and established systems in place to ensure that you are organised and your paperwork is up-to-date.

But before you commit to buy a franchise there are many issues you will need to consider. Stacks can provide expert advice about all aspects of buying a franchise. We will ensure that you understand the financial and legal ramifications of becoming a franchisee, and that you are well informed about your obligations and rights. This will help you to avoid issues down the track so that you get to enjoy your franchise experience.

Unlike buying a business, when you buy a franchise you are buying a license to use the franchise name for a set time period. You effectively buy intellectual property in the franchisor’s trademark and benefit from the good reputation of the brand. The Franchisor owns the product or service, and you the franchisee, become a dealer of that product or service. As a franchisee, you gain access to a standardised system, but you will be accountable to the franchisor and contractually obliged to run your business in a certain way.

• What are your tax obligations?
• In addition to the franchise fee, what costs will be involved? The costs of buying a franchise can vary greatly, depending on the kind of franchise (eg. if it is a retail franchise then it will require a fixed shopfront; if it is a well established franchise then it might cost more because of the added value of goodwill).
• What is the process for resolving disputes between your franchise and the franchisor?
• What is the franchisor obliged to do and what will you need to do yourself? For example - marketing, employing and training staff, managing utilities such as electricity and phone.
• What will happen when your agreement expires? Will you be able to renew the franchise agreement? At what cost?
• Can another franchisee of the same franchise set up shop nearby? Do you have exclusive access to a certain geographical area?
• Will you have to buy your products through suppliers approved by the franchisor, or will you have independence to choose your suppliers?
• What do some of the other franchisees have to say? Talking to your potential future colleagues who have been through the process of buying a franchise, may give you a valuable insight into what it is like to work with the franchisor and some of the issues they have faced.