Hutch

Have an opportunity to buy into a franchise here. Low cost, seen the books, looks like a go-er. However, the 15% fee each month to the franchise company irks me somewhat. Anyone else own a franchise? How do you find it?

DrWho

Never had one, but thought about it a couple of times (over here mind, not back in UK)... Like you it's that fee back that niggles and I eventually thought that if it niggles now then in a couple of years it's going to be really bloody annoying... so decided for me it's not going to work...

Centurion

Could you not just do a business start up from scratch instead ? I have and feel better about being my own boss and not having to adhere to franchise agreements and payments which could become quite large in the future.

NKSK version 2

We've done lots of research on this. The best thing is not to have a fee - which we've now got but this is not usual.

When we researched a few years ago - a 12% "marketing fee" was the payment. Another didn't want a fee but did insist you bought one of the major supplies from them.

Don't want to teach you to suck eggs but do the sums. What TO would you be looking at for a franchise without a fee? And with? What is the bottom line in both scenarios.

Other things are the franchisor's commitment to marketing, whether your patch is protected or whether they will cannibalise it.

julesandco

I agree with this. Hubby refuses to work his kn*ckers off to line someone else's pockets when it may take a little longer, but ultimately we'll reap the rewards, not the bloke who's name is on the franchise front.

Handy with a mower then are you Hutch? Hutch's Mowing - start your own brand!

ATB whatever you decide!

Jules x

Shakmaty

Success rates of businesses are very different from Franchises (estimates between 65-90% success rates) to new start businesses (estimates between 7-20% success rate) in Australia. Franchising is the biggest growing sector in Australia. I have a franchise, paying a flat fee per week.

The key areas are:

Franchisor reliability....I totally trust my boss
Brand name significance....how strong is your mother company
Franchisor support...training, product support/cost etc
potential for growth in your field....look at the industry, not just the company
competition....speaks for itself.

Starting a franchise is easier than starting your own business as it's already made up for you, often with an immediate client base (eg real estate).

There are loads of franchise mags in the shops, all offering good (and some dodgy) advice.

Shakmaty

Depends on the business though, doesn't it?

Would you start up a burger restaurant where there is already established McDonald's etc?

Shakmaty

The fee has to be taken into account when establishing your business plan. What's the problem with a fee if you're still making a decent living, working for yourself, but paying a fee to someone else. Don't forget, that fee gives you the right to a brand name that will earn you good cash. It's like you're chipping in on someone else's good business idea.

Scott

I think you could , the mcd's would draw the custom then its up to you to steal them away with better products & quality .

Hutch

Thanks for all the responses. It's a tricky situation. The deal is that the franchise is currently owned by a bloke that runs a group of companies, mainly in call centres. He bought it because his company supplies the staff that man the 1300 number on the side of the vans and he fancied having a techy on-hand to sort out the numerous computers in the company. However due to a high turn-over in employees (three in the the 10 months it's been running) they hired to run the franchise (no reflection on them or the business as I've spoken to two of them) - they want to off-load. I'm being offered it at a greatly reduced buy-in, because that's the price that they paid and they'd like to continue using the franchise for their tech support.

The franchise just turned its first profit this month thanks to the efforts of the most recent franchisee - I have the books in front of me and there's clearly a good market out there. My main problem is all the fees - 15% of the turnover (not profit), $440 for the lease of the van, various other bits and pieces - everything else seems fine. I have been offered a three month trial period during which I'll be paid a basic salary whilst we find out whether me and this business are a good fit - but I don't want to piss the franchise owners about (who are genuinely nice people) if I'm not going to take it on.

Shakmaty

Very difficult, though. They have a tried and tested product, usually ideal locations and territorial rights in many instances, global marketing etc....

But besides that, all I was trying to say is that it would be easier and more of a guarantee of success to buy a MacD's franchise than starting up a rival business.

Shakmaty

A trial period sounds great.....but do you have to trial as a franchisee or a paid employee? If it is the former, you should check out your rights as this trial period may be the same thing as actually setting up a franchise. Get a solicitor to examine any contracts before you sign them, and also seek financial advice if you are in any way hesitant.

Scott

yeah yer right , i was just making a point of thats the thrill & drive necessery .

Shakmaty

Agreed...you need loads of drive to start a business, whether a franchise or not.

BTW, I hate Mac's

Hutch

It'd be purely as a paid employee. That's the way they've been running it for the last year - they own the franchise and they hired blokes to actually go out in the van and supply the service. But they've been mucked about by these last three guys and don't want to deal with the ball-ache of getting someone new in, training them up, supporting the franchise while they find their feet etc - hence the desire to off-load it.