The Franchise Advice Centre - Developing a Franchise System

The first thing you need to do is decide what sort of business you are looking for. You need to work out what would best suit you and what you would want from it.

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It’s all about you
What's the best franchise for you?

The cost of buying into a franchise ranges from under $5000 to over $1 million. What matters is not how much you have to spend, but how much you – and your new business – can afford. That may mean arranging finance.

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What to ask about funding
Facts about franchise funding

Find out how franchising really works – particularly the unique relationship that exists between franchisees and franchisors. You will be appointed as a franchisee because you have the potential to succeed in a particular franchise, you'll be given a proven product or service and then trained and supported as you grow – but you will succeed or fail on your own merits.

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All about franchising
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The greatest single source of information on any franchise system is going to be the franchisors themselves, so don’t hesitate to ask questions. Prepare for every meeting by making a list of the questions you want to ask, and write down the answers. Be prepared to say if you don’t understand anything - the better informed you are, the more likely it is you will make the right decision.

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200 questions to ask the franchisor

You need to go into any franchise with a good understanding of what is involved, so make sure you find out everything you can about the business in advance. The franchisor will provide a lot of information and the amount of detail will increase as you get more serious, but you should also read everything you can about the company in magazines, trade journals and on the internet.

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How to research your franchise
What's in the disclosure document?

There is probably a franchise available in almost any industry that interests you (see our Directory). This is good, because you will have a good choice of opportunities. But it's important to research not just the franchise but also your chosen industry to make sure the business has a real future in New Zealand.

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Shopper's guide to franchises
Lost in translation

The best way to get information about the performance of the franchise is to talk to franchisees who are already operating the business. You will get a realistic assessment of the return to expect; the hours required; the assistance provided by the franchisor and the everyday experiences of a franchisee.

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Shopper's guide to franchises
50 questions to ask franchisees

Franchisors won’t usually make financial projections for any new business but should be able to provide you with figures based either upon the performance of an existing franchise or company-owned outlet. Some offer work or income guarantees that may be attractive to the newcomer. Get an accountant with experience of franchising to assess all figures.

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Why use an accountant?
Will it make money?

A franchise is like a marriage – but with more paperwork! Most franchise agreements are lengthy documents (40-60 pages), and are couched in legal language. That’s why you must get a franchise-experienced lawyer to check over the franchise agreement. If you don’t understand what you are getting into then you could be in for some nasty surprises further down the track.

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Why use a lawyer?
What's in the franchise agreement?

Before you sign the agreement and write the cheque, make absolutely certain you know what the up-front franchise fee covers. If you change your mind, pulling out may be expensive. You must also have a clear understanding in writing of any ongoing fees which are payable. It is important that you are aware of what fees are payable, how they are calculated and what they are for.

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What do you get for your franchise fees?