The Sunday Times - - PERSONAL FINANCE -

Mandy asks: I’m a 26-year-old woman work­ing full time in a job I hate. Quite frankly, I am sick of work­ing for the man! Now, I have never had my own busi­ness be­fore, and I am a lit­tle ap­pre­hen­sive, but I love fit­ness, and I also love F45 (a new high-in­ten­sity in­ter­val train­ing fit­ness fran­chise). It is rapidly grow­ing on a global scale, with 750 stu­dios around the world al­ready. The cost to open a fran­chise is $150,000, plus $1700 a month in fees (plus rent, wages, taxes, etc). I do not have the cap­i­tal, so I would also need to ap­ply for a busi­ness loan. Do you think this is a good idea?

Bare­foot replies: A mate of mine does F45 — short for “Func­tional 45-minute’’ train­ing and he never shuts up about it.

But let’s get one thing straight: if you buy a fran­chise you’ll still be work­ing for the man — but in this case it’ll be the ex-fi­nance dude who dreamed up the F45 fran­chise model. I imag­ine he’s cur­rently lift­ing gold-plated bar­bells from all the money he’s mak­ing . . . and good on him too! All I’m say­ing is that in this equa­tion he’s the en­tre­pre­neur — and you’re the worker.

So, would I buy an F45 fran­chise? No, I wouldn’t. And it’s not be­cause I could risk hav­ing a car­diac ar­rest if I ac­tu­ally did F45, it’s be­cause I’ve put the fran­chise through its paces, just like I would with any in­vest­ment.

So let’s you and I do a money work­out.

First, let’s look at the sec­tor. Aus­tralia’s gym mar­ket is one of the most com­pet­i­tive and sat­u­rated in the world, ac­cord­ing to IBISWorld. (Why are we so fat, then? Is it the chicken or the egg? Or maybe it’s the chicken and egg sand­wiches.) Sim­ply put, there are a lot of busi­nesses fight­ing it out for our fit­ness dol­lars.

Sec­ond, one of the key sell­ing propo­si­tions of the F45 fran­chise is that there’s not a lot to it — two train­ers, four walls, and a bit of equip­ment. Easy to start . . . and easy for po­ten­tial com­peti­tors to start, too. And what about when “F6” comes out? (Se­ri­ously, I could to­tally blitz six min­utes of train­ing.)

Third, while F45 is go­ing bananas right now, the busi­ness is just five years old. What will it look like 10 years from now? Fit­ness is a fad­dish in­dus­try (hello Zumba, Tae Bo, and pole danc­ing). Heck, F45 is it­self a gen­tler ver­sion of CrossFit, which is now re­port­edly start­ing to run out of puff.

So, here are a cou­ple of ques­tions you need to ask your­self:

How quickly could you earn back your up­front costs (a $150,000 loan plus $1700 a month)? Even bet­ter, could you avoid bor­row­ing (which al­ways ramps up the risk and makes life more com­pli­cated) and in­stead — as we Bare­foot­ers call it — “swing on the trapeze”. That is, keep your day job, start a morn­ing and week­end fit­ness boot camp, and make a go of it for the next 12 months to test it out. If it’s a win­ner, quit your job and go for it! Banker bait

Fiona asks: My 18-year-old daugh­ter lives at home, pays no board, works full time, and is sav­ing for her first prop­erty. She wants to buy a new car ($20,000) so she can get a credit rat­ing, which will make it eas­ier to get a home loan. Should she keep driv­ing the old car and put all her money to­wards the house de­posit, or get the car loan and take a bit longer to get

into the prop­erty game? Bare­foot replies: Con­grat­u­la­tions on rais­ing such an am­bi­tious daugh­ter! Now, all you have to do is teach her some com­mon sense.

Spend­ing $20,000 on a brand-new car will not help her buy a home in any way, shape or form.

In­stead, she’ll just end up fork­ing out roughly $30,000 for a car that will only be worth $10,000 in five years.

The idea that you need to take out a loan so a bank will lend you more money is ab­surd.

Just like Sam Dast­yari, the credit re­port­ing agen­cies have done their darn­d­est to con­vince ev­ery­one they’re more im­por­tant than they re­ally are.

Now, it is true that if you’ve got some­thing bad on your credit file it can be a red flag to lenders. But for a clean­skin like your daugh­ter, it’s re­ally not a big deal.

What is a big deal for lenders is: 1) a sta­ble in­come that can com­fort­ably meet the pro­posed re­pay­ments; 2) a ver­i­fied sav­ings his­tory; and 3) a meaty de­posit (I rec­om­mend 20 per cent).

If your daugh­ter can tick those three boxes, she’ll get her loan.

You’re wrong, Bare­foot

Linda says: I love your Q&A col­umn, but it’s very short-sighted of you to say “no one ever re­grets the kids they have”. I know many women who had chil­dren be­cause they felt they had to. Hav­ing a child is one of the big­gest gam­bles a woman can make, so please don’t re­duce it to noth­ing just be­cause, as a man, you don’t have to risk your health, body, fu­ture earn­ings and ca­reer to do so. I get that you are a fam­ily man, but please don’t go around spout­ing non­sense like this. You’re smarter than that. Bare­foot replies: The women who work for me (all mums) went crazy over your com­ments — some for, some against.

I cer­tainly wasn’t sug­gest­ing that hav­ing chil­dren is “noth­ing”. (My wife is cur­rently in her third trimester, com­ing into a sweaty sum­mer, and our two young boys have worked out there’s an in­truder about to en­ter the house, so our life is any­thing but The Brady Bunch.)

All I said was, “no one ever re­grets the kids they have . . . only the ones they don’t”. And I think the vast ma­jor­ity of par­ents would agree with that . . . even­tu­ally.

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