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WITH more than 1000 franchise groups operating in Australia, there is no shortage of choice for those looking to buy into an existing business model.
Buying a franchise can be a great pathway to running your own business.
You potentially reap the benefits of an established brand with a popular product or service and a respected reputation.
There’s also access to support with advertising and marketing, and operation manuals to streamline the way you run your business.
On the other hand, franchising gives you much less control of how, where and for how long you run your business.
For every success story, there is a cautionary tale of what not to do.
Before signing away your cherished savings, it is essential that the prospective franchise buyer seeks expert advice.
Franchise agreements are not always written with buyers’ interests in mind.
The recently released report Fairness in Franchising highlights concerns that the Small Business Development Corporation (SBDC) has aired around the imbalance of power in the current Australian franchisor/franchisee relationship.
Franchising is a big part of the Australian economy, and contributes about 9 per cent to our gross domestic product.
It is also a popular and important entry point for people wanting to run their own business.
While the long-awaited report makes 71 recommendations to help address the power disparity between franchisor and franchisee, it is still essential that buyers understand the franchise agreement, read the disclosure statement carefully, identify financial risks, understand the range within which your franchise can operate, and learn about any ongoing fees and royalty payments.