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ACCC tells franchisees where to go


ACCC tells franchisees where to go


The ACCC has warned aspiring franchisees not to jump in to their new year’s resolution without studying up first.

"In the New Year, many people are thinking of ways to change their lifestyle and income and may see buying a franchise as one way of doing this," said acting ACCC chairman Michael Schaper. "As part of the due diligence process, pre-entry education programs offer significant benefits to anyone looking to enter the sector."

Schaper spruiked an ACCC-funded franchise education course available online through Griffith University. Since its launch in July 2010, more than a thousand people have enrolled.

"By understanding more about buying a franchise business, including some of the practical issues they could face as a franchisee,” Schaper added, “prospective franchisees will be more informed before making a decision."

Schaper said the program helps provide would-be franchisees with detailed, realistic information about running their own franchise operation.

"The program can help maximise the potential for future success and minimise the chances of conflict or failure, by better understanding the system you are entering."

Some advice for budding franchisees

Allbusiness.com outlines five reasons why franchises can fail, and dishes out some tips on how to make a franchise succeed ….

1. The idea. Whether you are franchising your own company or buying into a franchise system, how the concept is received by the community is critical. While hamburgers seem to have universal appeal not all food chains meet with majority approval. Also, if your business model is complicated, you are in for a struggle. You want to create an operational standard that can be taught to and replicated by any businessperson. A company may be successful when run by the entrepreneur who dreamed up the concept; however, if the business model or prototype is not easily duplicated, the chances for success are not so certain.

2. Bad location. Ask seasoned franchisees to name one of the most important keys to a successful franchise and undoubtedly they will say, "Location, location, location." Even with a well-branded name, if you are off the beaten path, inconveniently located, or in an isolated area the opportunity to be as lucrative as possible diminishes.

3. Poor marketing/advertising. Many well-established and reputable franchisors have marketing and advertising funds into which franchisees contribute monetarily. Chains like McDonald's and Subway have national campaigns, while other types of franchises may advertise on a local level. Some franchise concepts require a lot of legwork on behalf of the franchisee. Depending on the business you chose, you may have to solicit your own clients, as in technical and computer support franchises. If you are considering a concept that requires outside sales skills and you lack them, you may want to rethink your choice.

4. Competition. If your market is already saturated with a concept, you may want to consider something that still is popular but not yet tapped out. Medical spas and restaurants offering healthful choices are gaining ground among the public, but there is abundant room on the business owner side.

5. Unrealistic expectations. New franchisees are notorious for having very high expectations for their businesses. It may take 2-3 years before you see a profit and if you don't plan for that, you may sink before you have a chance to swim.

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