Franchising Q&A

Here is a list of 7 mistakes that we likely ignore while developing a FinTech application.(https://www.fortunesoftit.com/au/fintech-development-company-australia/)

• Data Cleansing

• Security Practices

• Hard and Fast Selection of a Platform

• UX Blunders

• Accessibility

• Optimization of the Onboarding Process

• Experience Matters

I myself bought into a franchise. In brief the pro's are:

- you are not starting completely from scratch, someone else has taken time to develop and perfect the idea and hopefully got it to a stage where the product / service is a proven success and can be rolled out

- there should be a proven and documented system and a methodology you can implement

- you aren't on your own, head office should be able to provide you with guidance and support as you need it and you get the benefit of their learnings over time and experience

- there should be some existing brand awareness so you aren't a complete unknown

The con's are:

- in addition to the upfront franchise fee, there will be ongoing royalties which are generally a percentage of turnover

- there may also be fixed costs (e.g. marketing levy) you have to pay regardless of how well the business is going

- you may lose some flexibility as you have to work within the parameters of the franchise agreement (e.g. location, hours of operation, products, uniform, suppliers).

I personally never felt completely comfortable stepping out on my own and starting something from nothing (those brave enough to do that I salute you!), and I never had that big idea I could commercialise. So a franchise was a great way to take a proven concept, make it my own and run with it. Good luck!

Lachlan @ Fifo Capital

Hi Yee,

An interesting thought - and one entrepreneurs face a lot, in my experience. (If I had a dollar for every time I heard "Surely you just need to sell more"!)

I think the first part of your question has been covered, the difference at it's core is control and freedom.

One thing that hasn't been pointed out though is for an entrepreneur there is a big difference between running a SME to founding a business that becomes franchised. It isn't as simple as selling the model to a new person, there is a totally different emphasis needed.

Just about any venture, in its early stages, will be focussed on being different, agile and creative. That's what makes small business great, having that flexibility. As soon as the business is going out to franchise (either under a wholly franchised or company owned/franchised model) the focus of the founder has to change.

The boutique culture the business grew up with needs to be systemised and replicated. By its very nature, the individuality is lost. It is also a very different focus for the founder - one that is all about brand protection, product integrity and predictability in the market place.

For the entrepreneur it is a huge shift in mindset, from being at the cutting edge in every way, to ensuring customers always know what they are going to receive. Of course the business can still aim to be ahead of the curve, but implementing it becomes a much bigger stakeholder management task than when the business is all owned by the entrepreneur themselves.

There are plenty of examples of it happening successfully - to me the key is having a great culture and appetite for growth from the early days of the business.

Hi Ananda,

The investment in a franchise for the majors are fairly well defined. Are you planning to purchase an existing franchise? or a new location?

Greg