Graham Billings, executive director of the Franchise Association of New Zealand, recalls receiving a call a few years ago that illustrates a key point about success as a franchisee.
“Someone rang me and said they wanted to get rid of their franchise because it wasn’t working for them,” says Billings. “He told me he had a bakery, and I said ‘what’s the problem?’ He said ‘we thought the bread would be delivered to us at 8am so we could open for business at 9am, but then I find out I have to get up at 5am and start baking’. That was an extreme case, but the underlying point is you have to understand what you’re buying into.”
Taking the time to establish if there’s a good personal fit with the business you’re buying into is crucial for success as a franchisee, he says, as is gaining a solid understanding of what franchising actually is, doing careful due diligence, and then working hard ‘on’ the business as well as ‘in’ it.
Billings says there’s currently growth in the number of franchisees in New Zealand, with sectors such as mobile food and coffee, professional services, and building and renovations showing particular buoyancy.
ASB’s head of franchise, James Phillips, agrees overall the franchising market is reasonably strong at the moment, and notes prospective franchisees appear a bit more discerning – often considering several franchised businesses opportunities before they find the right one for them.
“A stronger economic climate usually makes people feel more confident to get into business on their own, and franchising is often seen as an attractive option – providing a business opportunity that has already been commercialized, says Phillips. “Also, good franchisors will take time to test and review the business model to try and mitigate the risks often associated with business startups.”
Billings says that while some people do get into franchising essentially to buy themselves a job, especially at the lower end of the investment scale, new franchisees need to realize they are becoming business owners, and that will mean working far beyond nine-to-five hours if they want to be successful.
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