The Franchising Code of Conduct underlines the importance of franchisees being fully aware of what they are getting into well before they buy any franchise.
When a person makes a decision to buy a franchise within a compressed timeframe, without conducting a sufficient amount of research or being aware of how the industry works, there is every likelihood that their expectations won’t be met, and the business outcomes may be significantly less than satisfactory.
This is why the code requires that franchisors are required to provide a comprehensive disclosure document; this particular document has to contain about 270 pieces of information, regardless of the system size and scale, a minimum of 14 days prior to the agreement signing. There also has to be a cooling-off period of seven days post the agreement signing.
However, irrespective of whether there is a code or not, people often take the decision to buy a franchise in an emotional way rather than rationally. They are attracted to the idea of moving out of their 9 to 5 routine and monotonous life, and being their own boss, in control of their own destiny. They also feel that moving into this industry will give them the scope to indulge in a few leisure activities, spend more quality time with their families and enjoy a better lifestyle as well.
All of these things are very strong drivers for anyone that starts up any business of their own, franchises included. But making a more balanced and sound business decision is about getting past these emotional drivers; and the one way to do that would be for franchisees to educate themselves a little better before signing on the dotted line.
This is something you as a franchisor should recognise as well. Franchisee education or educating a potential franchisee before purchasing a franchise can help them to:
This approach will go a long way in helping prospective franchisees to ensure that they transition smoothly into the realm of self-employment and make a success of their business venture. When you as a franchisor focus on franchisee education, it will help you weed out the ones that aren’t really interested or don’t have the capacity or inclination to get into this industry.
It also helps them enter the franchising landscape with their eyes open and improves your chances of building a stronger, more resilient and financially stable network that helps you and your franchisees thrive.
If you want to know more about setting up a franchise business or want some advice on franchisee education, feel free to get in touch with us at The Franchise Institute. You can call us on 1300 855 435 or fill in this contact us form and we’ll reply as soon as we can.
Thanks for reading,
The Franchise Institute Team
1300 855 435