04 Apr Steps To Follow To Set Up a Franchise Business
Every prospective franchise buyer conducts a certain amount of research online about what the industry is all about, how it functions, what the risks and benefits of running a franchise business are and more. While all of these are important things, it’s also crucial to know what steps to follow to setup a franchise business.
Here are some guidelines that will help:
#1 Research extensively
As mentioned at the outset, this is probably one of the most important things to do. When you start looking you will notice that there are a large number of franchises to choose from. This is why you need to be diligent about conducting research before you decide which system would work for you. Gather information, facts, and stats to get a better understanding of what the company is all about, what it’s standing in the market is etc. If possible, complete some online courses to give you some understanding of business management as this will help you run your franchise business better.
#2 Focus on the business structure
It is crucial to get the business structure right from the get-go. Consult a franchise lawyer as well as an accountant and get all the advice you can with regards to the legal and financial aspects of the business. The guidance and advice they provide will help you decide which entity structure you should use to run your franchise business. There are a number of different structures to choose from such as:
- Sole trader
The structure that works best for you will be entirely dependent on how you want to protect your personal assets and which people are going to be involved in the business. Every business structure has specific tax-related consequences. Something that may work perfectly for one person may not be suited to another. Just because someone you know follows a certain structure in their business doesn’t make it necessary for you to follow suit blindly.
#3 The financial aspect matters
If you don’t have sufficient assets or savings to fund the new venture, you would have to apply for some kind of financing and it can take several weeks for the approval to come in from the bank or financial institution. Most financers will also ask for a personal guarantee and this means if the entity is unable to meet the loan repayment amounts, you would have to forgo your personal assets to pay off the loan.
#4 Australian Business Number application
This is a prerequisite for all business in Australia and you would have to apply for an Australian Business Number or ABN for your business and also get the GST registration done.
#5 Go through all the paperwork thoroughly
Make it a point to read every single document that the franchisor has given you. Note down doubts and questions and get answers and from your accountant and lawyer. It’s also vital that you ensure these documents cover all the things you are expecting it to have.
It’s also crucial that you don’t be hasty about signing on the dotted line. Ensure everything is in place, that you have answers and understand everything clearly. Very importantly, double check with yourself whether you will be truly happy waking up every morning and managing that business every day and then sign on the dotted line.
If you want to know anything more about franchising or want some sound and professional advice, call The Franchise Institute 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