ANCHORANCHORFRANCHISE@FONTERRA.COMLORE
Anchorfranchise@fonterra.com
your Adventure starts with Us
!!!
Exciting Opportunity
BE YOUR OWN BOSS
!!!
Manage your own business, determine your own
Manage your own business, determine your own
lifestyle choices!
lifestyle choices!
•
Well tested franchise
Well tested franchise
•
Kiwi owned and operated
Kiwi owned and operated
•
Over 30 years’ experience
Over 30 years’ experience
•
Well-established business model
Well-established business model
•
Robust business framework and systems
Robust business framework and systems
•
No experience required
No experience required
•
Ongoing training and support
Ongoing training and support
•
Large database of established customers
Large database of established customers
•
Comprehensive marketing support
Comprehensive marketing support
Be part of one of the largest independently
Be part of one of the largest independently
owned rental car networks in the country.
owned rental car networks in the country.
For further information email:
For further information email:
steve@radcarhire.co.nz
steve@radcarhire.co.nz
www.radcarhire.co.nz
www.radcarhire.co.nz
23
franchise.co.nz – PUTTING PEOPLE IN BUSINESS
Changing business models
In the current economic environment, the fundamental profitability
of many franchise business models may have changed. Higher costs,
including wages, food costs and rent, different sales margins, and
higher (or lower) average sales numbers may influence the profitability
of the business.
Look at the latest financials and benchmarks when assessing any
opportunities. Ask, will you be able to recoup the set-up cost within the
term of the franchise agreement? This is where a good franchise system/
franchisor can make all the difference in helping tweak a model to make
sure it stays competitive and profitable.
Are you paying more?
When setting up a new franchise, potential buyers have the advantage of
being able to get a detailed breakdown of initial and ongoing costs from
the franchisor. This will normally be found in a disclosure document.
Akin to a prospectus, this tells you more about the business, its owners
and history. While this is not a legal requirement in New Zealand (it is
in Australia), all members of the Franchise Association of New Zealand
(FANZ) are required to have a disclosure document. Availability of quality
information can influence the premium you are prepared to pay.
Characteristics shared by good franchise systems include solid
management, clear information on performance of existing franchisees,
a proven product or service, strong brand or trade name, and a tried,
tested, documented way of doing business. Ongoing training and
support, plus continued development of a concept is also important for
systems to stay competitive, as is increased purchasing power.
Here’s a summary of initial costs and ongoing fees for starting up a
franchise outlet.
Franchise fee
This is an upfront fee to buy into a franchise. It covers intellectual
property, value of the brand, development cost of the franchise system
for the franchisor and sometimes includes training and other fees. The
stronger the franchise system, the higher the fee, and it could be worth
paying. This can range from $10,000 to $100,000-plus.
Set up cost
This can be significant, particularly for a retail outlet. It includes
furniture, fittings, as well as stock. If a franchisor has set up several
franchises before, they’ll likely source components from the best value
suppliers and can accurately predict set-up costs.
Look into fit-out contributions available from landlords. Do make sure,
however, that franchisors or landlords do not load the price, as has been
known to happen.
Ongoing costs
Royalties
These tend to be payable as a percentage of turnover (sales) or could
be a flat fee, in service franchises, for example. Usually paid for the
system’s brand, processes and other intellectual property, they should
also cover the support given to franchisees.
Marketing fees
The system may also have a marketing contribution. This tends to be
used for national advertising. You may still be responsible for local
advertising.
If your bank is a franchise specialist, they may place significant value on
the benefits and proven track record of a good franchise system, making
getting business finance much easier. In the next article, we will cover in
more detail funding aspects and the effect of the price of a business on
obtaining funding.
Daniel Cloete is the National Franchising Manager for Westpac. For
more information, contact your local Westpac Franchise and Business
Banking Specialist on 0800 177 007 or email: franchising@westpac.co.nz
The information contained in this article is intended as a guide only
and is not intended as an exhaustive list of matters to be considered.
Persons entering into franchise agreements should seek their own
professional legal, accounting and other advice.
About the Author