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We work with people in many different fields to assist them with
their franchising needs as both franchisor or franchisee.
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I bought a
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Franchise opportunities nationwide.
Call Stacey 027 406 3744 for a chat.
Visit www.pitstop.co.nz/franchising
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• Franchisees who are already running
exactly the same business you are
looking at;
• Franchisors who know the business
model backwards and have lots of
information about how it operates,
along with facts and figures gathered
from real experience;
• Specialist accountants, lawyers and
bankers, who may already know the
franchise system quite well and can
help you through the due
diligence process.
This means that after you have found an
industry and a franchise which appeals
to you, there are plenty of people you can approach to help you make the
right decision. Asking the hard questions when looking at a franchise
dramatically increases your chances of buying a profitable business.
Here are some examples of questions you should be asking.
Ask other franchisees
Franchisees normally love to talk about their business, and you can
learn a great deal from them, from what’s really involved in running the
business to information about profitability, typical cost structures and
the support provided.
• Is the franchise what they expected?
• What sort of hours do they work?
• How supportive is the franchisor?
• What do customers think of the franchise?
• Does the franchise have a Code of Practice? How is it enforced?
• Are they prepared to talk about profitability, margins, and
other things?
Find out more about questions to ask franchisees at www.franchise.
co.nz/articles/935
The latest Franchise Confidence Index (see page 16) has found that, at
the start of 2024, Franchisors and Service Providers are more positive
about general business conditions, access to finance, sales, system
growth and access to suitable staff. However, there are still concerns
about the impact of current inflation on operating costs and profitability
– factors which directly influence business finance. As a result, access
to finance is seen as one of the biggest challenges for franchise growth.
Higher interest rates also mean that funding costs have become a
real expense that need to be considered when buying and operating
a business.
The good news is that banks will generally be supportive for funding
profitable businesses from reputable brands – an area where
franchising scores highly over independent businesses. This may enable
you to fund setting up a new franchised outlet, or even buying a larger
enterprise than would have been possible when just using your
own resources.
Going into detail
As the banks have found, franchising is a great model for someone
wanting to get into a business for themselves. It differs from other types
of businesses in that you can get some real, up-to-date information from
several sources:
Daniel Cloete of Westpac looks at
some of the financial considerations
when buying and operating a
franchised business
The help you need
Buying a Franchise
Daniel Cloete
Franchise New Zealand Autumn 2024 Year 33 Issue 01