Q: What do you think about franchising? I am retiring from a job as a public servant and will have a good severance pay package, but as I am high 50s and want to work for another 10 years, I have decided to try my hand at business. I thought franchising might be the easiest way to get into a reliable business.
A: Be careful with your golden handshake because going from the public service to being your own boss is hard enough, but signing up for a franchise can add even more pressure as you often have a big outlay upfront. Make sure you survey lots of people who are franchisees in the franchise system you are looking at. Check all of the dispute resolution jurisdictions, newspaper websites, etc. to see if there are any trouble between franchisor and franchisees in the system you are considering. Find a lawyer who specialises in franchises, but make sure he or she doesn’t have a conflict of interest. Then have an accountant look at the figures involved in a typical franchise to see if they stack up. Also find out how long the typical franchisee works each week to make sure you are not signing up for slave labour. Finally, make sure the product or service you will be selling is in big demand and will stay that way and that the shopping precinct you are intending to trade in is doing well, has great potential and is not under threat from a new rival or shopping centre. Remember, Oxford Street Paddington has been turned into a semi-ghost town in recent years because of the growth of Westfield at Bondi Junction. If your franchise and trading area tick all of the boxes, then it might be a good wealth-building play.
WORDS Peter Switzer