Franchising: Pros, Cons & Scams

This is a somewhat surprising article published by Australia’s ANZ bank and covers some very reasonable advice; Guide To Buying A Franchise

The recommendation is to be cautious;

The professional reputation and competence of the franchisor is the key. Look for a proven track record and a history of solid performance.
The last thing you want is to purchase a franchise run by a dishonest or incompetent operator.

I would raise just two concerns [omissions and/or inaccuracies] and leave the rest for the reader to consider.

In relation to the ‘The contract’; when prospective franchisees are not forewarned that franchising contractual obligations require the insight and interpretations of an experienced franchising lawyer as opposed to the family lawyer, too often they get poor advice.  For example; how many inexperienced lawyers read the contract obligations but never read the Operations Manual obligations?  Too often the putrid meat of outrageous conditions locked into the Ops Manual are missed.

My second concern is the ANZ bank directing potential franchisee clients to the Franchise Council of Australia.  FCA represents the interests of franchisors, and only franchisors, and that includes the promotion of  franchise sales.  While FCA provide a franchisee ‘presence’ on their board, those within the industry accept this as a strategic placement to support it’s misleading claim that it represents all parties to Australian franchising.

While the FCA provides accurate information and advice to prospective franchisees the novice franchisee will not appreciate that FCA does not provide complete information and their advice is biased toward ‘making the sale’.

Sadly, Australia does not have a Franchisee Association that offers advice services.  FAAi is dedicated to developing better franchising policy.  No more; no less.  Franchisees must find their own way and FCA is the wrong way.