SmallBusiness.wa.gov.au
The Small Business Specialists
Phone: 131 BIZ
Website: www.smallbusiness.wa.gov.au
Franchising is the practice of using another firm's successful business model. A business owner (a franchisor) assigns independently owned outlets (a franchisee) the right to market and distribute their products or services.
For a fee, the franchisor grants the right to operate a replicated business under a trademarked name, using established management techniques, marketing and operational procedures.
In addition to this upfront capital fee, the franchisee is normally required to pay ongoing royalty fees and/or a percentage of gross monthly sales and agrees to comply with franchising procedures.
The Australian Competition and Consumer Commission (ACCC) is the federal governing body for franchises in Australia .
There are three major types of franchise models:
Are you thinking of buying a franchise? FREE franchise education is now available to help you assess franchise business opportunities, before buying a franchise business.
The free online Pre-Entry Franchise Education program was developed by Griffith University's Asia-Pacific Centre for Franchising Excellence and funded by the Australian Competition and Consumer Commission.
The program consists of five modules of easy-to-understand information to help prospective franchisees conduct due diligence and better understand their rights and obligations.
Each module takes about 45 minutes to complete and consists of video, audio and text documents, as well as additional resources and a self-assessment quiz.
After completing each module participants will receive a certificate of completion.
Topics covered in the program include:
Visit the Pre-Entry Franchise Education program website for further information, or to register.
Before deciding to buy a franchise there are advantages and disadvantages to consider. Advantages could include assistance with marketing and involvement with an established brand. Disadvantages could be the loss of decision making autonomy and strict operational procedures. Read more...
The cost of buying a franchise will vary dramatically depending on which one you select. However, most franchisees will pay an initial up-front franchise fee and a continuing royalty which is a flat monthly or weekly fee, or a fee based on turnover.
There are many things to consider when evaluating a franchise opportunity, not the least of which is how the business fits with your personal characteristics and situation. Many of the issues are the same as evaluating any business idea however, a franchise does have other factors to consider, such as the implications of the franchise agreement. Read more...
Most franchisees will also need to lease a commercial property. Before you sign a lease make sure that you know your rights and obligations under the agreement. Go to Leasing commercial premises or call 13 12 49 for more information.
The Franchising Code of Conduct (the Code) forms part of the Competition and Consumer Act 2010. The Australian Competition and Consumer Commission (ACCC) is responsible for ensuring compliance with the Code.
The Code regulates the conduct of participants in franchising towards each other and provides protection for franchisees in the following areas:
For more information about how the Code will affect you download the ACCC's Franchisee Start-up Checklist.
The initial franchise fee you pay when buying a franchise, along with any renewal or transfer fee, form part of the capital cost base of the business and cannot be claimed as a tax deduction. Given they form part of the cost of acquiring the franchise, they may be relevant in calculating any capital gains tax liability if you sell the business.
The ongoing fees payable to the franchisor such as administration fees, royalties, marketing levies and training fees, are generally tax deductible as are other operating costs of running the franchise business.
The Australian Tax Office ( ATO ) has more information about franchising and taxation.
Before buying a franchise, as with starting any business, you'll need to think about how you will secure the funds to buy the franchise. Go to Obtaining Finance.
Very few franchisors provide funding to prospective franchisees.
Most of the major banks has online information about franchising and applying for finance.