{"id":226371,"date":"2024-04-23T16:37:47","date_gmt":"2024-04-23T03:37:47","guid":{"rendered":"https:\/\/legalvision.co.nz\/?p=226371"},"modified":"2024-05-07T16:23:12","modified_gmt":"2024-05-07T03:23:12","slug":"franchises-good-investment","status":"publish","type":"post","link":"https:\/\/legalvision.co.nz\/franchising\/franchises-good-investment\/","title":{"rendered":"Are Franchises a Good Investment?"},"content":{"rendered":"\n<p>If you are considering opening a business, you might wonder whether <a href=\"https:\/\/legalvision.co.nz\/franchising\/buy-a-franchise-system\/\">buying a franchise<\/a> is a good investment. After all, a franchise is backed by a successful, established business model. As such, this is a huge contrast to all the unknowns of establishing your own business, which is a new business. This article will take you through six reasons why franchises are a good investment and some other key considerations that will help you determine whether franchise ownership is right for you.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Why Franchises Are a Good Investment&nbsp;<\/h2>\n\n\n\n<h3 class=\"wp-block-heading\">1. Access to Finance<\/h3>\n\n\n\n<p>Access to a business with an established reputation is one of the reasons franchises make an excellent investment. Unfortunately, it is common for aspiring entrepreneurs to have difficulty securing capital to launch a business. However, lenders may see a franchise\u2019s history and reputation as a lesser risk than an unproven company concept. In addition, articulating anticipated costs and projected income will make it much easier for banks to put together finance packages to ensure you can easily access funding.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">2. Lack of Start-Up Stage<\/h3>\n\n\n\n<p>The initial phase is one of the most challenging aspects of owning and operating a business. However, buying a franchise allows you to skip all the time and costs associated with the start-up phase. This includes the time and costs associated with:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>drafting a business plan;<\/li>\n\n\n\n<li>performing market research; and<\/li>\n\n\n\n<li>developing goods or services.<\/li>\n<\/ul>\n\n\n\n<p>Another reason franchises make excellent investments is avoiding these costs and time expenditure.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">3. Proven Business Model<\/h3>\n\n\n\n<p>One of the main reasons franchisees buy a franchise is because they are purchasing a tried and trusted business strategy. After all, your franchisor may have several years of experience. During this time, it is likely they will have faced numerous challenges and setbacks. By leveraging your franchisor\u2019s experience as a franchisee, it is less likely your particular franchise will fail. This provides franchisees with both comfort and the profitability of a solid investment.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">4. Brand Recognition&nbsp;<\/h3>\n\n\n\n<p>Franchises usually come with a well-known and trusted brand name. This means that when you buy a franchise, you also buy an existing customer base. On the other hand, small businesses often struggle to attract new customers and establish connections with them. \u2018Buying\u2019 existing customers is one of the reasons franchises make an excellent investment.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">5. Support and Training Assistance<\/h3>\n\n\n\n<p>Franchisees receive ongoing training and support from the franchisor. This is largely because it is in the franchisor\u2019s interest for each of its franchisees to perform well. On the other hand, small business owners often have to learn through trial and error. This can be a very costly way to build a successful business. The added value that comes with the franchisor\u2019s training and support is another reason why franchises make excellent investments.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">6. Lower Overheads<\/h3>\n\n\n\n<p>Franchises also make a great investment due to the lower overheads that come with buying into large-scale businesses. The larger the franchise, the greater the ability of the franchisor to reduce the costs of stock and supplies. Further, lower costs translate into greater profit potential for you as a franchisee.&nbsp;<\/p>\n\n\n    <div class=\"my-7 lg:my-10 border-y-2 border-gray-100 py-7 lg:py-10 flex flex-col sm:flex-row items-start gap-10\">\n                    <img decoding=\"async\" class=\"w-52 mx-auto my-0! rounded\" src=\"https:\/\/img.legalvision.com.au\/wp-content\/uploads\/sites\/2\/2021\/12\/22115855\/cytonn-photography-GJao3ZTX9gU-unsplash-e1640129621597.jpg\" alt=\"Front page of publication\"\n                 loading=\"lazy\" width=\"208\" height=\"298\">\n                <section>\n            <div class=\"text-2xl font-bold\">Commercial Contracts Checklist<\/div>\n            <div class=\"body-text\">\n                <p>To protect your business, ensure supplier contracts meet your business\u2019 needs. Our free Commercial Contracts Checklist will help.<\/p>\n            <\/div>\n            \n\n<a href=\"https:\/\/go.legalvision.co.nz\/Commercial_Contracts_Guide_NZ.html\" class=\" block px-5 py-3.5 max-w-fit bg-orange button__hover transition rounded text-white font-bold text-lg no-underline uppercase leading-tight text-center\" target=\"\" rel=\"\">Download Now<\/a>        <\/section>\n    <\/div>\n\n\n\n\n<h2 class=\"wp-block-heading\">Reasons Not to Buy a Franchise<\/h2>\n\n\n\n<h3 class=\"wp-block-heading\">1. Franchises Can Be a High Upfront Investment<\/h3>\n\n\n\n<p>It is important to consider that franchises are <a href=\"https:\/\/legalvision.co.nz\/franchising\/afford-to-buy-a-franchise\/\">not always a cheap investment<\/a>. This is particularly the case for larger franchises with significant brand recognition.<\/p>\n\n\n\n<p>For example, consider McDonald\u2019s. In New Zealand, the standard franchise fee for a McDonald\u2019s franchise is $75,000, excluding GST. An additional security deposit of $25,000 applies at the time of purchase. Further, franchisees must also foot the cost of recruiting and training their crew. You also as a franchisee have to fit out the property according to McDonald&#8217;s requirements.&nbsp;<\/p>\n\n\n\n<p>The high cost of entering certain franchises is often a large barrier to entry for many. However, franchising has so many benefits that the investment is often worth it.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">2. Franchises Are Not Passive Investments<\/h3>\n\n\n\n<p>If you are looking for a passive investment, franchising will <a href=\"https:\/\/legalvision.co.nz\/franchising\/common-risks-buying-franchise\/\">not be suitable<\/a> for you. Although franchises can be good investments, they are far from passive.&nbsp;<\/p>\n\n\n\n<p>As a franchisee, you will likely be involved in every aspect of running the business. This is particularly the case for new franchises, who are still getting used to business processes.&nbsp;<\/p>\n\n\n\n<p>You may eventually train a manager to oversee the daily operations. However, you will almost always be required to have a degree of involvement.<\/p>\n\n\n\n\n<a href=\"#content-next\"\n   class=\"block p-4 mt-10 text-xl font-bold text-center text-white no-underline bg-gray-800 rounded-t-xl\">\n    Continue reading this article below the form\n    <i class=\"text-xl fa-regular fa-arrow-down\"><\/i>\n<\/a>\n<div class=\"px-6 pt-10 pb-12 mb-10 text-center bg-gray-100 rounded-b-xl sm:px-12 test\">\n    <div class=\"mb-8 text-2xl font-bold text-orange\">\n        Need legal advice?\n        <br>\n        <span class=\"text-lg not-prose\">\n                            Call <a href=\"tel:+64800005570\" class=\"not-prose\">0800 005 570<\/a> for urgent assistance.\n                <br>\n                Otherwise, complete this form, and we will contact you within one business day.\n                    <\/span>\n    <\/div>\n\n    \n\n<div class=\"not-prose flex justify-center text-left gform_input_bg_white    \">\n    <script>\nvar 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Firstly, it is important to note that franchises can be a high upfront investment. Franchise ownership is also far from a passive investment. However, some reasons franchises make a great investment include:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>access to finance;<\/li>\n\n\n\n<li>lack of start-up stage;<\/li>\n\n\n\n<li>proven business model;<\/li>\n\n\n\n<li>brand recognition;&nbsp;<\/li>\n\n\n\n<li>support and training assistance; and<\/li>\n\n\n\n<li>lower overheads.<\/li>\n<\/ul>\n\n\n\n<p>If you need assistance deciding if you should invest in a New Zealand franchise, contact our experienced <a href=\"https:\/\/legalvision.co.nz\/franchise-lawyers-lp\">franchise lawyers<\/a> as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on <a href=\"tel:+64800005570\" class=\"AVANSERnumber dynamic-number\">0800 005 570<\/a> or visit our <a href=\"https:\/\/legalvision.co.nz\/membership\/\">membership page<\/a>.&nbsp;&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Frequently Asked Questions<\/h2>\n\n\n\n<p><strong>Are franchises a passive investment?<\/strong><\/p>\n\n\n\n<p>Although franchises can be good investments, they are far from passive. As a franchisee, you will likely be involved in every aspect of running the business. This is particularly the case for new franchises, who are still getting used to business processes.&nbsp;<\/p>\n\n\n\n<p><strong>Why are franchises a good investment?&nbsp;<\/strong><\/p>\n\n\n\n<p>A franchise is proof of a successful, established business model. This is a huge contrast to all the unknowns of establishing your own business. One reason franchises are a good investment is that you have easier access to finance and can skip all the time and costs associated with the start-up phase. You have access to a proven business model and the brand recognition that comes with the business. Finally, you will receive support and training and have lower overheads.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>If you are considering opening a business, you might wonder whether buying a franchise is a good investment. After all, a franchise is backed by a successful, established business model. As such, this is a huge contrast to all the unknowns of establishing your own business, which is a new business. This article will take<a href=\"https:\/\/legalvision.co.nz\/franchising\/franchises-good-investment\/\">Continue reading <span class=\"sr-only\">&#8220;Are Franchises a Good Investment?&#8221;<\/span><\/a><\/p>\n","protected":false},"author":13267,"featured_media":215460,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_relevanssi_hide_post":"","_relevanssi_hide_content":"","_relevanssi_pin_for_all":"","_relevanssi_pin_keywords":"","_relevanssi_unpin_keywords":"","_relevanssi_related_keywords":"","_relevanssi_related_include_ids":"","_relevanssi_related_exclude_ids":"","_relevanssi_related_no_append":"","_relevanssi_related_not_related":"","_relevanssi_related_posts":"202843,203214,221464,208890,221677,219757","_relevanssi_noindex_reason":"","editor_notices":[],"footnotes":""},"categories":[7],"tags":[126,488,1742,2170],"class_list":["post-226371","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-franchising","tag-franchising","tag-franchisee","tag-franchise-cost","tag-franchise-opportunity"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.5 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Are Franchises a Good Investment? 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