If you are looking to start a business, or want a career change, buying a franchise in New Zealand may be an excellent opportunity. With a franchise, you can own a business but get the perks of using your franchisor’s existing and proven systems and intellectual property. This can reduce the likelihood of failure and increase your business management skills. This article will outline the benefits of franchising and why you should buy a franchise in New Zealand.
This publication provides you with the fundamentals for franchising your New Zealand business, including set up, branding and management.
Variety of Business Opportunities
When buying a franchise, there are many industries and business types to choose from. For example, some enterprises in franchising include:
- fast-food;
- retail;
- food hospitality;
- e-commerce;
- home renovations; and
- cleaning.
Most franchises, no matter the industry, will contain the same characteristics. This includes having a franchisor whose franchisees operate as part of a network in different locations.
Turnkey Business
Starting a business from scratch can be challenging, especially if you have never owned one before. However, one of the main advantages of buying a franchise is the prospect of buying a turnkey business.
A turnkey business is an existing business or one where the franchisor has assisted with the preparation for the commencement of operations. Your franchisor will have already established a franchise system and business model that you must follow. Through their system, you can access the business’ intellectual property, processes, and distribution methods.
However, before buying the franchise, you still need to conduct due diligence and ensure it is a good investment. Hence, you may choose to investigate several factors, including:
- financial statements;
- reputation in the market;
- customer base;
- your obligations in the franchise agreement;
- support from the franchisor;
- territory; and
- franchise fees.
Franchise Brand Name
A business’ brand is its most critical asset. This is because your brand is the core of your marketing strategy and is the path to increased customers. With a franchise, you benefit from your franchisor’s existing brand and market reputation. Furthermore, your franchise will license its intellectual property to you, including their:
- brand name;
- trade marks; and
- logos.
As a franchisee, you can receive the following benefits:
- goodwill;
- exclusive branding through registered trade marks;
- centralised website and social media reach;
- goods and services that are known to customers; and
- operational systems associated with the franchise’s brand.
Before committing yourself to a franchise, it is crucial to conduct due diligence on the franchise. You should confirm whether trade marks are registered and the value of their goodwill. Some franchises may not have tremendous goodwill within the market, and it is vital to ensure you are not buying a franchise with a negative reputation.
Ease of Raising Capital
Investors are more comfortable financing a franchise due to a proven track record. In addition, they have increased assurance that they will receive a good return on investment. Moreover, investors can look at successful franchise chains and gauge the investment as low risk. This could mean lower interest rates that apply to most investors (including banks) depending on their goals.
Training Programs
Your franchisor may provide you with training and mentoring programs to help develop your skills and capabilities. These programs can help you manage your franchise and increase your chances of successfully running your business. As a result, your franchisor may aim to train you in accordance with how their locations are run. This ensures consistency across the brand and decreases the likelihood of mistakes.
Moreover, your franchisor may provide you with ongoing support. This can include assistance in:
- choosing a location;
- lease negotiations;
- finding reliable suppliers;
- vendor relationships; and
- finding employees.
Established Marketing Strategy
Marketing strategies are essential for your franchise to reach existing and potential customers successfully. As a new business owner, creating a marketing strategy that will work can take time and effort. This worry is reduced with franchising as your franchisor may provide you with marketing support or a plan. Assistance may include:
- connections to a central social media site for higher engagement with customers;
- season promotional campaigns;
- promotional flyers and signage;
- collecting market research data; or
- having your business information on the main business website.
Key Takeaways
Buying a franchise holds many opportunities and advantages. Advantages include:
- having various business types to choose from;
- entering into a turnkey business; and
- having ease of raising capital.
Moreover, you can benefit from the franchise’s existing brand and develop your skills through training programs. Furthermore, your franchisor may have established marketing strategies to help your franchise grow in the market.
If you need help buying a franchise, you can contact our experienced franchise lawyers to assist as part of our LegalVision membership. You will have unlimited access to lawyers who can answer your questions and draft and review your documents for a low monthly fee. Call us today at 0800 005 570 or visit our membership page.
Frequently Asked Questions
A franchise is similar to a turnkey business in that with a franchise, you get access to existing systems, processes, and products to sell. As a result, you do not need to organise and conceptualise your business from scratch.
You can buy any franchise that you feel comfortable with. Industries include food, hospitality, cleaning, gyms, and much more. However, before you buy a franchise, it is essential to conduct due diligence.
We appreciate your feedback – your submission has been successfully received.
