7 Things to Consider When Deciding What Franchise to Buy in NZ

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Table of Contents

• Your Skills and Experience 
• Your Finances 
• Industry 
• Franchising Opportunities 
• The Franchisor
• Experience of Franchisees
• Legal Implications  
• Key Takeaways
• Frequently Asked Questions 

Franchising is an increasingly popular business model. However, with opportunity comes a lot of choices. When buying a franchise, it can be challenging to decipher which structure best suits your needs. This article will take you through seven things to consider when deciding what franchise to buy in New Zealand. 

Your Skills and Experience 

The first step to deciding what franchise to buy is to evaluate exactly what you are looking for. This will depend on what type of business suits your lifestyle and what work you want to be involved with. 

Operating a franchise means you will simultaneously be bound by restrictions and work as your own business. This means you must be willing to do a lot of work yourself, including:

• hands-on work;
• paperwork; and 
• all other sorts of tasks. 

Additionally, you should carefully evaluate your:

• existing skills; 
• prior work experience; 
• understanding of the franchise business model; and
• ability to run your own business.

Ultimately, before deciding what franchise to purchase, you need to be realistic about your abilities, attitude and business goals.

Your Finances 

The following key consideration is the cost of buying into a franchise. One of the most appealing aspects of buying a franchise is buying a demonstrated business concept. However, this also means that the more established a franchise is, the more expensive it will be to invest in. 

With costs ranging from a few thousand to over a million dollars, you need to be practical about what you can afford and what this will mean for the type of franchise available. 

Further, it would help if you also considered that your franchise will not be profitable immediately. With it taking some time to make a profit, you need to assess how long you can support yourself before making an income.

Industry 

Franchises can be found across all industries, which means there is something for everyone. You will also be working in your franchise for at least a few years, so you should find something you enjoy doing.

To help you find an industry that suits you, you should consider:

• your existing skills and experience; 
• current trends; and
• how big the market is.

Talking to others across different industries will help you see where you best fit in and where your skills will have the most impact. It would help if you were sure to pick an industry with both a target market and not oversaturated in your area. 

Franchising Opportunities 

Once you have chosen an industry that suits you, you need to consider the franchising opportunities within that industry. Finding an opportunity worth pursuing requires you to have an idea about:

• whether you want to purchase a new or existing franchise;
• the location you wish to work in; and
• how much you can afford to spend.

Once you find a suitable franchise, you should contact the franchisor to learn more about the opportunity. Meetings and interviews are very time-consuming, so it is a good idea to ensure you meet the essential criteria to be a franchisee before pursuing anything further.

The Franchisor

Talking to the franchisor themselves will be the best way to determine whether a franchise opportunity is suitable for you. The franchisor will serve as an excellent source of information on the franchising system and reflects the franchise culture. Consider alternative opportunities if a franchisor cannot answer your questions or you feel you do not mesh well together.  

Experience of Franchisees

In addition to talking with the franchisor, discussions with franchisees are crucial. A franchisee can guide you as to:

• the realistic profit you can expect to make;
• how much you will have to work;
• how supportive the franchisor is; and
• their experience working with the franchisor.  

Notably, a franchisor who tries to prevent you from getting in touch with franchisees should be considered a bad sign. 

Legal Implications  

Finally, you must carefully consider the legal implications of any franchise you are considering buying. Again, a franchise lawyer will be able to help you with this.

Firstly, a franchise lawyer can help you assess any potential franchising opportunities. With a copy of the franchise agreement, a franchise lawyer can help point out any issues relating to:

• territory;
• exclusivity;
• length of the agreement;
• ability to exit the agreement;
• performance criteria;
• your obligations; and
• franchisor’s obligations. 

Understanding all the terms of the agreement will help you decide what franchise to buy and ensure you avoid major issues later down the track. 

Key Takeaways

Evaluating what franchise best suits you and your needs can be challenging. Some key things to consider when deciding what franchise to buy in NZ include: 

• your skills and experience;
• your financial position;
• what industry you want to work in;
• franchising opportunities available;
• what type of franchisor would you work well with;
• the experience elf other franchisees; and 
• legal implications of a franchising agreement. 

If you need assistance deciding what franchise to buy, our experienced franchise lawyers can assist 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 0800 005 570 or visit our membership page. 

Frequently Asked Questions