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7 Steps to Franchise Your NZ Travel Business

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Franchising your New Zealand travel business offers an effective way to expand into new markets. This avenue also allows for the minimisation of risks and costs associated with opening new locations. If you are considering franchising, you must take several precautions to ensure the success of your NZ travel business. This guide outlines seven key steps to ensure a profitable and legally compliant franchise system.

1. Assess the Market

It is essential to assess the market and determine if there is demand for your franchise concept. This includes: 

  • researching your competition;
  • evaluating the current market trends; and 
  • analysing the potential demand for your franchise in different locations. 

It is also vital to consider the unique aspects of the travel industry. These may include seasonality and the impact of external factors, such as natural disasters or pandemics. By conducting thorough market research, you can validate franchising your travel business. It also empowers you to craft a profitable franchise strategy with informed decisions.

2. Evaluate Your Business

Next, you must evaluate your current operations and determine your franchise goals. Ask yourself: 

  • is my business profitable and scalable; 
  • do I have a strong brand and customer base; and
  • are there areas where I could improve my operations?

Answering these questions will help you decide if franchising aligns with your NZ travel business. Additionally, you can set achievable goals for your franchise system.

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3. Develop Your Franchise System and Brand 

Once you have determined that franchising is the right path for your business, you should develop your franchise system and brand. This includes creating:

You should also develop a strong brand identity and trade mark. These will help you attract franchisees and build a recognisable brand. 

This step will require you to seek advice from professionals, such as a franchise consultant and lawyer.

4. Determine Your Franchise Fees and Royalties 

Franchisors rely on franchise fees and royalties as significant sources of revenue. 

Franchise fees are a one-time payment made by franchisees to join the franchise system. In contrast, royalties are ongoing payments based on a percentage of the franchisees’ gross sales. 

To determine your fee structure, consider: 

  • your business model;
  • market competition; and 
  • the value you can offer franchisees. 

Fee structures are a crucial component of a successful franchise. Therefore, the fees you charge to franchisees must be reasonable. Ultimately, this will help to ensure profitability whilst attracting new franchisees to your network. 

Franchising requires upfront fees to purchase the business and launch operations. These costs vary based on setup needs and future growth projections.  Ongoing fees, paid for the continued use of your brand and systems, typically come as a percentage of revenue or a fixed fee. Before launching your franchise, you should consult an accountant to understand the total franchisee cost structure. Remember, initial costs can grow alongside your business success.

5. Create Your Franchise Agreement 

Your franchise agreement is a legally binding contract between you and your franchisees. It should include essential terms and conditions, such as the:

  • term of the franchise agreement;
  • franchise fees and royalties;
  • intellectual property rights;
  • franchisee obligations; and 
  • termination and renewal provisions.

You should work with an experienced franchise lawyer to create a franchise agreement that is legally compliant and protects your interests. 

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6. Recruit and Train Franchisees 

Recruiting and training franchisees is important in building a successful franchise system. You should develop a comprehensive recruitment strategy that includes:

  • advertising;
  • networking; and
  • franchisee screening. 

You should also provide training and support to your franchisees to ensure they understand your business model, operations and brand standards. 

7. Provide Ongoing Support and Improve Your Franchise System 

Providing ongoing support and improving your franchise system is essential to the success of your franchisees and your business. Therefore, you should communicate regularly with your franchisees and provide them with ongoing training and support. Further, you must also ask for feedback on your franchise system. By continually improving your franchise system, you will be able to keep your franchisees happy and successful. Ultimately, this will help grow your business and brand. 

Key Takeaways 

Franchising your travel business can be a great way to expand your operations and reach new markets while minimising the risks and costs associated with opening new locations. However, franchising is a complex process that requires careful planning, legal compliance, and ongoing support and communication with franchisees. Accordingly, when franchising your travel business, you must assess the market, evaluate your business, and develop your franchise system and brand. Additionally, you should determine your franchise fees, create your franchise agreement, recruit and train franchisees, and provide ongoing support for your system. By following these and seeking professional guidance, you can transform your NZ travel business into a successful franchise network.

If you need assistance franchising your New Zealand travel business, 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

How do I assess the market before franchising my travel business?

To assess the market for your franchise concept, you must research your competition and evaluate the current market trends. You must also analyse the potential demand for your franchise in different locations. It is also important to consider the unique aspects of the travel industry, such as: 

  • seasonality; and 
  • the impact of external factors such as natural disasters or pandemics. 

How do I know if my travel business is ready to be franchised?

To know if your travel business is ready to be franchised, you must first ask if it is profitable. Additionally, you must consider if you have a strong brand and customer base. Finally, you should also determine if there are any specific areas where you can improve your operations.

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Emily Young

Emily Young

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