Coffee cup in franchise

3 Good Reasons to Start a Franchise

Coffee cup in franchise

According to data from Griffith University, there were 1,120 franchised brands operating in Australia in 2016, with 90% of those brands originating in Australia. Annual sales turnover in the franchise sector is estimated at $146 billion, so there is huge opportunity for those willing to put in the effort to operate a successful business.

Buying a franchise is just like buying any other business and requires strict due diligence and professional advice. However there are specific advantages when buying a franchise compared to establishing any other business.

Although there has been negative press around franchising in Australia over the past year, franchises have an 80% success rate, compared to a 60% success rate for other businesses. However, like every other business, a successful franchise takes hard work and good business sense, and so may not be suitable for everyone. Here we explain the three main advantages offered through a franchise business model.


1. Established brand

The most obvious advantage of buying a franchise rather than starting out alone is the ability to piggyback off the success of an established brand. Franchisors usually offer group advertising resources to maintain brand consistency, which saves you the effort of creating your own advertising. The value of recognised trademarks. proprietary information, patents and designs is one of the main attractions for most franchisees.

Being part of a franchise group means being part of a uniform operation. All locations will share the same product, interior and exterior appearance, service levels, overall quality and customer awareness and loyalty.

2. Set up and ongoing help

Whilst you will have the freedom to make decisions as a business owner, the franchisor will assist you to set up the business to ensure it meets their standards. Before and during launch, a good franchisor will provide you will support in matters relating to running a business, including finance, accounting, employee training and operational procedures.

Owning a franchise gives you the chance to enhance your management skills and business acumen, all within the existing framework of an established brand. This results in a lower risk of failure or loss of investments compared to starting a business from scratch.

3. Franchisor buying power

A franchisee generally gets the benefit of lower costs for supplies and produce due to bulk buying contracts negotiated by the franchisor. Similarly, they are often able to recommend discounted suppliers for shopfitting and store design. Through their experience opening many other franchises prior to yours, the franchisor will have been able to eliminate unnecessary expenses and minimise start up capex.

At Lendfin, we provide finance options designed specifically for franchises. Funding is available for both new and established franchises, usually to the value of 70% of the purchase price. What’s more, in certain cases the loan can be partially secured against the goodwill of the franchise, which can reduce the deposit required.

Contact a Lendfin specialist today to discuss whether a franchise loan could help you start the business of your dreams.