If I Could Get OUT For What It Cost Me To Get IN, I’d Be Happy!

It happened again today! I was talking to a franchisee about her chances of selling her franchise business and she came out with the statement I hear so often from franchisees – “If I could just get out of it for what it cost me to get in to it, then I would be happy”.

I hear this so often from franchisees struggling to make a profit in their business. Usually they are in a retail situation in a shopping centre. After a few years they realise that the only people making any money are the shopping centre owners and the franchisors. In effect, the franchisee is working to keep the shopping centre owners and franchisors in the lifestyle they have come to expect!

Unfortunately, once you are IN and have invested the money, it can be very difficult to get out and recover your costs. And if the lease is in the franchisees name then they are stuck with that as well.

The first piece of advice I give anyone considering buying a franchise is “Find out how are you going to get out of it?”  They normally laugh and ignore my advice.

If you really must buy a retail franchise business in a shopping centre then do your homework first. In Australia we have such a strict Code of Conduct for Franchisors – as part of the Trade Practices Act – there is no excuse for a prospective franchisee NOT doing their homework before signing up. At least speak to existing franchisees and see how they are going, and if possible, franchisees who have left the franchise. Under the Act the franchisor must provide details in their disclosure document for you to do this.

To view the Code of Conduct for franchisors CLICK HERE and I recommend page 29 onwards.

Regards
John
“Committed to helping business owners realise their life’s dreams through buying and selling businesses!”
Thinking of buying or selling a business? Then attend my workshop on the 6th August – click on WORKSHOPS tab above.