The reason many prefer buying a franchise rather than starting their own brand in Australia is purely logical. Established franchises have proven to succeed, so the risks should be less.
They already have loyal customers, so marketing should be less challenging. There are policies and procedures already in place, so the process of trial and error should be out of the equation.
All these points make sense and are true. But just because you purchase the right to sell the products and services of a well-known brand doesn’t mean your venture would be an automatic success. That’s not how it works. And this kind of perception is actually naïve.
To avoid learning them the hard way, it pays to know these realities before experience catches you off guard:
Savings Beat Loans
The majority of your capital should come from your personal savings, not from loans. This way, you can minimise your overheads and increase your net profit. In case you suffer from negative cash flow, the pressure will be a lot less, because a small loan repayment is relatively easy to cover.
Market Research Can’t Be Done Overnight
Even if you think your initial marketing plan is ironclad, it’s probably not. It’s never enough to study your location and competition at one glance, as you’re most likely to see the market just at the superficial level.
Also, what works for one branch might not work for another. Not all ice cream and burger franchises in Australia have the same exact formula for success. Burger Urge says you may tweak your strategy a little bit to adapt to the market you wish to penetrate.
Failure Is a Huge Possibility
Again, buying a franchise doesn’t guarantee your venture’s success. Your franchisor would familiarise you with the ins and outs of its operation, but in the end, its fate still lies in your ability to run it.
Not all franchise buyers have what it takes to become real entrepreneurs. Franchising is a great option to grow your wealth, but don’t be blind to the pitfalls the come with starting a business.