Franchises

When considering the costs of buying into a franchise, people often only consider the initial royalties and set up costs (for example, shop fit-out or equipment purchase). It’s important to know what these fees include, and what you’re expected to pay going forward in addition to this amount.

Once you’re up and running, your focus will shift to the ongoing costs. Check if the franchise fees vary depending on your business performance and revenue, or if it’s a fixed number regardless of sales.

Marketing is often an area that people don’t consider too much when buying into a franchise group as they assume it will be done for them. In most cases, the franchise group has a marketing team that operates at a national level to promote the brand across Australia (or state-based if it’s not a national franchise). They are usually there to provide marketing support and guidance, but the local promotion of your business is usually down to you and there is a cost involved.

Do you need finance to purchase initially?

There will be a big initial outlay of funds to buy into the franchise group, and you may or may not have the funds available. If you need finance to support this, it’s wise to check if the franchise group has any current agreements with banks or lenders to assist. If not, this is another thing you will need to consider and organise. A finance broker, such as the team at Carbon Finance & Lending, can help guide you through this process.

Who will do your accounting and bookkeeping?

Some franchises will require you to use an approved service provider while others will allow you to choose your own. In the case of the latter, it can be tricky to find someone you trust and who has the expertise in franchises to help. Our advice is to look for a firm, such as Carbon, who have accountants and bookkeepers under one roof. This means they can easily talk about your business, reducing the need for you to play middle-man. It’s even better if the firm has other business services at their disposal, such as finance, business insurance, payroll, R&D and grants.

Ensure you meet your tax obligations to avoid penalties and save on tax.

When you have the guidance of qualified tax accountants, like the team at Carbon, you will take comfort in knowing you’re meeting your tax obligations and that your tax planning strategies are tailored to your business. Without tax planning strategies in place, you could be facing large tax bills and you definitely don’t want that!