Question: I want to expand my business using a franchise – is this a good idea?Answer:
Yes, but only if you are at the stage in your business where it is advisable to expand to this level. You can franchise your business concept to other businesses, making you the franchisor and the people you bring in to run a branch of your business become the franchisees. Benefits include that you can focus on the overall brand, concept, business model and marketing strategy of the franchise system, while each franchisee focuses on running and expanding their franchise.
Franchisees generally pay the franchisor a higher fee than a licensed contractor would pay a principal. Further benefits for the franchisor include the ability to expand nationally while maintaining branding and quality control. The disadvantages include the significant costs associated with setting up the franchise system, and the need for ongoing compliance with the Franchise Code of Conduct, which governs franchises in Australia. A franchise relationship must comply with the Franchise Code, including having specific legal documents. A franchise requires a Franchise Agreement, a Disclosure Document and other legal documents, which a franchise lawyer will need to help you draft. The franchise agreement sets out the rights and obligations of the franchisor and franchisee with regards to the franchise.