Management

Franchisees: Free Pre-entry Program

Budding franchisees urged to join ACCC course

By Michelle Hammond
Thursday, 13 January 2011

The Australian Competition and Consumer Commission is calling on wannabe franchisees to enroll in its franchise education program at Griffith University.

The program, which is funded by the ACCC, consists of five modules covering the Franchising Code, franchise fees, royalties, operations manuals, marketing funds and site selection, and general business concepts including cashflow, working capital and business reporting.

Since its launch in July 2010, more than 1,000 people have enrolled in the program. A Griffith University survey shows most participants found the program useful and would recommend it to other prospective franchisees.

According to ACCC acting chairman Michael Schaper, the start of a new year prompts people to change their work life by choosing to go into business for themselves.

“Many people are thinking of ways to change their lifestyle and income and may see buying a franchise as one way of doing this,” Schaper says.

“As part of the due diligence process, pre-entry education programs offer significant benefits to anyone looking to enter the sector.”

Schaper says it is important for prospective franchisees to understand as much as they can about operating within a franchise system in order to make a fully informed decision prior to purchasing a business.

“The program can help maximise the potential for future success and minimise the chances of conflict or failure,” he says.

The Franchising Code of Conduct, enforced by the ACCC, is a key focus of the program. It is a mandatory code of conduct that has the force of law under the Competition and Consumer Act 2010.

The code aims to regulate the conduct of participants in franchising towards each other and to ensure they are sufficiently informed about a franchise before entering it.

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Comments (1)

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One additional piece of advice for buddy franchisees is to fully understand the contractual ability within the franchise relationship and how that influences risk assessment. I would suggest that this is not adequatley covered in the Griffith course.

A franchise contract may, and usually does, dhange within the term of the franchise agreement by why of alterations or additions to the franchise Operations Manual. Typically those changes will alter the franchisee financial model so prospective franchisees must become totally aware of the historical motivation of the franchisor when making changes.

Such Operations Manual changes can be a positive for all parties to the franchise agreement or they can be designed to increase the franchisor profit to the detriment of the franchisees. In worst case systems this can be instrumental in franchisees being tuned over and losing their investments to begin with.

The franchise contract does offer the franchisor to further pursue a failed franchisee and typically franchisees have guaranteed their ongoing success with the asset that is their home. A poor choice of franchisor can be a nightmare that lasts long past business failure.

There are quality franchisors in the market but the difficulty is that prospective franchisees typically cannot tell the difference especially when there are professional franchise sales people in the mix.

RayBorradale , January 14, 2011