How to make the best decision when investing in a franchise

There is no doubt that buying a franchise can be a very effective way to gain a leg up, so to speak, when starting your own real estate business.  Buying into an established, well-known organisation can instantly afford your own company credibility and recognition, allowing you to overcome many of the initial hurdles that small businesses are so often faced with. 

However, investing in a real estate franchise is a significant purchase and one that should not be entered into without research.  There are a number of factors that you need to consider, including the length of time you will be contracted for, the corporate culture of the organisation, and the support offered by head office, among other things, before choosing which organisation to go with.    

In order to make sure you are making the most suitable choice when investing in a real estate franchise, there are a variety of research methods that you can utilise. 

Talk to other franchisees
According to CENTURY 21 Franchisee John Rault, who was recently quoted in the Autumn edition of The Australian Real Estate Review in an article entitled ‘Find a perfect franchise match’, one of the methods of research he employed before buying into a franchise was to talk to existing franchisees. 

And according to Steve Wright, CEO of the Franchise Council of Australia, this was a smart move.  Wright, also quoted in the article, says that while official information will be disclosed to a potential franchisee by the company when they are thinking of buying into the brand, “other intangible elements of how the franchise does business... and their relationships with franchisees are things that a potential franchisee must research for themself”.

In the article, Rault recommends that those looking to buy a franchise contact both people who have been with a company for six months, and those who have been with a company for several years. 
 
Conduct due diligence
It is important to approach the purchase of a real estate franchise as a significant business decision, which means that you should rely on a variety of facts and figures, company research, and a full understanding of what your franchise agreement entails before signing on the dotted line.  According to Rault, “due diligence is the most important consideration when venturing into any sort of business relationship.” 

In the end, the purchase of a real estate franchise means that you are entering an established, successful network, in which your inclusion ought ultimately to add to your success.  You should look for an organisation with which you will be happy to be associated, and whose values, business ethics and performance are aligned with what you also want your business to achieve. 

Posted by George Tarbey on 14/06/2011 at 9:29 AM | Categories:

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