What to Expect when Buying a Franchise?
Buying a franchise has many known benefits, such as having support from a network of businesses and going into business with a tried and proven system, but some aspiring franchisees tend to forget about financial inclusions, perks and other details that come with owning a franchise.
Here are some of the more important things to expect when buying a franchise:
1. Ongoing Fees
Franchises may require you to pay certain ongoing fees, also known as royalties, management fees or license fees, in the form of a flat fee, a percentage of turnover or a mark-up on products and services. These payments provide the franchisor with the ROI they need in order to continue supporting and developing the franchise system.
Ongoing fees cannot be compromised; meaning, you cannot ask for a lower fee. So this is a responsibility you need to meet when owning a franchise.
2. Approved Suppliers
It is not possible for you to get your own suppliers for your franchise. If this were a possibility you were looking at once you committed to buying a franchise, you might have to rethink your options again.
Franchisors actually have a list of their own approved suppliers in order to maintain consistency within the system. They will require you to purchase from them. This makes it easier for you as a franchisee because you no longer have to think about reaching out and creating relationships with other vendors.
3. Tax Obligations
Sometimes, franchisees overlook planning their tax payments. It’s best to hire and talk with an accountant who can give you advice on contributions, the payroll system you should use and if you want to take drawings.
Drawings are withdrawals with no tax for a time but you will need to pay for them later. This is something to talk in-depth with your accountant, as well as other details, especially before you start your franchise business.
4. Reports
Franchisors will want to get a monthly profit and loss statement from you, as well as annual accounts and other types of financial information. This is done to see how you are doing as a business and what kind of support they can offer for you to improve.
This is also handy when you want to find out if you’re reaching your financial goals for your franchise.
As you can see, being a franchisee can take so much work. But all of this is doable especially when you’ve joined a franchise that will continue to support you all throughout your journey as a business owner.
If you’re looking for franchise opportunities in New Zealand, particularly in the health and beauty industry, then sign up and partner with Laser Clinics New Zealand. We are a global cosmetic clinic and take pride in our award-winning growth and successful network of franchise owners. Learn more about what you’ll get from us when you visit and enquire on our website.
