Franchise fuss

Across Australia there are some 70,000 small business people running their own franchise operations, ranging from gyms to fast food outlets, or mail-order products.
They are just as prominent in the major metropolitan areas as they are in regional and rural centres around NSW.
For the most part, franchise businesses provide their owners with the opportunity to run their own business with the protection of an established brand and franchise system.
However, it’s important for people looking to buy into a franchise to do so with their eyes wide open.
Recently we saw a high-profile franchisor, the diet spray company SensaSlim, placed into administration, with the impact now being felt by more than 70 people who had invested their hard earned money in SensaSlim franchises.
While these sorts of collapses are the exception rather than the rule, before entering into a franchise arrangement, it is important prospective owners conduct due diligence and obtain professional advice. It is worth asking a range of questions.
We have unfortunately seen a number of examples where a person has been given misleading advice about how much support they would receive and even how much business they should expect.
Most franchises are above board but, when you are investing hard earned capital into a new business project, it pays to be well-informed about who you are dealing with and what you are getting involved in.

Van Moulis,
Lawyer (Slater & Gordon)

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