Advice for franchisees and SMEs

 

working, computerFive thousand potential franchisees have registered for the Pre-Entry Franchise Education Program developed by Griffith University’s Asia Pacific Centre for Franchising Excellence, funded by the Australian Competition and Consumer Commission (ACCC).

The free, online program consists of five modules and is designed to give small business operators and prospective franchisees a realistic understanding of franchising.

ACCC deputy chair, Dr Michael Schaper, said the program goes beyond the text book to provide practical tips for would be franchisees.

“It’s designed to assist prospective franchisees make informed investment decisions, help them understand the demands of franchising, and know where to go for assistance if things turn sour,” Schaper said.

Research into the effectiveness of the program compared the experiences of people who completed the program versus those who had not was conducted in August. The research revealed franchisees that complete the program have more realistic expectations of franchising performance.

“The Pre-Entry Franchise Education program has significantly improved the confidence, knowledge and readiness of entrepreneurs who have gone on to operate a franchise. Anyone thinking about buying a franchise should complete the program,” Schaper said.

Centre director and lead researcher, Professor Lorelle Frazer said the research also showed people who completed the program were more likely to become franchisees.

“People who completed the program not only had more positive franchising experiences, but were more likely to become franchisees than people who didn’t complete the program,” Frazer said.

A number of franchisors are incorporating the program into their franchisee recruitment processes. Subway development manager (QLD/NT), Lesley Dobson, has made the program compulsory for franchisees applying to Subway in Queensland for the last 18 months.

“The program gives franchisees a more thorough overview of franchising, which we feel is a necessity. It has certainly raised awareness of the rights and obligations of franchisors and franchisees and we’ve seen an increase in questions around those elements, which is what we wanted. We’re very happy with the program,” Dobson said.

Schaper said the ACCC understands that potential compliance issues can be reduced or eliminated if prospective franchisees are educated about their rights and obligations under the Franchising Code before they enter into a franchise agreement.

“If a prospective franchisee does its due diligence by participating in the free pre-entry education program it will be able to make a better and more informed investment decision – and this can result in the prospective franchisee concluding that franchising is not the right investment for them,” he said.

Topics covered in the free online program include:

·         An overview of the franchising sector and the Franchising Code of Conduct

·         Franchise disclosure, agreements, royalties and finance

·         Franchise support services, site and territory selection, retail leasing and franchise marketing funds

·         Franchising intellectual property, the operations manual, franchisor-franchisee relationships and dispute resolution

·         Questions to ask franchisors and existing and former franchisees, additional due diligence, useful business skills and assessing suitability to become a franchisee.

For further information or to register visit http://www.franchise.edu.au/pre-entry-franchise-education.html

The ‘Preparation for Franchising: A study of prospective and current franchisees’ research report is available here.

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