Steps To Buying Courier Franchises
The purchase of a courier franchise business is different from the purchase of an independent business
. As a franchisee you will be party to a long-term relationship with your courier franchisor and you will agree to run the business in accordance with the franchisor's system.Buying courier franchises has the advantages of offering many benefits, such as:
A uniform, consistent business that often relies on a successful formula
Support from the franchisor in respect of knowledge relating to management, industry, marketing, advertising and buying power
Use of an already established business name and format and a reduction of business risk
It also involves the payment of fees and/or percentages of turnover to the franchisor, a reduction of independence through franchisor control of management, and there may be factors that adversely affect a franchisee that are outside its control, e.g. reputation risk.
Before buying into a franchise you will need to evaluate the franchise opportunity. You will need to assess the business itself, the franchisor, other franchisees within the system, financial matters, what your obligations and entitlements will be, and decide whether you want to be a franchisee. You will need to consider the advantages and disadvantages of a franchise business, and have read and understood the franchise agreement and disclosure document provided by the franchisor.
Make sure you obtain relevant information
The following are important factors you must give consideration to.
The information provided in the disclosure document. This will give a useful insight into the current status of the franchise system.
The business model - How successful is it? Does it have a solid business plan and marketing strategy? Is there a demand in the marketplace for the goods or services on offer? Are there other competitors?
The track record and/or reputation of the franchisor - How long has it been in the business? What are its motives for franchising? Has it complied with the laws in relation to the business?
The support the franchisor will provide to you - Product supply, service support, advertising, marketing, reputation, site location, operations manual, policies, guidelines.
How other franchisees are faring in the same network? The franchisor is obliged to provide you with details of other franchisees in the network in the disclosure document. You should be able to contact franchisees directly and ask frank questions about their experiences.
How much will it cost? This includes start-up costs, working capital, operating expenses (including administration, marketing, staff, signage, customer service expenses), royalties, and other associated expenses.
If goods are supplied by the franchisor - What are the terms of trade? Can you purchase goods from outside the franchise network?
The franchise agreement - What is the term of the franchise? Can it be renewed? What happens when the franchise ends? What are your obligations?
The location of the courier franchise - Where will your franchise be located? Is there a lease on the property? If so, can it be assigned? What territorial rights will you have? Are they exclusive? Is the territory clearly defined? Will you have a choice of territories?
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