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Buying a Franchise
Written by
Shaun McGowanBuying an existing franchise can be a great way to get your foot into the business market. There are a handful of reasons a franchise can be a great business move, and we’ll cover some of these below.
A new franchise or an existing operation?
When you’re buying into a franchise, you’ll often have to use specific equipment and meet certain standards set by the franchisor. Thankfully, this might often mean you can start - or continue - operating your business with all the equipment you need.
But equipment isn’t all you’ll get, you’ll also find:
- An established customer base providing consistent, ongoing revenue
- Existing systems and facilities
- Existing processes and operating guidelines
The benefits of buying into a franchise include:
- Start operating immediately
- Establish customer base
- Existing systems, facilities, equipment
- Clear budget in setting up
- No delay on business operations
What are the downsides?
Purchasing an existing franchise is a relatively low-risk option when looking to finance an existing business.
The main downside to purchasing a franchise is meeting franchisor approval criteria. Basically, this is when you’ll speak with the franchisor (a.k.a. the parent company for all the franchises in operation) and decide on an arrangement that suits you both.
However, they may impose strict conditions on how you choose to operate the business. If you’re looking to make something entirely of your own and not conform to the demands of a franchisor, an existing franchise may not be the choice for you.
The risks of buying into a franchise include:
- Requires franchisor approval
- Existing financials can be complex
- Existing equipment or premise leases may expire
- Franchise not performing well may suffer from large fees
- Low flexibility in negotiation with the franchisor
What can I use?
Just like when you’re choosing to buy an existing, established business, there are a number of business loan options available to help finance your purchase if needed:
Secured Business Loans
Secured business loans will get the best rates and the best deals when buying into a franchise.
Unsecured Business Loans
Unsecured business loans have higher rates of interest than secured loans but are usually easier and faster to get approval for, especially if you aren’t applying through your bank.
Equipment Finance
Equipment finance refers to specialist lender loans that are used to purchase vehicles, equipment and machinery for a business.
There are conditions applied to equipment loans, and you’ll need to ensure that you understand any restrictions on your ability to sell or upgrade the equipment throughout the loan term set by the lender.
Where to find franchises for sale
A great place to start is to attend one of the franchise conferences organised by the FCA (Franchise Council of Australia) who list their upcoming events on their website.
You can find franchises for sale through:
- National Franchise Conventions with the Franchise Council of Australia
- Gumtree
- Inside Franchise Business
- Franchise Direct
- A business broker
Ready to see if you can finance your franchise purchase?
Buying a franchise can be a complex procedure, so when you’re looking for a loan, you won’t want to waste any time on vague deals or empty promises.
The easiest way to find a competitive business loan for your franchise in Australia is to simply use our Money Matchmaker™ engine.
We’ll compare the best loans we can find from our available pool of lenders, personalised entirely based on a few simple questions, and you can see exactly how much you’ll pay with each lender - this includes all the little details like fees and restrictions, so you can find the offer that suits your lifestyle the best.
If you’re ready to compare lenders and find finance for your franchise, get started with the Money Matchmaker™ today.
About the Author
Shaun
McGowan
Shaun McGowan
Shaun is the founder of Money.com.au and is determined to help people pay as little as possible for financial products. Through education and building world class technology. Previously Shaun co-founded CarLoans.com.au and Lend.
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