How to find a franchise

With a background in real estate and automotive finance, mortgage brokering felt like a good fit for Mason, and it was a growth industry at the time. "While I probably had a stronger background than most Mortgage Choice franchisees going in, I didn’t want to completely wing it by myself and be an independent broker and have to negotiate commissions with lenders and so on. The Mortgage Choice franchise model gave me the support I wanted, so I’d be able to get in and concentrate on building a business."

Your budget is another major consideration, and this means sitting down with a banker or accountant to work out exactly how much capital is available. It’s important that potential franchisees have a budget slightly more than the entry price to cover additional startup costs, McFedries adds, and the extent of this will depend on the size of the franchise and the entry fee.

These additional costs vary, especially if comparing a shopfront to a mobile franchise. Retail outlets, for example, will need to allow for fitouts and so on, but the best thing to do is to speak to other franchisees to understand the experience from them.

"We were lucky because we went into a brand new store, so our fitout costs were quite low," says Jones. "Nevertheless, I’d still add at least 15 percent to cover startup costs. It’s just little bits and pieces that can add up." Jones also spoke with at least 20 other Cold Rock franchisees to gauge what his expectations should be and how to make the set-up most seamless.

Another choice is, whether to buy an existing franchise business or start a new one. "It’s what we call the primary versus the secondary market," McFedries explains. "The primary market is for greenfield sites, and the secondary market is resale activity.

"If you want to buy a local franchise which has been built up over a few years, that will come with some goodwill attached and you’re going to pay a little extra for it. But as an established business it should have good commercial returns, and as a result you’ve got less startup risk.

"However, some people are more predisposed to buying a greenfield site because they back themselves to build a business and they don’t want to have to pay for somebody else’s goodwill."

Marwan Kojok, director of Baybridge Lawyers, franchise specialists, says there are also different legal aspects involved with these two scenarios. "When buying an existing franchise there’s a contract for sale of business. They need to ensure the contract meets their expectations, they’ve done their due diligence in respect to that contract and they’ve sought the appropriate advice."