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FRANCHISING IS NOT A DIRTY WORD!

    Home post_news FRANCHISING IS NOT A DIRTY WORD!
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    FRANCHISING IS NOT A DIRTY WORD!

    By admin | | 0 comment | 30 March, 2015 |

    There has been an increase in demand for quality franchises which has been fuelled by a number of factors, including the downturn in the mining sector, franchiseleaving many middle rank executives out of work, and Gen Y buyers wanting to be their own boss.

    Franchises are an attractive investment for a business owner with little skill or knowledge of the particular industry. Buying a quality franchise has the benefits of:

    • Initial training and support
    • Ongoing training and support
    • Loyal customer base
    • Proven track record
    • Established brands / household names
    • Immediate market share
    • Some financial institutions have generous lending criteria with eligible franchisees
    • Quality franchises are favourable with landlords

    Our own experience suggests that business owners are looking for a change in career and the security that comes with a well established name. Low interest rates are also making it more attractive to invest. We’ve had three clients instruct us to perform due diligence on franchises in the last three months.

    It has been reported that franchise revenues are expected to increase by 2.5% over the next 5 years, with online sales gaining prominence among franchised businesses. Things are looking up for the industry and there has never been a better time to consider buying a franchise business.

    However, it’s not all bells and whistles. Business owners must be diligent when buying a franchise. They are like any other business. You must perform your due diligence, including a review of the:

    • franchise agreement
    • lease agreement
    • trading figures
    • operational support
    • marketing
    • buying power

    Franchisors tend to overvalue their businesses, using multipliers of EBIT of between 3 and 3.5. Each business must be valued on its own merits to determine the true value.

    This is where we can help. If you’re considering purchasing a business, let Optima Partners assist you to make the right decision.

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    Optima Partners is an energetic and innovative accounting, taxation and business advisory firm with offices in Osborne Park, Guildford and Fremantle.

    To discover how we help businesses across Perth please drop us a line today.

    Tel: (08) 6267 2200

    Email: reception@optimapartners.com.au

    Osborne Park Office

    Suite 3, 128 Main Street,
    Osborne Park,
    WA 6017

    Office Hours:
    Weekdays 8:00am – 5:00pm

    Postal Address

    Locked Bag 5000,
    Osborne Park,
    WA 6917

    Guildford Office

    143 James Street,
    Guildford,
    WA 6055

    Office Hours:
    Weekdays 8:30am – 5:00pm

    Fremantle Office

    Level 1, 72 Marine Terrace,
    Fremantle,
    WA 6160

    Please call for appointment

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