Franchisee Buyers Guide - Our Top Five Must-Dos - Iridium Partners
Franchisee Buyers Guide – Our Top Five Must-Dos
General News

Wednesday, 1 February 2023

Franchisee Buyers Guide – Our Top Five Must-Dos

Want to Own a Franchise in 2023? Here’s a Detailed Look at the Steps You Need to Take to Ensure a Successful Purchase

A lot is going on as we wrap up the year and move into another. You’re busy buying gifts, attending Christmas functions, making travel plans and of course, revising those annual goals. The last thing on your mind is quitting your job… And then, just like that, February rolls around. We think, there’s no better time to take action.  

You aren’t alone if you have returned from your summer break eager for a new career challenge. New data suggests more than half of workers in New Zealand have the same thoughts as each new year comes around. 

If, after a couple of weeks of R&R, you have found yourself ready to finally take that leap into franchising, keep reading. We’ve pulled together an Iridium 5-step checklist to help get you ready for the ultimate 2023 work adventure: purchasing your first franchise business.

Tip #1: Speak To Your Inner Circle

Your new business has to suit your family

If this is your first time becoming a franchisee, it’s important to talk to your family and friends early on in the process. They will be your biggest cheerleaders and most honest confidants once you are in business, so you’ll want to get their buy-in first.  

Ask them what kind of franchised business they think you’ll be great at; it might be different from the one you first thought about. 

Consider also how buying into a franchise could change your family dynamic. Moving from a 9-5 salaried role to a franchisee is a big shift. You may need to work nights or weekends to match your store’s open times and to keep up with managerial tasks, and your income is likely to ebb and flow as you start out. It’s important to have these conversations about expectations and any potential changes in lifestyle before you enter into any agreement, so you know you have their full support. 

Tip #2: Research the industry and the brand

Invest your future where there is a future

The most obvious next step is to research, research, research. And then research some more. 

Experience the brand as a customer and get familiar with the product, the audience, and the company website. There will likely be a franchise section on the website, and this may provide some helpful information in the early stages.  Our guide here is also helpful to get you thinking about where to look first. 

Once you have got to know the brand, learn as much as you can about the industry, both internationally and locally. Is it a growing market overseas with potential for growth in New Zealand? How much is the industry worth? What are the trends from the past few years? What’s the competition like? Learning as much as you can about the business will give you a good idea of the opportunities that exist and any pitfalls that could make you want to turn your attention to another industry. 

The recent economic environment has challenged businesses in some industries but definitely not all. We recommend you look for franchises within industries that have had improved sales in the past couple of years. 

Tip #3: Get in touch with us

Work with us to find the right match

Spoken to your family and learned all about the business? Now it’s time to give us a call! 

Think of us as your franchise matchmakers, we connect you with the right people and businesses and provide coaching and guidance every step of the way. We act on behalf of you and the franchisor to make sure everyone is happy.  

To start you on your journey to purchasing, we provide you with a guide to the costs involved and let you know what location availabilities we have now or will have soon. If we feel your skill set and experience are better suited to another franchise opportunity, we will also recommend this to you. 

Working through us means we can also put you in touch with other existing franchisees we have placed so you can learn more about the opportunities out there.

Tip #4: Get your finances in check

Spend what you can afford, and not a dollar more

After you have spoken to us you will have a clear idea of how much money is required for the franchise you want to buy into. Now’s the time to get your finances in check. Buy only what you can afford in today’s dollars.

The average cost of a franchise site in New Zealand is $150,000, according to the Franchise Association of New Zealand, although we have multiple options to suit different budgets. The franchises we work with range in purchase fees from $50,000 to over $2 million. 

Before you commit, it’s important to make sure you have enough funds to pay the initial franchise costs and advisor fees (eg lawyer and accountant fees) and have money still left over for the ongoing business costs. Depending on the franchise you are considering, further funds may be needed at the start to purchase products and equipment or any fit-out costs. 

To put this into further context, a larger franchise like BurgerFuel requires you to have up to $700,000 worth of capital on-hand after paying the franchise purchase fee. This is to ensure you have the funds to pay for the ongoing running of the restaurant.  

On the other end of the scale, a smaller franchise like Streetwise would require far less capital to get off the ground and have little ongoing costs. 

Getting clear on the initial cost as well as the ongoing costs will be sure to set you up for success (and save you the panic when an unexpected bill comes through). 

We recommend you have at least a six-month plan for covering expenses when you are starting out. 

Tip #5: Reach out to qualified and trustworthy advisors

Get a team of experts in your corner

Franchising is a powerful and brilliant model for business, but there can also be serious risks involved.

To purchase a franchise site, you will need advice from an accountant and a lawyer to guide you through the signing of the sales and purchase agreement. We strongly recommend you seek out advisors that specialise in New Zealand franchise law and the nuances involved in this type of business deal. 

Your team of advisors will act on your behalf to ensure a due diligence check has been carried out. 

To learn about franchising best practices and to connect with trusted industry professionals, the Franchise Association of New Zealand is a great place to start.