Home – New Forums Starting your journey Franchisor not supplying start up cost

  • This topic is empty.
Viewing 10 posts - 1 through 10 (of 10 total)
  • Author
    Posts
  • #993156
    franchisenewbie
    Member
    • Total posts: 4
    Up
    0
    ::

    Hello,

    If you don’t want to read the full story, my main question are at the very bottom!

    When does a franchise usually disclose the cost of the franchise?

    I am completely new here but so glad to find something like this! My husband is looking into buying a franchise. Initially he had to fill out forms asking for assets, cash available, details about our mortgage etc. They asked if we would need to borrow money to buy the franchise. We asked for the ‘ball park figure’ so we would know whether or not we’d need to borrow. They said just write ‘to be confirmed’ and fill in the details.

    So we have given them all our financial details but we haven’t gotten any pricing information in return.

    They called my husband today to go through his application and then sent an email saying they want to go ahead with the process and asking him to fly interstate next week for a 4 to 5 hour meeting to go through everything – still without discussing territory (it’s a sporting franchise) or cost.

    He has emailed back asking for a ballpark figure or even a range of possible cost to buy the franchise. No reply as yet.

    When does a franchise usually disclose the cost of the franchise?
    (We would like to know at least a ballpark figure before flying interstate … is this reasonable?)

    Any advice on what sort of things they should have to disclose to us immediately?

    Is it okay to call other franchisees?
    (I wanted to call some other franchisees to ask them questions regarding their start up costs (which I know would be different dependent on territory etc but at the moment I just feel like they’re holding all the cards). I can’t find any information regarding costs for this franchise on the internet so I assume it’s fairly usual for a franchise to keep this information guarded.)

    Do they have to provide us with financial statements from other franchisees?

    Thanks so much for any advice!!!

    #1189982
    Anonymous
    Guest
    • Total posts: 11,464
    Up
    0
    ::

    Hi there franchisenewbie,

    I’m not the right person to answer your questions, but will see if we can rustle up an expert to provide you with some advice.

    In the meantime, welcome to the forum – please make yourself at home.

    All the best,
    Jayne

    #1189983
    franchisenewbie
    Member
    • Total posts: 4
    Up
    0
    ::

    Thanks Jayne, I appreciate that!

    #1189984
    bb1
    Participant
    • Total posts: 4,485
    Up
    0
    ::

    There is a franchise disclosure document which they are meant to provide you which should give a lot of relevant financial and obligations, etc, etc.

    When I was looking at a franchise, I asked for all the information up front before I did the planned trip and everything else.

    Basically you are the one with the money, insist on getting the information you want up front or walk. Sorry that’s my standard answer, but if they are reluctant to disclose, you need to question why.

    You don’t select an item at Kmart without first knowing how much it will cost, ask, insist and ask again.

    #1189985
    franchisenewbie
    Member
    • Total posts: 4
    Up
    0
    ::

    Thanks so much Bert. I appreciate your advice and will ask them to provide the franchise disclosure statement and more information before we consider going interstate to meet with them.

    #1189986
    SuzsSpace
    Participant
    • Total posts: 692
    Up
    0
    ::

    If it helps I have a book I picked up on franchising. I’ve read it and have no intention of going into a franchise so it’s looking for a new home. If you’re interested PM me a postal address and it’ll be yours.

    #1189987
    Dave Gillen – Former FS Concierge
    Keymaster
    • Total posts: 2,566
    Up
    0
    ::

    YES call other franchisees! Not necessarily for pricing, but ask them about everything else.

    Dave

    #1189988
    Jane Business Advisor
    Member
    • Total posts: 3
    Up
    0
    ::

    Hi there franchisenewbie. Where are you located? Did you know local and federal government provide free business advice to people in your situation (a business intender)? I’m in NSW where SmallBizConnect operates. You can find an advisor in your area and a lot of information about doing business on the Government website http://www.business.gov.au. Cheers Jane

    #1189989
    franchisenewbie
    Member
    • Total posts: 4
    Up
    0
    ::

    Thanks for your reply Jane. We’re in Queensland and no I didn’t know that about the free business advice. I will check it out.

    #1189990
    LucasArthur
    Participant
    • Total posts: 3,171
    Up
    0
    ::

    HI

    Have been following this post with some interest, for several reasons although the main one is the ambiguity of the entire process. Whilst i may not offer much formal advice, i hope it may produce some food for thought.

    Generally speaking, most operators will be able to provide you with some guidance as to an expected investment amount before proceeding down all this due diligence.. Main reason is that it will scare of those unable to proceed and also give the intended buyer some insight to conduct some initial due diligence to see if it is even viable to proceed further.

    Understanding that some zones can vary in cost, established v new or even profitable v unprofitable, and this must be considered.

    What i am missing though, is that it is hard to provide more info as to whether this is normal or not as we dont know what industry – what stage – how many franchisees etc etc and this can have an impact on the operational standards of the person intending on signing you up.. EG: Jims franchise group pretty much has standard costs to set up and its well and truly upfront, although if you are buying a franchise already set up this will have an impact on the cost and could potentially be negotiated with the existing territory owner.

    Will continue to see how you go

    Jason Ramage | Lucas Arthur Pty Ltd | E: [email protected]   P: 61 3 8324 0344    M: 61 412 244 888
Viewing 10 posts - 1 through 10 (of 10 total)
  • You must be logged in to reply to this topic.