hello

[officer]

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hello everyone,

My name is Brendan and this will be my first thread.

I am currently researching franchise options and have narrowed it down to 4, all around the $50-$70k mark before any royalty fees. One of the options, on the face of it, would appear to provide excellent admin, technical and marketing support but there fees seem to me to be extreme – 40% of gross revenue bases on the leads they supply and 20% based on my direct sales. Others I have researched vary between 15-25%.

Can anyone who may have had experience in this area give me their thoughts on what they consider to be a reasonable fee. Taking almost half of my income, even though they may have great support systems, seems over the top. Thanks

[Bob Owen]

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Hi Brendan,

Franchising is both extremely popular and highly successful in Australia. Per capita we would be among the top countries worldwide to embrace this business model.

I`m not able to comment your fees’ percentages but if you have not already done so, suggest you contact The Franchise Council of Australia, http://www.franchise.org.au, together with additional research on Flying Solo.

Best of success with your new venture.

Regards,
Bob

[MissSassy]

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Hi Brendan

The important thing to remember with any franchise is to look at what they are giving you for the % they require in return.

Now if the franchisor is providing you with marketing, admin, leads, technical etc and all you have to do is the actual work – then maybe it is worth the high rate.

If you are the person responsible for all those activities then naturally the rate goes down.

You must decide on what you are capable of and what you want – If you are buying a business or a job.

[Dave Gillen – Former FS Concierge]

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Hi Brendan,

Welcome to the forums!

A big decision that will impact your life in a big way. I’d find a consultant/advisor who assesses these opportunities for a living to help you out, even if it costs you money.

To me it sounds like a great deal for the company selling the franchise. I’d start by asking yourself what is the reason you want to buy into a franchise? What responsibilities do you want and not want? What are the perks of being a business owner that you’re after? What ways do you want it to be different from a job?

Good luck!

Dave

Dave Gillen | LinkedIn

[Tony Manto]

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Hi Brendan, yes this does seem to be very high.

10 to 15% is normal and perhaps even 20% would be ok.

I agree with the other post. It depends what they are providing for your money.

Other franchises might charge less but do less.

Its all relevant.

My recommendation is to talk to other franchisee’s and see if they are happy with the support they give and the leads they provide.

Do your own sums.

Can you make money if you have to give them so much for each lead. If one customer is worth $10,000 and you have to give away 40%, how much is left for you. How long will it take to service this customer and can you still make money.

[officer]

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thank you Kelly, Dave and Tony,

I will be seeking professional advice and will be doing a significant amount of research before I decide if I will take the plunge.

Your feedback is greatly appreciated.

Brendan

[Author]

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